Insurance is one of those things in life you want to get it and forget it. The caveat though is regret it. Most people spend more money on insurance annually than they do doctor, dentist, lawyer and medical bills combined…most people. Yet no one takes the time to see what their money is actually doing for them.
I was with a prospective client the other day and she showed me her declaration page. The problem was she was paying for her husband and herself, and the kids were non-rated, but living with them. So what she didn’t know, or her agent for that matter, was that a non-rated person could be in the same household and not affect your coverage, but they had to have their own vehicle with their own separate policy. Not the case here. If the kids got into an accident the company would state they were not properly written and not pay any money out.
Imagine that, you are paying thousands of dollars per year for car insurance and you’re not protected because of the agent who did not properly write their policy. They would have had to sue the agent against his E&O insurance and the process would have been extremely difficult for everyone.
Another incident involved a realtor who, for 23 years, was paying near $3000/year for home insurance! She assumed everything was fine because it came through her husband’s company and was deducted from his check before he paid. The problem was when I priced it out – with better coverage I might add – the premium was only $1450/year. If she was overpaying for 23 years she could have unnecessarily spent an extra 35,000.
Review Your Insurance
In both incidences there was a get it, forget it, and regret it scenario! Don’t be this type of person. No one wants to deal with insurance, I get it, but at least take the time with a true professional who knows what they are talking about and figure out what is best for you and your family. I try to, at the very least, meet with my clients once a year to go over their policies and see if anything has changed. Whether they had a child, or bought a boat, or anything I could help price out for them before they buy something is also very convenient. I do this because I am responsible for the protection of their assets. They are paying me, the Scottsdale insurance professional, to keep what they worked so hard for.
Home insurance is the most overlooked insurance policy because it often gets paid by the mortgage company.
When people buy a house, they may use the home insurance company they have used in the past or the one the mortgage company recommends. However, the mortgage company only cares that the loan amount is covered, and doesn’t care that your personal property value is low, or that your personal liability is below what you should be carrying. Homeowner insurance can start around $300/year and go as high as $3,000+. So why wouldn’t you check your coverage premium, at the very least, every three years?
Like auto insurance, home insurance can be a burden to many people, and they just want to get it over with and take the cheapest premium they can obtain. Do they know what insurance company is covering them and the strength of that company? In late 2010, Arizona had a hail storm that destroyed the roofs of many homeowners, but the insurance companies many people used carried an ACV, or Actual Cost Value, on the roof of their home.
So what is Actual Cost Value?
The ACV is the value of your roof with depreciation calculated into the value. In 2010, homeowners made claims on the roof damages only to find out, for example, instead of receiving $20,000 required to replace their roof they only received $6000 because the depreciation reduced the value of the home. Homeowners were irate but couldn’t do anything about it.
I can tell you I never cover a roof with an ACV; rather I always set it to the replacement value (RCV).
What about insuring your personal property?
Is it covered with ACV or RCV? If you are covered with ACV, that television you bought five years ago for $2000 is now worth only $500, and that is what you receive if it is stolen or victim to a fire damage. If you are covered via RCV (which is the only coverage I provide even though I have the option for ACV) you will get the $2000 to purchase a new television.
Personal Liability Insurance
Are you covered for $100,000, $300,000, $500,000, or more? What is personal liability? If your dog bites someone, your personal liability coverage steps in to cover the loss. If someone trips on a cord on your floor and hits their head, again, personal liability steps in to protect you. What if you have a pool and something terrible happens? Your personal liability protects you. But what home insurance coverage is best? In today’s litigious society, the minimum I input is $300,000, but I most times I use $500,000 because the price difference may only be $10/year.
Contact me today about your home insurance and let’s see if we can save you money and protect your assets better than your current policy.
Auto insurance can easily be forgotten with no care as to what you are paying because it is just another bill and not looked at as a protection, or even an investment, of your assets. The Arizona legislature, in the early 90’s, created state minimums for auto insurance for bodily injury and property damage of 15/30/10.
What does this mean for your auto insurance protection?
To many, it is the cheapest auto insurance, and that’s what they want. But what if you worked your whole life and built up assets and you carried only state minimums, only to get hit by someone who just wants the cheapest insurance or someone who carries no insurance at all?
When you only have the state minimums of 15/30/10, you are taking chances on your assets and your future earnings. If you hit someone and hurt people, your state minimum coverage will pay out no more than $15,000 to any single victim that you hurt. If you hurt more than one person, your coverage will pay out no more than $30,000 to all victims combined with no single person getting more than $15,000. Also, if you only carry state minimums, your policy will pay out no more than $10,000 if you cause damage to other vehicles, curbs, signs, etc. If you have assets and carry the state minimums, the lawyers will sue you for everything you have worked for to cover the cost your state minimum policy does not cover.
A gentleman was driving his Lexus when he ran a red light and t-boned my niece in her 2015 Ford Focus with her brother in the passenger seat.
Her vehicle was totaled, and she and her brother had to go to the hospital. They are still going to physical therapy and recovering.
Question- Do you think the 2015 Ford Focus that was totaled cost $10,000 to replace? Do you think the ambulance ride, the hospital stay, and the physical therapy cost less than $15,000 for both my niece and nephew?
Answer- NO! The Focus cost just under $20,000 and the hospital bills have surpassed the $30,000 mark and are growing, especially when the driver of the Lexus has to payout pain and suffering.
Solution- Get the proper amount of insurance to cover your assets and future earnings. My minimum recommendation is to carry 100/300/100, but for those with many assets why stop there? I suggest to many of my clients to carry 500/500/500 and add a $1 million umbrella. This gives you $1.5 million in liability coverage and will certainly help cover the majority of accidents you may cause. We have umbrellas that can cover up to $10 million. Keep in mind these coverages are not as expensive as one might think, it just depends on the driver and their history.
What about uninsured and underinsured coverage?
Did you know that 66% of drivers either carry no insurance or not enough insurance? This means you are responsible for protecting yourself, and you cannot rely on others. If someone hits you and does not have insurance, or not enough, what does that mean for you? What if they have no assets and eke by every week on what they make? You can’t sue them! You can garnish their wages but that does nothing for you now, if ever!
Uninsured and underinsured coverage was created for this purpose. Similar to your coverage for bodily injury, you can receive the same coverage for uninsured and underinsured of 100/300 to 500/500, and can even include it in your umbrella for an added expense. If you go to the example of my niece and nephew, they had 100/300 for both uninsured and underinsured, so when the guy driving the Lexus hit them and was underinsured, their policy kicked in and paid the bills. Now, Farmers is subrogating the guy who drives the Lexus, which essentially means their getting their money back with lawsuits.
The Ugly Truth- If you are in an accident, and it is blamed on you, and you carry the state minimums, do you think your insurance company will back you and spend the money to investigate or go to court? Or do you think they will payout $10,000 for property damage and $30,000 for bodily injury and walk away with minimal losses? What if you had 500/500/500 and a $1 million umbrella? Do you think they may listen to you and investigate and go to court if you say you were not at fault? Now you have the full power of your insurance company behind you and their team of lawyers to defend you and investigate the incident and find out the truth to PROTECT YOUR ASSETS!
Contact my agency and let us determine what auto insurance coverage you should have and how we can protect your assets and future earnings.
Life Insurance is the most important policy I sell and comes with several options.
It is the most important policy because if a provider passes away prematurely, I do not want to tell the significant other that there is no life insurance for them and their children. There are several reasons to have a life insurance policy. The number one reason is so that your loved ones continue the lifestyle you present for them and if they have to adjust to the decreased income it can be gradual and not immediately. You don’t have to have children either. If you are in a business relationship and the company would suffer because one of you die, or an employee you would have a hard time replacing. If you own a home together, but unable to make the payments without the other. Juvenile Life Insurance is an excellent thing to start as well. You can start a $50k Index Life Policy, pay $25/month and by the time they are in their 50s could have a substantial retirement account.
Term insurance is the most common Life insurance policy, but the dirty little secret is that 5-7% never pays out.
Many companies provide term insurance for their employees, but the employees have no control over what they can do with it. If you get fired or quit, the policy terminates. I say have their policy, but have something you can control as well. Start with a term if you are unable to afford Index or Variable Life insurance because Farmers Term Insurance has a nice little twist. If you start in Term, which comes in 10, 20, and 30-year options, you can convert your policy into an Index or Variable Life policy. The sooner, the better! Converting your policy means you will pay more annually or monthly, but now you have a permanent life insurance policy AND a retirement account. The minimum Term life policy I urge is $150,000 because to have a permanent policy that is the bottom threshold where it must begin.
The Index Life Policy is new and exciting. In a time where the market is volatile, Farmers has created a product that will never lose the principal, but will never earn more than 12%. Your money mirrors the S&P 500. If the market goes to up 5%, you get 5%. If the market goes up 20%, you get 12%. On the flip side if the market goes down 2%. You lose zero. If the market goes down 40%? You still lose zero. This policy is preferable for the conservative investor who doesn’t want to watch their money fluctuate drastically.
The Variable Life Policy is the aggressive, betting person’s type of policy. This is for the younger group ages 18-35. Mostly because over the long haul, the market averages about 9.9% growth. The Policy allows the investor to choose from Farmers pre-selected mutual funds to grow their accounts. The investor can change the mutual funds anytime, but must understand the volatility of the market, and that long-term investment is the priority.
It is important to contact a life insurance agent at a trusted agency to help you plan the right policy for you and your family. If you have any questions, we are here to help!
Taking care of your financial future is something people do not associate with an insurance agency. However, here at James Merrill Farmers Agency, we pride ourselves on providing as many products for our clients so they have options, and not all agencies can do what we do. On top of our multitude of insurance products, we can service your needs for:
Variable Life to:
Grow a retirement fund
Protect the capital from litigation
Protect your family in the event of your premature death
IRA’s and rollovers to fund your retirement
Variable annuities and 529 college funds for savings
Business retirement plans – SIMPLE, SEPs, 401(k)s, 43(b)s
Investments – Mutual Funds approved by Farmers such as the American Fund, Oppenheimer,
Duetsche, Franklin Templeton, Voya Investment Management, PIMCO, Putnam, etc
Here at James Merrill Farmers Agency, the type of products we supply require extensive training and licensing in order to get approved, but we feel the more we can do for our clients, the less aggravation they will encounter. As a Farmers insurance agency, we provide our customers the information they need to make sound decisions about their coverage as their life priorities change and develop. Because we also provide Financial Services, we can give you options on how to achieve your dreams.
How many people personally know their insurance agents? We want to build a relationship with you. Providing these products allows us to do annual Farmers Friendly Reviews more easily with our clients; and don’t you want someone you can trust to build AND protect your assets!
Here is a video about what it is like to be a Farmers Customer: