Brian's Insurance Blog

For Farmowners Clients: Blanketing vs Specific Listing of Farm Inventories, Equipment and Livestock

brianmatthias — Tue, 20 Apr 2010 18:36:50 +0000

Consider blanketing if you are insuring more than $25,000 of farm inventory:

As a more dynamic alternative to specifically listing inventory items on your farmowners policy you may want to consider “blanketing”.

When you blanket you must inventory everything on the farm, including livestock owned by you, produce (including hay and straw), supplies, chemicals, and shop tools. HOWEVER, you can then EXCLUDE anyone or multiple categories from that blanket. As an example if you don’t want to insure livestock or supplies and chemicals, you can simply add an exclusion for those items to the blanket. This prevents them from being included in the adjustment process in the event of a claim.

Advantages of blanketing:

Automatic coverage (no time limitation as with Coverage F) for newly acquired items*
When your total inventory is determined, you ONLY need to purchase coverage for 80% of the inventory amount. Yet everything IS covered at its full actual cash value. THIS SAVES MONEY!!!!
Value of items is determined at time of loss, rather than pegged arbitrarily ahead of time by the policy. The amount paid will be the actual cash value of the item or the repair at the time of loss. Remember even with Coverage F, if an item is listed for more than it’s worth, the company will still only pay the worth of the item.
Less concern with keeping the blanket updated. We will contact you approximately every three years for an update request. However if you ever purchase highly valued piece we should be notified immediately so you don’t become underinsured. And of course it is important to review the list periodically to re-evaluate the worth of existing inventories as they depreciate, and on occasion, appreciate.

*The company reserves the right to perform an inventory at time of loss to determine your ACTUAL inventory, and then compare it to the amount of blanket coverage you have purchased. If your purchased amount is LESS than 80% of your actual inventory at time of loss, there IS a co-insurance penalty. So it is IMPERATIVE to keep an eye on your actual inventory vs your insurance amount for Coverage G.

Remember to include shop tools, small equipment, i.e.: generators, welders, etc, and lawnmowers worth over $2500. The farmowners policy our agency utilizes will only cover lawnmowers up to $2500 as personal property (Cov C). You can lump shop tools and misc equipment on one line. Example: “Misc tools and equipment- $8000.” There is no need to list every hammer and nail…. For this “misc line”, I usually recommend listing out on the Coverage G inventory those items worth $1,000 or more, and lumping all other items into “Misc tools and equipment”. This will keep your list more manageable.

The blanket rate per $1000 of coverage is about .60 higher, however, the 20% “back out” in every case will more than override this slightly higher rate and save you money.

If you are interested in this type of protection and want to pursue it, please contact our office.

Until Next Time,

Brian E Matthias

Insurance To Value- Preventing Claims Issues

brianmatthias — Wed, 27 Jan 2010 13:04:41 +0000

Hello. I hope everyone had a restful and enjoyable holiday season.

This month I wanted to touch on the important subject of insuring property “to value”. In other words, properly insuring dwellings and structures adequately to avoid penalties built into policies when a loss occurs.

In order for the replacement cost provision to trigger in those policies which make it available certain requirements must be met. One of the most important of those requirements is “co-insurance”. Co-insurance simply means one must insure their dwelling or other structure to at least a certain percentage of it’s estimated replacement or reconstruction cost.

This co-insurance percentage is normally at least 80% of the replacement/reconstruction cost, but can be 90 or even 100%, depending on the policy language and the company writing that policy.

When a claim arises, it will be determined if the co-insurance requirement has been met. If it hasn’t, various penalties will result which will always result in a lower claims payment. These penalties can vary from contract to contract and company to company.

So read your policy carefully. If you feel this requirement is not being met, contact your agent or company for a re-evaluation of the structure in question.

Also, remember that meeting this requirement (if replacement cost is your wish) can cost more since higher values are required. Of course, as mentioned in my previous blog, use higher deductibles to offset some of this increased premium cost.

Ask your agent to provide the cost savings for various deductible options so you can make an informed decision.

Until Next Month,

Brian E Matthias

Insure For The Catastrophe

brianmatthias — Tue, 15 Dec 2009 01:41:38 +0000

Happy Holidays, Everyone! Yes, I missed my November blog entry. Suffice it to say that DSL issues in my office became top priority, and some things just didn’t get done.

Many times I hear my clients and prospects utter the time worn adage, “I’m insurance poor”. I’m not sure EXACTLY what that means, but I have a hunch… I think what they are really saying is this- “I don’t particularly like insurance, I pay too much for it, and I’d rather spend my money on other things.”

Guess what? My sentiments exactly! Well, with the exception that I DO “like” insurance. It’s a challenging business and has provided me with a long and rewarding career, but that’s another blog.

But what I do find with many individuals upon further investigation is this– There seems to be a pre-occupation with wanting LOW deductibles, and having everything covered to the fullest extent possible.

This approach to insuring indeed can lead to the “insurance poor” syndrome, through unnecessarily high premiums.

Say to yourself, “How much can I afford to lose and not be financially devastated to the point where I could not recover, or recover in a reasonably short time frame?”.

With this in mind, your thinking will change. You might say, “That $1500 or $2500 deductible per occurrence might now sound so bad. That shed out back that I’m spending $40 a year to insure, REALLY doesn’t NEED to be insured, and it wouldn’t affect me at all if I lost it…”

Helpful Hints To Avoid Feeling “Insurance Poor”:

Don’t insure things you don’t need, or can afford to lose.
Don’t insure buildings and structures that do not have a crucial usage.
Do use higher deductible levels where it make sense and premium savings are worthwhile. Key areas where higher deductibles can be a big money saver are: Dwellings, Farm Buildings, Machinery Equipment, Comprehensive and Collision on cars and trucks, Health Insurance
Eliminate Comprehensive and Collision on your vehicles when you feel you can absorb a total loss. If the unit is worth less than 10 times the purchase prices it’s time to consider deleting physical damage coverage. Another rule of thumb: Delete collision at 7 years and collision at 10 years.

Surprisingly all too often when reviewing insurance programs, I encounter low deductibles, coverage on things that really don’t NEED to be covered, AND LOW insurance amounts. This is a BAD combination!

Follow the suggestions above, and INSURE TO VALUE (avoid underinsuring) so in the event of a catastrophic loss you will be properly protected, and will not incur any insurance penalties. If you follow these simple rules you will hopefully feel that you are spending your insurance dollars more wisely, and may even start to feel “INSURANCE RICH”!

Regards,

Brian Matthias

Family-Teen Driving Contract… Could It Help?

brianmatthias — Sat, 17 Oct 2009 05:32:55 +0000

Hi. Something’s been heavily on my mind the last couple of months… As I go about the day-to-day operation of my insurance agency, I’m constantly reminded of it.

There’s been at least five tragic deaths of teens and young adults in my immediate neighborhood within a short time frame. I don’t read obits, and hardly have time to pay attention to the headlines, but these serious and deadly accidents have definitely not gone unnoticed.

You and I know it IS our worst nightmare. You get the call… Your child has been killed in an auto accident. I know it’s something I STILL worry about, and my kids are 26 and 29. I do worry less since they are older now and more experienced behind the wheel. But as a parent I still think about it occasionally. It’s part of being a parent, I suppose…

Driver distraction and inattentive driving, lack of defensive driver skills, and yes, irresponsible behavior. And how much strength does it take to admit, “Yes, my child was killed in an auto accident, due to his/her own recklessness.”? These are certainly words I could not utter to anyone very easily.

And although we know much of this unnecessary heartbreak and pain can be avoided, the cycle continues. I’ve had my share of my own “occurrences” during my teen years. And looking back, I can say without a doubt even then… in the age of 8 track tapes (playing loudly of course) and WITHOUT a mobile phone, the issues were the same.

So in my own small way, when I’m talking to a parent and adding their 16 year old child to their auto policy as a driver, I also talk to them a little bit about “the human side”. Not just the cost of the insurance, the protection it affords, and all the insurance jargon that seems to eclipse the real underlying concern… “How do I get my kid to be as responsible as he/she can be, behind the wheel?”.

I hand out the Teen Driving contract which is agreed to and signed by both the parents AND the new driver. Yes, it’s just a piece of paper both parties sign, but hopefully when faced with decisions and choices, your young driver will think about that signed agreement, and remember what it means.

The contract is available from the “Downloads” tab on our Home Page. Feel free to use it as is, or make any changes to it which may better suit your family’s preferences.

It’s a reminder of one’s responsibilities behind the wheel, and that driving a vehicle is DEFINITELY a privilege and NOT a right.

Regards,

Brian Matthias

Welcome to Brian’s Insurance Blog

brianmatthias — Fri, 04 Sep 2009 01:33:40 +0000

Hello Everyone!

I’ve started this insurance blog as a way to communicate with existing clients and non-clients, to educate, and share my experiences in the insurance business over the years.

Here’s just a partial listing of the types of things I’ll be blogging about:

Proper insurance planning and execution of that plan
Insurance pitfalls
Ways to save AND improve your insurance program
Insurance humor
Industry trends and their effect on clients and independent agents
Role and duties of the independent agent
Insurance misconceptions
Claims discussions
Importance of maintaining insurance
The privacy and credit scoring issues
Safety Issues

This is just a small sampling of the subjects I plan to touch on via my MONTHLY blog. Look for the newest entry no later than the 20th of the month.

I hope I can provide some helpful insight regarding the complex and often misunderstood industry of insurance, and how it affects you as the end consumer.

Regards,

Brian Matthias