Ask Liz Weston

photo credit: rutlo

Face it–you have a lot of stuff. So much that if you tried to list everything you own from memory, you’d probably forget most of what you have. (Do you know how many pieces of clothing are in your closets and drawers? Can you list everything in the medicine chest? How about all those holiday decorations in the attic?)

But trying to remember a houseful of stuff is exactly what people face when they file an insurance claim after their home has been destroyed in a fire or natural disaster. Without a household inventory, it’s all but impossible to remember everything or even most things.

United Policyholders, a non-profit group that educates consumers about insurance issues and their rights, offers a lot of good tips and resources to help you get started on your inventory:

• Create a room-by-room inventory in Excel. UP provides an Excel sheet that lists items found in the typical home so you don’t have to start from scratch.
• Fill out a sample home inventory from a total loss insurance claim.
• Build your inventory with a flash drive that’s preloaded with the inventory spreadsheet. This was created with help from disaster victims who struggled to remember the contents of their home after it was damaged. (UP does request a $10 donation for the flash drive)
• Walk around your home with a video camera, talking about the items as you film. (Store the clip/chip/tape outside your home in a secure location, preferably in another area or state.)
• Pay an inventory specialist to do the work for you. Inventory specialists charge either by the hour or for the project. Some will store the data for you. Others will give you the disk or inventory list to store yourself. Visit the FIND HELP section on UP’s Web site by CLICKING HERE.

To access UP’s links to the Excel spreadsheets and other inventory tips, CLICK HERE.

Also, make sure you’ve got your disaster/home insurance in order. Not sure? Check out some of my previous columns:

• Do you need disaster insurance?
• 10 things your insurance may not cover
• Is your home underinsured? 8 key points

photo credit: captg

Home values have dropped across the nation. But that doesn’t mean you should reduce the coverage under your home insurance policy.

Why? The real estate value of your home is very different from the rebuilding cost. You could wind up seriously underinsured, says the Insurance Information Institute, a nonprofit group supported by the insurance industry. It suggests asking these key questions about your policy:

1. Do I have enough insurance to rebuild my home?
Your policy needs to cover the cost of rebuilding your home at current construction costs. The cost to rebuild your home is not based on the price you paid for your home, the real estate value in today’s market or even the cost of new construction, the III says. Rebuilding costs are often higher than new construction costs because of demolition and debris removal fees.

Extra coverage you should check on:

• Water back-up (damage from sewer or drain backup)
• Disaster coverage (floods and earthquake aren’t covered on the typical policy, and wind damage may or may not be)
• Building code upgrade, also known as ordinance or law coverage (pays for additional expense of rebuilding your home to comply with building codes that didn’t exist when the home was originally built).

2. Do I have enough insurance to replace all of my possessions?
Most homeowner policies provide coverage for your personal possessions of about 50 percent to 70 percent of the amount of insurance you have on the structure of your home. For example, if you have $100,000 worth of coverage on the structure, you would be covered for $50,000 to $70,000 worth of the contents of your home. You may need  more, particularly if you own antiques, guns, furs, expensive jewelry and artwork or business equipment–all of which may require separate “riders” to ensure adequate coverage.

You can insure your possessions in two ways: Actual cash value or their replacement cost. Actual cash value is the amount it would take to repair or replace your belongings  — minus depreciation. That $1,000 sofa may be only worth $50 today, which is all you’d get under an actual cash value system. A better bet: Replacement cost, which gives you the amount it would take to replace your belongings with items of comparable value and quality without deducting for depreciation.

3. Do I have enough insurance to protect my assets?
Home insurance also provides liability protection, which covers you against lawsuits for bodily injury or property damage that you or your family members cause to other people. The coverage pays for the cost of going to court (your defense) and court awards – up to the limit of your policy.

Most standard home and renter’s insurance policies provide at least $100,000 of liability coverage, but additional protection is available. You want to make sure you have enough insurance to protect your assets and finances should someone sue you. A good rule of thumb is to have liability insurance at least equal to your net worth. Even better: Get enough to cover twice your net worth. Extra liability coverage is not that expensive, and if you max out the available coverage on your policy you can get an “umbrella” policy that gives you $1 million or more for $200 to $300 a year.

Want to know more? Check out my columns for more tips:

• Is your home underinsured? 8 key points
• 3 costly myths about insurance
• Homeowners, demand your (insurance) rights

photo credit: Night Owl City

One of the biggest mistakes people make when they decide to store their extra stuff in a storage unit: They assume that their belongings are insured by the facility.

Nope. The storage facility has nothing to do with insurance, according to the Insurance Information Institute. It simply provides a place to stow your belongings.

Here are few things to consider if you’re going to stash your belongings in one of these units:

Do you really need to do this? You’re essentially paying rent on belongings you aren’t using. And if you aren’t using them, perhaps it’s time to get rid of them. Storing stuff temporarily while you’re moving is one thing. But long term? Maybe it’s time to “release” some of your items via a yard sale or charitable donation so that someone else can get some use out of them.

Check with your insurance company. If you own a home, your homeowner’s policy might cover items that are being stored, but then again, it might not. If you are a renter and have renters insurance, the same applies. Call your insurance company and ask if your items that are being stored are covered in your policy.

What some policies cover – and don’t. Most policies that include protection for storage provide coverage from theft and damage from fires, tornadoes and a few other disasters listed in the policy, says the Insurance Information Institute, a nonprofit group supported by the insurance industry. Most policies will not cover damage from flooding, earthquakes, mold and mildew, vermin (rats, termites, etc.) or poor maintenance. Some insurers may limit the amount of coverage to 10 percent of the amount of insurance you have on your overall personal possessions for items stolen or damaged away from home. Other insurers may offer higher limits.

Consider the type of insurance you need. Personal possessions can be covered on either an actual cash value or a replacement cost basis. An actual cash value policy pays only the depreciated value of an item.  A replacement cost policy would pay to replace the item at what it would cost to purchase it at the time of loss. Clearly, replacement cost is the way to go, especially since these policies generally run only about 10 percent more than actual cash value policies.

Ask about adding a “floater’’ or endorsement to your policy. If you’re storing really valuable property such as artwork, antiques, jewelry, furs etc., there might be dollar restriction on your standard policy. As your insurer about adding a floater or endorsement to your policy to make sure you’re fully covered on these items.

Don’t forget to make an inventory. This is probably one of the easiest things you can do.  Take photos, record purchase prices, serial numbers, appraisal forms and sales receipts. If your property is lost or stolen, an inventory can help you speed the claims process and substantiate your loss. It also helps you figure out how much insurance you really need.  (The Insurance Information Institute offers a free, online software program called “Know Your Stuff” to help you document your items. CLICK HERE to check it out.)

For more tips, check out some of my previous blog entries:

• “Cut your insurance costs, not coverage”
• “Consumer groups warn: Don’t go bare (on insurance coverage)”
• “Basic insurance questions still stump Americans”

photo credit: sterno74

We’re right in the thick of summertime driving, especially for teens, who spend 44 percent more hours driving each week now than during the school year.

If you haven’t looked at the financial and safety implications of adding a young driver to your household, here are some tips to consider from the Insurance Information Institute, a nonprofit group sponsored by the insurance industry:

Talk to your teen about costs. Explain how a driving infraction or accident can drive up insurance costs.

Insure your son or daughter on your own policy. It is generally cheaper to add your teens to your own policy than it is for them to purchase their own. If they are going to be driving their own car, insure it with your company so you can get a multi-vehicle discount.

Find out how your insurer assigns drivers to cars. Some insurers assign the driver who is the most expensive to insure (typically the teen) to the car that is the most expensive to insure. If you can, try to have your teen assigned to the least valuable car. Some insurers will allow policyholders to do this if the number of autos equals or exceeds the number of insured drivers on a policy. However, with this kind of deal, your teen can only use the car he or she has been assigned – even in an emergency.  You face penalties and your premiums might rise if your teen is involved in an accident in a car he/she was not assigned to drive.

Increase your liability insurance. State minimums for liability insurance will not be enough to fully protect you from lawsuits if your teen gets into an accident. If your teen is found negligent in an accident and the damages exceed your insurance limits, you will be held financially responsible and could be sued for those amounts not covered by your insurance. Consider an umbrella liability policy, which kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. For about $150 to $300 per year, you can buy a $1 million personal umbrella policy.

Let your insurer know when you teen is at school. You may be eligible for lower premiums once your teen is at college, providing he or she leaves the car behind.

Tell ‘em to get good grades. Most companies will give discounts for getting at least a “B” average in school and for taking a recognized driver training course.

Here’s a tip that the III didn’t offer, but I will: don’t let your teen drive an SUV or a sports car, which are tricky for inexperienced drivers to handle.

Above all – make sure you talk to your teen and get them into a good driving program. And set a good example. Their lives are at stake.

Need more information on insurance? Check out my columns for more advice:

• Cut the cost of insuring your teen driver
• What a car wreck could cost you
• Cut your auto insurance bills in half

photo credit: butler.corey

In a disaster, nothing is easy. If you have a mortgage and your home has been severely damaged or destroyed, some or all of the payment checks from your insurance company will be made payable jointly to you and your mortgage company.

But until your mortgage company releases its claim on the funds, that money will sit in your mortgage company’s account. And you need that money for your repairs! So you must understand how to negotiate your way through the claims process.

Here are a few tips from United Policyholders – a non-profit tax-exempt organization that helps to educate consumers about insurance:

• Read your documents and get in touch with your mortgage company by phone and mail.
• Be persistent and patient. Be polite but firm.
• When talking to your mortgage company, emphasize that without the money, you cannot get their collateral rebuilt.
• Ask the mortgage company to document what happens to the money while they have it (does it generate interest, and if not, is it invested?). The answer could be uncomfortable for them — and if so — that’s good for you.

To read an FAQ from United Policyholders and more details about how to get your money, CLICK HERE.

And to learn more about disaster/home insurance, check out some of my previous columns:

• Do you need disaster insurance?
• 10 things your insurance may not cover
• Is your home underinsured? 8 key points

Some key findings from the 2009 Health Confidence Survey from the Employee Benefit Research Institute:

Between 68 percent and 88 percent of Americans either strongly or somewhat support health reform ideas such as national health plans, a public plan option, guaranteed issue, expansion of Medicare and Medicaid, and employer and individual mandates.

Those experiencing health cost increases (53% of those with insurance) tend to say these increases have negatively affected their household finances. In particular, they indicate that increased health care costs have resulted in a decrease in contributions to a retirement plan (32 percent) and other savings (53 percent) and in difficulty paying for basic necessities (29 percent) and other bills (37 percent).

Many consumers report they are changing the way they use the health care system in response to rising health care costs. Seventy-nine percent of those who experienced increases in the amounts they are responsible for paying under their health insurance plan say these increased costs have led them to try to take better care of themselves, and 77 percent indicate they choose generic drugs more often. Sixty-seven percent
also say they talk to the doctor more carefully about treatment options and costs and 64 percent go to the doctor only for more serious conditions or symptoms. One-quarter (25 percent) also report they did not fill or skipped doses of their prescribed medications in response to increased costs.

Clearly, many American households are trying to do what they can to contain health care costs–even if that means endangering their health.

We’re pretty much hitting the limits of what individual effort can do. It’s time for lawmakers to step up and create affordable, universal coverage.

You would expect insurance companies to tell you not to cut your coverage. But a leading advocate for insurance consumers is making the same pitch.

United Policyholders – a non-profit tax-exempt organization that helps to educate consumers about insurance — is concerned that too many people in this recession will be penny wise and pound foolish about their coverage.

Instead, UP recommends:

• Raising your deductibles
• Calling around and using the Internet to find discounts
• Switching to a lower priced (financially healthy) insurance company
• Removing any riders that were added to your home insurance policy after you sold any valuables, such as fine art or jewelry
• Checking to see if you are eligible for a premium reduction if you made recent home improvements
• Finding out if you qualify for a discount for being a good driver, a member of a professional association, or for having completed a defensive driving course
• Insuring your car and home with the same company for savings

For more specifics on making the most of your insurance policies CLICK HERE for more tips I’ve posted.

Or, go to United Policyholders’ Web site. The national organization was created in the wake of the Oakland Hills fires and has terrific resources for dealing with a disaster, such as the booklet above.

Weather forecasters are expecting fewer storms than last year, but it only takes one hurricane to wreck havoc on your property and finances.

Expectations are for 12 storms for the 2009 Atlantic season, including six hurricanes and two storms that could reach major status with Category 3 winds or higher. Some forecasters are also predicating more activity on the East Coast this year than along the Gulf Coast.

“Forecasts of an average season should not lead to complacency,” warned Jeanne Salvatore, senior vice president of the Insurance Information Institute. “An average hurricane season was also forecast in 1992 when Hurricane Andrew destroyed much of South Florida, causing more than $23 billion (in 2008 dollars) in property losses. The time to prepare is now.”

To prepare for a hurricane and other disasters, the insurance institute recommends the following:

Check your insurance coverage. You need enough insurance to rebuild your home and to replace all your personal belongings. If you have made a major alteration or improvement to your home or have made significant purchases, notify your insurance agent so that the increased value is reflected in your policy.

Check deductibles. Be aware that coastal residents have percentage deductibles for storm damage rather than the traditional dollar deductibles that are used for other types of losses such as fire or burglary.

Ask about flood insurance. Flood damage is not covered under most standard home insurance policies, as many Hurricane Katrina victims learned. Flood coverage is available from the National Flood Insurance Program (NFIP) and some private insurance companies. It can generally be purchased from the same agent or broker who provides your homeowners or renters insurance. Additional information on flood insurance can be found at FloodSmart.gov or by calling 888-379-9531.

Create a home inventory. An inventory helps ensure that you have purchased enough insurance to replace your personal possessions. It can also speed the claims process and substantiate losses for income tax purposes. A detailed home inventory is also helpful should you need to apply for disaster aid. (The I.I.I. provides free Web-based software at KnowYourStuff.org. Storing your inventory online gives you the ability to access it from any computer in the event your own computer is destroyed.)

Protect your property. Homeowners should secure loose roof shingles, seal openings, cracks and holes. Keep in mind that unsecured building materials or trash from partially completed homes could become airborne missiles impacting nearby buildings.

Plan your evacuation. Know where you will go and how you will get there. Try to have more than one option: the home of a friend or family member in another town; a hotel; or a shelter. Keep a map and the phone numbers and addresses of these locations handy. If you have a pet, identify locations where animals are welcome.

Pack an evacuation kit. Remember to have key items ready to take with you:

* Medicines, prescriptions and first aid kit.
* Bottled water
* Clothing and bedding (sleeping bags, pillows)
* Flashlight, battery-powered radio and extra batteries
* Special items for infants or elderly or disabled family members
* Computer hard drive or laptop
* Photographs
* Pet food and other items for pets (litter boxes, leashes)
* Important documents such as insurance policies, passports, drivers licenses, wills and deeds, birth, adoption and marriage certificates, recent tax returns, stocks, bonds, and other negotiable certificates

Practice. Give yourself just 10 minutes to get your family and belongings into the car and on the road. You’ll find out if there is anything you need to modify in your emergency plan, and your family will know what to expect.

Need more info? Check out my columns for more tips and the latest on insurance policies:

• 3 costly myths about insurance

• Do you need disaster insurance?

• 10 things your insurance may not cover

If you’re worried you might lose your job and won’t be able to pay your bills, the idea of a credit-card protection plan sounds great. But think twice and read the fine print before signing up. You could do better on your own.

In general, these plans advertise that if you have a hardship – lose your job, have a death in the family –  it will freeze your account so it stops interest accrual and the minimum payment made until you’re able to work again.

But nothing is free, and these plans are costly. In the end, the credit-card company wants to be paid. And you need to understand that no one will just wave a wand and absolve you of your debt. You will have to repay it — and with their fees under these plans.

The cost of the purchase protection varies by carrier. It ranges from $0.50-$0.99 per $100 that you carry as a balance. If your balance is $10,000, the protection plan could cost almost $100 per month or $1,200 per year, says Bill Hardekopf, CEO of www.lowcards.com.

“If you carry a balance on your credit card, the monthly cost of the plan is added to your balance and you have to pay interest on it,” Hardekopf says. “These plans are another way for issuers to increase their revenue.”

Since the plan will only cover your minimum payments, why not put the money you would pay for the plan toward your current bills, he suggests.

Here are some other tips from Hardekopf, also author of The Credit Card Guidebook:

• If you already have life insurance, that plan may cover your debts after death.
• Contact your issuer and try to work out a payment plan yourself.
• If you are currently unemployed, are you eligible? Most issuers require that you be employed for 30-90 days before enrolling, and you must be a full-time employee.
• Are you close to your credit limit, or have a history of late payments on your card? You may not be eligible.
• Credit card protection plans don’t follow the same rules as traditional insurance. It is the consumer’s responsibility to be familiar with the requirements and exclusions of these plans.
• Look for time limits and exclusions. Payment periods vary by the reason you need them.
• Examine the age requirements since many have a maximum age limit.
• Ask the issuer what situations will it pay for? What situations aren’t covered?
• Will the plan cover your spouse or supplementary cardholders?
• What happens if you miss a payment or if your account isn’t in good standing when you file a claim?
• How and when can the policy be canceled?

And check out my columns on how to get the best from your plastic:

• Credit cards with the happiest users

• 9 big credit card myths

• Don’t use 401-(k)s to pay off credit cards

Before letting your teen get behind the wheel to drive home from prom or that graduation party, consider these statistics from the Insurance Information Institute:

• Motor vehicle crashes are the leading cause of death among 15- to 20-year olds.
• 31% of  drivers age 15 to 20 who were killed in motor vehicle crashes in 2007 had been drinking some amount of alcohol; 26 percent were alcohol-impaired, which is defined by a blood alcohol content of 0.08 grams per deciliter or higher.
• Teens are involved in more motor vehicle crashes late in the day and at night than at other times of the day.
• Teens have a greater chance of getting involved in an accident if other teens are present in the vehicle.

Scary, right The good news is that these deaths are declining, thanks in large part to graduated drivers licensing that restricts when and with whom teenagers can drive.

The Insurance Information Institute has a video on proms/drinking and driving as well as tips on the safest cars for teens. CLICK HERE for that page of information.
The best advice? Talk to your teen about making prom night safe. Here are some tips from Gary Direnfeld, developer of the I Promise Program - teen safe driving initiative:

1. Check your brakes and brake fluid. Teens speed the most. While teens are interested in how fast the car can go, parents should be interested in how well the car can stop. Make sure your vehicle is in its best mechanical shape if your teen is taking to the wheel.

2. Limit the number of passengers your teen is allowed to transport. The risk of a car crash goes up exponentially for each passenger added.

3. Insist that your teen and all passengers wear their seat belts and again, lead by example.

4. Do not allow your teen to drive after midnight. If transportation is required after midnight, make alternate arrangements. Act as chauffeur, car pool with another parent or arrange for a taxi. It is better that the parent loses one night’s sleep than the life of their child.

“Remember, the Prom is but one night a year. To be really safe, parents must concern themselves with teen driver safety 365 days a year. Even with Prom night occurring in the spring, most fatal car crashes actually occur in the summertime. Safe driving doesn’t take a holiday,” Direnfeld writes on his Web site.

Once you’ve had the important talk, check out my columns on money-saving tips on auto insurance:

• Cut the cost of insuring your teen driver

• What a car wreck could cost you

• Cut your auto insurance bills in half