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A Tutorial that may save you hundreds of thousands of dollars

In October of 2007, Homeowners throughout San Diego County suffered devastating losses of their homes. Multiple fires burned consecutively in all regions of the County and people helplessly watched as firefighters battled to extinguish the fires.

Once residents were given the authority to return to their homes, they discovered the extent of their damage. Homeowners immediately filed claims with their insurance carriers and began the long claims process. As early as March, 2008 insurers were claiming that 97% of all October 2007 fire claims had been settled. The reality is that many homeowners have not settled their insurance claims.

What is most disturbing is that almost two years after the fires, homeowner's losses continue to increase.

The main reason for the increase of loss is due to the widespread issue of homeowners being underinsured. Fire survivors have learned a very important lesson. Relying upon their insurance agent or insurance company to set the limits of their policy can be a very detrimental act. Unfortunately, it is an act that only hurts the homeowner, without repercussion to the insurance agent or insurance company. If it is later determined the insurance limits are not sufficient to rebuild their damaged or destroyed home, what actions can the homeowner take?

1) It is necessary to know exactly how much you are underinsured by

a. Obtain an estimate from a licensed contractor to rebuild the damaged house

b. Have a line-item Scope of Loss prepared to use as the basis of your claim.

2) Once it has been determined how much the property is underinsured by, a request can be made to the insurance company to reconsider the limits they have set. In some cases, the insurance company will make an attempt to reform the policy. This is a time-consuming process that will require the insured to answer a lengthy questionnaire and return it to the insurer. Regardless of how you answer the questionnaire, inevitably the insurer will state the responsibility to determine the appropriate levels of insurance lies with the insured. It is uncommon for the insurer to accept responsibility and increase limits.

3) The homeowner can file a Request For Assistance (RFA) with the California Department of Insurance. The instructions and form for this can be obtained on the Department's website at: http://www.insurance.ca.gov.

It has been my experience that many homeowners have not reached a favorable outcome to the action steps outlined above. So, how do you prevent this from occurring in the future?

Be sure to purchase a Replacement Cost (RC) policy. A Replacement Cost policy will cover the total amount necessary to rebuild your property, up to the policy limits. However, the insurance company will only pay you the Actual Cash Value (ACV) of the property until the repairs are complete or the property has been replaced. Some insurance companies calculate ACV by determining the amount of the RC and then subtract depreciation. However, ACV should be calculated as the Fair Market Value (FMV) of the property. This is very important when valuing personal property. Insurers like to rely upon the age of an item to determine the amount of depreciation. The problem with this methodology is that it fails when the value of an item increases over time. Likewise, how do you address 20 year-old carpet that is still in like-new condition? Based upon the insurers view, you would owe them money! I suggest that depreciation should be based upon the remaining life expectancy of the property.

First - Insurers claim it is the responsibility of the homeowner to determine the appropriate levels of insurance for their property. The agent or broker will not know your property as well as you do. Accept the responsibility to properly insure your house. If you do not purchase the appropriate amounts of coverage, the loss will be yours to suffer.

When shopping for coverage, be sure to provide the agent/broker with all relevant information. For example: Do you have an office at home? Do you run a business from your home? Do you have any special hobbies or interests that includes special equipment? Do you have expensive collectables or antiques? Riders and endorsements can be added to your policy to ensure you have sufficient coverage to insure those items.

Some of the most commonly overlooked areas are:

Additional Structures - Additional Structures includes outbuildings, sheds, walls, fences, decks, driveways, pools, and other structures not attached to the residence Dwelling. Be sure you describe your additional structures to your broker. Additional structures are typically insured for 10% of the Coverage A limits. Coverage A insures your Dwelling. This amount can be increased if needed.

Landscaping - Landscaping is not typically insured as a separate category, but rather is included in the policy as an Additional Coverage. This coverage insures trees, plants and shrubs up to $500 each. The total limits are generally capped as 5% of Coverage A. For many people that live in rural areas or have large parcels, this will not be adequate to replace all of their trees, plants and shrubs. Be sure to ask for increased limits if you do not think 5% of your Coverage A limits will be sufficient.

Personal Property - Many homeowners have hobbies or interests that lead them to build collections of various items. Some people collect figurines, wine, vintage watches, stamps, guns, art, antiques, dolls, sports memorabilia, well, you get the idea. Most homeowners policies have limits on the amount the policy will pay for these types of items. The good news is there is always additional insurance you can purchase to protect yourself from losses in these areas. Ask your broker/agent about endorsements that may add additional coverages for those items. Most of the endorsements I've seen provide much broader coverage to that personal property than is contained in the standard homeowner's policy. For example, jewelry riders provide worldwide coverage for your jewelry which is broader than offered in the standard homeowner's policy.

Liability Coverage - Section II of your standard homeowners policy insures you for damages for which the insured is legally liable for. This means if someone gets hurt while visiting your property, they could sue you for the bodily injury or property damage they suffer. This coverage also provides your legal defense for the suits against you.

Additional liability insurance can be purchased via an Umbrella Policy. An Umbrella Policy will increase your limits on all of your liability coverages, including those on your automobile policy, a boat owner's policy or any other policy you may have that insures property. Umbrella policies are very inexpensive for the amount of additional insurance you receive.

When setting the limits for your Dwelling, the following steps will help you determine the appropriate limits.

1) Talk to a licensed contractor to obtain current building costs. Ask what the average per square-foot costs are to rebuild your home. Keep in mind if you have a partial loss, it is more costly to repair your house than it is for new-construction.

2) Refer to a real estate appraisal or talk to a real estate appraiser to find out what their Replacement Cost Values calculate to.

Other factors affecting your coverages are:

Extended Replacement Cost Endorsements - Is the insurer offering to increase your limits with an Extended Replacement Cost Endorsement? This is the new way of attempting to increase your limits. The old way was to sell Guaranteed Replacement Cost Policies. The trouble with those policies were the insurers found it was very difficult to limit their exposure, so they switched to Extended Replacement Cost Endorsements.

One of the problems this coverage creates for the homeowner is being able to comprehend your coverage limits. You see, these endorsements typically increase your limits on all coverages. In effect, the limits will float up or increase limits in your other categories - such as Additional Structures, Personal Property, Loss of Use, Additional Living Expense, etc.

Another problem this coverage creates for the homeowner are the additional conditions that must be met in order for coverage to apply. So, not only do you have the regular policy conditions to meet, you also have the additional policy conditions for the Extended Replacement Coverage. How does this help the homeowner? Seems to me this only benefits the insurer. Wouldn't it have simply been easier to increase the stated Dwelling limits? You may sense a bit of skepticism, but I deal with real people on real claims and this is my experience. It is rare that an insurance company makes a change that somehow benefits the insured. We often learn later these changes have only helped the insurer.

Discrepancies on Square Footage - Some insurers are turning to Tax Assessors records to determine the amount of square footage the insured property had. Guess who this creates a problem for? Obviously, the homeowner now has one more thing to deal with. It is a rare occurrence to see the records of the Tax Assessors Office reflect exactly the same amount of square feet that is listed on the Declarations Page of the insurance policy. What can you do to address this discrepancy?

1) Refer to the insurance policy first. Your policy covers your property as described on the Declarations Page. As long as your property is correctly described, with the correct number of square feet, then you have paid insurance for the number of square feet listed.

2) Most Tax Assessors Records only include the square feet of livable area of your house. This does not normally include a garage. So, one reason for a discrepancy could be the garage. Your insurance policy should include the total number of square feet for your house and should not be limited to livable square feet.

3) Ask the insurer in writing to explain to you how they would resolve a discrepancy if the Tax Assessors Records reflected a larger number of square feet than is stated on your Declarations Page. Would they increase your limits or pay more than is stated in your policy? I doubt that very much.

Insurance Requirements Under A Mortgage or Deed of Trust - Another area of importance is relative the requirements under a Mortgage or Deed of Trust. The homeowner is referred to as the Borrower and has certain obligations and requirements to maintain appropriate levels of Replacement Cost insurance.

Typically, the lender will require Replacement Cost limits up to the amount of the Unpaid Principal Balance (UPB). A word of caution - do not relay solely upon the minimum requirements your mortgage company requires. It most likely will not be sufficient.

Because you can never know, happen what, it is a good decision for you and your parents look at look at life insurance offers. Keep in mind that College loans as grants or scholarships are - they back must be unpaid!

Even if so you happen something bad, your family, your debts would have to worry about. Life insurance could facilitate some of the burden associated with your loan you should die unexpectedly or ill.

What is life insurance?

Life insurance is a policy with an insurer opened someone. The policy owner makes payments to the insurer and the insurer guaranteed money pay a certain amount, if the policy owner were to die. Life insurance include an insurer, insured persons and the policy owner.

In most cases of the insured and the policy owner are the same people, but there are cases where they differ. A policy owner can sometimes take a policy with an insurer for third parties, the insured person. Those who get the money, if the insured party dies are beneficiary.

Life insurance and student loans

Interested students, the record in a life insurance offers should be reflected in temporary life insurance. Temporary policies are only for a specified length of time, for certain amounts of money.

An insured person dies within the specified time, the recipients will receive the insurance payments. Students want to leave their parents in debt no longer could a life insurance policy as a way to a student complete credit, loan repayment.

Look at life insurance quotes can not your typical undergraduate student, but a student consider entering medical or law school. These types of student loan debt can for a family in the event of an accident, repay, especially if it be other financial obligations and funeral costs to cover brutal.

By a a temporary or term life insurance, protect your family a need your student loan refund policy take care of.

Shopping around on the various life insurance agencies can give you some good life insurance offers help before your final decision. Much as you, as you to student loan lender bought, you should the same operation for life insurance provider.

The choice of a life insurance provider is nearly as important as picking the right student loan provider. She spent months and months research on student loans. Check also, so many life insurance quotes as you can get.

Life insurance quotes may not like something, you need to worry about how you know want to preparation, but you for the school, that your student loan debt is paid, regardless of what you can do during your collegiate career.

This is especially true if you have high levels of debt. Examine planning for the unexpected - life insurance.

I do not sell car insurance, but as a lawyer in the area of personal injury practice I people often suffer because they have the wrong insurance cover. This is often because she instead bought by as independent agents directly from an insurance company.

Many of my clients who were seriously injured in a car accident were from somebody taken had no insurance or only the minimum liability is insurance coverage, the $25,000 in New York and much less in many other countries. Unfortunately many of US$ 100,000 or $ 300,000 were sold my customer insurance with limits of liability, but not matching uninsured and underinsured coverage sold.

Just in this week, but another new client had this problem. My client was a pedestrian crossing of the street when she was hit by a car, fled the scene. The driver was shortly after the leaving of the accident, trapped, but the owner of the car only has the New York State minimum liability insurance of $25,000 and my client has serious injuries leg and skull consisting of many broken bones, including a broken arm,.

My customer has a car liability insurance limit of $300,000, but she bought the insurance by GEICO the Verkäufer underinsured coverage sell their didnt. GEICO insurance no independent insurance brokers, but used to consumers through in-house sales agents sold.

For a small fee my client could have acquired underinsured coverage over $ 300,000 her $300,000 for their restore allows violations instead of $25,000 would have. Ironically, she needed the $300,000 liability coverage to protect their assets. However, as you don't exceed your liability underinsured coverage can buy coverage, I would be her the $300,000 liability plan for the sole purpose of being able, $300,000 underinsured purchase plan purchase advise have.

I have many clients in this situation, who lost their jobs due to severe injuries and significant debt. They were underinsured coverage, matching the additional funds would, a great help would be to pay their claims, pay their bills and their lives get back together.

Underinsured Motorists coverage numbers insurance if you have been violated by someone in a car accident, who was for your injuries cause money of your own car negligent and had less liability insurance as you have done. Uninsured drivers in the other car you coverage numbers no insurance cover or the identity of the other car is unknown.

Underinsured and uninsured coverage is cheap and within the limits that your liability insurance are usually available. It is not available in quantities greater than your liability insurance coverage.

Underinsured and uninsured coverage is so important that a few States now your insurance limits, require coverage suitable limits unless you reject the coverage in writing. A few years ago, I have proposed several New York senators, state that they to enact a similar law in New York.

I have many clients that not the maximum medical payments insurance, have been sold which cost me only $2.01 per month on my car insurance. This is especially important for people who do not have a good health insurance. It is also useful for passengers who have no health insurance.

Why should you buy auto insurance by an independent insurance broker? The courts have defined the reason. There were several "Misconduct" complaints against insurance companies in the absence of underinsured offer and uninsured motorists coverage limits due to the limits. However, if the insurance company sold directly to consumers, these cases for the insurance companies gone. The courts found that if a consumer directly from an insurance company, rather than an insurance broker buys insurance, the consumer is only insurance purchase and pays not for advice.

If you buy car insurance from an independent insurance broker, who represents several different insurance companies, you get the benefit of an insurance professional to assess your needs and advise you accordingly. In addition a variety of insurance companies, and premiums can give you only offer independent insurance broker, so you get the best coverage at the lowest price.

Whether you buy your car insurance directly from an insurance company or by an independent insurance broker, you always make sure that you are matching drivers of uninsured and underinsured coverage and maximum medical payment purchase benefits.

Term life insurance is used to protect of a fault you not your Inheritors for responsible, if you should die. As the name implies you have only insurance for a specific term or period. At the end of this period, you have no more insurance and premium numbers you stop. The period may be only a year or more than thirty years. Term insurance is useful if you have debts, which have a measurable life at the end of which they disappear. Examples include college tuition for your children, and mortgage payments. Premiums may be variable on some policies. She would be low at the beginning, if the insurance company risk is low. The insured benefit since he or she has usually less available money for the insurance in younger age groups. The premium increase closer comes as the end of the term and the insured is (hopefully) better they can afford. Because you buy only - with whole life insurance insurance buy plus a saving plan - get more per premium dollar with term insurance insurance insurance. (See my article: whole life insurance - you should ever buy it?) Conclusion: the benefits are that term insurance is specifically designed for a commitment entered into, disappear, and bonuses to your ability, they make are cut.

Annual renewable term insurance is a type of term life insurance. This can appear as a series of policies a year. The premium increases risk increases every year as the insurance company as you grow older. However, buyer beware. Some insurance companies require that you maintain Insurabiltiy continue to cover. What does that mean? If you develop a terminal illness, and before you die comes up to the renewal date, the insurance company say, can you are no longer insurable and refuse your policy to renew. Now you have no insurance, and if you die nothing would get from the insurance company your heirs. Of course, some policies are "renewable guarantees" and their premiums would be higher than the guidelines without this feature.

The most common type of term life insurance is level term life where the premium is. This means that you the same numbers amount in premium annually, which is in effect the directive. This may not as beneficial as annually renewable, because the total premium for all the years to a level premium be averaged out. With annually renewable, you pay for the insurance from year to year, and while the premium increase each year the exact cost of a year insurance will pay you. (Exact justification of why that would be on average more expensive would include a discussion on the time value of money which I will here.) You can the most insurance companies your level term life policy renew expiration of the term but obviously at a higher premium.

Term life insurance has its place. If you have a debt that you want to be sure is paid, if you should die before the debt is taken into account, purchase term life insurance.

In today's fast paced world, business owners don't often have the time to thoroughly check out the companies they rely on to provide goods and services. In many cases, a determination of product/service quality can be made at the time goods are delivered or services are rendered. If goods or services do not meet expectations, there is often an immediate remedy available. For example, poor quality goods can be shipped back to the supplier and/or payment for services can be withheld until services are satisfactorily rendered.

Unfortunately, business owners do not always purchase items that are tangible items, in the sense that they can immediately determine the quality of the goods and/or services at the time of purchase. One example of such a purchase is health insurance. Since health insurance is not usually used immediately after purchase, the quality of care or the legitimacy of the policy may not even come into play until the business owner, or a family member, actually needs to have medical treatment. This is one of the primary reasons that many companies, often appearing legitimate, can get away with selling bogus health insurance coverage to unsuspecting business owners.

In most cases, fraudulent health insurance policies are sold to business owners by telemarketers or "agents" through bogus Associations and Unions. In that, the buyer must join a professional and/or trade association or become a union member to qualify for health insurance. In fact, in a study published by the U.S. General Accountability Office (GAO) in 2004, the GAO found that association schemes ranked at the top of the marketing methods followed by bogus health insurers. According to the report, "Employers and Individuals Are Vulnerable to Unauthorized or Bogus Entities Selling Coverage, between 2000 and 2002, the U.S. Department of Labor and state insurance regulators identified 144 unauthorized entities selling health insurance unlawfully. These entities defrauded 15,000 employers and more than 200,000 policyholders out of $252 million."

However, it is important to mention that many individual and group health insurance products are endorsed by reputable Associations, such as the ARRP and the American Bar Association and, many reputable Unions, such as the AFLCIO and the Teamsters. These organizations have long been recognized for bringing a common class of professionals or citizens together for other purposes that have very little to do with health insurance. Membership commonly includes a wide range of other benefits in addition to discounted health insurance. Typically, the organizations have a governing organization, a constitution and bylaws, a set of officers, voting rights, regular membership meetings and a professional code of conduct.

Unfortunately, most individuals do not find out that they were making hefty monthly payments or premiums to fraudulent Associations or Unions until they have a severe condition that requires medical treatment. Usually, it isn't until after they receive treatment that they receive notice from their medical provider that the claim that was submitted to the insurance company was denied and that all the medical charges that were incurred are now their responsibility.

Often, the scheme starts when business owners are contacted by telephone or approached by someone who claims to represent a certain, official sounding, Association or Union. The business owner is then informed that if s/he becomes a member of the Association or joins the Union, s/he could qualify for a low cost group or individual health insurance plan. Typically the Association or Union is promoted to represent self-employed individuals and small business owners. The low cost health insurance is usually presented as one of the many "perks" that the business owner can qualify for, in addition to many other "member" benefits, like discounts on other services, such as dental, eyeglasses, office supplies, hotels, rental cars, etc.

In many instances, these bogus companies involve licensed health insurance agents to sell their fraudulent health insurance products. Sometimes the "agents" know the products are fraudulent, other times, the "agent" also falls prey to the scheme. Often, the schemes prey upon consumers who have been previously declined insurance coverage or suffer from a pre-existing condition. Since these consumers have very limited options to purchase private health insurance coverage, the benefits of an Association or Union membership that offers health insurance coverage for a "membership fee" or "union due" is enticing. To the unsuspecting consumer that has a pre-existing medical condition or is paying high premiums for coverage, the "membership fee" or "union due" is a small price to pay for what they believe will be a quality health plan that provides "guaranteed" coverage with no "pre-existing condition exclusions" and no "waiting periods."

In many circumstances, the print materials that are left with the consumer are very well designed, however, the majority of the time, the language in the "health plan brochure," if there is one, is very unclear. The literature may name the entity that is authorized to act as the health plan administrator of the plan, but neglect to name the actual insurance company that is providing the health insurance coverage. Unfortunately, it is often difficult for the consumer to separate the illegitimate companies selling official sounding health plans from the legitimate ones. Typically fraudulent health plans have many commonalities.

Here are 10 "Red Flags" that may indicate health insurance fraud:

1. The "agent" is not a licensed insurance agent but an "enrollment" or "membership" coordinator.

2. The term "discount plan" is written in the product literature, but the term health plan, health insurance or policy is frequently used by the plan promoter. Discount plans often provide nothing more than a discount for medical services, such as prescription medications, eyeglasses, dental, etc. These plans are not designed to offer major medical health insurance coverage.

3. The official sounding "Association or Union" is one that you have never heard of before.

4. The plan is referred to as an ERISA plan. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that allows employers to set up employee benefit plans for employees and their dependents. ERISA plans are not subject to state regulation and are not regulated by the state insurance commissioner. ERISA plans are normally not sold as health insurance, but are instead, established by employers, unions or groups acting on behalf of employers. Therefore, unsuspecting buyers believe these plans actually offer health insurance coverage, when if fact, they do not.

5. The buyer is told that the "membership fee or union dues" includes the health insurance premium, but there is no mention of the word "premium" in any of the plan literature.

6. The plan offers "guaranteed" insurance coverage with no exclusions for "pre-existing conditions" and no "waiting periods."

7. The plan is significantly cheaper in price than other health insurance plans.

8. The term "reinsured" is used in regards to the plan. Reinsurance is something insurance companies buy to protect themselves against their own risks. It is insurance for insurance companies. Licensed insurers rarely have their agents mention any of their reinsurance arrangements during a sales presentation.

9. If the Association or Union is comprised of members from all walks of life and/or requires its members to state that they belong to a certain trade, class or group of professionals that they have no affiliation with, for example, the Association or Union is said to be comprised of "Food and Beverage" workers, but "Florists" and "Machinists" are allowed to enroll as members.

10. If the Association or Union is said to have a special arrangement with a health insurance company, a plan administrator or another third party that has designed the plan using a legal "loophole" that allows members to purchase health insurance at a discounted rate or to purchase a individual or group health insurance policy.

So how can you protect yourself from falling victim to a fraudulent insurance scam? Make sure you contact your state's department of Insurance to determine if the health insurance company and the third-party administrator are licensed to do business in your state and make sure that the "agent" selling the plan is a "licensed health insurance agent." Additionally, make sure that the health insurance company has been approved to sell the particular policy that is being offered. Since it may be difficult to tell if fraud is involved, always put off buying your insurance policy until you have had the opportunity to perform your own due diligence.

©2007 Small Business Insurance Services, Inc. http://www.smallbusinessinsuranceservices.com