A Parent’s Guide to Insurance for College Students

It’s that time of year again: football season, fall weather, and children leaving for college! It’s an exciting time; however, it’s important to address some insurance issues that could arise. Here are some helpful tips to discuss with your insurance professional:

Auto Insurance:

1. Will your child be taking a vehicle to college with them? If so, it’s important to let your insurance company know so they can update the garaging address for that vehicle. Since rates are dependent upon the zip code of the garaging address, you may see a slight rate change.

2. If you’re sending your child to college without a vehicle, let your insurance company know! Many companies offer discounts for students that are at least 100 miles away from home (attending school) without a vehicle. Furthermore, it’s imperative that you don’t remove your child from your auto insurance policy (even if they don’t have a vehicle at school) – they will still need coverage when they are home for the holidays (and also in the event they drive a friend’s vehicle who may not have insurance on their vehicle).

3. Lastly, many companies offer a discount for maintaining at least a ‘B’ average (whether or not they took a car to school). Just be ready to furnish a copy of their most recent report card showing their grade point average to the insurance company.

Renters Insurance:

1. Providing coverage for your children’s belongings in their dorm or at their residence at school can be a tricky task. Each company will treat this situation differently, so it’s important to discuss with your insurance professional. Typically, 10% of the ‘personal property’ limit on the parent’s home or renters insurance policy will extend to an ‘off premise’ location. However, there are sub-limits and restrictions on certain items (jewelry, computers, etc.). In some instances, this 10% extension is adequate for the student. If it’s not (or if your insurance company has other restrictions), it’s best to purchase a renters insurance policy for the student. Renters insurance policies can be purchased for about $10/month.

As exciting as the fall season can be, it’s important to take a few minutes to ensure that you and your children are covered properly. As always, please read the policy forms for exact coverage details and discuss your specific situation with your insurance professional.

Personal Insurance 101: Actual Cash Value – what does it mean?

The insurance industry does itself no favors in terms of being clear, concise and unambiguous (contrary to what the law says).  If you’ve ever attempted to read your insurance policy forms – you know exactly what I’m talking about.  This is where soliciting the advice of an educated, insurance professional is recommended – because it’s our job to decipher it for you and explain it in an understandable way!  It also helps clients and consumers understand how  potential claims may be settled ahead of time.

Automobile insurance policies are traditionally settled on an actual cash value basis.  This is contrary to standard homeowners policies which settle damage to the building on a replacement cost  basis.  What’s the difference?  Actual cash value (commonly referred to as ACV) is calculated by determining an item’s original value and subtracting the amount of depreciation it has incurred.  Replacement cost is calculated by determining the amount necessary to replace an item with a new one.


Replacement Cost:

We’ll explain replacement cost in detail in our next blog post (I can’t hardly wait, can you!?).  However, here is a quick example:  you own a home that was built 10 years ago.  A horrific fire destroys your entire home (no one was injured!).  Your homeowners policy will provide coverage for this loss and pay to replace the damaged home with a new home (including cost of materials and cost of labor) after you pay your deductible.  The important distinction to make is that there is no reduction in the payout for depreciation.

Actual Cash Value:

You’re driving down the highway on a fall night in Wisconsin and BAM! – you hit a deer and total your 8 year old vehicle.  You consequently file a claim with the insurance company and find out that the loss is covered as long as you carry comprehensive coverage.  The insurance company will pay for the car that you have now – not the one you had 8 years ago.  They’ll take the original cost of your vehicle, subtract 8 years worth of depreciation, and provide you a check for that amount (less your deductible).  This, in its simplest form, is an example of an actual cash value loss settlement.  We’ll explain some finer details in a later post – for example, if you lease a vehicle and you owe more on the lease than what the vehicle is worth.

Congratulations!  You’re now an educated consumer! As the spring rolls on, we’ll continue to try and define many common policy terms.  As always, ‘knowledge is power’.

Does it matter what insurance company you do business with?

As an independent agency, we have many options and companies to work with.  Ultimately, this provides a great benefit to our customers – one advisor/professional to work with who has dozens of companies to choose from to find the best coverage and rates for you.  First, the customer needs to decide what is most important to them when choosing an insurance company.  Some factors to consider are as follows:

  1. Claims Service – Yes, different companies have different levels of claim service.  Some companies make the process very easy and provide great support during the process; however, other companies pay claims begrudgingly and can make the process painful.  This is one of our highest priorities when choosing a market for you because a successful claim settlement equals a happy customer.

  2. Price – Price is a dominant force in our industry and is usually a consumer’s top concern.  Price does matter but it is important to verify that other factors are not being omitted to create a lower price – specifically coverage (amongst others).

  3. Coverage Options – Do you have a unique risk exposure? Does the company you have your insurance with offer all the coverage you need?  These are important questions to consider when electing to place business with a company.

  4. Deductible Options – Many companies are increasing home deductibles and limiting deductible options.  If the company you’re with doesn’t have a suitable deductible for you, it may be worthwhile to ask your insurance advisor to explore other options.

  5. Size & Financial Stability – As an independent agency, we represent small, local mutual companies to Fortune 100 companies.  Size does matter – to a point.  It’s important that the company you’re with has enough capital surplus to cover any catastrophic events that may occur.  Furthermore, it’s important that the company allocates enough resources to critical functions of the company (i.e. customer service/support, claims, underwriting, etc.).  With that said, bigger does not always mean better.  We represent some regional companies that are AM Best A+ rated (financially stable) and provide good service, claims service, and pricing (if not better).

As always, it’s important to discuss these factors and any other factors that may apply to you with your insurance advisor to provide the best fit for you.  Every individual and family is different and subsequently, has different needs.  As an independent insurance agency, we feel that our flexibility and options provides a massive competitive advantage and most importantly, the best options for you.

8 Things to Know About Home and Auto Insurance

Fun factHere are 8 interesting facts about home and auto insurance (courtesy of www.insurancejournal.com).

  1. New Jersey is the most expensive state for auto insurance where the average expenditure is $1,183.95.  Idaho is the least expensive with ana verage expenditure for coverage at $535.15. — Insurance Information Institute

  2. The average auto liability claim for property damage was $3,073 in 2012, while the average auto liability claim for bodily injury was $14,653.  That same year, the average collision claim was $2,950, and the average comprehensive claim was $1,585. (ISO)

  3. 25% percent of consumers rent their primary residence; however, 46% of renters remain uninsured.  (J.D. Power)

  4. In 2013, the homeowners industry will generate its first statutory underwriting profit since 2007.  The GAAP homeowners results from 2011-2013 for four of the largest homeowners insurance companies (by market share) reported an aggregate homeowners combined ratio of 79.6% for 2013.  (Fitch Ratings)

    1. It’s important to note that this may not necessarily mean a decrease in homeowners premium, but if profitability can be attained for the full-year 2014, I would expect to see property premiums decrease.

  5. The most frequent type of homeowners claims are related to wind or hail (especially in WI!); the costliest are related to fire, lightning or debris removal.  About one in 20 insured homes have a claim each year. (III/ISO)

    1. About one in 50 insured homes have a property damage claim related to wind or hail each year.

    2. About one in 65 insured homes have a property damage claim caused by water damage or freezing each year.

    3. About one in 200 insured homes have a property damage claim due to theft each year.

    4. About one in 230 insured homes have a property damage claim related to fire, lightning, or debris removal ever year. (III/ISO)

  6. One in 800 homeowners policies have a liability claim related to the cost of lawsuits for bodily injury or property damage that the policyholder or family members cause to others. (III/ISO)

  7. Dog bites account for more than one-third of all homeowners insurance liability claim dollars paid out in 2012, costing more than $489 million.  (III)

Insurance changes for those saying “I Do” (or will be soon)!

Before you say “Yes to the Dress” – you may want to give your insurance representative a call.  It may be the last thing on your mind while you pick out colors, dresses, and flowers – but it may be the most important call you make.  Marriage changes many things – including your insurance contract – so it’s important to figure out what you need to do.  We’ll share the six most common tips for those who are planning on getting married.

  1. Schedule your engagement ring!  – The average cost of an engagement ring (according to theknot.com) is $5431!  What if the ring is stolen?  What if the ring is lost while washing dishes or doing lawn work?  Standard renter’s and homeowner’s insurance policies only provide coverage up to a certain amount and only for certain causes of loss.  Protect the jewelry by ‘scheduling’ the ring on your home or renters policy to provide cost-effective comprehensive coverage.

  2. Add your spouse! – Add your spouse to your policies after you are married – you may be eligible for certain discounts.  Statistics show that married people have fewer accidents than those flying solo.  Also, if you each are insured with different companies (or different policies) – you’ll most likely save money by combining your policies.

  3. Ask about a multi-vehicle discount!  – If you each own a car, you will be eligible with most companies to receive a multi-policy discount.  In some cases, it may cost the same amount to insure two vehicles as it does one!  When are insurance companies ever logical!?

  4. Ask about a multi-policy discount! – When combining insurance policies, always first check to see if it is cheaper to put all of your insurance policies with one company.  Many insurance companies offer substantial multi-policy discounts – which may save you bundles of money.

  5. Ask about an umbrella policy!  – After marriage, life tends to start moving quite quickly.  Home purchases, baby showers,  and babies all happen before you know it!  An umbrella policy is a cost effective way (around $10/month) to protect your assets from the increasing liability exposures that usually accompany marriage.

  6. Buy life insurance! – You no longer just care for yourself – you have a spouse (and possibly children) to care for and protect.  Life insurance can provide protection for a spouse in the event the unthinkable does happen.  Life insurance proceeds can be used to pay off mortgages and debts, used as replacement income, for children’s tuition, final expenses, and a myriad of other uses.  Protect those you love by purchasing life insurance.

Insurance is the last thing anyone thinks about while planning their special day; however, it is an important topic to bring up.  It’s also a great way of saving money and offsetting some of those wedding day expenditures!