Why Purchasing a Personal Umbrella Policy is a Wise Decision

One of the most important insurance policies you can buy is the personal umbrella policy, but many people are unaware they need one. This policy provides high limits of liability to protect you against a catastrophic liability loss. It pays after your homeowners or personal auto policies’ limits have been exhausted. For example, a major car accident in which you severely injure sev-eral persons can result in damages easily exceeding your personal auto policy’s liability limits. Losses that result in injuries to numerous people, head injuries, and death are often covered by a personal umbrella policy. In addition to providing higher limits, this policy normally pays for some losses not covered by the underlying policy, such as legitimate allegations concerning libel or slander.

Personal umbrella policies are growing in popularity. In the past, only wealthy individuals and families purchased this coverage. Today, middle-income families also may procure this policy for protection in our society’s increasingly litigious climate. As the tendency to sue for damages rises and awards granted by the courts grow, the personal umbrella policy is increasingly seen as an insurance necessity, rather than a luxury. It is especially attractive because of its relatively low cost.

In particular, you should consider purchasing a personal umbrella policy if you have certain
characteristics or engage in certain activities, including the following.

• Your total assets are greater than your underlying liability limits.
• You are financially responsible for the actions of a young, inexperienced driver.
• You live in an exclusive and affluent neighborhood.
• You have a high profile career or high income.
• You frequently host guests on your property.
• Your residence includes a swimming pool.
• You own waterfront property, a farm, or a ranch.
• You own watercraft or aircraft.
• You own numerous rental properties.
• You engage in extensive international travel for pleasure.

Reducing Auto Insurance Fraud

The insurance industry calculates that property and casualty insurance fraud costs our society over $30 billion annually. According to some estimates, this insurance fraud adds about $200 to $300 annually to total insurance premiums for the average household. Auto insurance fraud accounts for a large segment of these losses, which are ultimately passed on to you, the auto insurance consumer, in the form of higher automobile insurance premiums.

Auto insurance fraud can occur in a variety of ways. For example, unethical groups of doctors and lawyers can team together to overtreat patients and thus exaggerate claims. Staged accidents are also a common problem, in which a conspirator’s car pulls in front of an innocent driver’s automobile and stops suddenly. This causes the innocent driver to rear-end the conspirator’s vehicle. Thus, the innocent driver often believes he or she is negligent. Typical victims are usually driving alone in new and expensive vehicles. In many cases, the criminal driver uses a large, older sedan with several passengers inside.

There are several ways by which you can avoid becoming a victim of these “staged accidents,” including the following.

• Avoid tailgating at all times and focus on driving defensively.
• Obtain the names and driver’s license numbers of all occupants in the other car.
• Attain the names and key information of witnesses.
• Report your suspicions to your insurance agent immediately.

In addition, auto insurance companies emphasize several key steps drivers can take to fight auto insurance fraud in general, including the following.

• Be aware of all the various ways in which auto insurance fraud can occur. Your agent is a good source for this information.
• If you believe you are a victim of auto insurance fraud, report your concerns to your agent.
• Communicate with your legislative representative about this issue and request new laws to assist the fight against automobile insurance fraud

Top 10 Contractor Hiring Tips for Homeowners

Your home is probably your most valuable asset. Properly maintaining your home is a key factor in the retention and growth of its value. This factor is one reason why it is important to hire highly qualified contractors when making major repairs or renovations to your home. The following 10 key rules should be followed when selecting a contractor to work on your home.

1. Be wary of contractors who solicit business door-to-door or via cold calls. In addition, avoid contractors who quote you a price that will automatically go up the next day or week if you don’t accept it immediately.
   
   
2. Obtain recommendations from friends, family members, and neighbors about experienced and reputable contractors who have performed excellent work for them.
   
   
3. Ask for a written estimate from the contractor that includes any oral agreements the contractor makes in this process. The estimate should contain a line-by-line breakdown of costs, including materials and labor. In addition, ask if there is a charge for an estimate. If there is, avoid dealing with this contractor.
   
   
4. Obtain at least three estimates along with the names and phone numbers of two former customers of the contractor. Contact these customers and ask about the work performed.
   
   
5. Do not automatically select the lowest bidder. Their work may be lacking in quality.
   
   
6. Verify that the contractor is licensed, bonded, and properly insured. Ask for certificates of insurance for workers compensation and general liability policies.
   
   
7. Contact the Better Business Bureau to see if complaints have been filed against the contractor. This can be performed via the Bureau’s Web site at www.bbb.org.
   
   
8. Avoid dealing with a contractor who asks you to pay for the entire job before the work begins. The standard practice is to pay 33 percent of the job up front.
   
   
9. Get a copy of the proposed contract. Ideally, it should include a hold harmless clause in your favor, particularly for major work such as when heavy equipment will be used in constructing a swimming pool. A hold harmless clause specifies that the contractor will indemnify you with respect to your liability to members of the public who are injured or whose property is damaged during the course of the contractor’s operations. The contract should also explicitly specify the work to be performed, the start and end dates, payment agreements, and warranty information.
   
   
10. Ask a knowledgeable friend, relative, or attorney to review the home repair contract before you sign.

Protect Yourself from Identity Theft

Identity theft occurs when someone appropriates another person’s personal information without his or her knowledge in order to commit fraud or theft. These identity thieves may open charge accounts in the victim’s name and thus borrow money and even perpetrate felonies.

The Federal Trade Commission found that complaints of identity theft have increased rapidly during the last several years. The U.S. Secret Service estimates that consumers nationwide lose hundreds of millions of dollars to identity theft each year. According to the Identity Theft Resource Center, the normal victim spends approximately 550 to 700 hours clearing his or her
credit record. What can you do to reduce your chances of becoming a victim?

• Your credit record should be checked each year to verify all the information is accurate. In addition, you should contact your creditors if your bill does not arrive in time. A missing credit card bill could mean an identity thief has taken over the credit card account and changed the billing address to cover his or her tracks.

• All old financial documents, including bank statements and credit card bills, should be shredded to reduce the exposure to what is called “dumpster diving.”
  
  
• You should not carry your Social Security card with you; rather, it should be secured in your safety deposit box.
  
  
• You should avoid using an unlocked mailbox, such as at your residence, to drop off out-going mail, since mail can be easily stolen.
  
  
• You should not print your Social Security number or driver’s license number on your personal checks.
  
  
• Ask your insurance agent about an identity theft endorsement providing protection if your identity is stolen.

Maintain That Home!

Many consumers have faced rapidly escalating insurance premiums on their homeowners insurance during the last few years. In some cases, consumers have experienced difficulty in procuring insurance, particularly people with several claims. However, there are numerous measures that consumers can take to lessen the possibility of future losses, resulting in more readily avail-able insurance down the road and more affordable premiums.

The following tips offer ways of saving premium dollars and reducing losses on your homeowners policy.

1. Replace washing machine hoses when they show signs of deterioration. Consider replacing them with stainless steel hoses, for which your insurer may provide you a discount. The hoses should also not rub against the wall. In addition, turn off the washing machine water faucet when the appliance is not in use to prevent leaks.
2. Maintain your roof in optimal condition. A quality roof inspection on a periodic basis can identify sections that need repair and thus prevent water losses. Roofing materials containing high wind resistance features should be considered in windstorm-prone areas.
3. If you experience a water leak, make sure it is properly repaired and promptly remediated, which can include the removal and replacement of building materials such as sheet-rock. For larger water leaks, a professional who specializes in remediation should be called in. These measures will reduce the possibility of hazardous and expensive mold losses down the road.

CANDLE-LIT FIRES

As the popularity of candles grows, so does the incidence of fires in the home. According to the National Fire Protection Association, candles are responsible for starting more than 15,000 home fires each year, which is twice the number of recorded in 1980. An estimated 4% of all house fires are started by candles, and four out of ten candle-ignited fires start in the bedroom. Candle fires also occur most frequently in December, when 13% of the fires involve holiday decorations. Many of the fatalities caused by candle-lit fires occurred among people who were using candles to light homes in which the power had been shut off. Homeowners are urged to use flashlights for illumination and bulbs for decoration whenever possible.

With the holidays here, many people will be lighting candles in hallways, dining rooms, and living rooms. Candles add ambiance and warmth to any room, but they are also a fire hazard. Never leave a candle unattended, and be sure to have a fire extinguisher on each floor of your home. Never place a candle in reach of children or near combustibles such as curtains, draperies, and decorations.

Pursue Those Auto Insurance Discounts

One way to avoid paying too much for your personal automobile insurance is to assure you are getting all the discounts you deserve. The following are discounts you should inquire about. Some may not be available in all states and from all insurers, but it doesn’t hurt to ask. These discounts may significantly affect your insurance premium.

• “Defensive Driving Discount.” This discount can save you 10 percent on most of the major coverages under your auto policy, such as liability, medical payments, and collision coverage. Defensive driving courses can cost as little as $20 and last as few as 5 or 6 hours. However, the discount normally applies for 3 years. For example, if your auto insurance premium is $100 per month, the premium is $3,600 for 3 years. If liability, collision, and medical payments or personal injury protection coverage constitute 85 percent of this $3,600 premium, the resulting premium subject to this discount is $3,060. In this scenario, the actual premium savings would be $306 (10 percent of $3,060) for that
• 3-year period. To get the true savings, you must deduct the cost of the defensive driving class. If the cost is $26, the savings in this example would be reduced to $280. If you spend 6 hours taking the class, you are earning $47 per hour in savings—not an unproductive way to spend a Saturday!
• “Good Student Discount.” Statistics show that good students tend to be more reliable and mature than students with marginal grades, leading to better driving decisions. Therefore, many states allow a 5 to 10 percent discount if your student driver makes good grades, usually an overall “A” or “B” average in high school or college. If your child has to pay his or her own automobile insurance, this will be another motivator for him or her to make good grades.
• “Home/Car Discount.” Many insurers offer discounts of 10 percent or more if they pro-vide both your homeowners and personal automobile insurance. This can lower your costs on both policies.
• “Auto Safety Features.” Most insurers recognize that owners with cars containing safety features may have fewer accidents and reduced injuries. Many insurers encourage drivers to purchase cars with antilock brakes by giving small discounts for these safety features. Other insurers give discounts for vehicles with airbags and daytime running lights.
• “Auto Club and Professional Organizations.” Some insurance companies offer auto insurance discounts if you are a member of AAA or similar organizations.
• “Multicar.” Many insurance companies provide generous discounts up to 15 percent if you have multiple cars on your policy. This reduces the insurance company’s administrative costs, on a per-vehicle basis, in issuing the policy.
• “Long-Term Customer.” More insurance companies are offering discounts of 5 to 10 per-cent if you stay with them at least 5 years.
• “Claims-Free Customer.” If you have been insured with the same insurance company for at least 3 years and have not experienced any losses, inquire about a claims-free customer discount. These discounts help insurers retain customers with excellent driving records.