Will Your Homeowners Insurance Policy Be Enough?

According to a survey by J.D. Power and Associates, a well-respected market research company known worldwide, more than 60% of American homeowners are under-insured on their homeowner coverage. By extension, this includes Greensboro home insurance policies as well as others sold throughout the Triad Region.

Under-insured, in this case, simply means that the amount of home insurance Greensboro homeowners have elected to maintain for their financial protection against losses from covered perils to their homes and property are likely inadequate. If a major loss were to occur, such as your home burning to the ground and taking everything you own with it, there's a chance your homeowners insurance would not have the benefits needed to build your house back to the way it was (or build a new house of like or equal value) and replace all your lost personal possessions. This doesn't even take into account the fact that flood insurance is not covered at all in a typical homeowners policy but must be obtained separately from the federal government's National Flood Insurance Program.

Things Change

Many homeowners, when buying a new home, elect to purchase the minimum amount of homeowners coverage required by their mortgage lenders to cover the lender's financial exposure. As the balance on the mortgage is slowly paid down, the mortgage lender's financial exposure also lessens. Yours, however, likely increases as the value of your home goes up and the cost of replacing it also becomes more expensive. Any additions, upgrades or remodeling will also tend to increase the value and, unless you increase your insurance coverage to take into consideration this increase, you'll most likely be under-insured.

The same goes for the personal property in your home. Most homeowner insurance policies have express limits on the amount they'll pay out on certain claims for items lost, destroyed or stolen. This probably affects the coverage applicable to the following types of items in your home:

• Electronics, including computer equipment
• Furs
• Artwork
• Collections, such as stamps, coins, rare books, baseball cards, etc
• Jewelry
• Silverware and more

If the limits on these items are too low to cover their replacement, you should consider adding an endorsement to your coverage or buying a separate “floater” applicable to specific items. It's a good idea to have an annual insurance coverage “checkup.” Get with your agent and determine if what you currently have is enough to adequately meet your needs.

5 Reasons to Consider Whole Life Insurance

Back in the 1990s there was a move afoot in the U.S. that had people cashing in their whole life insurance policies in favor of a strategy called, “buy term and invest the difference.” This advice became popular because people realized how much more expensive whole life insurance was to purchase compared to term life and, although whole life policies contain a cash accumulation component lacking in term policies, this accumulation was slow and at only a slight interest rate compared to what was possible to make at the time in mutual funds or in stocks and bonds.

When the dot.com bubble burst in the year 2000, with the NASDAQ falling as much as 78%, many who had bought term and invested the difference saw the floor drop out from under their feet. While there are no guarantees in investing, the cash accumulation associated with whole life policies is guaranteed to increase each and every year for the rest of the policyholder's life, regardless of what the markets do. That's a big plus.

Whole Life vs Term Coverage

The major draw to obtaining term life insurance is that you can obtain a much higher death benefit for the same amount of premium you'd pay for whole life coverage. This makes the coverage attractive to younger individuals on a tight budget with a growing family to protect. The downside is that this premium level is only guaranteed for a certain “term,” after which the premium payments will increase. You'll also have to re-qualify for a new policy and any existing medical problems acquired could conceivably stand in the way of getting that new policy.

The premiums on whole life coverage are guaranteed for life, as long is your policy remains in force. You'll also never have to re-qualify for coverage even if subjected to failing health. Here are some other major reasons to consider whole life insurance coverage:

1. Your cash value won't be subject to losses in the market.
2. Any dividends you may receive aren't taxable.
3. You have access to your cash value at any time and for any reason you choose. This is without paying any taxes or paying other penalties.
4. Your insurance is guaranteed for life as long as you keep your premium payments current.
5. Benefits paid upon your death to your named beneficiaries are tax-free and guaranteed.

Here's more information. Consult an insurance professional for the whole story.

2 Things to Know About Personal Liability and Your Home and Auto Insurance

We Americans live in a “litigious society,” meaning lawsuits are a common occurrence. With approximately 15 million civil cases being filed in the U.S. annually, it's no wonder 80% of the world's lawyers live here. This is where the business is!
Unless you're a doctor or involved in some other risk-sensitive profession, your chances of being sued may not seem great, but the number of frivolous lawsuits seeking compensation for doubtful damages continues to climb. Consider the following:

• A man in CA sued the owners of a stadium for $5.4M because he felt uncomfortable using the unisex toilets at the venue!
• A Florida couple sued a guide-dog school because one of their graduates leading a blind man around a mall “allowed” the man to step on the woman's toe!
• A woman in New York using the well-known “clapper” to turn her lights on and off sued the company because of injuries sustained from clapping too hard!

Fortunately all of these lawsuits were thrown out due to lack of merit, but many more not considered frivolous were successfully litigated. By far, the greatest percentage of civil lawsuits are the result of automobile accidents. Damages awarded from these cases can be astronomic. Two notable instances include a Texas case where the verdict granted an award of $21M and a California case that paid the plaintiff $49M.

What About Your Auto Insurance and Home Insurance Greensboro Policies?

1. While it's true that the auto and home insurance Greensboro residents carry both include a certain amount of liability coverage, the limits on these policies are typically extremely limited. The State of NC, for example, only requires liability coverage of 30/60/25 on your vehicle insurance policy. Any damages you cause in excess of these minimum limits will fall to you, which means you'll likely be facing a lawsuit.

Homeowners Coverage

2. Your homeowners insurance policy likely has significantly higher limits than your auto policy, but when lawsuit judgments extend into the millions even a $500,000 liability limit isn't enough. The only logical (and affordable) solution is to invest in an umbrella policy, sometimes called excess liability coverage, that kicks in as soon as your regular liability coverage limits are met. A good umbrella policy could easily save you from a total loss of your assets. Most people are under-insured in their liability protection. Umbrella coverage is affordable, even with coverage limits of $1M or more.