How To Navigate The Home Insurance Claims Process

Nobody wants to think about it, but damages to your home can happen. In fact, the average homeowner files a claim approximately every nine years. When you’re in the midst of a crisis, it can be difficult to think clearly. You’re worried about the future and how you’re going to get back on your feet. Luckily, having home insurance can help make the process a little less stressful.

Knowing the claims process, and steps to take after an accident or disaster can be incredibly beneficial. Knowledge is power in these situations; and the more you know, the better chance you have to get what you deserve from your claim, and do so within a timely manner.

Who is the Claims Adjuster?

The claims adjuster is the person working for the insurance company. They are the person who will evaluate your claim, looking at the damage incurred and what your policy covers. They will also decide how much your insurance provider will compensate you.

The adjuster plays such an integral role within your claim and it is important to work with them. You will be asked questions about the damage and the condition that your home was in before it occurred. The adjuster will basically serve as the intermediary between you and the insurance company. You will be giving them all of your documents and evidence that the insurance company requires for the claim.

The First Step

First, you should document your claim through pictures or videos as soon as you are able to in order to paint the most accurate picture of the damage incurred. When filing the claim, take all of the costs into account, including money that you might have to spend on a hotel, missing days of work, labor and materials for repairing the property, as well as the value of the items that were lost or damaged.

Having a third party assessment done is a great way to get another set of eyes on the damage and to come with even more ammunition when the claims adjuster comes to assess the damage and offer a settlement.

Evaluate the cost of all the damage and compare it to your deductible. You don’t want to fall victim to the $0-Pay. Discuss with your insurance agent to see if it’s worth filing the claim. If the cost of the damage is right around the cost of your deductible, you might want to hold off to avoid filing an unnecessary claim that will go against your record and affect future insurability.

How Payment Works

When getting a payout for your claim, you most likely won’t get the entire settlement amount at once. Instead, the initial check will probably be an advance of the total amount. However, there is always a chance for an “on-the-spot settlement” in which case you will get the total check right away. This settlement can be reopened if you find more damage down the line, typically within the year of the damage.

Additionally checks for property damage, damage to personal possessions and additional living expenses incurred as a result of uninhabitable property, should come in separately, not in one lump sum. This can help make sure that the money is going toward the right funds.

Personal Possessions

In the event that personal belongings are damaged, one of the first steps you should take is to try and find out the cost of everything inside your home. If you have an inventory of your possessions, that will be incredibly useful in the process. If you don’t have one, look back at old photos and videos to recollect the things that might have been damaged.

Next, depending on whether you have an actual cash value or replacement cost policy, you will either get reimbursed for the items (factoring in depreciation) or for the cost of buying new items, respectively. In many cases, your replacement cost policy will require you to buy the replacement items prior to compensation and then they will reimburse you, so keep those receipts.

Additionally, talk to your insurance company about how much time you have to replace your items. Oftentimes, you don’t have to make an immediate decision.

Property Damage

If there is property damage to your home and you have a mortgage, the check will most likely be made out to your lender. This is typically laid out as a condition of granting your mortgage. By receiving the insurance check, the mortgage lender can help ensure that appropriate repairs are made to the property, as this is also in their best interest to secure both of your investments in the property. Therefore, in most cases, the mortgage company will have to endorse the check, with the money typically being put in an escrow account, paying for the repair work as it is completed.

If you are in a situation in which you need to rebuild your home you can decide if you want to rebuild on the same site, a different location, or not at all. The money you are given to do this will depend on the policy you purchased. Typically, you’re entitled to the replacement cost of your home, keeping in mind that your insurance company will pay to have your home returned to the state it was in prior to the damage, not for a bigger or more expensive place.

Additional Living Expenses

In contrast to the payout for property damage, the check for any additional living expenses should be made out to you. Though you may still have to get the check endorsed by the mortgage lender, these expenses don’t have to do with repairs to your home. This can help cover the additional costs of living in a hotel or getting a rental car.


  1. Be thorough and document everything. This includes the inventory of your possessions, documents and conversations with the insurance company, and being on top of deadlines and appropriate forms.
  2. If you are able to, be present for inspections by the insurance adjuster or independent inspector.   
  3. Make sure that you understand your insurance policy and everything that you are covered for. Know your rights.
  4. Stand firm to your claim. The process may take a little longer than anticipated and you may not get the compensation you expected. You are able to dispute it if you believe you’re entitled to more. Don’t be forced into settling by the duration of the process either, be patient.
  5. Be honest with your claim. Lying won’t get you any farther in the process and is illegal.
  6. Cross your ‘t’s and dot your ‘i’s. Make sure you get all the appropriate information from your claims adjuster including your claim number, and the name and phone number they can be reached at. This can help ensure that your claim is properly filed and your forms are accurate.

When push comes to shove, home insurance has your back. The reason you purchased it was to protect your investment, so if you need to repair damaged property or possessions, make sure you stay calm and understand the process so that you are able to restore this investment.

The Importance of Renters Insurance

One of the first steps you take when buying a home is purchasing homeowners insurance. Similarly, one of the first steps you take when renting a home is getting renters insurance. Just because you don’t own the property itself doesn’t mean that damages are any less likely.

However, many people don’t get renters insurance because they feel they don’t need it. One of the main reasons being, that they think their landlord’s insurance will cover them, when in fact, a landlord’s policy typically only covers them and their property.

To protect your possessions, renters insurance is one of the most essential tools you can purchase to reinforce your financial stability. It can be fairly inexpensive as well, costing less than a dollar a day (averaging 15 to 30 dollars per month) depending on your provider, geographic location, and additional insurance policies you carry.

What’s covered?

Renters insurance covers personal property and personal liability. So things like furniture, electronics and clothes, as well as medical expenses if a guest gets hurt while at your place, can be covered. Additionally, some policies will cover temporary living expenses if your rental property becomes uninhabitable.

Just like with H03 and HO5 homeowners insurance, not all situations are covered with renters insurance. If you’re looking for protection for natural disasters such as earthquakes or hurricanes, you will need to buy riders for additional coverage. If a natural disaster such as a wildfire, tornado, or hailstorm cause damage to the building, the landlord’s insurance will most likely cover the damage to the building, however, your personal property will probably not be covered, which is where your personal policy can come in handy.

Other riders can include sewer drainage damage (drain gets backed up and floods, ruining your possessions), extended theft coverage (items stolen outside of your home, such as a laptop from your car), and loss of use (living expenses if your property becomes uninhabitable).

Additionally, if you’re in a building with multiple units and you are responsible for an unnatural fire (i.e. you leave the stove on and a fire starts), you can also be responsible for the damage to the other tenants apartments including any of their property damage.

What types of coverage are there?

There are two types of coverage that renters insurance provides: personal property and liability. Personal property coverage covers repairing or replacing personal belongings in the case of theft or damage. Liability coverage covers you in the case of a claim or lawsuit if someone is injured or their property is damaged by an accident on your property.

Additionally, you can opt to get a broad form of coverage or a comprehensive form. The broad form is the typically the most common form purchased and is similar to HO3 coverage as it extends to specific events like fire or theft. Comprehensive coverage is more similar to HO5 in that it covers a more general range of events, with only specific exclusions.

Next, you get to decide if you would like actual cash-value coverage or replacement cost coverage. For actual cash value, your insurance provider will factor in depreciation before offering your claim amount. So if you bought a couch for 500 dollars five years ago, and now it is worth 300 dollars, your insurance company will compensate you 300 dollars.

For replacement cost coverage, your insurance provider will compensate you for the actual cost to replace the couch. So you would get 500 dollars for the couch, or however much it costs to get a comparable one. Replacement cost coverage typically has higher premiums than actual cash-value, but could save you some serious out of pocket costs down the line.

How much coverage should you get?

When deciding how much coverage you need you should evaluate a few things. First, take a look at your landlord’s insurance to see what they are actually liable for and what they will cover in the event of damage to the property. Additionally, take inventory of all of your possessions (beyond just those ‘big ticket’ items). It’s estimated that an average two-bedroom apartment contains about 30,000 dollars worth of stuff, which will be difficult to replace if something unexpected were to happen.

To save some money on your policy, look into installing a smoke detector, burglar alarm, and fire extinguisher to help reduce your risk of needing to file a claim. If you have roommates, check with them to see what their policies are and if you have the ability to purchase one together.

Why is it important?

Renters insurance is important because it can help protect you and your belongings from unexpected events. It also helps fill the gaps that other policies may lack. For example, if your car is broken into and your laptop is stolen, the window will most likely be covered under you auto policy, but the laptop probably won’t be. Your renters policy can help extend this coverage of your property.

Just because you don’t own the building you’re living in, doesn’t mean your other possessions are any less valuable, or your guests are any less accident-prone. Through purchasing renters insurance, you will be covered for personal property and liability claims throughout the duration of your rental experience, and you can do so without breaking the bank.

Home Insurance Shopping 101 – The First Time Home Buyer’s Guide

A house is more than just a roof over your head; it’s an investment. For many people, it’s also one of the most expensive purchases they’ll make in their lifetime, which means this coincides with one of the biggest loans of their lifetime in the form of a giant mortgage. Right after that offer is approved on your new home, protecting it should be a number one priority. Home insurance quickly becomes one of the best ways to protect this investment. In fact, many insurance companies won’t even approve you for a mortgage to purchase your home without insurance.

When choosing your policy, you want to make sure you pick the one that’s right for you. Not all insurance is created equal and basic plans won’t meet your unique needs. Therefore, don’t procrastinate, do your research and prepare.

So, where do you start?

Figure out how much insurance you need at the very minimum.

It’s better to prepare for the worst to happen. Having deep coverage that can cover 100 percent of your home’s replacement cost is seen as a good place to start. Therefore, you help ensure that if something were to happen to your home, you wouldn’t lose out on the entire investment. Get an official assessment of the home and your belongings to value how much coverage you should purchase.

Know what’s covered and what’s not. The devil is in the details.

In most homeowners insurance policies you can expect damage to the interior or exterior of the house, damage to your personal belongings and liability protection to be included. However, you can also expect for flood, earthquake or poor home maintenance damage to not be covered. Homeowners policies may exclude certain circumstances, whether they’re not a named peril or they are explicitly excluded from a more encompassing plan. If this is the case, consider buying specific add-ons to tack on to your policy. If you’re in an area that is prone to earthquakes, getting separate earthquake coverage will help make sure there aren’t any surprises if you need to file a claim.

This is when riders and floaters come in. These provide additional coverage that basic home insurance policies do not. Floaters are good to purchase to insure your valuables as these assure that the full value of the item will be replaced if there is theft, loss or damage. A rider covers items that are either not cover or that have value that exceeds the per-item limit of your policy (i.e. jewelry, fine art, musical instruments). If your policy only covers 1,500 dollars in jewelry, but your wedding ring costs 10,000 dollars, taking out a rider to protect the value of that possession might be a good idea to consider. Make sure that there aren’t any fine print details in your policy that prohibit certain items from being covered or don’t cover the full value of the item.

The value of high deductibles.

A deductible is the amount of money you will pay out of the pocket in the chance you file a claim. For example, if you file a claim of 10,000 dollars and your deductible is for 500 dollars, your insurance company will pay 9,500 dollars, while you pay the 500. The higher your deductible, the lower your premium. By assuming more of your own risk, you are taking some of the burden off of insurance companies. Therefore, your deductible should be as high as you can reasonably afford in the event of a claim. By raising your deductible, you can cut the cost of your premiums up to 20 percent.

If raising your deductible even $1000 saves you $200/year on your annual premium, you only need to go 5 years to start ‘making money’ on your investment choice, if you will.  Couple this with the fact that the average homeowner makes a claim every 9 years and it becomes a wise decision for the long game of home insurance.  Dash suggests putting this deductible savings into a sort of “home maintenance slush fund” in case a small incident does happen so that you still have the money on hand.  Worst-case, that home maintenance fund becomes a vacation fund if you go multiple years without tapping into it!

Pick your battles.

The moment you file a claim, your rates are almost guaranteed to go up. In the eyes of many insurers, you become uninsurable after you file as few as two claims in three years. To insurance companies this looks like you have become a bigger risk of filing future claims, and to compensate for this risk, they will most likely raise your rates.

In Minnesota, the average premium increase after one claim is one of the highest in the nation. After filing just one claim, your annual premium cost increases at an average of 21.2 percent, far surpassing the 9 percent national average. On top of that, as a Minnesota resident, you’re already paying higher premiums to begin with due to the often times extreme winters, spring hail, tornado seasons and subsequent risk of damage to your home. In 2010, the average annual cost of homeowners insurance in Minnesota was 981 dollars, whereas the national average was 909 dollars.

Therefore, as Minnesotans we have to pick our battles wisely, understanding the implications of the small claims, or the $0-pay.

Let’s say there is a hailstorm one evening. You check the next day to assess the damage and realize that some shingles are missing or loose, costing about 700 dollars in damage. Now, let’s say your deductible is 700. If you file a claim, you’ll become a victim of the $0-pay. Minnesota law actually prohibits insurers from raising your premium based on an “act of God” type claim like wind or hail. However, this $0-pay still counts as a claim against you and can therefore make you ineligible to switch carriers because of the “two claims in three years” standard, meaning you’re essentially stuck with the insurer whether you like them or not for a certain period of time because you can’t go elsewhere.

If you raise your deductible, you can help avoid these small claims and save money every year through lower premiums.


One of the best things you can do to secure your investment is get the right type of homeowners insurance and be prepared. Take an inventory of what you own and continually update it. Other things to consider that might affect your insurance policy coverage are the breed of dog you have, if you have a wood furnace or stove, or if you have a swimming pool or trampoline. These can increase your liability, resulting in higher monthly premiums.

Additionally, look for discounts. Many newer homes qualify for discounts because the new materials can be more durable. If you have a smoke detector, alarm system, fire-sprinkler system, deadbolt locks or window security devices, this can help provide more security to your plan and lower your monthly premiums. If you bundle your homeowners insurance with your auto insurance, you can also save some money.

Don’t assume that the insurance you buy when your first purchase your home will be the same coverage you’ll need in a few years. As your possessions and value of your home change, your coverage should adapt along with them. Remember that you get what you pay for and if you choose a basic/low cost policy, your coverage will follow suit, and your investment will be less secure.

Better than Basic – The Difference Between HO3 and HO5 Homeowners Insurance

Imagine this. You go away for the weekend on a nice relaxing trip with the family. You make sure to schedule a massage, some time on the beach, a dinner at a nice restaurant, the works. Finally, after a well-deserved weekend off, you come home and all you want to do is sleep in your own bed. But you can’t.

You open the door to find a raccoon has weaseled its way through your doggy door and has subsequently torn up your living room and kitchen. Now your furniture has been mutilated, your flat screen TV has been knocked over and the screen cracked, the hard wood floors are all scratched up, the glass table has been shattered and you find holes in the walls where the animal panicked and tried to escape. Who would’ve thought so much damage could be caused by such a tiny animal? Not an HO3 policy, that’s for sure.

You may be thinking how unlikely it is for a scenario this extreme to occur, which is why a HO3 policy may seem like reasonable coverage. However, the future is an unpredictable place. These things do happen and they will end up costing you many future vacations in out of pocket costs. However, a HO5 policy can help you save those future getaways.

What’s the difference?

The main difference between the HO3 and HO5 policies is the perils they cover: named perils vs. open perils. Named perils are specific causes of damage and loss. Open perils include all causes of loss, unless they are specifically excluded.

A HO3 policy is seen as the most basic coverage and the contents of your home are only covered for 16 named perils.

  1. Theft
  2. Fire or Lightning
  3. Explosion
  4. Smoke
  5. Freezing
  6. Vehicles
  7. Falling Objects
  8. Volcanic Eruption
  9. Windstorm or Hail
  10. Riot or Civil Commotion
  11. Damage Caused by Aircraft
  12. Vandalism or Malicious Mischief
  13. Damage due to Weight of Ice, Snow, or Sleet
  14. Sudden and Accidental Tearing Apart, Cracking, Burning, or Bulging
  15. Sudden and Accidental Damage from Artificially Generated Electric Current
  16. Accidental Discharge or Overflow of Water from Plumbing, Air Conditioning, etc.

Though these policies cover very basic circumstances, there are more than 16 things that can happen to your home. And they’re sure to cost you a pretty penny. Now, enter, the HO5 policy.

Center Stage

A HO5 homeowners policy covers open perils, so they don’t have to be specifically outlined in the coverage plan, baring a few specific instances that are excluded. It’s a lot less limiting and can expand on existing coverage. Additionally, you won’t have to worry about proving that the damage was caused by one of the named perils on the HO3 list, which can take away some of stress from an already tumultuous situation.

One thing to note about HO5 insurance is that, due to its more broad nature, your home has to qualify to receive this form of homeowners insurance. Generally, homes that are newer, well maintained, have a higher value, and/or are protected by a fire/police station are the homes that are more likely to qualify.

The HO5 policy provides more protection and therefore will cost a bit more than the HO3 policy. However, the additional monthly cost is nowhere near what you could be paying out of pocket if something outside the named perils occurs to your home. Additionally, depending on the town you live in, your credit score and claims history, you may be able to qualify for close to the same price as a HO3 policy.

Be Prepared

If you qualify, it is recommended to take the HO5 policy. It provides better coverage, protects the contents of your home, prepares you for the unpredictable, and helps ensure that one specific instance doesn’t dictate your future or limit your financial security.


How to Actually Not Worry About Your Awesome Home Insurance

Insurance Information


How to Actually Not Worry About Your Awesome Home Insurance

Homeowners insurance in Minnesota is a little tricky. In terms of average cost, Minnesota is pretty normal; it’s only 8% above the national average. But Minnesota homeowners suffer from a unique problem: Minnesota is the worst place in the nation to file a homeowner’s claim. After filing one claim, a Minnesotan homeowner can expect a 21% increase in his/her premium. That’s over $200 more annually on average. For comparison, this figure is just 9% (about a $50 increase) more in neighboring Wisconsin.

So what’s responsible for these sky-high increases? Natural disasters are chiefly to blame for these increases. For the last twenty years or so, Minnesota has experienced an unprecedented increase in natural disasters. For example, there were 144 tornados in Minnesota in 2010; that’s over three times Minnesota’s national average. When natural disasters strike, insurance companies are forced to increase their premiums in order to compensate for their losses and also to anticipate future risk.

The other main reason for Minnesota’s huge premium increases after one claim is the Minnesota insurance law. In Minnesota, insurance companies cannot cancel someone’s policy after the policyholder makes one weather-related claim. In a lot of states, insurance companies are actually allowed to do this. While this might sound a little cruel, it actually makes business sense in a lot of cases. For example, if a policyholder files a claim for minor damage to their house, such as some broken windows (this is a bad idea), then their insurance company might drop them because the policyholder is simply taking advantage of the insurance company to get compensated for minor losses. In Minnesota, the insurance company would be obligated to continue covering the policyholder, even after an irresponsible claim had been filed. As a result, the only option that insurance companies have in order to stay afloat and be competitive in a certain area is to increase people’s premiums after they file a claim.

So what does this mean for you as a policyholder? As always, this highlights the importance of being careful about filing a claim. A claim should be filed to recover from a serious loss and shouldn’t be taken lightly. In Minnesota, this is treated more seriously than almost anywhere else. Before you make a claim, put yourself in the position of your insurance company for a minute. In a state with a whole lot of natural disasters, how much would you trust a policyholder who files a given claim? Is the loss serious enough to warrant such a claim? Remember, you won’t be able to drop someone if their claim is irresponsible, so you’d be forced to increase their premium. Try to keep this in mind when thinking about filing a claim.


“Average Cost of Homeowners Insurance (2010).” Value Penguin. Accessed 6/8/15.

Bjorhus, Jennifer. “Storms push insurance rates sky-high.” Star Tribune. Written 10/22/12, accessed 6/8/15.

“One home insurance claim may raise your premium by up to 21%.” Insurance Quotes. Written 10/9/13, accessed 6/8/15.

What You Need to Know About Your Surging Premium


Insurance Diagram

What You Need to Know About Your Surging Premium

         Insurance can be fairly complicated. A lot of work goes into an insurance policy, on the part of both the insurer and the policyholder, in order to determine the proper amount of coverage and the appropriate premium. Also, insurance premiums often change, and your premium could change even if you didn’t make any changes to your lifestyle or possessions since your last term. But it’s easier to understand once you gain a basic understanding of insurance. Once you understand the basics, you can be smarter about your policy, and you’ll have a better idea of how this whole processes works for both your insurance company and yourself.

         To understand the concept of insurance, let’s go all the way back to ancient Greece. The Greeks were one of the first civilizations to use insurance and they used it to cover goods carried by merchants. For example, perhaps a merchant wants to send his goods across the sea. Without insurance, he would simply pay a carrier to transport the goods and the merchant would have to accept the risk of the goods getting lost or stolen. If the merchant’s goods were indeed lost, then he would be left with nothing. But the Greeks used insurance to solve this problem. In ancient Greece, a merchant could pay an additional fee, now known as a premium, to insure his goods. In exchange for receiving this extra money, the carrier would guarantee a safe delivery. Thus, if the goods were lost or stolen, the carrier would completely compensate the merchant. People were then able to transport their wares safely at a minimal fee.

Why does all of this work? How can these carriers afford to pay their customers whenever their wares are stolen? The answers lie in the numbers. We must understand that there were many sellers attempting to send their goods across the sea. When many sellers pay a premium to a small group of carriers (let’s call this an insurance company), then this insurance company is going to make a great deal of money. However, occasionally someone does lose their goods due to a bad storm or to thieves. In this case, the insurance company must compensate the merchant. This will come at a high cost for the insurance company, but these catastrophes are so infrequent that the insurance company will make enough money to stay in business. Neither the insurance company nor the merchant (the policyholder) wants anything bad to happen. Yet, the policyholder benefits from this comfort and safety, and the insurance company benefits from the premium. Insurance companies use the money they get from these premiums to invest and earn even more money. This whole process enables insurance companies to award massive amounts of money to people on a regular basis.

So what does this mean for you? When shopping for an insurance policy, you’ll want to consider two main things: your premium and the amount of coverage that you will receive. More coverage means a higher premium, but more importantly, less risk means a lower premium. If your insurance company thinks that your insured entity is likely to fail, then it’s going to be reluctant to cover you, and it’s going to charge you a lot for your coverage. The best way to keep your premium low is to reduce your risk. This means making sure that your article (your car, house, or your health) is in top condition. But some things that determine your premium aren’t under your control. For instance, an insurance company wouldn’t want to cover a large amount of articles in a small area; this is because all of these articles could be wiped out by one catastrophe. If you have an article in an area where all the other articles are insured by the same company, you will pay a higher premium because you are creating a higher risk level. So if your premium changes mysteriously, just remember this whole process. Insurance is all about risk, and good risk assessment is what keeps everyone insured at a reasonable price.

Avoiding The Dreaded “$0-pay” (If you don’t dread it, you should!)

Most everyone knows that having claims on your record with insurance companies can affect your future rates.  And we know that sometimes making claims is unavoidable, because after all, getting reimbursed by your insurance company is the primary benefit of carrying insurance!  But what happens far too often with consumers is that they suffer the mark of a claim on their record but don’t receive any reimbursement!  It’s the dreaded $0-pay.

Every company is different of course, so I can’t speak for all of them, but did you know that even calling in to discuss a hypothetical claim with your insurer can appear as a $0-pay on your record?  Or that if you make a claim  and don’t get any money from your insurer due to deductible or claim denial that your record will still reflect that a claim was made for $0?

Here’s the worst part:  With fire insurance (home/renters/condo/townhome/etc), insurers are more concerned with claim frequency than claim severity.  That means that those pesky $0-pays on your record can be just as harmful to your rate and your ability to switch insurers as a $100,000 claim where half the home needed to be rebuilt.  With most insurers, you become uninsurable as a consumer when you have as few as 2 claims in 3 years.  This will prevent you from switching insurers when the rate that you pay skyrockets because of the claims you made.  You may even be at risk of getting dropped altogether by your current insurer, forcing you to buy insurance from your bank or the state government for exorbitant premiums.

Another risk with $0-pays on your record is that it limits your options should something severe happen in the future that actually warrants a large claim.  What if you made a claim for your stolen iPad but didn’t get any reimbursement because your deductible was $1000, then a thief breaks into your home over Christmas and steals $10,000 worth of jewelry and presents?  Making a second claim here could get you dropped.  This is why the decision to make a claim should be heavily thought through.

So how do we avoid $0-pays?  Start by having an agent that actually looks out for your best interests.  Before calling that 1-800 number, use every available resource to determine the approximate value of your loss as it compares to your deductible.  There are dozens of home restoration experts who would love to give you a free estimate in an attempt to win your business.  If that snag in your roof is valued by a contractor at $1400 but you carry a $1500 deductible, it’s not worth making a claim!  It seems elementary, but too many people call the insurance company before they call their agent or get a third party estimate.  Control what you can control.  Don’t give your insurance company more ammunition to justify raising your rate even further.  It’s probably going to go up moderately due to inflation and company loss ratios anyways – don’t let it be a spike.

Let your agent work for you and represent you!  That’s where you’ll get true value out of a relationship with an agency!




Homeowners’ Deductibles and Avoiding Small Claims

I can’t even count the number of times I’ve heard homeowners say, “I’ve been paying my insurance for 10 years and haven’t filed a single claim!”  Well that’s a good thing!  Not filing a claim is probably the best thing you can possibly do to control the premium you pay every year.

Even after filing just one claim, the average annual premium in Minnesota went up 21% for homeowners.  So if you’re going to self-insure to a certain point and avoid making the smaller claims (which would be my recommendation), then why are you paying all of that extra premium to carry such a low deductible?  Raising your deductible even $500 to $1000 can sometimes result in hundreds of dollars a year in savings.  If you’re the person who goes 10-12 years without filing a claim and raising your deductible saves you even $200 in premium a year, you’ve just pocketed over $2,000.

Now don’t get me wrong – your deductible should be a number that you could at least uncomfortably pay in the event of an emergency.  But insurance exists to pay for the things that you can’t.  Yes, $2,000 is an unpleasant amount of money to have to pay, but it doesn’t compare to the $200,000 you’d need to rebuild your home in the event of a total loss.  Making a small claim in order to receive a mere $500 from the insurance company after your deductible is paid will cost you more than that in premium in as few as 2-3 years.

If we can adjust our philosophy about insurance so that it’s used primarily in the event of a catastrophe, there is a ton of savings to be had without jeopardizing the quality of your homeowner’s coverage.

Renters Insurance

Renters insurance is one of the most neglected and important types of insurance out there. The statistics vary, but a glance at surveys and reports will show you that at least over half of renters don’t have renters insurance at all. There are a few reasons why this could be; people tend to think that renters coverage is much more expensive than it actually is, or they just don’t understand its importance. The truth is that renters insurance is cheap, and it protects you from risks you might not have thought about.

To understand why renters insurance is so important, let’s start with the basic premise: your landlord’s insurance will not cover your stuff in the event of a disaster. A landlord’s coverage will pay for the entire building, but as far as replacing the contents of your apartment or rented home, you’re on your own. If you’re renting, your place is at just as much risk, if not more, than a homeowner. You might think that you’re responsible enough to not set all your stuff on fire, but maybe your fellow tenants aren’t. Also, renters tend to experience much more theft than homeowners. Renters insurance will protect you from these risks, and coverage typically costs only $60 to $200 per year. We’re talking about substantially less money than you probably spend on clothes each year.

Now that we understand how important renters coverage is, let’s go over how it works. Renters is a lot like homeowners insurance in that it provides coverage for personal possessions, liability, and additional living expenses. If water seeps into your apartment and ruins your stuff because your tenant upstairs left the water running, your renters insurance will cover your possessions. If your disgruntled neighbor decides to sue you because she hurt her back while helping you move some furniture, your liability protection will help cover you against the lawsuit. This liability coverage also includes no-fault medical coverage, so you might be able to convince her not to sue by getting your insurance company to cover those injuries. If you have to live somewhere else because your apartment complex nearly burned down, your additional living expenses coverage will pay for your hotel bills and meals while your room is being repaired. The only disasters that renters coverage tends to exclude are floods and earthquakes, although you may be able to add an endorsement to your policy for this coverage if necessary.

To find the renters policy that’s right for you, it’s a good idea to do the same kind of prep work that you’d do for all other types of insurance. First, take a look at how much coverage you need. Taking an inventory of all your possessions is a good start; this will give you an idea of how much coverage you need, and it’ll also make it easier to file a claim in the future. As with homeowners insurance, you’ll need to decide between replacement cost and actual cash value coverage. An actual cash value policy pays to replace your possessions minus a deduction for depreciation. If you’re willing to pay about 10% more, replacement cost coverage is well worth it because it will pay for everything regardless of depreciation. Renters insurance requires you to pay a deductible before the coverage kicks in; this typically ranges from $500 to $2000. A higher deductible means a lower premium, so go higher if you can afford it. Make sure to note any especially valuable possessions, such as jewelry or musical instruments, as these may require a floater (a policy endorsement that provides additional insurance). Lastly, don’t forget those discounts. Already have a life or auto policy with Farmers? You’ll get a discount. If you’re a doctor, teacher, engineer, police officer, or another selected professional, your premium will get even lower. Insurance companies like it when you keep your property safe, so not smoking will get you a discount also. You can do even more for your safety by installing an approved security or fire protection system, as this will take off another chunk of that premium. Now you’re ready to talk to your agent and add yourself to the list of responsible, well-protected renters.