Insurance Blog, Home Insurance Blog, Life Insurance, InsWeb Insurance Blog

A standard homeowners insurance policy provides four fundamental types of coverage, all of which are not affected by fluctuating home prices: 1.) rebuilding the structure of the home, 2.) replacing personal possessions, 3.) liability protection, and 4.) additional living expenses in the event you are displaced from your home.

Those who consider making adjustments to their homeowners insurance policies, nonetheless, are on the right path to optimizing their homeowners insurance to meet their changing financial position. Reviewing the policy every year affords a home owner the ability to make necessary adjustments to their policy limits, be it, adding additional coverage for recent home improvements, or removing extra policy riders for valuable possessions that may have been sold. Rates continually fluctuate, and can vary by hundreds of dollars from company to company, therefore, an annual review also gives home owners the opportunity to realize significant savings by simply getting a couple quotes.

As home prices begin to drop, and the cost of mortgage payments increase, homeowners insurance can offer some financial flexibility that can help offset the increase. In such a case, home owners should look for multi-policy insurance. For example, if your auto insurance company also sells homeowners insurance, you may be eligible to receive discounts of up to 15% off your premium for buying both products. Additionally, increasing the deductible by just a few hundred dollars can make a significant difference to the cost of the premium. Most deductibles start at $250, therefore, if you raise your deductible from that to $1,000 you may save nearly 25% on your premium. Even further, there are dozens of homeowners insurance discounts that go unrecognized by many consumers. Even though they seem ordinary, you may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire retardant roofing material.

Fluctuating housing markets can distort reality, and often times are blown out of proportion by the polarized opinions that informally define them. In the confusion and uncertainty, home owners should not overreact and automatically change their homeowners insurance coverage. Instead, homeowners insurance policies should be evaluated as a whole, taking into consideration the cost of rebuilding the structure, replacing possessions, and protecting against liability lawsuits that threaten the home owners.

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Insurance companies classify smokers differently based on their tobacco consumption. Some companies differentiate between moderate and heavy usage, and charge moderate users less. Other companies use the classification of “standard” or “preferred” tobacco users, where smokers will generally fall into the preferred category if they smoke but are otherwise healthy with regard to their weight, blood pressure, and cholesterol. Those who recently quit may qualify for non-smoker rates, depending on the insurer’s guidelines for how long a consumer must be tobacco-free. There are policies that offer graduated scales, with rates that drop the longer a person remains tobacco-free — sometimes reaching non-smoking rates in the course of a year.

The process of applying for a term life insurance policy generally requires a medical examination that verifies the information provided by the applicant (height, weight, blood pressure, etc.). In order to identify tobacco users, most insurance companies administer a test that measures their body’s level of cotidine (byproduct of nicotine) in their urine or saliva.

The bottom line is that nearly everyone can find affordable term life insurance rates when paired up with the right company — even smokers. Nearly a quarter of the US adult population smokes, creating a significant market for life insurance companies to offer competitive term life insurance products.

InsWeb Life Insurance Learning Center
InsWeb's quick and easy way to find affordable term life insurance.

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Insurance companies use several factors to determine your premiums, including your driving record, age, the type of car you drive, marital status, and your address. But increasingly, companies are using your credit history as an indicator of how likely you are to file a claim. Called an insurance risk score, this controversial number is calculated using a special formula similar to a credit score but developed specifically for insurers. This formula is currently unavailable to consumers; however, many states are currently considering legislation to regulate the use of this score. In fact, Maryland and Washington have passed laws that restrict the use of credit information by insurance companies.

A few things have been made public about your insurance risk score recently. We now know that five main financial factors are evaluated to calculate your insurance risk score:

1. Your payment history: Your record of paying credit bills in the past, number of adverse public records (i.e. bankruptcy, collections, liens), and the amount of delinquencies on your credit record account for about 35% of your insurance risk score. This is the largest factor in your insurance rating.

2. Amount of debt you owe: The number of accounts you have open, the types of accounts, and the amount you have charged all combine to count as 30% of your risk score.

3. Length of credit history: The amount of time that you've had credit and the specific length of time that you have had certain accounts make up 15% of your risk analysis.

4. New credit: 10% of your risk analysis is calculated based on your recent credit activity. Your number of new accounts, recent inquiries, and efforts to re-establish troubled credit are grouped into this category.

5. Types of credit in use: The number and activity of credit accounts including credit cards, retail store accounts, and mortgages count for another 10% of your risk evaluation.

Although consumers can't access their own insurance risk score, simply knowing that your credit history is used by insurers can help you get a better deal. If you have excellent credit, you may want to use it to your advantage and shop around for the best insurance rates possible. If you have troubled credit, you may want to stay with your current insurer until your finances improve.

By understanding some of the credit factors that go into your insurance assessment, you are empowered to improve your insurance risk score. Take charge of your credit and get the insurance rate you deserve.

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Demonstrated best in a repair estimate, the difference between aftermarket parts and OEM parts is generally cost alone, however, we promptly alert all drivers: “buyer beware.” Comparing costs between OEM and aftermarket parts is not always an apples-to-apples comparison. There are potential hidden future costs and risks associated with a vehicle’s insurance coverage, sustained resale value, and even safety.

OEM parts are a vehicle’s “original” part, and are literally produced by the same auto manufacturer. Aftermarket parts on the other hand, are a replicated part manufactured by a company other than the original. As aftermarket parts are an affordable alternative to the expensive OEM parts, insurance companies will not always reimburse 100% of the repair costs when OEM parts are used. In fact, some carriers require the policyholder to pay the difference between the OEM part and the otherwise fully capable non-OEM substitute part.

According to many car owners, aftermarket parts do not necessarily restore the car to its pre-accident condition. Some believe that aftermarket parts decrease the resale value upon trade-in or private resale. Even worse, for those who lease their vehicles, using aftermarket parts can complicate matters at the completion of their lease contract. If the leased vehicle is returned with aftermarket parts, the lessee faces the risk of not returning the vehicle in the original condition.

An industry rule-of-thumb is that for more expensive luxury vehicles, it is recommended to maintain your vehicle’s resale value with OEM parts, especially considering the fact that car dealers monitor the repair history of most vehicles. For those owners that do not have aggressive resale objectives or have a car that is not worth much, then aftermarket parts may be the best route to go.

Understanding the difference between aftermarket and OEM parts is often overlooked when purchasing an insurance policy. Don’t wait until an accident happens to learn what your policy actually covers. Take this time to review your insurance policy and use this knowledge to shop for a policy that best covers your needs.

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Fall is upon us once again and it is time to go through my yearly routine of preparing my vehicle and self for the winter driving months. I have lived in several climates in my lifetime and learned that preparation for the winter driving season is important in all of my living locations. Below is a list of tasks/items I make sure are completed on my vehicles every fall:

• Replace wiper blades
• Check vehicle fluids (Oil, Anti-Freeze, Cold-Weather washer fluid)
• Check brake pads
• Check tire treads (penny test)
• Pack winter car survival box (water, blanket, packaged food, jumper cables, flashlight and flare, and chains if needed)

It is also good to remind yourself that the first few rains of the season will result in oily and slippery roads. I always use extreme caution when driving in the winter, it is not me doubting my winter driving abilities…but doubting the winter driving abilities of the other drivers on the road.

You can find some more important winter driving tips here:
http://www.insweb.com/learningcenter/articles/auto-how.htm

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More than 4 of 10 families survey by Trusted Choice® who said they had a young driver move away from the home hadn’t updated their family’s auto insurance coverage to reflect that change. Of those who are frequent carpool drivers to a job, school or activities with children, an alarming 85% hadn’t changed their liability insurance coverage to reflect the increased risk of additional passengers in the automobile.

Also, if you have purchased property or a home since you first purchased your auto insurance policy, you may want to consider upping your Bodily Injury and Property Damage Liability coverage levels. If you own a home and make more than $75,000 a year, most insurance experts recommend that you own at least $100,000/$300,000 of Bodily Injury coverage and $100,000 total of Property Damage Liability coverage.

Remember to keep yourself adequately covered; while having the bare minimums required by each state may keep you in compliance with state laws, they may not be enough to protect your assets if you have a major incident. Insurance experts recommend that you review your insurance policy often and thoroughly.

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