Insurance Assurance A Preparedness Workshop Sponsored by: Rebuilding Mountain Hearts and Lives Septe

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Insurance AssuranceA Preparedness Workshop
Sponsored by Rebuilding Mountain Hearts and
LivesSeptember 13, 2008, Lake Arrowhead and
Running Springs, CA.

• Amy Bach, Executive Dir.
• www.unitedpolicyholders.org

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About UP

• United Policyholders is a not-for-profit
  tax-exempt organization dedicated to educating
  the public on insurance issues and consumer
  rights
• Our work is funded by donations, grants
  volunteers and prior disaster survivors
• Our information is free of charge
• Our website is a great resource
  www.unitedpolicyholders.org

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The voice of experience

• UP has been working closely with homeowners on
  insurance issues since 1991
• Affordability is an ongoing challenge
• Availability is a cyclical challenge
• Large loss victims are often under, rarely over
  insured
• Most agents are more concerned with closing the
  deal/making the sale than making sure theyre
  selling you enough coverage

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History repeats itselfUnderinsurance was a huge
problem after the

• SoCal wildfires (Witch Creek, Harris, Rice,
  Slide, etc.) Oct. 2007
• Angora Wildfire (So. Lake Tahoe), June 2007
• Esperanza Fire, Oct 2006
• Sawtooth Fire, July 2006
• French Fire, (Redding, CA. ) 2004
• SoCal Wildfires (Cedar, Old Fire, etc.), Oct 2003
• Highway 41 Fire (San Luis Obispo), 1994
• Laguna Hills/Malibu Fires, 1993
• Oakland/Berkeley Firestorm, Oct 1991

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A flat screen would be more fun to buy, yes, but

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• So here we go again. This time I'm taking the
  insurance papers receipts in addition to the
  cats, clothes, etc.
• Email sent to UP by a 2003 fire survivor,
  Evacuating for the second time  - October 2007

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Benefit from lessons learned by local 03 and 07
wildfire survivors

• Adequate private insurance is essential
• Government and charitable aid programs will not
  cover the cost of rebuilding a destroyed home
• Take your insurance papers if you evacuate
• Oral promises by insurance reps that youre fully
  covered are useless if you cant prove them later
• Inflation protection features generally do not
  protect you against rising costs

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If youre going to spend the money to buy
insurance

• Put in the time it takes to buy enough and the
  right kind of coverage
• If you have options, choose an insurance company
  that has a good reputation with local fire
  survivors
• Reduce your premium by increasing your deductible
  and qualifying for discounts
• Your home is your biggest asset protect it

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Shopping options

• You can input your zip code at www.insurance.ca.go
  v to find companies that might insure your home.
• If the CA. Fair Plan is your only option
• shop for a wrap around to supplement their
  limited coverage.
• consider setting up a rainy day savings account
  for extra protection

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Simple, essential steps

• Establish a relationship with a good insurance
  agent or broker.
• Ask the agent or broker point blank whether
  theyre qualified to tell you what kind and how
  much insurance you need to fully cover the cost
  of replacing your home and your stuff in the
  event of a total loss. If the answer is no, take
  your business elsewhere. If the answer is yes,
  follow his or her recommendations.
• Over time, if your agent or broker recommends
  increasing your limits do so. Alert your
  insurer of any major improvements, unusual
  features and high value personal property items
  you may have.
• Every time your agent or broker assures you that
  your coverage limits are up to date and adequate,
  take notes and record the date and source of the
  assurance. Store this information safely offsite.
• Ask your agent/broker to review whats excluded.

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A bit o lingo

• Most policies have separate dollar limits for
• Dwelling (Coverage A)
• Contents (Coverage C)
• Other Structures
• Loss of Use (Additional living expenses)
• Endorsements add-ons, extra amounts of
  coverage. Generally each one has a code, listed
  on your Dec page. You generally need quite a
  few of them to be fully covered these days.
• Dec page is a map to your policy

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The most important number to get right is the
Coverage A limit

• Coverage for landscaping, debris removal and
  other items is often set as a percentage of A
• Coverage for contents is also often set as a
  percentage of A

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Be pro-active, be safe

• If youre buying insurance online, be extra
  careful.
• Regardless of how you buy, (online, agent or
  broker), do some rough math by multiplying the
  local per square foot average construction cost
  by your homes square footage adjust upward for
  unique features, high end items, etc.
• If you can find a local contractor whos willing
  to calculate the cost to rebuild your home,
  consider their opinion.
• Compare the math and/or second opinions with the
  limits recommended by insurance salespeople and
• Insist that your limits be adjusted upward if
  theres a shortfall. Insist until it happens.
• Keep good records of policy changes in a safe
  place. Save notices that alert you to changes in
  your policy.

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Double check your dwelling limits

• There are many online tools you can use to see
  how much it would cost to rebuild your home, as
  is.
• Accucoverage
• www.accucoverage.com
• Homesmart Reports
• www.homesmartreports.com

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Homesmart Reports lt7.00

• www.homesmartreports.com
• By entering your home address, HomeSmart
• Reports gives you a high and low estimate of
• what it would cost to replace your home, based
• on standard construction in your area.
• They do not take into consideration any unique
  or custom features.
• Easy, takes 5 min., cheaper than a sandwich

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Accucoverage to check your coverage

• www.accucoverage.com
• Accucoverage is a more detailed way to estimate
  the replacement cost of your home.
• You must enter the materials and details or your
  home and of each room.
• Its worth it spending 25 minutes and 8.00 to
  double check that your biggest asset is
  protected.

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We tried them both, and.

• UP tested both and the estimates were 40,000
  apart.
• Bottom line Accucoverage is more likely to give
  you a more accurate estimate.

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The Fudge Factor

• Extended replacement cost endorsements replaced
  GRC
• For extra security, buy highest percentage
  extended replacement cost endorsement you can
  afford. This is a fudge factor. If you suffer a
  major loss and it turns out your limits are too
  low, this endorsement is designed to bridge the
  gap.
• Extended replacement cost endorsements are sold
  as percentage amounts above your stated dwelling
  limits. Most insurers offer 25-100 above limits.
  Shop around for this important protection.
• ERC endorsements may not apply to increase your
  other categories of coverage along with your
  dwelling limits

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Building Code Upgrades

• Building codes change over time
• After a loss the codes may require you to make
  improvements/upgrades
• Your insurance policy wont cover these
  improvements/upgrades unless you have Building
  Code and Ordinance Coverage
• The safest bet is full building code upgrade
  coverage, which is available from companies such
  as Firemans Fund, Safeco, Chubb, and Allied.
  Most other insurers offer either an extra 10 for
  building code upgrade coverage or a flat 25,000.

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Keep your insurer informed if you make major home
improvements

• Make sure you tell your insurer of any home
  improvements. Most carriers require you to
  report any renovations costing 5,000 or more.
• Some home improvements may lower your risk of
  loss, making you eligible for better, cheaper
  coverage. Ask your agent about mitigation
  discounts.

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Protect your prized possessions

• Some items such as jewelry, art items and
  collectibles may be better insured if theyre
  specifically listed in your policy contract. This
  is known in the industry as scheduling.
• Scheduled personal property items are listed with
  separate coverage limits in a document that
  becomes part of the policy contract.
• Most policies have very limited coverage for
  unscheduled valuable papers including money.

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Protect ALL your possessions

• Make sure you have enough contents coverage. A
  replacement cost endorsement that increases your
  dwelling limits may not also increase your
  contents limits.
• Most insurers set the limits for your
  possessions, (contents) as a percentage of the
  limits on your dwelling.
• Contents limits are typically set at 50-75 of
  dwelling limits. Most insurers sell a replacement
  cost endorsement that only increases dwelling
  limits.
• This means your contents limits will stay at the
  amount stated on your declarations page even if
  the replacement cost endorsement kicks in to
  increase your dwelling limits.
• Make sure you get confirmation that your limits
  in all categories are high enough or buy coverage
  elsewhere.

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ALE A-OK?

• Your Additional Living Expense (ALE) limits
  should cover the amount of rent youd likely pay
  if your home was uninhabitable for at least two
  years.
• .

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Other stuff

• Landscaping
• Debris removal
• Other structures
• Outbuildings and pools

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This is getting expensive

• Opt for higher deductibles. Increasing your
  deductibles will lower your premium. You're
  generally better off paying small claims out of
  pocket anyway these days.

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Lets play concentration?

• Imagine your entire house is gone and everything
  in it.
• You still have to go to work, take care of kids,
  etc., but now you have a second full time job
  reconstructing, remembering and documenting
  everything you had.
• Now list every single item in your living room.
• OK, lets move on to the kitchen
• PASS THE ASPIRIN! (or something stronger)

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Speaking of aspirin Inventory Your HomeNOW

• Do it yourself Use UPs free home inventory
  worksheets to document your possessions. We
  offer an Excel and a PDF version. Photograph or
  videotape each item, scan or make a copy of sales
  receipts, proofs of purchase. (Buying Tips
  section of www.uphelp.com)
• It is time consuming, but what may take you part
  of a day to inventory will take you years to
  remember after a a large or total loss.
• Your insurer gets to keep your money if you cant
  remember things

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3 safe places to store your personal property
inventory

• 1. In an online vault. There are companies out
  there like AnywhereVault, in which you can scan
  and store your personal property inventory as
  well as other important documents. They are
  backed up in multiple states on multiple servers.
• 2. With an out of state friend or relative. Put
  your Personal Property Inventory on a flash drive
  or CD and give it to someone you trust for safe
  keeping. Make copies, just in case.
• 3. On the internet. E-mail your Personal
  Property Inventory to yourself.

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Major donts

• Dont rely on the purchase, appraised or
  estimated sale price of your home to set your
  dwelling limits. That is not predictive of the
  cost to rebuild.
• Dont be penny-wise and pound-foolish by buying
  the lowest priced homeowners policy. Your home is
  your biggest asset make sure its covered.
• Dont understate the size and amenities of your
  home to get a lower premium quote.

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Do not

• Dont underestimate your personal possessions.
  Your contents limits probably wont float up
  with your dwelling limits if you have a
  replacement cost endorsement.
• Dont be afraid to switch insurers to get a
  better policy. Loyalty doesnt benefit you in
  this context.
• Dont wait until after a loss to get appraisals
  of valuables. Do store copies off-premises.

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Our heartfelt thanks to

• Rebuilding Mountain Hearts and Lives
• Mike Kirby
• Emily Cabral
• Julie Robinson
• David Shaffer, Shaffer Insurance Services
• Larry Tencer, Tencer Insurance Agency