Cleveland Insurance

Diminished Value

2012-01-16T18:20:00.000-08:00

So you have had the unfortunate expereince of being involved in an accident in whcih you were not at fault. The other persons insurance company has paid to get your car fixed, but did you know that you may be entitled to additional compensation? This additional compensation is "Diminshed Value."

Diminished Value is the reduction in a vehicle's market value occurring after a vehicle is wrecked and repaired, otherwise called accelerated depreciationA reasonable person will not pay the same price for a wrecked, then repaired vehicle, as they will for a vehicle with no prior accident history. Even if the repairs are proper, the vehicle will still lose value. To collect diminished value after a car acident , insurance companies usually ask for a diminished value report. These reports are usually generated after an unbiased third party appraiser inspects and appraises the vehicle and establishes the loss in value.
Some insurance companies use a formula called 17c to determine diminished value, this formula is inaccurate and generates values not consistent with current market data.

A diminished value report is a third party appraisal and inspection conducted to measure the reduction in value of a motor vehicle after an accident. These inspections are conducted after the vehicle has been repaired. Reports are usually created by an unbiased company for a minimal fee. This report is used when filing for a diminished value claim with an insurance company.

Most reports include an assessment of the damage done to a motor vehicle, the quality of repairs, the market value of the vehicle before and after the accident. There is no set rule for measuring diminished value

Remember every situation is different, and laws vary from state to state. For additional information feel free to email me, or contact your local agent.

Buying Life Insurance

2011-11-17T09:18:00.000-08:00

If you are considering buying life insurance, how do you know if the agent will show you all the products available so that you can choose the one that will best meet you and your family’s needs and goals? I am a firm believer in “comparison shopping”. The key here is making sure you know what to ask for so that you have the right things to compare. You have to ask the right questions to get the answers and information you need to make an informed choice.
When dealing with the average agent you will most likely be presented with policies that are of a type that is referred to, (in the industry), as “cash value” or “permanent” insurance. These products are often called “Whole Life”, “Universal Life”, “Variable Universal Life” or some variation of those names. These are products where, in essence, the insurance company has bundled together a death benefit and some type of account that accumulates a balance of cash, (often called an accumulation account). The way these policies work is part of the monthly amount paid to the insurance company is used to purchase the death benefit, (i.e. pay the premium), pay any required fees, and then remaining amount of the monthly payment is placed in an account where it is supposed to earn interest and grow.
What most people don’t know is that there is another option available that the agent has somehow “neglected” to present. This other option is very rarely offered to the consumer on a regular basis. This is unfortunate. I feel it is a very powerful alternative to the other products available. What is it? It is an option where the customer purchases a term insurance policy and invests the difference of the cost in a stand-alone savings/investment “vehicle”. Here is an illustration*.
First let’s look at one type of insurance plan that is often presented by agents. We’ll call it, “Plan A”
Let’s pretend that Mr & Mrs Smith want to have life insurance, (and yes, they should have it). They are both in their mid thirties and have two children. Their budget is such that they can afford to spend about $150 a month. The first type of insurance under consideration is the “whole life” policy. The Smiths are probably able to get a policy that provides $100,000 death benefit on him, and $75,000 on her. The coverage will last from now until age 100. When the Smiths reach the age of 100, the insurance company promises to pay them $100,000. If they decide they want to “take the money and run” before that, (at age 65, for example), they can terminate the policy, (end the insurance), and take what ever cash has accumulated to that point, (probably about $50,000 to $65,000). Ok, that sounds pretty good, doesn’t it?
Let’s look at the other option. We’ll call it, “Plan B”
With a 30 year, renewable term policy, Mr. Smith can get about $200,000 of coverage, Mrs Smith about $150,000, and they can get $10,000 on each of the kids. Total monthly cost, about $53. Remember, they budgeted $150 per month for this, so what would happen if they took the $97 and put it into some type of savings “vehicle”? Over the course of 30 years, $97 a month could grow to about $300,000 **. This is what is referred to as, “buy term and invest the difference”.
With this type of policy, at age 65, Mr & Mrs Smith would have the choice of continuing their insurance coverage if they felt they needed it, AND they could also take the $300,000 and use it how ever they see fit, (without ending their insurance coverage). Some agents might argue that the premium on the term policy will be higher at re-newal. That may be true, but the $300,000 would also be creating about $2500 in interest income each month**. More than enough money to pay for any modest rise in the premium costs. (Besides, if the Smiths have $300,000 saved up, do they really need to buy that much insurance any more?)
So which would you choose?
(A) Pay $150 per month for $100,000 in coverage and get $100,000 at age 100
-OR-
(B) Pay $53 per month for $200,000 in coverage and set aside $97 per month in savings, and have $300,000 at age 65 **
So why don’t insurance agents present this second option? (I’ll let you answer that one yourself)
There are some other differences between the two plans. For example, what happens if the Smiths need to use some of the money that was accumulated?
If the Smiths had gone with Plan (A), in order to get the money they needed, they would have two choices.
(1) They can terminate the policy and take the entire amount of what has accumulated. They would have their money, but now they don’t have any insurance coverage.
(2) The other choice is to borrow the money they need from the insurance company, using their account as collateral. Their coverage would still be there, but they would have to make payments on the loan, (including interest), in addition to their monthly premium payment. If one of them should die before the loan is paid off, the outstanding loan balance is subtracted from the death benefit. For example, if Mr Smith dies and they still owe $5,000 on the loan, the death benefit paid to his wife would be $95,000. ($100,000 - $5,000). Also the $5000 could become taxable as non-death benefit income.
With Plan (B), the savings account is separate from the insurance policy so the Smiths can take money out of their account, and it would not have any effect on the insurance coverage. The policy does not have to be canceled, and the amount of the death benefit paid is not reduced. Depending on the type of savings “vehicle” the Smiths use, they might have to pay some type of tax or interest penalty on the money they withdraw, but again, there is no effect on the insurance coverage.
As you can see there can be some clear advantages to buying term coverage over a “cash value” type of policy. Which type of policy works best for you is strictly a matter of personal choice, but that is the key word, “CHOICE”. You deserve to be shown ALL of the options available that best meet YOUR needs and not be steered into something just because the agent gets more commission.
* The insurance plan costs and coverages described are hypothetical and for illustrative purposes only. A actual comparison can only occur using actual policy documents issued by an insurer.
** This is an illustration only and is not a representation of a specific investment product or plan.
This above information is provided for educational purposes only and is not an offer or solicitation to conduct any type of business or transaction.
Why go it alone?
A personal financial coach can provide you with valuable insights in your quest for financial security.

What should my Auto Limits Be?

2011-09-27T08:18:00.000-07:00

It is generally accepted among insurance agents that the state minimum policy limits are not enough. Most insurance professionals would agree for the average driver the minimum liability limits to have are 100/300/100. This means:
-100,000 per person for bodily injury
-300,000 per accident for bodily injury
-100,000 per accident for property damage

Since in most areas medical treatment is in fairly the same range, the last limit, per accident for property damage, is the one you may want to take into account if you are not the average driver. If you live in an area where you feel that if there was an accident, that was your fault, and property damage may exceed 100,000, you may want to consider higher limits. Remember, property damage is the other person's car and any other property damaged during the accident if you are at fault. In some areas one's landscaping can cost over 100,000!

In order to understand fully how much your liability limts should be set at you have to remember what you are trying to protect. The purpose of Insurance is to protect your assests in the event of a loss. What are your assests? Your home, your retirment, your savings, your future income. All of these come into play.

I personally thing that most drivers to be fully insured should have at least 300CSL (or case limits) and a 1,000,000 umbrella policy. This will insure that if you are in a car accident you will have 1.3 million dollars of protection for all of your assests.

As always everyone is differrent, and every client has differrent needs. If you need advice specific to you and your state contact your agent, or email me at Gerry@askgerry.com

Hey...What about my coin collection, jewelry, guns, and other expensive stuff??

2011-09-21T13:26:00.000-07:00

Here is a common question asked by many of my insureds. "My coin collection, Jewelry, Furs, Guns, Monet painting and other expensive stuff… aren’t they covered under my regular home policy?" This seems like a pretty straight forward question. I will answer it as detailed as possible.

Yes, but most home policies place specific dollar limits on coverages for cash, securities, coin collections, jewelry, furs, guns, silverware, antiques, and art. Make certain you check your policy to determine if there are special limitations for certain kinds of personal property. Check what the categories are, and the special limit for each category. If your personal property falls into a listed, limited coverage category and is worth more, you can increase coverage by adding a "rider" to the policy. Insurance policy riders are available at nominal cost.

As always it is best to take some time and look at your own policy. If you have questions you can always call your agent. If you have any questions about this topic or any other insurance related question feel free to email me at gerry@askgerry.com Thanks have a great week!

If someone borrows my car, are they covered under my auto insurance?

2011-09-14T08:07:00.000-07:00

      As a general rule, auto insurance coverage actually follows the vehicle, not the driver. So if your car is involved in an accident, the car typically receives the full coverage provided by the auto insurance policy, regardless of who is driving.Auto insurance policies normally provide coverage for your car if it is driven by anyone to whom you lend your car.Your insurance company may require that certain conditions be met in order for other drivers to be covered under your policy. For example, anyone who drives your car must typically be a licensed driver. Additionally, most insurance companies require that anyone driving your car be doing so with your permission. This doesn't mean that you have to give explicit permission each time someone takes your car for a spin, but the person driving must have a reasonable belief that he or she is entitled to do so.

     However you can run into coverage issues if the person has unlimited access to the car. For example, if you have a roommate who lives in your home and you tell them to take the car whenever they want. An insurance company can determine that they should be a rated driver, because they have equal access to drive your car. In that case you may find yourself without coverage.

    Because these conditions can vary, it is important to check your policy carefully and make sure you understand any limitations that might apply before you allow others to drive your car. This is one reason why it is important to work with an insurance professional and not simply buy your insurance from a website or an 800 number. Your agent can answer your questions and help you get the coverages you need.

    If you have any questions concerning this or any other insurance question feel free to email me gerry@aim-insurance.net or contact me at www.askgerry.com

Replacement Cost?

2011-06-29T09:13:00.000-07:00

Replacement cost is a word used often times in regards to homeowners insurance. Everybody wants their home insured for the amount that it would take to replace their home. The question is when you look at your policy to you have replacement cost or a limit of coverage?

Most people will receive a quote for their home from an agent on a HO-3 form. It will have an amount listed for Dwelling coverage. In addition most people will add an endorsement that give the insured an additional percentage of coverage to the dwelling. For example the dwelling will be covered for $100,000 and have an additional 25% coverage to give a total coverage of $125,000. The result would be at if you suffered a loss the limit of your coverage would be $125,000.

In order to have a policy that is true replacement cost it would need to be written on a HO-5 form. It will still have a listed amount of coverage for your dwelling, but if you suffered a loss you would be guaranteed that no matter how much it cost to repair your home it would be covered.

The question is which is better? The answer is depends on the person. When you first work with an agent and the write your home with either and HO-3 or HO-5 they use some system for determining the replacement cost of your home. The HO-5 would be more expensive, and lets you as the insured go on cruise control and not worry again about your coverage. However, the HO-3 requires you and your agent to periodically evaluate your coverage to make sure that the home is correctly covered.

The bottom line is if you have to have that guarantee that no matter what you will be covered you will want to make sure that you have an HO-5, but if you and your agent will meet at least once a year to review your insurance an HO-3 should cover your insurance needs. When in doubt contact your local insurance agent. If you have any questions as always you can email me at Gerry@aim-insurance.net

Product over Price..

2011-06-15T08:45:00.000-07:00

Most of us have seen the commercial. There is the girl in the all white store helping people name their own price for their insurance. Or you hear the "dollar for dollar we save people money." Time and time again the competition for your insurance dollar becomes price driven. While I am all for saving money, price is not everything. What you need to look for is where am I getting the best value for my insurance dollar. You need to ask why am I buying.

The agency I work with is blessed. We have a wide selection of companies and coverage to help clients with. We can meet or beat most peoples rates. With that said rate is not everything, we need to look at what exactly you are buying. Are you getting the coverages you need, and are you paying for coverages you will probably not use.

Something I have learned and share with my clients is that there is never an apples to apples comparison. Every company uses the same standard, but each company operates their business and policies different. My job as an independent agent is to talk to you find out your needs and then place you with a company that will best fit your needs. Most times I will present my clients with two options and explain the differences and then let them decided. Even in these side by side presentations it is never apples to apples.

One of the key things to look at is your roof. Many companies will actually sell you a replacement cost insurance policy, but it will have actual cash value for your roof once it reaches a set number of years. This is not really important to you if you roof is only 2-3 years old, but if your roof reached 15 years old that might be an issue. Or take debris removal. Most Homeowners policies have a $1000 dollar limit for tree removal, while some will provide an endorsement that can increase that amount. Well if you live in an clear lot or subdivision this may not matter to you.

The bottom line is this you are the consumer. You need to feel free to ask questions of your agent. He or she works for you. Make them explain to you what you are getting, and what you are not getting. Its your hard earned money.

As always I welcome your thought and comments. If you have any questions you would like answered you can email me at gerry@aim-insurance.net

Do you need an Umbrella?

2011-06-06T09:20:00.000-07:00

No I'm not talking about the umbrella that you never seem to have with you when you get caught by an unexpected storm. I'm talking about personal liability umbrella policy. This is a special type of policy that extends over your other personal insurance policies. These usually come in layers of 1 million dollars. Now that we know what an umbrella policy is, lets answer why I believe everyone needs one.

First, most people drive around with 100/300/100 limits. Which means they have $100,000 per person $300,000 per accident of bodily injury protection. They also have $100,000 of Property damage coverage as well. Is $100,000 per person enough? Is $300,000 per accident enough? Lets look at a real wold scenario. You are accident where three individuals are injured person one has $25,000 in medical bills, person two had $125,000, and person three is killed. How would your coverage work. It would pay all of person one, It would only pay $100,000 of person two, and only pay up to $100,000 for person three. It would leave you with covering $25,000 of person two and any loss of income and judgements over $100,000 for person three.

How will you pay the rest. First they will put a lien on any personal property over $5000 in value, that includes cars, trucks, boats, homes, Anything of Value. Second, they can go after savings and retirement funds. Third, they can garnish up to 30% of your income until the judgment is paid in full.

So who needs a policy? In my opinion there are two people who need the umbrella. Any person who has assets in excess of 1 million dollars, or anyone who has income. If your insurance agent has not spoken to you about an umbrella policy or you have any additional questions you can email me. The average cost of an umbrella policy is $15 a month. For under $200 a year you can protect your assets and income.

Why I love being an Insurance Agent

2011-06-01T10:44:00.000-07:00

I am often asked what I like about being and Insurance Agent. While there are a lot of reasons I enjoy my work I decided to focus on one basic reason why I LOVE being and Insurance agent. The reason is I love to help people.

As an Insurance Agent that is the most basic element of my job. I help people. I help them by addressing the risks they need covered, and then when they suffer a loss I help them by provideing the finincal resources to help put their life in order.

As I meet with people I find one constant truth, weather we are looking at their personal insurance, life insurance, or commerical insurance, most people have coverages they dont need, and dont have all the coverage they do need, and I help them get the best value out of their insurance dollar.

They way we do business has chaged a lot with the advent of e-commerce. You can buy just about any insurance coverage you want online or through and 800 number, but are you getting what you really need or are you left to make these decisions on your own?

As an Insurance agent, it is my job to talk to you get to know your personal situation, and then recommend the right coverages for you and your family. Then when we discuss these recommendations we can be sure that before the crisis comes you are covered with the right types and amount of insurance. With insurance one-size does not fit all, and its never an Apples to Apples comparison.

If you have any questions email me at Gerry@aim-insurance.net