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What is Insurable Interest?

What is Insurable Interest?

With so many different types of insurance policies existing, it is hard to think of something that you can’t insure. You can insure your home, car, motorcycle, boat, belongings, and even your life. But can you insure your neighbor’s car? Surprisingly the answer is no. You can only insure the items that you have an insurable interest in.

So what is insurable interest? Insurable interest means that the destruction of the property or the death of the person insured would cause you to take a direct financial loss. You can’t insure your neighbor’s car, because you would not suffer a financial loss over it being totaled. You also can’t insured your barely known distant relative with life insurance since their passing isn’t going to directly impact your personal finances. You can insure the home & car, and belongings in your name as if they are destroyed or damaged, you will be directly responsible for repairing or replacing them. There can also be life insurance on your spouse that you can benefit from as their untimely death would create financial hardship for your family.

Insurable interest is required so that you only benefit from insurance payouts for losses that would actually affect you financially. Insurance companies often require you to have insurable interest when you start the policy on the person or object and insurable interest at the time of the loss. For example:  you owned a car and added it to your auto insurance policy, but later you sold it to your cousin. Let’s say that cousin then had an accident. Your insurance would not cover this vehicle even if you still have it listed on your policy as now it belongs to your cousin. It is your cousin who would take the financial loss, not you.

Sometimes, with families, friends, and romantically involved parties, this can be complicated. Insurance policies have listed named insureds for the policy and these named insureds are the ones that receive the funds. Usually named insureds are an individual or an individual & spouse combo.

So can you insure your child’s vehicle? If a child owns a vehicle in their name, is paying the payments on the vehicle, would suffer the damage to their credit if they don’t pay, but insure it on their parent’s auto policy, the parents receive the funds for the totaling of the vehicle.  So it is better in this scenario for the child to insure their own vehicle on their own policy as they have the insurable interest and should receive the funds vehicle in a claim. Sometimes insurance companies will allow for a child/parent co-owned vehicle to be insured on a policy in either the parent’s or the child’s name. This makes it so that the loss funds can be put in both names.

 

In the case of romantic relationships and friendships, insurance companies sometimes do not want to insure something owned by two unrelated individuals. If they start a policy together, but part ways, how does an insurance company decide to whom the funds belong? Insuring married couples is safer as if they split, lawyers help decide to whom funds and property belong. This will vary from company to company following their rules about how they will insure co-owned items or items owned individually insured on a co-owned policy.

The best idea is to ask your insurance agent before you buy anything co-owned or buy something and expect to be able to insure it on someone else’s policy.  To make sure that you will receive the funds for the loss, make sure to insure everything correctly. Provide your agent with your proof of purchase for an item showing who has ownership and let them know if you transferred ownership to someone else. For life insurance policies, make sure all of the beneficiaries are kept up to date. This way you know in the case of a claim, the correct people (you including) receive the benefit of the insurance you are paying for!

Power Your Home with Solar! (& Get a $600 visa card!)

Have you ever wondered about solar panels and whether they would be a good investment for your home?

Right now in central and eastern Pennsylvania, homeowners have an opportunity to have solar panels installed on their home roof without having to pay any large upfront costs.  Legacy Power is offering homeowners the opportunity to install solar panels on their roof for free and then you purchase the energy they produce for a reduced cost. Typically homeowners have seen about 20% or more in reduction of the electricity bills by getting the energy from solar panels right on their home. (Any excess energy goes into the local electricity grid, giving your community a little more green energy.) After you have had the solar panels on your home for about 5 years, you can then purchase the panels for a reduced price if you wanted to own them yourself at that point.

There is little risk in having the panels on your roof as they are insured, monitored, and maintenanced by Legacy Power (the largest solar company in the state!). If you sell your home, they often add value to your home and Legacy Power will continue their services for the next homeowner.

Homeowners may have many questions about the solar panels & their installation.  These are best answered by a professional representative, but after speaking to one myself, I learned a few secrets.  They will make sure your roof is the correct type and in good shape prior to installing any panels, put the panels on the side of the roof where the sun is optimal for our area (typically the southern facing side & away from overhanging trees), and they use the amount of panels needed to power your specific home.  They really work to customize the experience to match your home.

If you would like a free no pressure consultation to see if solar panels and their reduced energy cost would work for your home, please contact our friend, James White.  Please let him know that you were referred by the Allstate Downey Agency and you can receive a $600 visa card upon installation of the solar panels on your home!

James White

Legacy Solar Area Sales Manager

717-329-4915

jameswhite@lgcypower.com

 

The Biggest Threat To Your Wealth

The Biggest Threat To Your Wealth:

A Lawsuit

You take many precautions to get the best returns on your investments, minimize taxes, and protect your home & family from financial hardship.  However, most people don’t think about protecting their wealth from legal judgements.  Some people believe the risk is so small that it will never happen to them, but all it takes is one accident to completely overwhelm your current insurance limits leaving you with a pricy legal defense bill. Don’t think it can happen to you? Check out some local recent lawsuits here and here.

Often home insurance policies have about $100k-$300k in liability coverage & auto policies with good coverages may have between $300k-$500k in bodily injury liability along with $100k in property damage. However, a lawsuit can often quickly surpass these limits leaving you to pay for your legal defense and whatever settlement amount the court may decide on.  Your home, business or real-estate holdings, future income, and non-qualified retirement assets are left to foot the bill.  Although rare, the court can order up to a 25% wage garnishment until the settlement is paid off.

To cover claims in excess of either your auto or homeowners policy, you can purchase excess liability coverage through a Personal Umbrella Policy.  They are called umbrellas since they cover excess liability from any policy you have under it. These could be homeowners, auto, motorcycle, boat, renter’s, landlord, recreational vehicle, and others. Another area Personal Umbrella Policies help protect families is in personal injury lawsuits, such as in liable or slander cases; for example a family member posts a negative online review that results in an alleged defamation lawsuit.

You can usually purchase $1 million in liability coverage for around $150-$400 per year depending on your risk factors. Umbrella policies usually have $1 to $5 million in coverage, but also come in larger amounts for celebrities, business owners, executives, and politicians.

Everyone has the risk of being sued over an accident, but if you have any of these risk factors, you may need an umbrella more than the average person:

  1. You have a dog (or other large animals like horses).

  2. You have teenage or young drivers in your household (or you are accident-prone).

  3. You have a long commute to work or drive a lot.

  4. You volunteer for (or are on the board of) a non-profit, or coach youth sports.

  5. You have a pool or trampoline (or other fun structure at your home).

  6. You (or your children) play sports in public areas.

  7. You are a landlord or own multiple properties.

  8. You have a boat, motorcycle, ATV, or other recreational vehicle.

  9. You frequently entertain guests at your home.

  10. You own a business.

  11. You have a job that others associate with making good money.

  12. Your  income is higher than the average for your community or you live in a high income community.

Which of these risk factors do you have?

 

Water In My Basement?

Water In My Basement?

Here in Pennsylvania, many homes have basements and people are looking for extra livable space. So many have finished their basements turning them into valuable living and storage space. However a question that is often brought up is, “What is covered if I get water in my basement?” Water leaking in through the foundation walls or through the floor is a common issue for some on a regular basis or during storms.

Most homeowner’s insurance will cover water damage due to sudden leaks from a pipe bursting.  Slow leaks over a period of time are often excluded. So if you have a sudden pipe burst in your basement, most likely your insurance will cover the damage above your deductible amount.

Some homeowner’s insurance policies come with an additional water back up coverage add on. This allows you to have a limited amount of coverage for water and sewer damage coming from your drains, septic lines, or sump pumps. This is often a suggested coverage for an additional fee for those who have finished basements – especially ones with a bathroom in the basement!

Lastly, you can purchase flood insurance for your property whether you live in a high risk flood zone or not.  For it to be considered a “flood”, water must cover the ground on your property and an adjoining property (unless you have a large property, then it has to cover two acres on your property). Flood insurance only covers limited items in a basement though. These include electrical systems, hot water heaters, heating/cooling systems, freezers, washers, and dryers. Flood insurance does not cover finished basement rooms, furniture, or anything stored in the basement though.

Generally if you have water that comes in through the walls or floor of your basement, there is a gap in coverage where often none of the water coverages available will cover any damages.  If you have not finished your basement yet and have gotten water in the basement before, you may want to not finish the basement or store valuable items on the floor.  If you do finish your basement, keep in mind that you take on the risks of paying for repairs yourself if you do take in water from the walls or foundation.

Tips to Quickly Stop the Damage of Identity Theft

Tips to Quickly Stop the Damage of Identity Theft

Have you been a victim of identity theft? Do you know someone who was? Chances are you answered yes to at least one of these questions. According to CNN, every two seconds another American becomes a victim of identity theft – and it’s growing rapidly!

There are clear steps you can take to protect yourself from identity theft before it occurs, but what about after it has already taken place? Consumers should be made aware that most homeowner or renters insurance policies don’t cover much, if any money stolen from property, and none of the money stolen from a bank. Once the damage is done, you can still manage its impact by following these key tips to stop the damage from going any further.

Check your bank accounts daily

The few minutes of your day it will take to diligently check your bank accounts, is well worth the price of fraudulent spending cleaning out your savings. Beyond just spotting ID theft, this practice will also help you spot erroneous fees or mistakes made when depositing checks. Online platforms, such as mint.com, can help you aggregate all of your different bank accounts into one location where you can view them seamlessly. This daily practice will ensure ID theft will have no more than 24 hours impact on your bank account, increasing your chances of getting all of your stolen funds restored.

Check your credit score three times per year

While you’ve likely seen commercials out there for all sorts of credit score companies, keep in mind that there are just three main credit bureaus: Experian, TransUnion and Equifax. You should run your credit score with them each once per year. Spread these out over the year, so you are checking your credit every four months. Checking all main credit bureaus will give you the full picture of your credit, so you can spot anything that appears fraudulent. The sooner you catch these errors, the sooner you can report them to the bureau and restore your credit.

Set alerts on spending

One of the best ways to catch ID theft in real-time is to set alerts on any spending from your bank accounts or charges to your credit card. Most banks or credit card companies will monitor your account for what appears to be fraudulent spending, but this may not be enough to catch a sophisticated ID theft. Take matters into your own hands and get an email alert for any time a card is used. These may result in a few extra emails a day, but it’s easier to delete these emails than to recover money lost due to ID theft.

Change all passwords on important accounts

Once you see fraudulent charges occur, it’s safest to assume the ID theft has all of your sensitive information. Immediately change your passwords for all bank accounts, email accounts, government accounts, social media and PayPal. This is one of the fastest and smartest ways to reduce the impact of ID theft. Additionally, don’t reset your password to something obvious or something you’ve recently used for another account.

Send creditors and credit reporting agencies a copy of your ID theft report

Once ID theft takes place, you should share copies of your ID theft report with your creditors and credit report agencies so they can note the fraudulent charges as such and remove the impact these would otherwise have on your credit score.

Escalate things to the police or FTC

If after you have taken all of the actions listed above and the fraudulent activity continues to occur, it may be time to take your case to the police or Federal Trade Commission (FTC). Usually the entities only get involved if the case is extremely sophisticated, but yours just might be. With their resources, you have a better shot at restoring your identity and the money or credit you may have lost in the process.

The good news is there are services and insurance out there that can offer you some additional peace of mind. Companies like LifeLock and IDShield offer subscriptions to closely monitor your private information and alert you of any potential threats. However, these services are by no means a guarantee you will never experience identity theft. Additionally, you can usually add on ID theft expense coverage as part of your homeowners’ insurance policy for about $30 a year. While this doesn’t cover the actual money stolen as the result of ID theft, it does provide up to $25,000 to cover the cost of hiring an attorney, credit recovery and monitoring service, and pay for time off work related to getting your ID back.

Remember, the best safeguard against ID theft is using precaution, closely monitoring your bank accounts and credit score, and taking action immediately if anything looks out of place.

What other questions or tips do you have related to identity theft? Share your thoughts by leaving a comment below!

7 Common Mistakes People Make With Their Homeowners Insurance

7 Common Mistakes People Make With Their Homeowners Insurance

Owning a home is a great joy and a big responsibility. It’s important to properly protect your assets with the right homeowners insurance. Unfortunately, there are quite a few common mistakes homeowners make when insuring their home and assets. Take a moment to learn from these mistakes and compare them against your current coverage.

Having too much or too little coverage

When it comes to insuring your home, it’s important to find the right balance of insurance that is not too much or too little. If you’re over-insured, you’re going to be paying more for things you don’t likely need. If you’re underinsured, you may run into damages your insurance doesn’t cover, causing you to pay for repairs completely out of pocket. An experienced insurance agent can help you find that “just right” amount of coverage unique to your home and family.

Setting your deductible too high or too low

A low deductible sounds great, but keep in mind your premiums will also be higher as a result. A high deductible may save you some money on your premium, but if you can’t afford to meet the deducible when you need to file a claim, that will leave you in a tight spot. Similar to finding the right amount of coverage, you also need to find the right deductible. Think: How much money can I immediately and reasonably pay out of pocket if something goes wrong?

Not understanding the extent of your coverage

Don’t sign off on your policy without reading the fine print and asking questions. Many homeowners make the mistake of assuming their policy will cover everything that could happen to their home. Wrong! Your policy covers what it says it will cover, so read it. Issues like flooding, earthquakes and mold may require additional coverage.  If you have special items in your home, they may require special coverages too.

Failing to report any life changes

If your family gets a dog or remodels the basement, you may not think this is something you need to share with your insurance agent. It’s always better to be safe than sorry. Some “life changes” could impact your insurance policy. Check with your agent who can advise if this is something that will require different or additional coverage. In the case that a change to your house could save you money, like adding a security system, it’s always worth the ask!

Not making an inventory of your property

If your house caught fire tomorrow and everything you owned was gone, could you recall all your household items by memory? It’s not likely any of us could. This is why it’s so important to take a photo inventory of each room in your home, and pictures of the outside of your house. Place the file with the photos in a fireproof safe. Don’t forget to update this inventory if you purchase a new item or change something in a room.

Not taking immediate action to report or resolve an issue

If you spot something that could be mold, don’t drag your feet to get it looked at. What might not seem like a big deal now, could cost you big down the road. Not only will the issue continue to get worse, your insurance may not cover the repairs since you did not take action when you first identified a problem.

Forgetting to regularly review your policy

On an annual basis, you should review your homeowners insurance, and all insurance policies with your insurance agent. They will be able to ask you questions on things that have changed in your life over the past 12 months. They can also advise you of changes to your policy or other policies that may be a better fit for your current life situation. One annual meeting can save you both time and money – make it a priority!

Have you run into issues with your homeowners insurance? Ask a question or share and example from which others can learn!

LOCAL AGENT

David Downey
Insurance Agency Owner
11 N US Hwy 15, Ste 7
Dillsburg, PA, 17019
717-432-1361
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