Does this sound familiar?
You’ve been a responsible driver for many years, but you notice an upsetting pattern; every year your car insurance premiums creep upward. What’s going on? What are you doing wrong? Well, the answer may be “nothing.” Remember that the cost of providing insurance, as it is with other products and services, may increase for various reasons. Factors that can affect car insurance premiums include the following:

• Your insurance company’s overall loss experience (due to a higher level of claims)
• The increased value of newer model cars
• Increases in judgment amounts awarded in auto lawsuits
• Increased business processing and administrative expenses

What these items have in common is that they’re out of your control...so don’t worry about them. However, you do have some control over what happens with your premiums. It may be time to step back and take a fresh look at your car insurance.

How do I evaluate my situation?
A good first step is to gather your insurance records and any other car-related information. Next, determine if circumstances have changed since you last dealt with your coverage. Consider your cars or trucks, how they’re now used, who are the drivers and your driving experience. Once this information is handy it’s time to call your agent. What should you discuss? Well, here are some areas to consider:

• If you have your home and auto insurance with the same company, are you getting a discount?
• Does my coverage take full advantage of the discounts offered by my company?
• I have more than one car; am I getting a credit?
• How much premium can I save by changing deductibles? Determine the dollar amount of any loss that you can comfortably handle as an out-of-pocket expense.
• Do my cars really need full coverage insurance? On an older car (over six years old) you may want to drop collision and/or comprehensive coverage and carry liability coverage only. Ask your agent what makes sense. IMPORTANT: you must maintain these coverages if you’re still paying off a loan on your car or truck.
• Do lifestyle choices such as drinking or smoking affect my premium?
• Does it matter that my daughter made the Dean’s List? Don’t think this information is bragging since your company may give discounts to young drivers with good grades.

(See: So Your Child Just Got a Driver’s License)

• Did you know that my car has anti-lock brakes; airbag; theft alarm system? (Some companies provide discounts for safety and anti-theft features)
• Did you know that my son took Driver’s Education?
• Does the company have accurate information on how often and how far I drive?
• Am I with a standard carrier or do I qualify for any preferred program?
• Is my vehicle charged an additional premium because of its type or performance?
• Do I get a credit for my driving/claims history or for how long I’ve been covered? If applicable, find out if your company rewards a loss-free history or longevity.

Communicating with your agent
The best way to discuss your insurance needs is to be open and honest with your agent. Giving your agent accurate information puts him in the best position to make certain that you get the best available premium. Carefully answer your agent’s questions and provide complete details about any tickets, accidents, or violations in your driving history. This approach also applies to information about who drives your cars and how the cars are used. Finally, your agent is a terrific resource for handling errors about your account or which may be shown in your driver records... so use their expertise.

(Revised 10/98)

FACT: Putting a newly licensed youthful driver on your automobile policy can more than double the cost of your auto insurance.

We won’t debate the fairness of this fact or argue the validity of statistics that say that kids are involved in more accidents than other drivers. Let’s focus on the things you can do something about.

FIRST: Each state has different restrictions on how companies charge for automobile insurance. In some states it doesn’t matter how old you are, just that you haven’t been driving long. Most states allow companies to charge more for male youthful operators. Many states also allow companies to cancel auto policies after only one youthful operator accident or violation. A few states, e.g. Massachusetts, set the rates rules and forms and there are fewer options or ways to reduce cost. Talk with your agent about the rules in your state. Your agent will often have excellent ideas on how you can cut costs.

What are some of the definite things you can do to reduce insurance costs and keep your kids safe from auto insurance accidents?

• Review and make sure your new driver understands and signs the Youthful Operator Driver Safety Agreement
• Enroll your child in driver training. Driver training can be expensive, but you will save hundreds of dollars in insurance cost each year.
• Many companies give significant premium discounts for good students. Generally, a good student has a B or better average (average of all courses on a five-point scale. A = 5. B+ or A- = 4.5, etc.) on the last report card.
• But – don’t rely completely on the driving schools. Test your child in regard to passing, parallel parking, looking all ways when making a turn, Y or U-turns, speed, traffic law understanding, general attitude and respect for the power of the automobile. Don’t convert the learners permit into a license until your teen passes YOUR driving test. Even after your child is licensed, test your child’s abilities in rain and snow before you permit the child to drive alone in adverse weather. In the wrong hands, cars are lethal weapons.
• Find an insurance company that will rate your new driver on the car the teenager actually drives most of the time. Some companies will assign the most expensive driver the highest rated vehicle. You don’t want your teenager charged to Dad’s new Cadillac, when all your child drives is the older Accord.
• Do you really want your child driving to school each day? Driving to school for many companies is the equivalent of driving to work. The longer the drive, the greater the premium charge.
• Finding the correct company for your youthful driver doesn’t begin when that child decides he or she wants a learners permit; it begins years before. Youthful operators have quick reflexes, but don’t have the experience you or I have. They may not recognize that the driver at the intersection ahead may not stop. Police are less likely to give the youthful operator the benefit of the doubt in marginal speeding situations. So what? Many insurance companies will forgive the first accident, and permit more minor traffic violations the longer you are insured with the company. Find out when your child is 13 or 14 – do I have a company that has a reasonable price for youthful operators and will minor infractions cause the company to cancel?
• Drill into your child that speeding, running yellow lights and accidents cost money. Once you are canceled, the fact you have a youthful operator may prevent you from finding any company that will write standard auto insurance. Substandard automobile insurance is extremely expensive, and many companies will only offer limited coverages.
• Increase your collision or comprehensive deductibles. Eliminate collision and comprehensive coverage on older vehicles where the value of the vehicle is low.
• Don’t think about lowering liability insurance coverage. True the child has no assets, but you may not be able to avoid expensive lawsuits if your child should be involved in an accident where another is hurt. You could be found “vicariously liable” for not properly supervising your child. Don’t forget the “deep pockets” theory either... The other person is injured, the child has no money – but you do! Purchase higher limits of liability protection, and ask your agent for a quotation about a million dollar umbrella insurance policy.
• Your child owns a vehicle – should your child be insured under a separate policy? This remove the cost of the child from your policy; but will also eliminate the multiple car discount for the child. Your child will then want to purchase low liability limits to reduce cost. If the child causes an accident that injures someone, and the judgment is $300,000 but the coverage is $50,000; someone will have to pay the difference. Your child may be exposed to many years of salary garnishment and it is not out of the realm of possibility for the injured party to go after you for “negligent entrustment” of the vehicle to a minor. You would not have any liability insurance or defense coverage if the child caused the ccident in his/her own car.
• In a two parent household, if you start with two vehicles and your child becomes licensed, your child is normally an occasional operator of one of the two vehicles, unless you give your child more or less exclusive use of one vehicle. If you then purchase another car, the child then becomes a principal operator of one of the vehicles. Insurance rates can often double for principal operator youthful drivers. Compounding the problem – some companies assign the most expensive vehicle to the youngest operator. If you don’t need the third car...(In a one parent household, adding a second car usually means having the youthful operator rated as a principal operator.)
• Giving your child the 10 year old clunker to drive may not be the wisest thing to do. Even if the vehicle is well maintained – does it contain air bags or anti-lock brakes? If a teenager is statistically more likely to be involved in a serious accident – do you want to send your child out in a lesser protected vehicle?
• Seat belts. No alcohol. No drugs. No guns. Period. Set an example. Don’t you drink and drive.
• Establish with your child, even before the child begins to drive, that driving is a privilege; not a right. Only the state can revoke a person’s license, but a parent can revoke a child’s driving privileges at any time.
• Some companies will give credits for youthful drivers who attend defensive driving classes. Beyond that, the reason that many children have accidents is that they don’t know what to avoid or know the signs that the other driver may not do what we expect.

Auto insurance collision and comprehensive coverage rates are based on several factors, some of which are: the original cost new of the vehicle, the year of the vehicle, the damageability of the vehicle, and the sportiness of the vehicle. Each vehicle identification number is converted into a number between one and twenty-six. At this point, the number is called a “symbol.” The higher symbols are assigned to the higher end cars such as Mercedes, Ferrari, etc. Logically, the lower symbols are assigned to the modest cars; but even the little Yugo has a symbol higher than one!

Insurance companies look at vehicle safety features, weight to horsepower, body styling, utility of the vehicle and many other factors beyond the price of the vehicle. Generally, vehicles that are renowned for their safety features (Volvo’s, Saab’, etc.) will actually have a lower symbol than comparably priced sedans and thus cost less to insure. Two door, two seater, high horsepower vehicles will generally receive a symbol much higher than their actual value because of their sport or high performance nature. The insurance company may actually increase or decrease the symbol based upon the actual claims history and damage repair cost history of the vehicle. This can happen a few months after a new model is introduced or after a few years! If you own a celebrated rollover, vehicle gas tank explosion vehicle, you may have already seen an increase in insurance cost.

Why is this symbol stuff important?

First, if you’re out looking for a car, check with your agent before you buy. A simple decision such as ordering a 4 door vs. a 2 door could make the difference in hundreds of dollars in additional insurance cost over the years.

First, if you’re out looking for a car, check with your agent before you buy. A simple decision such as ordering a 4 door vs. a 2 door could make the difference in hundreds of dollars in additional insurance cost over the years.

Factory options...

Car options actually installed at the car manufacturer’s factory are included in the vehicle identification and symbol numbering scheme used by most insurance companies. Factory installed does not mean when it leaves the automobile manufacturer it also goes to the van conversion place or the auto dealer for additional items.

Unfortunately, the manufacturers sometimes jump ahead of insurance policy designers. In the past, theft deterrent car radios installed by the factory that when removed from the dash won’t work, were not covered by the auto insurance policy. The 1994 version of the personal auto policy corrected this, but check with your agent if you have one of these factory installed radios and are not sure if you have the 1994 version of the Personal Automobile Policy or its equivalent.

Dealer options...

Car dealers are adept at adding options to vehicles to boost styling, salability, and of course, profits. Spoilers, body side moldings, special wheels and hub caps, body paint, car phones, speakers and stereos, pin stripes and the whole van conversion thing can be added right onto the dealer invoice and you may never know which parts are original and which parts are Fred’s Conversion.

The insurance company cannot price for these additional options unless you tell your agent what the options are and how much they cost. Sure, you can avoid telling the company; but, if you get into an accident, you may not be covered for the unknown options.

How do I know if the dealer buried the options in the price? Simply ask the dealer. If the dealer will not tell you, go to another dealer. Only you will lose in the end if you do not know.

Your options...

You don’t like the stereo – won’t pay $1,000 for a dealer installed CD player that you can install for $400? You want a car phone; you want special paint? Let your agent know as soon as you purchase the vehicle. Your agent can add coverage onto your policy.

The Nitty Gritty

The following comes from both the Homeowners ’91 policy and the 1994 version of the Personal Automobile Policy. Your agent or company may have sold you a different policy or version, so ask your agent about whether you are covered for any of the situations described below.

1991 Homeowners form 2, 3 or 6:

Mobile electronic equipment:
• You have up to $1,000 coverage for mobile electronic equipment that can be operated both by the car’s electrical system and normal house current or internal batteries. This $1,000 applies when the equipment is in the car or is anywhere else. You can pay additional premium to increase the coverage.
• If the electrical equipment (car phones etc.) can only be operated by the vehicle and does not have any other source of power (electrical outlet, battery etc.) then the equipment is not covered by the homeowners policy.
• If the equipment cannot be operated by the vehicle (you haul your computer from one home to another) then the $1,000 limit does not apply and your normal contents limits under your homeowners will apply.

1994 Personal Automobile Policy

• Electronic equipment designed for the reproduction of sound must be permanently installed or removable from a housing unit which is permanently installed, and is designed solely to be operated by the auto’s electrical system. Equipment of this type includes:
  • Radios, stereos, tape decks, CD players.
• The following types of electronic equipment are not covered unless they are permanently installed as an integral part of the same unit housing sound reproductive equipment in the opening of the dash or console normally used by the manufacturer for installation of the radio.
  • CB radios, telephones, two-way mobile radios, scanning monitor receivers, television monitor receivers, video cassette recorders, audio cassette recorders, personal computers.
• Tapes, records, or disks used with any electronic equipment. (Not covered because they cannot be ermanently installed. You must purchase additional coverage).
• Any accessories for any electronic equipment must be covered separately if not permanently attached to the actual piece of equipment (Attached does not mean attached to another part of the car by electrical connection, or by microwave as in the case of the car phone antenna.)
• Custom furnishings and equipment on any pickup or van are not covered. Examples:
  • Awnings, cabanas.
  • Special carpeting, insulation, furniture, bars.
  • Cooking and sleeping facilities.
  • Height extending roofs.
  • Murals, paintings, decals, graphics.

NOTE: You can purchase coverage for electronics and van and truck conversion items. Check with your professional insurance agent for details.

A driver who’s unlucky or careless can maim or kill other persons and severely damage or destroy property. This deadly potential is a primary reason for having auto insurance. In fact, most states have versions of financial responsibility laws which require proof that you are financially able to pay for any damage that you may cause while driving. Insurance policies are the most common method of complying with these laws. More specifically, drivers are typically required to carry liability insurance at some minimal limit which varies by state.

Bodily Injury Liability

This covers damage or injury that you may cause to other persons. The key is that it involves your being held financially responsible for injuries to other persons as a result of the way you operated your car. This coverage does not apply to your injuries.

Property-Damage Liability

This covers damage that you may cause to the property of others. The key is that it involves your being held financially responsible for property you may damage or destroy as a result of the way you operated your car. This coverage does not apply to damage to your property.

Uninsured motorist coverage

The limits and coverage details also vary widely by state. It typically pays for your expenses that result from an accident caused by an uninsured driver. Now be careful with this coverage. An uninsured driver must be the one who is responsible for causing the loss. "Uninsured” is typically defined to include a person who has no insurance; a person who can’t be located (“hit and run drivers”); a person who has insurance, but their insurance company is financially incapable to provide coverage; plus other situations which may be considered to involve an “uninsured” motorist. IMPORTANT: The amount of protection under this coverage may depend upon state law. Payment under this coverage part may be controlled by the limits mandated by the state’s financial responsibility law. Or, a particular state may have specific uninsured motorist legislation that dictates what limit or limits must be offered to insurance consumers. In some cases, a consumer may choose to reject the coverage. Typically, the rejection must be in writing.

Underinsured motorist coverage.

Although the coverage concept is similar to uninsured motorist, this coverage is for injuries caused by a driver who is inadequately insured. Basically, it operates as excess insurance, paying for your expenses which exceed the amount of insurance protection available from the other driver’s policy. For example. you are seriously injured by a person who carries a bodily injury liability limit of $25,000. Your injuries amount to $50,000. Your Underinsured Motorist Coverage limit is 100,000. If the loss circumstances qualify for coverage per the policy’s underinsured motorist provisions, your policy would pay the difference between $25,000 and $50,000, or an additional $25,000.

Remember that this is merely an introduction to complex policy coverages. Be sure to contact your agent for detailed insurance information. Please watch for Part Two of this topic which discusses other, typical auto policy coverages.

The Problem

Car loans and leases are getting longer-48, 60, 72 months and more. Vehicles normally depreciate very quickly the first few years. The loan or lease gap occurs because the loan or lease payments are spread over a longer period of time, and the amount of the unpaid balance remains larger than the value of the vehicle over much of the loan period. The gap is often discovered only after a total loss when the amount the insurance company pays you for the actual cash value of the vehicle is less than what you owe the bank or leasing company. Instead of being reimbursed for your total loss, you have to pay the bank or leasing company thousands of dollars out of your own pocket in addition to the deductible.

Nobody is to blame for this problem-not the bank or leasing company or the insurance company or the car manufacturer, but there is a solution to the dilemma.

The Auto Loan/Lease Coverage Endorsement

This endorsement is available in most states, and many companies will offer this endorsement or a variation.

Coverage:

Leased vehicles: Reimburses you for the difference between the amount due under the terms of the lease and the actual cash value of the auto in the event of a total loss to the auto.

Owned vehicles: Pays any outstanding indebtedness incurred by you for that financed new vehicle in the event that there is total loss or damage to the vehicle and the amount due under the finance agreement is greater than the actual cash value of the automobile.

On partial losses the company will normally pay to have the damages repaired or parts replaced, and the lease or loan gap will not come into play.

There are exclusions:

• Overdue lease payments at the time of the loss are not covered.
• Financial penalties imposed under a lease for excessive use, abnormal wear and tear, or high mileage.
• Security deposits not refunded by the lessor, costs for extended warranties, credit life, health, accident, or disability insurance purchased with the loan or lease.
• Carryover balances from a previous lease.
Many companies will offer this endorsement only if you purchase the coverage soon after you acquire or lease a new vehicle. Companies may not offer this endorsement on used vehicles.

The cost for this endorsement averages about 7% of collision and comprehensive coverage premium. We recommend that you seriously consider this important and reasonably priced coverage.

Part Two

Here we continue our brief discussion of typical coverages found in an auto policy. Be sure to see Part One of this topic.

Cars are expensive to buy and repair and their high cost is a strong incentive for protecting them. If you borrowed money to buy your car, the lender was likely to make certain that you carried comprehensive (increasingly referred to as “other than collision”) and collision coverages to pay for any damage to the vehicle.

Collision coverage

This covers damage to your own vehicle. The damage has to be the result of your vehicle running into (colliding with) another object, such as other vehicles, trees, light poles, mountains, etc.

Comprehensive or Other Than Collision coverage

This also covers damage to your own vehicle. The damage has to be the result of a specific cause of loss. Although causes of loss may vary by policy, some common causes include fire, theft, hitting an animal, vandalism, earthquake, flood or hail.

Remember that both Collision and Other Than Collision coverages are subject to deductibles. A deductible is merely the initial dollar amount of a loss which is paid by you, the policy owner.

Personal Injury Protection or Medical Expense

This coverage, the available financial limits, and the exact details of how such coverage operates vary by state. The coverage typically handles medical expenses for injuries to you, your passengers or people who are “around” you. It is usually a “per person” limit. It may also cover you and members of your household if you, as a pedestrian or while riding a bicycle, are struck by an automobile.

Towing and Labor coverage

This coverage is to help pay for your costs to deal with a disabled car. It could help pay for the car to be towed to a service station or for any repair that occurs at the location of the car’s breakdown. Again, this coverage is for labor and not the cost of any necessary parts. Typically the available coverage amount is minimal (often between 25-$75).

Rental reimbursement

This coverage reimburses you for the expense of renting a car as a temporary replacement. The car being replaced must be an insured car that’s unavailable for use because of that car being damaged or destroyed due to a covered cause of loss. Coverage is also available if use of the insured car is lost because of it being repaired or serviced.

Remember the above information only touches upon some typical auto insurance issues. It’s always wise to contact your agent and discuss your coverage questions and needs in detail. If you missed it, please see Part One of this topic which discusses other, typical auto policy coverages.

An Emotional Start

How likely is it to get enraged while in your car or truck? Well, if you are a veteran driver, you probably know how emotions can affect driving. Long before starting your car, you’ve had to wake up, deal with home emergencies, perhaps get your kids moving, and worry about the upcoming work day. After all the hassle, you get behind the wheel and hope that you make it to work on time.

“Characters” Add To Road Experience

Now that you’re stressed out by the way your day may have started, your emotions may be fueled by having to deal with the following characters:

• “Karl Kollision” cruising through the intersection on a brilliant red light
• “Mary Me-First” making a quick left turn in front of oncoming traffic
• “Larry Lane-Change” practicing his art six times in the space of two city blocks
• “Tailgate Tommy” attempting to weld his car onto your rear bumper
• “Mollie Make-Up” ignoring the changing light so she can get her mascara “just right”
• “Charlie Cell-phone” almost sideswiping you because he’s trying to make a long distance call.

Such folks turn every day on the road into a test of patience and are a challenge to our civility, but there’s another perspective that drivers must consider.

The “Character” In Each Of Us

“Road rage” has become a popular way to refer to driving incidents involving aggressive or violent behavior. Various sources have blamed increased traffic accidents and fatalities on road rage. Others debunk the term as a “fad.” and say that traffic statistics don’t reflect increased violence on the part of drivers.

Chances are, most instances of poor driving are isolated incidents. Every driver is guilty of an act that can be blamed on a momentary lapse in judgment. You or I may make a proper lane change or legally proceed through an intersection 99 out of 100 times. However, the drivers who witness our mistakes may assume that we’re hopelessly inept. Take a deep breath from behind your wheel and recognize that “Larry,” “Mary,” or “Karl” may be making a rare appearance in the guise of a “character,” but actually may be someone who normally drives without making mistakes.

Why Be A Reasonable Driver?

It makes sense to give other drivers the benefit of the doubt. One reason is because it’s earned. Most drivers do a terrific job on the road. Especially when you consider the dangers inherent in driving; such as:

• traffic congestion
• poor weather
• time-pressures
• speed, etc.

A better reason for staying calm behind the wheel, is that cool-headed drivers make better decisions. They have a better chance of avoiding or minimizing accidents. Finally, you may run into serious problems if you cause an accident while acting too aggressive. There’s a greater chance of causing serious injury and a higher likelihood of legal consequences. You also increase your chances of being sued. Oh, and let’s not forget that insurers aren’t seeking to cover drivers who fail to use common sense.

Who Needs It?

Driving is tough enough without complicating it with rude or aggressive behavior and car insurance isn’t free, so start your car, give other drivers a break, and keep a cool head. It’s an attitude that creates the best chance for getting where you need to go...safely.

Monitoring and prohibiting unfair claims settlement practices

The Problem

The complexity of insurance contracts place the typical insurance consumer at a severe disadvantage when it is time to file a claim. Requesting payment for a loss is considered the specific performance of the insurance contract where “performance"” refers to the insurance company’s obligation to investigate and, if applicable, pay for a loss.

The interest of insurance consumers like you are protected by the efforts of individual state governments. States agencies, typically via a special insurance or commerce division, bear the responsibility of seeing that insurance companies and agents operate in a manner that is faithful to the commitment represented by the insurance policy.

Unfair Practices

Most states actively enforce the requirement that all insurers fairly settle valid claims against their policies. The insurance companies and agents operating within a state are also provided with complete information regarding unacceptable claims practices. A specific state’s rules concerning claims is based on the parameters of the National Association of Insurance Commissioners (NAIC) Unfair Trade Practices Model Act. The guidelines developed from the original act, and other regulations (which vary by state), are meant to shield insurance consumers from practices that are misleading, unfair or deceptive. Here are some examples of such practices:
• Attempting to settle a claim based on an application which the company has changed without the insured’s knowledge or permission
• Delaying a claim investigation by requiring unnecessary reports or documents which contain substantially the same information
• Failing to act promptly after receiving information concerning an insurance claim
• When applicable, failing to pay a claim quickly, fairly and equitably
• Failing to promptly settle claims where liability is reasonably clear under one portion of the policy to influence settlement under any other portion of the insurance policy coverage
• Failing to promptly and clearly explain the basis in the policy or the law for either denying a claim or offering a compromise settlement
• Attempting to persuade insureds not to take advantage of the arbitration process
• Misrepresenting significant facts or insurance policy provisions
• Refusing to tell an insured what is happening with a loss within a reasonable time after receiving a completed proof of loss statement
• Denying claims without a reasonable loss investigation
• Offering very low settlements to encourage insureds to sue
• Settling claims for less than the amounts a reasonable person would expect

Of course a good way to avoid problems is to deal with reputable agents and companies who have a strong commitment to properly serving their insurance customers. Your insurance agent would be happy to discuss your concerns and/or expectations about making an insurance claim. Take advantage of his or her expertise!

• The first step toward correctly insuring your condominium or co-op begins with a review of your condominium unit owners association document or co-op incorporation papers. Be sure you receive a copy of the document before purchasing the condominium or co-op. Have your agent review the document if the agent is not already familiar with your condominium or co-op by-laws. Important items to review:
• What property is your responsibility to insure? From inside the walls? The internal walls? The appliances? Your separate and detached garage?
• What is the potential for loss assessment after a fire? Does the association or corporation insure the buildings owned by the association to replacement value? How high is the association’s deductible? What is not insured?
• Are there any coverages, limits or additional interest endorsements you must add to your policy as required by the association agreement or incorporation document?

Find a company that wants to insure your condominium or co-op. Some companies do a better job with new construction, and others excel in reconstructed warehouses or factory loft-type condominiums.

There are two types of coverage: Named causes of loss or risks of physical loss.

• Named causes of loss coverage is just that. The policy only covers for certain kinds of causes of loss to your property. You must prove to the company that one of the covered causes damaged your property.
• Risks of physical loss covers all causes of loss except those that are excluded. The company must prove that one of the excluded causes of loss damaged your building.

Many companies offer risks of physical loss coverage for that portion of the building or real property that is “yours” and named causes of loss coverage for your “stuff.” Other companies will offer risks of physical loss coverage for virtually all of your covered property. Risks of physical loss costs more, but here are some claims that would not be covered under named causes of loss policies:

• The washing machine in the spin cycle danced across the room and broke the water heater, causing water to cascade throughout the home.
• A guest injured herself and bled all over the couch and carpet.
• While the insured cleaned the imported crystal chandelier, the chandelier fell, shattering into pieces.
• While working on the attic floor joists, the insured slipped and put his foot through the ceiling.
• A two-year old boy went on a rampage with a hammer, smashing the bathroom toilet, sink, walls, etc...
• The insured dropped a storm window. It tumbled through the home, down the stairs, damaging walls along the way.
• The insured was cleaning the bowling ball in the bathroom sink – the bowling ball slipped and shattered the sink.
• The insured’s lawnmower kicked a rock through the exterior air conditioner.
• The insured slipped and threw a full paint can into the room; the spatters hit virtually everything in the room.
• Freezing and thawing of ice on the roof caused a break in the wall and water damage to the interior of the home.

The policy name for named cause of loss coverage for condominium or co-ops is often referred to as Homeowners Form 6. To add risks of physical loss to personal property and the part of the real property (building and fixtures) for which you are responsible under Form 6, you must have the Homeowners 17 31 and Homeowners 17 32 endorsements.

NOTE: Your state may have restrictions or natural disaster cause of loss problems. Coastal states face wind problems. California and certain Midwestern areas have severe earthquake problems. Some western states have brush-fire problems. Other areas face hail damage. Each state and company has its own rates and philosophy on how it will insure these common causes of loss. Be smart. Check around.

Basic homeowners coverages common to all homeowners form that insure both condominium or co-op real property you are responsible for, and personal property:

• Real property: Coverage for the structural part of the condominium or co-op you actually own. Usually, the interior walls, appliances, fixtures, plumbing, heating and electrical that services your property, carpeting, flooring, Jacuzzi’s, possibly private garages, and other improvements you make to the property that do not become a part of the building that is owned by the association at large. You work with the agent to establish the replacement cost of your real property. You must insure to 80 or 90% of replacement value to avoid any kind of “under-insurance” penalty if you have a loss. These penalties can include reduced payment, or change from payment on a replacement cost basis to actual cash value. Actual cash value means depreciation. Work with your agent to make sure you insure to value.
• Coverage for personal property (“stuff”) is often combined with your real property insurance. Most people who live in a condominium or co-op have personal property values similar to people who own free-standing homes. How much “stuff” do you own? Is it new, is it of superior quality?
• Loss assessment. After a fire or other covered cause of loss, the condominium or co-op association may assess all of the owners for the repairs to the property to reimburse the association or corporation for deductibles, under-insurance or even no insurance. The standard Homeowners 6 policy give you only $1,000 loss assessment coverage. If you need more coverage you can add more to your policy.
• Additional living expense coverage is usually a percent of your personal property limit of insurance (20-40% or even no limit or actual loss sustained). Additional living expenses covers the additional cost of temporary housing, food and other increased costs of living when you are forced from your condominium or co-op by a fire or other covered cause of loss. If you have a tenant, the condominium or co-op form can cover your loss of rents if rent payments (by contract) do not continue after a covered loss. For most customers, the limit of coverage provided by the standard policy will be adequate; but if your condominium or co-op will take a long time to repair or the loss occurs in the dead of winter, you may not have enough to pay the extra living expenses. If you are in a disaster prone area (tornadoes, hurricanes, earthquakes, wildfires), we have seen recent occurrences where it has taken 2-3 times the normal time to repair property because materials and workers were overwhelmed with work or unavailable. Actual loss sustained coverage is best, for there is no limit to worry about.
• Endorsements: Sump pump, ordinance or law, business in the condominium or co-op. Companies make available literally hundreds of endorsements to provide additional coverage not found in the standard condominium or co-op policy. This is where you need a good agent who specializes in condominium or co-op insurance. Let the agent ask you a lot of questions. The agent needs answers to build the right policy for you. Condominium or co-op unit owner policies are not cookie-cutter forms. Every family’s needs differ and a good agent can help you design the correct plan for you.
• Theft limitations. This brief article is not the forum in which to discuss every limitation and exclusion under the condominium or co-op form. However, you need to know that certain “target” items have limited coverage for theft. The limit shown is the average limit in the market. Your company may provide less or more. Increase coverage by endorsement to the policy. (For more detailed information on insuring this valuable property see Jewelry, furs, guns, silver, goldware, fine arts, antiques, and other expensive stuff.

  • Jewelry and gems ($1,000)
  • Furs ($1,000)
  • Gold, silverware, pewterware ($2,500)
  • Guns ($2,000)
  • Building supplies – no coverage for theft

• Other property limitations. The following property is subject to certain maximum limits of coverage. The limit shown is the average limit in the market. Your company may provide less or more. Increase coverage for most by endorsement to the policy.
  • Electronics used in an auto ($1,000)
  • Money ($200) including coin collections – face value only.
  • Stamps ($1,000)
  • Business personal property ($2,500 on, $250 off premises)
  • Other than boat trailers ($1,000)
  • Boat trailers ($1,000)
  • Boats – anything bigger or more valuable than a canoe – purchase a separate boat or yacht policy.
  • Credit card forgery ($500)
  • Fire department service charge ($500)

• Fine arts, antiques, Persian rugs, Hummels and other collections should be appraised and listed separately in a personal articles floater or endorsement.
• Your personal property “stuff” can be covered for replacement cost. That five-year-old refrigerator that is only worth $100 but would cost $600 to replace could be covered for $600 for this endorsement. Ask for replacement cost contents coverage. When you add this endorsement, make sure your limit of insurance is adequate to cover all of your “stuff” for replacement cost. (See How much are your possessions worth?)
• Liability coverages are usually identical from form to form. Some companies will have special endorsements to improve coverage. Liability covers you for your negligence in injuring other people or property on your premises (those accidents for which the condo association is not responsible) or through actions related to many of your hobbies. The policy also provides defense coverage, including hiring and paying for a lawyer (if necessary) and paying most court costs. Covered claims include slips and falls, baseball beans the neighbors’ child, you hit the foursome in front with your errant hook shot. Homeowners insurance does not provide you with any car insurance for any car you drive. High limits of insurance are recommended, and you should ask your agent about an umbrella policy to increase your coverage to $1,000,000 or more.
• Why high limits of liability insurance? Anyone can sue for any limit. If your policy covers you for $100,000 liability insurance and you are sued for $200,000, your insurance company will advise you that you need to hire a lawyer. If the insurance company pays out the $100,000, its obligation is over, but the lawsuit may not be settled. Courts are backed up. The high cost of lawyers, whether good or bad, is not exaggerated. The injured party may not have to pay a dime in attorney’s fees until the lawsuit is won. You don’t have that option. Your defense lawyer will want to be paid from the day of hire, often for each hour worked – even if you eventually lose the case.
• Medical payments coverage is for minor injuries to people other than residents of the household. You don’t have to be sued or be negligent. Example: Aunt Bertha from 200 miles away comes to visit for a few days. The day she arrives she slips on your transom and breaks a hip. The insurance company will pay up to the medical payments limit ($1,000 to $10,000 normally) for the medical expenses incurred. After the medical payments limit is used up, you must be negligent and/or sued by the injured in order for that person to be reimbursed for the expense.
• Cutting costs? Deductibles save money. Combine your auto and condominium or co-op insurance with the same company. Many companies offer discounts on both auto and home when you insure them together (not available in all states). Some companies offer combination auto/condominium or co-op policies which usually provide superior coverage at a lower price than if you were to cobble all the coverages together using many policies (not available in all states).

Certain property is subject to special limits of insurance.

The following property is limited only for the cause of loss THEFT.

• $1,000 for loss by theft of jewelry, watches, furs, precious and semiprecious stones.
• $2,500 for loss by theft of silverware, silver-plated ware, gold-ware, gold-plated ware and pewter-ware. Included in this category are plated-ware, flatware, hollowware, tea sets, trays, trophies and the like, and other utilitarian items made of or including silver, gold or pewter.
• $2,000 for loss by theft of firearms.

Coverage can be increased for THEFT by one of three ways:

• With the Coverage C Increased Limits Endorsement you can increase theft coverage for any or all of the above items. This endorsement increases limits for theft only. It does not improve the coverage to risks of direct physical loss. With jewelry there is one more limitation – loss of a stone from its setting is not covered.
• With the Scheduled Personal Property Endorsement you remove items from coverage under the basic homeowners policy and place them in a new risks of direct physical loss contract. Each individual item is scheduled or listed and a value is attached to that item. That value is the most that will be paid in the event of a total loss. In the case of jewelry, guns and furs, insurance companies have vast buying power and can normally replace the article for far less than the retail value and will probably do so. However, if the limit of insurance is not enough, you can’t go back to the homeowners policy for more coverage. The limit of insurance is usually established by an appraisal. The description of the item in an appraisal is usually transferred to the policy as a very effective way to help the insurance company find a replacement for you after a loss. Appraising valuables every few years is an excellent idea. Jewelry, furs and guns are covered world-wide. An additional feature of the Scheduled Personal Property Form is that it gives up to $10,000 coverage for newly acquired property in the same class of property that you have coverage now. Thus, if you have jewelry scheduled, but not guns, there would be up to $10,000 coverage for newly acquired jewelry, but not guns.
• The third option is to cover the item(s) under a special Inland Marine property floater. This kind of coverage is available from insurance companies who specialize in high valued homes and expensive collections. Considerations such as residential alarm systems, vault storage and special overseas coverage may be necessary for expensive articles. Your agent will know when to recommend a specialty coverage.

Special Considerations for Fine Art

Fine arts are pictures, statuary, sculptures, collectibles, antiques and other items that do not fit into standard personal property definitions. The problem is value. Personal property is normally covered at actual cash value – replacement cost at the time of loss, less depreciation for use and wear. Replacement cost can be provided by the Personal Property Replacement Cost endorsement.

The following have limits for ALL causes of loss, not just theft:

• $200 on money, bank notes, bullion, gold other than gold-ware, silver other than silverware, platinum, coins and medals.
• $1,000 on securities, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, passports, tickets and stamps.
• $1,000 on watercraft, including their trailers, furnishings, equipment and outboard motors. (Purchase a boat insurance policy to provide the coverage)
• $1,000 on trailers not used with watercraft. (Purchase an auto insurance policy to provide the coverage)
• $2,500 Business Property on the residence premises. (Can be increased by endorsement) (Not covered in Dwelling Fire policy)
• $250 on business property off premises. (Can be increased by endorsement) (Not covered in Dwelling Fire policy)
• $1,000 for loss to electronic apparatus in a car. (This includes cellular phones. Can be increased by endorsement.) (Not covered in Dwelling Fire policy)
• $1,000 for loss to electronic apparatus while away from the residence premises, used solely for business purposes. (Can be increased by endorsement) (Not covered in Dwelling Fire policy)

Look at and print the following list and complete it. Keep it in a safe place away from your home in case your home is destroyed. It is also a good idea to take pictures of and/or videotape your possessions to assist the claims adjuster and to make sure that during a stressful time such as after your home has burned down, that you won’t forget anything.

General Personal Property

Inventory completed by

Date completed

• Sofa, couches, etc.
• Chairs
• Tables, end tables, etc.
• Desks, secretaries
• Chests, cabinets
• Cupboards, buffet, etc.
• Lamps
• Pictures, wall hangings
• Clocks
• Decorative appointments
• Books
• Draperies, curtains
• Rugs
• Music and Sound Production equipment
• Radios
• Table linens
• China, chinaware
• Crystal, glassware
• Kitchen appliances
• Small appliances
• Cookware
• Cutlery, utensils, etc.
• Beds, mattresses.
• Dressers, vanities
• Bedding, blankets, linens
• Bath towels, linens
• Suits (men’s, women’s)
• Coats (men’s, women’s)
• Dresses
• Jackets, sweaters
• Skirts, slacks
• Shirts, blouses
• Hats, gloves
• Purses, billfolds
• Costume jewelry
• Robes, lounging wear
• Shoes, boots, slippers
• Luggage
• Sports equipment
• Miscellaneous effects
• TOTAL

Valuables and Treasures

• Fine jewelry (list items separately at the bottom of the page)
• Valuable furs (list items separately at the bottom of the page)
• Art treasures
• Silver, silverware
• Camera equipment
• Guns
• Musical instruments
• Stamp collection
• Coin collection
• TOTAL
• GRAND TOTAL OF ALL ABOVE

List specific items and value below:

• Item
• Item
• Item