Is an alarm a worthy investment?

I’m often asked by clients if an alarm is worth getting for the discount you get on your home insurance for having one. This question is usually prompted by a flyer or door to door solicitor from an alarm company that home owners are bombarded with usually as soon as they purchase their home. Some will erroneously claim you get a 20% discount on your home insurance to get your business if you get their system, but I don’t know of any carrier that gives that big of a discount for having an alarm. Plus, the discount varies from carrier to carrier so it’s impossible for them to say how much of a discount you will get. I will say though that a burglar alarm is totally worth the investment. Every 15 seconds, a home burglary occurs in the US. Home break ins are unfortunately a very common claim all over metro Atlanta, even in the nicest neighborhoods. I’ve never had a client with an activated alarm have a burglary claim. Researchers at Temple University found that alarms can reduce the chances of your home being burglarized by 66%! Not only is being a victim of a home burglary violating and often times costly to replace stolen items and repair damages, it can also increase your home insurance rates for several years if you file a claim. My family always had an activated home alarm growing up and we luckily never experienced a home burglary, but unfortunately it did happen to neighbors. I’m always shocked at how many people don’t have one. This post actually came to mind because my friends and neighbors a couple houses down from us were victims of a home burglary two weeks ago. I was encouraging them to get an alarm, but obviously I wish I had told them sooner like I try to tell all of my clients.

 

There are so many options out there now, not only for alarm monitoring companies, but also system features like cameras, smart phone apps, climate control, key pads, and so much more. The customization options also make it easier to find an alarm for any budget. A basic system is actually very affordable now, not anywhere near as expensive as they use to be 10 years ago. With all the options though, shopping for alarms has become just as overwhelming as shopping for insurance on your own. When I started my most recent search for a new alarm system, I found having to deal with an overly pushy rep from each company to get a quote, most in person, extremely time consuming and obnoxious to be honest. For that reason, I kept putting it off (despite my own advice). When my friend in a local moms’ group one day mentioned that her husband was an alarm system broker for multiple companies, I was instantly intrigued! I had no idea this kind of free service (very similar to what I do with insurance) was even an option. That’s how I found Trey Burdette and I’ve been referring him to clients ever since and they always rave about his services. He shopped companies for me and my specific needs. I knew I’d be moving soon so it was important for me to get a system that could be transferred to a new home. I also wanted a camera I could view through my cell phone and a monitored fire detector. He found me exactly what I wanted in my budget through a reputable alarm monitoring company and got it all set up for me. If I have any issues, I can call his cell phone directly. He services all of metro Atlanta and you can call his cell phone at 678-886-3313 or email him at treyburdette@gmail.com

To get your discount on your home insurance for having an alarm, you just need a copy of your alarm certificate. Your alarm company will know exactly what you are talking about and will usually fax or email it directly over to your agent or insurance company for you.

Here are some more helpful tips on how to prevent your home from being a target of burglars:

http://ncpc.typepad.com/prevention_works_blog/2012/10/lock-crime-out-of-your-home.html

http://www.cnn.com/2007/LIVING/homestyle/07/16/burglarproof/index.html?_s=PM:LIVING

The importance of replacement home cost!

What happens if your home dwelling coverage is less than the replacement cost of your home?

Let’s say your home’s dwelling coverage is $350,000, but your replacement cost is $450,000 (we’ll use these numbers in the theoretical examples used in this post). If your home is completely destroyed from a covered loss, you will most likely only get $350,000 to rebuild your home. Imagine paying for $450,000 for a home, paying for insurance, but then your home is destroyed and the house rebuilt is 22% less than the size of the home you initially bought? Most people think this is the only negative way having less dwelling coverage than needed can affect them, but that’s not the case. Let’s say your house wasn’t a total loss, but a covered claim, for example hail, destroyed your roof. It’s going to cost $20,000 to repair. If you don’t have the current dwelling coverage where your home is insured at the full replacement cost, you will be responsible for a bigger chunk of the repairs in addition to your deductible. Using the amounts above, your insurance company will only pay about 78% of the damages because your dwelling coverage is only about 78% of your replacement cost, so in this example you’d be responsible for $4,400 plus the deductible. Your insurance company will obtain proof of the cost. If you don’t repair the damages, they can cancel/nonrenew your policy and it’s near impossible to get a standard home insurance policy if repairs are needed on a home.

I offer a free insurance audit (you do not have to be a client!) on Georgia home and auto insurance policies. This audit includes a detailed replacement cost estimator (RCE) and I send you a copy of the detailed report. Most carriers use the MSB RCE and this how they determine the dwelling coverage. RCE is not based on market value or purchase price. If your home burns down, the new home is built on the same property, you don’t have to rebuy the land. RCE is simply the cost to rebuild your home should it be a complete loss. When getting a new home insurance policy, your agent is suppose to do a RCE to determine the most accurate estimate for the dwelling coverage amount. Agents will often times just use your current dwelling coverage to save time, but I like to make sure my quotes and policies are as accurate as possible. It’s good to show an apples to apples quote so clients can easily compare rates, but the recommended dwelling coverage should be noted to the client and the policy written for that amount.

Some unethical agents will actually use a lower dwelling coverage amount than the RCE to make their rate cheaper so that they get your business. This is referred to as “low balling” because the carrier’s underwriter will review a home insurance policy after it’s written. Over the past few years, they’ve become very strict about the accuracy of the dwelling coverage at binding and many will do a RCE to make sure the agent wrote the policy for the correct amount. If it’s too low, the client or the mortgage company will be sent a notice with a bill for the increase in premium and the dwelling coverage will be increased. Since most home insurance policies are billed to a mortgage company, those unethical agents hope the client won’t notice the increase or of they do, that they won’t want to deal with switching carriers again in such a short time. I do not like my clients to get surprise bills so it’s important to me that my RCE estimates are as accurate as possible. Mistakes do happen, but you can always request a copy of the RCE report from your agent and let them know if there are any discrepancies.

Your RCE should be updated at least every few years to make sure your dwelling coverage is still accurate. The cost to rebuild homes changes year to year. Clients do updates and/or additions that can affect their RCE and forget to notify their agent/carrier. Most carriers automatically increase the dwelling coverage on a policy each year at renewal, but you don’t want to count on that as an accurate dwelling coverage.  There is a very important endorsement, usually referred to as “increased replacement cost.” It’s based on a percentage of your dwelling coverage, most often with options of 25%, 50%, or 100%. This endorsement should be included on every home insurance policy with a minimum of 25%! That way in case their is a mistake or inflation and your dwelling coverage is not high enough, it offers a cushion. It’s not intended to be used as a replacement though for dwelling coverage being intentionally to low. Your mortgage company and carrier will still require your dwelling coverage be insured at replacement cost.

Here are other articles on the subject:

Home Insurance Buyer’s Guide

Buying Home Insurance- The Full Story

What my clients have to say:

Is state minimum auto coverage enough coverage?

This is a very common question posed to insurance agents and the answer from a good agent that wants to make sure you are properly covered is definitely “no, state minimum coverage is not enough coverage!” Most people do not understand what all the coverages on their policy means and they rely on their agent to make sure they are properly covered. Here is a quick breakdown of basic coverages on a standard policy:

Bodily Injury/Liability Coverage: State minimum for Georgia is $25,000 per person and $50,000 per accident. This means if you hit someone and they have to go to the hospital in an ambulance to the emergency room and stay for a few days, your insurance will only pay up to $25,000 per person. If there are four people in the car you hit, your insurance will max out at $50,000 total for all of their medical bills. According to the AJC, basic ambulance transport fees in Georgia range from a low of $343 in Douglas County to $1,628 at Grady in Fulton in County. That’s just for the bare minimum ride and does not include additional services they may need while in the ambulance. A visit to the emergency room is another expensive cost which can easily go over $20,000 depending on the severity of their injuries. As an insurance agent I see auto claims all the time that far exceed $25,000. If you do not have enough insurance coverage to cover your liability, you are responsible for the expenses out of pocket and your wages could even be garnished. The minimum recommended liability coverage is $100,000 per person and $300,000 per accident. Statistically, drivers with higher liability limits have fewer accidents so a lot of carriers give discounts to clients for having at least $100,000/$300,000. In many cases the difference is as low as $10 a month to raise your coverage from state minimum to the recommended coverage.

Property Damage Coverage: This covers your liability for another person’s property. For example, if you hit and total someone’s $55,000 Corvette or run into someone’s house the damage would be covered up to your property damage limit and you are responsible for the rest out of pocket. The state minimum for property damage coverage in Georgia is $25,000, but the recommended minimum by a good agent is $100,000.

Uninsured/Underinsured Motorist Coverage: This is an optional coverage, but it is so important! Despite there being state minimum requirements for auto insurance people drive without auto insurance all the time. Those people are also statistically more likely to have an accident. So for example, let’s say someone hits you and you spend several days in the hospital. Your hospital bill is $40,000, but the driver at fault that hit you didn’t have insurance, your UM coverage would kick in to cover your bills up to your UM limit. The recommended minimum UM coverage is $100,000 per person, $300,000 per accident, and $50,000 for property damage added-on (UM property damage limit should be at least the value of your car). There are two types of UM coverage, click on the link below for a comparison:

Uninsured Motorist Acord Explanation

Medical Payments Coverage (MedPay): Generally MedPay pays for medical costs after you are hurt in a car accident, regardless of who is found at fault for the accident. Depending on your carrier, it may also pay for funeral expenses, injuries to your passengers, injuries you sustain as a pedestrian or bicyclist after a car hits you, and necessary dental care as a result of a car accident. This coverage is typically inexpensive and at the bare minimum you should have $1,000 for MedPay. If you do not have good health insurance benefits, you will want much higher MedPay limits.

Collision Coverage: This coverage covers physical damages to your car caused by rolling over or a collision with another vehicle or object (like a building, pole, or guard rail). Most people have a $500 deductible for collision coverage, but you can pick the deductible that best fits your needs. The deductible is what you have to pay out of pocket before your insurance will kick in.

Comprehensive Coverage: This coverage covers physical damages to your car caused by a covered peril other than collision, for example, hitting a deer, a tree falling on your car, someone keying your car, or your car being stolen. Most people have a comprehensive deductible of $250-500 depending on your needs.

Towing and Labor/Roadside Assistance: Unless you have a service like AAA, you need this inexpensive coverage to help you out if you need your car towed. Most carriers also now include roadside assistance with this coverage as well. For most carriers, this coverage is only $2-4 a month.

Rental Reimbursement: This coverage covers the cost of renting a car if your car is in the shop due to a covered peril up to your limits. Most people have $30 per day with a $900 maximum, but if you need an SUV or minivan, you will want higher limits for this inexpensive coverage.

Umbrella Insurance: This is a separate policy that adds at least $1 million of liability coverage to all of your personal insurance policies. The cost is minimal, generally around $200 if you have one home and two autos, plus you get discounts on all of your policies for having an umbrella policy so it’s really costing you a lot less. You can also add an endorsement to add it to your uninsured/underinsured coverage (this endorsement is generally around $200).

If you are in Georgia and want a free audit of your current coverages or have any questions regarding your coverages, please contact me at twhitneyhorne@gmail.com or call me at 770-833-2898.

Increasing your liabilty coverage could save you money!

Did you know that it sometimes cost you more to have state minimum auto liability coverage? Statistically, people with state minimum have more accidents and claims, so standard carriers prefer clients with better rates and often give them a discount for having better coverage. I don’t recommend anything less than 100/300 for auto liability coverage. I just switched a new client to a new carrier and quadrupled her coverage from state minimum and she still saved money! Please contact me if you’d like a free audit of your current coverages.

A quick and simple explanation of some of your home owner insurance coverages

Home insurance is one of the most important purchases home owners make. After all, how many people can afford to just build a brand new home out of pocket should their home burn down? Despite this being such an important investment, many people do not understand their coverages. The most important coverage is your dwelling coverage. This coverage is based on the cost to rebuild your home and to remove the debris if your home were completely destroyed. It is not based on market value. In today’s market, it is not uncommon for your dwelling coverage to be much higher than the market value or appraised value of your home. Your insurance agent will do a replacement cost estimator to determine the dwelling coverage amount and you can request to see a copy. The carriers will also do an exterior inspection to see if this amount needs to be adjusted. Another important coverage is your liability coverage. I recommend at least $300,000 since there is not much of a difference in premium from the lowest coverage of $100,000. The next coverage you want to look at is your personal property coverage, this is usually based on a percentage of your dwelling coverage and covers your belongings not attached to your home. If you have any high value items, you want to check with your agent to make sure they are covered. If you want more information about your coverages, please feel free to contact me for a free insurance audit and I am always happy to answer questions whether I am your agent or not.

Why choose an independent agent?

There are three types of carriers and it’s important to know the difference:

• Independent Agent: An agent that has multiple contracts with several carriers rather than a single company. They have an agency where you can meet them in person. They receive a commission based on a percentage of the policy, so it does not cost the client anything additional to use an independent agent. It is a free service for the client.
• Captive Agent: An agent who has only one contract with one carrier, most often with a non-compete clause. They have a store front.
• Direct Agent: An agent who works directly for the carrier in a call center. You never meet them in person and it’s likely you won’t even work with the same representative twice.

Having an independent agent means you have an advocate on your side that works for you, not a big corporation. If you ever have a claim or insurance issue, you’ll have peace of mind knowing you have an agent that can walk you through the process. If you don’t like call centers, then you definitely want an independent agent that can give you service you expect from a small business. You’ll still have access to the carrier, but you also have your agent you’ve built a relationship with to look out for you, that knows you.

Since independent agents are not captive, they can shop around for you, finding you the best rates for your insurance needs. You can switch carriers as your insurance needs and/or rates change, but you can keep the same agent that has built a relationship with you. As an independent agent I use an advanced rating system that allows me to quote numerous A rated and above carriers at once to help me find the best rates for my clients. Should they ever want to be reshopped again, all I have to do is push a button; they will never have to be overwhelmed with shopping for insurance. A captive or direct agent can only give you quotes for one carrier. As an independent agent, I can switch clients to another carrier for a better rate, but they still have me as their agent, making the switch much easier and painless!

Captive agents are in a contract with one carrier that prevents them from working with other carriers. There is usually a non-compete contract as well, so depending on their state laws, even if they leave that carrier, they will have to wait sometimes years before being able to write business for their clients again. Unfortunately, this means in many cases a captive agent has to keep their carrier happy so that they don’t lose their entire book of business, this can get in the way of trying to advocate for their clients. For an independent agent, if a carrier is not treating clients fairly, they can let clients know and switch them to another carrier. They are not stuck in a non-compete with one carrier. This also means that many times it’s in the carrier’s best interest to keep the independent agent and their clients happy because they don’t want to lose the independent agent’s business.

Another benefit to having an independent agent is that you can ask your independent agent about possible claims without worrying about it ending up on your insurance report. Just the other day I had a new client that was shocked to find out there were two claims on his insurance report. Both were zero pay outs, but because he called and asked his previous direct agent about a possible claim. One was when his HVAC system stopped working and he wondered if that was covered by home owner’s insurance, it’s not but now he has that as a claim on his insurance report. This scenario happens all the time, I constantly run quotes for people shocked to find out they have claims on their reports simply because they asked a question.

Here is a list of some captive and direct carriers that do not work with independent agents:

• Allstate (they do have a product for independent agents called Encompass)
• Amica (call center only)
• Esurance (owned by Allstate)
• Farm Bureau
• Farmers (they do have a product for independent agents called Foremost)
• Geico (call center only)
• Liberty Mutual (they do have a product for independent agents called Safeco)
• Nationwide (they do have a product for independent agents called Allied)
• State Farm
• USAA (call center only)

Related articles

• Benefits of Independent Insurance Agents (webtecinsurance.wordpress.com)
• Consumer info: Why choose an independent insurance agent?
• Safeco’s Benefits of an Independent Agent
• All Agents Are Not Created Equally

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