Insurance
Auto Actual Cash Value Coverage
May 13, 2011 | 
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Whenever comprehensive and collision coverage is selected on a policy the vehicle is covered up to the actual cash value unless otherwise stated. Some policies are written as stated value such as commercial auto policy that have vehicles that are significantly altered from their original condition or classic car policies that insure the classic vehicles to their appraised value. Almost all personal auto policies are written on an actual cash value basis for the vehicle.
This means that in the event of a total loss or theft with no vehicle recovery that the vehicle is covered to the current fair market value. There are many factors that determine what the fair market or actual cash value is at the time of the loss. Vehicle values will vary from year, make, model, mileage, and condition. In order to determine the value of the insured vehicle appropriately all of these need to be reviewed in order to ensure that the appropriate value is being given for the totaled vehicle.
This system is designed to make sure that the insured is compensated for what the true value of their vehicle was at the time of the loss without putting them into a position that of betterment. It is not likely that there will be an identical vehicle to the one that is being replaced while considering all of the variables involved. The best way to ensure that the actual cash value of a vehicle is accurate is to review other vehicles that are comparable and have similar characteristics. Generally it is wise to find 3 very similar vehicles and average the cost of these in order to determine an accurate value of the vehicle in question.
Many times consumers that have an auto loan the actual cash value will fall short of the principal balance of their loan. They often expect that the insurance company will pay for the total amount owed for the vehicle. This is not the case and when viewed from an opposite perspective if the amount owed on a vehicle was significantly less that the principal balance of the loan. The insurance company would not limit the compensation for the vehicle that was lost to the balance. There are policies that are offered to protect consumers from the “gap” between the actual cash value of their vehicle and the loan balance. These are commonly referred to as Gap policies. They are usually offered at the time of the purchase of the vehicle.
By: Paul R Woodward
Life Settlements and the Key to Fair Market Value
One of the most important aspects of advanced estate planning is the secondary market for life insurance. But, like any other financial planning strategy, it is not for everyone. The life settlement has traditionally been used an exit strategy for unwanted or unneeded life insurance that might ordinarily be lapsed or surrendered. Now life settlements are being used with other strategies to provide estate liquidity using alternative funding methods, such as premium financing.
Trusted advisors have a fiduciary responsibility to inform their clients of all of their options when reviewing their estate plan. The fair market value of life insurance should be at the foundation. Anyone who ever bought or sold real estate knows the importance of fair-market value. In recent years, our access to real estate equity has kept our economy from screeching to a halt.
Most of us probably breathe a sigh of relief every time we get our tax statements in the mail and look at the assessed value. We know that the tax is a percentage of the assessed value from a county appraiser and we are thankful that it’s not based on fair-market value. But, we would likely see the largest act of civil disobedience since the Boston Tea Party if the county appraiser consulted the realtor every year. We would feel slighted, to say the least, if we had to sell real estate for its assessed value instead of its fair market value. Our equity is based on a more accurate appraisal, which takes into account supply and demand imbalances, among other things, and leaves us with more opportunities.
Now, another widely owned asset offers the same opportunity for a more accurate appraisal of fair market value. The asset is life insurance. The secondary market for life insurance is nothing new. Viatical settlements have existed in one form or another for years. They are usually associated with investing capital in a fractional share of a policy in which the insured has a terminal illness. Generally, the insured has a life expectancy of fewer than 24 months and is pursuing a tax-free portion of the death benefit to fulfill an immediate need for cash.
Life settlements involve the sale of a policy by someone over 65 who no longer needs, wants, or can afford the policy. The life settlement is often used as an exit strategy for under-performing universal or variable life policies in which “vanishing premiums” have reappeared or the death benefit is no longer guaranteed. These settlements are transacted on all types of individual and survivorship policies including term policies. The settlement amounts are always in excess of any cash-surrender value for the same reason that real estate is largely bought and sold for more than its assessed value.
Traditionally, before a life insurance policy is issued, an underwriter reviews the insured’s medical records and makes an offer to the insured based on accepted findings. Unless the case is declined, different offers could be made including, preferred, preferred plus, standard, table 2, and table 3, etc.
Companies using the term “clinical underwriting” to assess mortality risks on an individual basis imply that their underwriting is more accurate at the time of issue. This benefits consumers in the same way settlements do at the outset by taking a more individual approach to assessing an applicant’s medical history. Because of this, an occasional smoker can still be looked at as a “non-smoker” risk and be offered more affordable coverage.
Once the policy is in force, underwriting of the client is never revisited. This approach to pricing life insurance policies serves the insurance carriers, but does little for the consumer when the insured has a change in circumstances. In fact, it only reinforces the power of the carriers. The ability to purchase a life insurance policy back from an insured is limited to the carrier that issued it in the first place. Their offer is the policy’s cash-surrender value, which is based on medical underwriting at the time of issue. Any change in expected mortality that would increase the policy’s value can only be captured in the secondary market when medical underwriting gets revisited, allowing for a more accurate appraisal of the asset.
A typical settlement application includes some very important information, which is used for the appraisal. Basic questions concern the type of policy, the insurance company, and when the policy was issued. The insured signs a The Health Insurance Portability and Accountability Act (HIPAA) form. Under HIPAA, the insured can share his or her medical history by authorizing a copy of their medical records to be reviewed. This is where the most accurate and timely information concerning the insured’s health status is used to assess life expectancy. The third piece of critical information that is reviewed is a current illustration of the life insurance policy. It will show the estimated cost to carry the policy to maturity. The non-binding offer can be given to the client once these variables are known.
If the offer is accepted, the policy owner and beneficiary are changed to the institution making the offer, which assumes all premium obligations. The insured gets the settlement proceeds once the changes have been recorded at the carrier. Any amount, up to the cost basis, is a tax-free return-of-premium. The amount above that, up to the cash-surrender value, is taxed as ordinary income. Finally, the amount above the cash-surrender value, up to the settlement amount, is typically taxed as a longterm gain since the policy must be at least two years old. (This tax opinion was issued in 1997 by KPMG Peat Marwick.)
Life Settlements as Conventional Wisdom
The idea of using the secondary market to evaluate life insurance is slowly becoming conventional wisdom for many reasons. Most important is that household names, such as The Bank of New York, GE Capital, and Lloyd’s of London, have committed billions of dollars to this market. This builds credibility for regulators and the public as the perception shifts to recognize life settlements as a sophisticated financial planning technique. Many clients who are life settlement candidates would probably never purchase investments without knowing all the facts and having a sound exit strategy. The time has come to determine the usefulness of life insurance, especially if the premiums have become a financial burden to the policy owner. The liquidity that the secondary market provides can only enhance the value of life insurance by increasing demand in the primary market. Also, a more accurate appraisal of the asset is the key to unlocking the hidden value for the benefit of the consumer.
By: Bill Mountain
Posted in Insurance | 
Tags: Accurate Appraisal, Boston Tea Party, Civil Disobedience, County Appraiser, Estate Equity, Estate Liquidity, Exit Strategy, Fiduciary Responsibility, Financial Planning, Fractional Share, Life Insurance, Life Settlement, Life Settlements, Mail, Premium Financing, Sigh Of Relief, Supply And Demand, Tax Statements, Terminal Illness, Viatical Settlements | 
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Car Total Loss – Determining And Settling The Value Of Your Car!
What is the car total loss process? Once you are in an
accident, the insurance company must inspect the vehicle and determine whether
the damage was substantial enough to declare a complete loss.
Most insurance companies will want to inspect the vehicles
themselves. In most accidents, insurance companies have approved body shops
write estimates and they eventually issue payment based on that estimate.
However, when there is a potential for a car total loss, most insurance
companies want their insurance adjuster to inspect the vehicle.
The reason for this is the conflict of interest that arises
from the arrangement between the insurance company and the body shop. Body shops
are in the business of fixing cars. They have a vested interest in quoting the
repairs so the car can be fixed and not declare it a car total loss.
For all practical purposes this means that you will be
waiting longer. Usually it takes two to three business days for the body shop to
issue a repair estimate. If the claim adjuster or the field representative has
to inspect and write their own estimate, then you will be waiting three to five
more days to get to the location of your car.
Before the adjuster comes out, she/he will submit all
pertinent information about your car (year, make, model, and mileage) to a third
party company. This company usually is CCC
Information Services Group, Inc. CCC will do a preliminary report to
determine what the value of your car is so the adjuster knows what the insurance
company would be looking to if there is a total loss.
Depending on your state law and the specific insurance
company, there will be a car total loss when the insurance company believes that
the cost to fix the car reaches 70%, 80%, or even 90% of its total value. It is
always a good idea to ask the adjuster what is the threshold they use to
determine a total loss.
When the vehicle is being estimated by the car total loss
adjuster, this individual will be looking at the condition of the vehicle. They
will note how “clean” the vehicle is, what is the exact mileage, and what
equipment and options the car has. All of this information will be reflected in
the final evaluation of the vehicle.
The adjuster will then submit the inspection report again
to CCC. CCC will send a final report showing comparative prices for the vehicles
in your local market. They will establish what the fair market value of the car
is and what a fair offer of settlement would be. For more information on how to
dispute this report visit:
http://www.auto-insurance-claim-advice.com/car-total-loss-2.html.
Next, the adjuster must determine who the lien holder of
the vehicle is. If you have a car loan, the insurance adjuster must get that
information so they can contact the bank to determine how much is owed. There
are different requirements insurance companies must follow. If the insurance
company you are dealing with is your own (you are claiming the car total loss
against your own insurance company) then they will be bound by the terms of the
policy, which 99% of the time requires them to pay the bank first. If you are
making a total loss against someone else’s insurance company (the person that
hit you), then this requirement does not exist (there is no actual policy to be
bound by).
If you have a loan, then the insurance adjuster will
request from the bank a Letter of Guarantee. This letter is an agreement between
the bank and the insurance company that for the payment of x amount, the bank
will release the title of the car to the insurance company directly. This
process usually takes four to five days.
If the amount you owe for the car is less than what the
insurance company will pay for the car total loss, then the insurance company
will pay the loan amount and then issue you a second check directly. If the loan
amount is higher than what the car total loss offer, then you will be upside
down your loan. You will be required to continue making payments even though the
car title will be transferred to the insurance company.
Once you receive payment for your loss, you will be able to
go out and get another car. For more information the total loss process and how
to protect your interest, visit:
http://www.auto-insurance-claim-advice.com
By: Hector Quiroga, J.D.
Compare Equity Indexed Life Insurance
A relatively new type of life insurance policy is offering a new option for people to gain from the rising value of the stock market. Called equity indexed universal life insurance, it meets many people’s financial needs by proving protection against the uncertain future as well as growing in value, thus letting the holder experience the benefits of a growing economy. Whether this is a good idea for you and your family will take some research, but you should at least learn the facts about this new type of insurance plan.
Purpose
Life insurance is really two different types of protection against uncertainties in the future: its main purpose is to replace lost income from a wage earner. By giving the beneficiaries money when the policy holder dies, the policy protects them against the financial burden caused by bills, mortgage payments, or other debt payment. But another purpose of life coverage can be to provide protection of estate assets from inheritance taxes. This is a major consideration for families that are well off.
The cash value of an equity index life insurance policy is based on an index such as a stock market index. This is built into the policy so be sure to read it carefully. The policy allows the holder to benefit from an increase in this index over time. Since stock markets tend to rise in the long run, this can provide powerful appreciation for policy holders.
Appreciation vs. Depreciation
To cover the risks that the stock market might go down, most policies have clauses that say the value of the policy cannot decrease. This cost is offset because the policy doesn’t share all the appreciation of the stock market; you will only get a percent of the rise. This can still be a good deal for people with equity indexed universal life insurance policies.
Since there are many extra expenses not found in traditional life insurance policies, premiums may be a bit higher. Things like management fees for funds, stockbroker fees, and other professional fees are needed to manage the policy. Equity indexed policies are riskier than a traditional policy and might offer less profit potential than other types of investments. On the other hand, they can be good choices for those who expect the stock market to rise in value over the long term.
Equity indexed life insurance and equity indexed annuities are another option for long term financial planning and insurance protection for those looking to protect their loved ones in the years ahead. Find out if these plans are right for you, do some research and get a great policy.
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By: Steve Mackey
Definition of Whole Life Insurance
Would you benefit from buying a whole life assurance policy? If you think that you may need life cover for when you are 70 years and older, you may consider this type of life cover policy. We can now take a quick look at some of the basic features of a whole life insurance cover policy.
A Definition Of Whole Life Insurance
Whole life cover offers death protection for the whole lifetime of the insured person. A whole life assurance policy has two parts. The mortality charge is the first part of your premium that pays for the insurance coverage. The second part or rest of the premium goes toward an investment component that earns interest. When the contract holder dies, the insurance payout is made to the contract’s beneficiaries.
The Whole Life Insurance Premium
The policyholder typically pays a level premium for a whole life cover policy. This is a premium which does not go up as the person ages.
The Whole Life Insurance Investment
A whole life policy incorporates an investment component. This gathers a cash value that the policyholder can withdraw or borrow against. Life assurance companies traditionally invest insurance premiums in stocks, bonds and real estate in order to create boosts in cash value for policyholders. The policy’s returns may rise and fall with the markets. It will typically gather less returns than those available from other investments such as equity mutual funds.
Whole Life Insurance Dividend Paying
Insurance Companies may credit the investment part with an annual dividend in addition to interest. This will depend upon the insurer’s loss experience and investment performance.
The Cost Of Whole Life Insurance Whole life cover can be really expensive. You may not be able to afford all the insurance coverage you need if you are on a tight budget.
Other Whole Life Insurance
There are several types of whole life assurance policies. Here are 7 traditional forms:
Non-participating: The death benefits, cash surrender values and premiums of the policy are determined for the life of the contract when the policy is issued. It cannot be adjusted afterward.
Participating: With this policy the insurance company shares any surplus profits with the policyholder. These are the dividends the company may add to the policy investment.
Limited pay: Premiums are only owed for a certain number of years instead of paying annual premiums for life.
Single premium: The premiums are limited to a single large payment at the beginning of the life cover policy.
Indeterminate premium: The premium may differ from year to year, but it can never exceed the maximum premium guaranteed in the policy contract.
Economic: This is a combination of participating and term life cover. A part of the dividends is used to pay for additional term life cover.
Interest sensitive: The interest on the cash value of the policy fluctuates with current market conditions.
The Whole Life Insurance Guarantee
A life cover company will normally guarantee that the cash value of the policy will increase in spite of the performance of the company or the amount of death claims it receives. We have now finished taking a quick look at the definition of whole life insurance as well as some of the general aspects of whole life cover.
By: Gert Hough
Understanding Replacement Cost
Most American’s single largest asset tends to be their house and because of this, insuring it properly is a must. Several factors must be reviewed when coming up with a proper home value for insurance.
First, a discussion between an insurance agent and customer must take place to understand expectations, and plans, if a devastating loss were to occur. A determination whether or not the customer would rebuild their home on their land or move and sell their land needs to be discussed because this will impact the type of coverage needed.
Replacement cost typically is the best option for homeowners. Most homeowners would rebuild their home on their lot if they suffer a catastrophic loss such as a fire, and expect to rebuild the same size and quality of house they had prior to the loss. This, in a nutshell, is the basic definition of replacement cost. (If you don’t rebuild on the same premises, the company will not pay to replace the house and thus replacement cost is not for you).
When calculating the value of a home using the replacement cost method, the following need to be considered:
• The construction quality of the house
• Distinct features in the house (porches, decks, patios, basement, air conditioning, skylights, kitchen, bedrooms, bathrooms, etc…)
• The square footage of the house
• The year the house was built
• The area of the country/state/county where the house is located.
Most local insurance agents will help their customers come up with a general estimate based on fact finding conversations with the client and entering this information into an insurance company formula. The formulas the insurance companies use will help generate an acceptable replacement cost. Furthermore, some insurance companies will come out and do an inspection of the property to ensure the proper limit is selected
Many individuals deem these estimates of a home’s replacement cost to be more than their house is “worth” and don’t fully grasp the concept of replacement cost because more often than not, they’re thinking more in line with market value.
Market value seems to be what customers gravitate towards and thus in many instances think their home is over valued and hence over insured. Market value only takes into consideration the value of other comparable houses in the area, the selling price for these homes and what a particular house would possibly sell for. Here’s the problem, if a particular house is located in a depressed neighborhood of the city, the market value may only be worth for example $50,000. If the same exact house were to be located in an upscale area of this same city, the house might have a market value worth $200,000. More importantly, the cost to rebuild this house in each spot would be the same due to similar construction materials, similar labor costs and therefore the house needs to be insured using the same replacement cost determined using the steps previously mentioned.
Now, if the home is located in a depressed area and the owner would like to insure it for a lesser value because they wouldn’t rebuild on the same property and therefore aren’t concerned with the replacement of the house, there are other options such as a market value policies, actual cash value policies or a purchase price plus improvements value policies. You should speak with your agent, or insurance company, to determine which amount is best for your situation.
Lastly, once a reasonable amount of coverage is determined, the policy should be reviewed at least every 2-3 years for accuracy to ensure proper coverage will exist at the time of a claim.
The time to find out if you are properly insured is when there isn’t a problem. Compare your home insurance rates today and speak with your insurance agent to be sure you have the coverage you need and expect.
By: Jake Sapio
Posted in Insurance | Tags: Air Conditioning, Bathrooms, Conversations, Distinct Features, Home Value | No Comments »
CCC Valuescope & USAA Conspiring to Defraud, Committing RICO Act Violations?
I am filing a consumer complaint against CCC Valuescope (CCCG) and my insurer USAA for falsely alleging a fair “market value” of my automobile.
My insurer USAA has breached its duty to exercise the utmost good faith to me its insured. By using CCC Valuescope (a company I allege violates the U.S. federal RICO Act) USAA has intentionally provided me a low and fraudulent valuation of my automobile in hopes of obtaining an unreasonable and unfair settlement.
CCC Valuescope (formerly known as CCC Information Services Group Inc – CCCG) can by no means be deemed a fair and market value of automobiles as CCC Valuescope works exclusively for insurers and therefore has an economic interest to supply valuations that are intentionally below the actual fair market value of what insured vehicles are truly worth.
It is known fact throughout the insurance industry that CCC gathers its values from what car dealers would sell a vehicle for at basement wholesale prices, not the true “retail value of an auto of like kind and quality prior to the accident” as mandated by FL insurance regulations. Moreover CCC Valuescope uses a mix of vehicles formerly leased, used, and abused among wrecked cars when compiling valuations to afford their insurance company customers paying out total losses the lowest possible “values” to present their insured.
Ironically, nearly every vehicle in CCC Valuescope’s appraisal of my car report consisted of vehicles that had over 20 records indicative of issues such as accidents and faulty cars. Among the report, some cars had 28, 31, and 32 records.
Cutting costs and denying its insured “the utmost due care” historically can be documented against USAA beginning with the class action lawsuit against USAA in Washington’s King County (March 12, 1999) for compelling auto repair shops to use “imitation” parts in repairs, while simultaneously hiding this practice from policyholders. Beyond auto insurance, USAA has countless complaints filed against it in 27 states across the country.
CCC Valuescope is not independent in their valuations since they are a hired gun for the insurance companies! Upon conducting a VIN search on the vehicles within the CCC report 39813905, many cars had over 20 records indicative of numerous collisions, issues with the vehicle, and several changes of ownership. By relying upon CCC’s intentionally low valuation of my vehicle, USAA is breaching its fiduciary duty to act in good faith in handling my claim. No fair and honest evaluation of my claim can be performed by CCC as it is contracted by insurers for the primary purpose of minimizing monies paid out by insurers to its fiduciaries. By using CCC Valuescope, USAA is clearly not exercising the “utmost due care” in the interest of me its insured as required by Baxter v. Royal Indemnity.
CCC admitted itself in its SEC Filing on 3-16-2005 that “the Company sometimes pays a new customer for the remaining commitment of its previous contract with third parties as an incentive”. In regard to regulation, CCC mentions in the same filing “in most states, however, there is no formal approval process for total loss valuation products”. CCC itself confesses in the same report “individual state departments of insurance have taken positions as to whether the use of CCC Valuescope valuations is in compliance with a states claim handling regulations”.
“The Company is aware that since 2002 the California Department of Insurance has advised some of the Company’s customers (which management estimates to be approximately 14% of the total revenue earned in 2004 from the Company’s CCC Valuescope valuation product and service) that the Department believed that their use of CCC Valuescope had not been in compliance with the California insurance regulations in effect prior to October 4, 2004, with respect to certain components of the products methodology. The Company believes the product was in compliance with the applicable California regulations.”
“On April 24, 2003, the California Department of Insurance formally adopted new regulations that required the Company to change its methodology for computing total loss valuations in California.” There is good reason therefore to believe CCC Valuescope’s valuation methodology is terribly flawed and skewed to favor its insurance company customers.
In CCC’s annual report filed February 13, 2004 the legal proceedings and numerous class action lawsuits against CCC are documented in pages 35, 42, 43, and 44 of the 53 page report.
On page 35, CCC Valuescope admits to setting aside $4.3 million as an estimate towards potential settlement to “resolve potential claims arising out of approximately 30% of the transaction volume of CCC Valuescope”.
By acknowledging 30% of transaction volume becoming potential claims, CCC Valuescope thereby makes it public record that it anticipates a sizeable percentage of lawsuits for unfair and fraudulent valuations. Such a high percentage of transaction volume alone attests to the flawed methodology of CCC’s report, its unscrupulous dealings, and wholehearted commitment to protect the financial interests of the insurers it serves.
Ironically, four of CCC Valuescope’s automobile insurance company customers have made contractual and, in some cases, also common law indemnification claims against CCC for litigation costs, attorneys’ fees, settlement payments and other costs allegedly incurred by them in connection with litigation relating to their use of CCC’s flawed TOTAL LOSS valuation product.
Certainly the countless class action lawsuits filed across the United States against CCC Valuescape provides further evidence concerning the grossly low and inaccurate valuations of vehicles they give the insurers they serve. Among the many are:
CCC Settles Class Action Suit on Valuation of Total Loss Vehicles (July 15, 2005)
Chicago-based claims software-maker CCC Information Services Inc. announced that it and 15 of its customers signed a settlement agreement with the plaintiffs in various class action suits pending in Madison County, Ill. These consolidated suits, Case Nos. 01 L 157, et al., relate to the valuation of vehicles that have been declared total losses by insurers.
Terms of the settlement agreement will require CCC to pay notice and administration fees and other costs associated with the settlement. The company estimates that these costs will total about $8 million, and including available insurance proceeds of $1.8 million, the company is fully reserved for these payments. Other settlement costs, including claims by class members, will be paid by the insurance companies that are participating in the settlement.
August 23, 2000, a putative statewide class action was filed in the Circuit Court for Hillsborough County, FL, against CCC and USAA Casualty Insurance Company (Peter Sintes et al. v. USAA Casualty Insurance Company and CCC Information Services, Inc., Case No. 00-006308). Plaintiffs allege that USAA contracted with CCC to provide valuations of “total loss” vehicles and that CCC supplied valuations that were intentionally below the actual fair market value of the insured vehicle.
Iinsurance companies “owe a duty to the insured to exercise the utmost good faith.” Baxter v. Royal Indemnity Company, 285 So.2d 652 (Fla. 1st DCA 1973).
Given the countless and ongoing class action lawsuits against CCC Valuescope there should now be no question that CCC Valuescope is not independent in its auto valuations and is guilty of violating the U.S. federal RICO Act and National Insurance Regulations, along with many of the complicit insurance companies such as USAA who willingly and knowingly use their product with the intent to deceive.
By: Paul Davis
Worst Case Scenario: Will Your Home Buildings Insurance Cover You?
Nobody likes to consider the ramifications of a worst case scenario, least of all the financial consequence. However, did you know that if a major storm (of the likes we experienced in the UK in the late 1980s) struck the UK today, almost one-half of all homes in the UK would have inadequate home buildings insurance to cover the cost of repairs!
Valuation of your home buildings insurance – is it being done correctly?
Before you consider the value of your home, ask yourself a quick couple of questions:
- what is the principal reason why you have home buildings insurance?
- who assess the value of your home buildings insurance?
In most cases, the answer to the first question is you need to have home buildings insurance because it is a requirement under your mortgage agreement. The answer to your second question is also likely to be your home mortgage provider, because they feel they know the value of your home better than you do. So, what’s the problem? Well, the problem is, each year your home mortgage is going down, but hopefully the value of your home is going up. As your insurance is principally to cover your outstanding mortgage, a disparity – between the value of your home and the outstanding mortgage amount – will rapidly arise. Therefore, it is vital that you keep control of valuing your home for home buildings insurance purposes and always ensure that the insurance relates to the actual value of your home, not the outstanding mortgage amount.
Improvements to your home – are they being included?
Likely as not, over time you are going to do some building work to your home. Maybe you’ll add an extension. Put in a greenhouse. Add a conservatory. Etc. The question is – are all of these add-ons being included in the additional value they bring to your home, or are you only continuing to insure the main part of the home that was part of the original policy?
Increased costs – have you factored these in?
Nearly every insurance policy comes with an excess amount. Essentially what this means is that you have to pay a threshold amount before you can claim against the insurance company. Fine, let’s take an example: say you bought your home in 1980 and set the threshold amount at ?500. Would you get more or less in materials and labour today if you were still maintaining an excess sum of ?500? Answer, far less and you’d be claiming on your insurance far sooner, which in turn means your premiums are likely to be higher.
As you can see then, home buildings insurance is not as simple as guessing what you think the value of your home is. It takes certain precision and year-on-year upkeep if you want to make sure you’ll be sufficiently insured should the unfortunate worst case scenario occur.
By: Joseph Kenny