If you’re planning a trip to a vacation home, it’s a good idea to think about insurance coverage before you go. Whether you plan to vacation in a second home or visit a time share, a rental property, or a home exchange, the National Association of Insurance Commissioners (NAIC) offers useful vacation home and property insurance considerations.
It’s a good idea to check your policies to be clear about the extent of what they will and won’t cover while you are traveling and staying in some type of temporary lodging – generally, a Homeowners policy will extend some coverage for your personal belongings. Also, be sure to review any trip or travel benefits or coverage that might be available from your credit card.
If you have a second home for vacation use, the insurance issues require more consideration. Homeowners coverage for a second home can vary significantly from the terms in your principal home’s insurance policy and requirements may be different if you are in a different state or a different area. Your coverage needs will vary depending on how often your home is occupied and whether the home is for your own use – owner occupied – or whether you rent it to others. You may need additional coverage if your vacation home is a waterfront property or if it is located in an area that is subject to natural disasters such as hurricanes or floods. You may also need additional coverage such as boat insurance or “named peril” insurance.
We often don’t think about insurance until we need it – and then, it can be too late. If you haven’t considered the insurance issues related to a second vacation home or to temporary vacation lodging, you might want to give your agent a call.
Especially in this tough economy, The National Association of Insurance Commissioners (NAIC) is warning consumers to keep their guard up to avoid becoming victims of insurance fraud. When it comes to insurance pricing, it’s best to adhere to the old adage of “if it seems to good to be true, it probably is.” According to NAIC:
“Fake insurance companies and dishonest insurance agents can defraud consumers by collecting premiums for bogus policies with no intention or ability to pay claims. Phony home, health, life and auto policies typically are offered at rates that are significantly lower than the traditional market price in order to woo consumers who are trying to save money.”
They suggest that if you are unsure of the company or agent that you are dealing with, take these three steps:
STOP before signing any paperwork or writing a check
CALL your state insurance department, which is easily reached by phone
CONFIRM that the company or agent offering insurance is legitimate and licensed in the state.
June 7-13 is Tire Safety Month, an event organized by the Rubber Manufacturers Association to promote safety and to raise awareness about proper maintenance and care. According to the National Highway Traffic Safety Administration, more than 600 deaths and 33,000 injuries per year are due to under inflated tires. And in addition to being a safety hazard, tires that are improperly inflated also lower a car’s fuel efficiency. Consumer Reports offers tips on tire maintenance.
Conventional wisdom has been to use a penny to measure tire tread for safety, but Consumer Reports notes that based on driving performance in a battery of tests, using a quarter would be a safer gauge:
“It has long been the standard that tires are worn out when their tread depth reaches 1/16 inch (or 2/32 inch as found on standardized tread-depth gauges). The easiest way to measure this, if you didn’t have a gauge, was to hold a penny upside down in the tread. If the top of Lincoln’s head was visible, you needed new tires. See test results of foul weather comprises with worn-out tires.
But CR’s tests show that using a penny is too stingy and that most consumers should consider replacing their tires when the tread reaches 1/8 inch.”
Experts at the Tire Rack, an independent tire tester, suggest that measuring tire tread via the quarter method can improve braking distances up to 24 percent. See a quick tutorial for using coins to measure tire depth.
In addition to maintaining good tire pressure and tread, the age of your tires can be a safety factor – rubber breaks down over time. Many safety experts suggest replacing tires that are more than 5 years old to avoid the potential for a blowout or tread separation.
There’s been more than one occasion when a customer called or visited to report a claim, and I have had to tell them they are not covered. Talk about a very uncomfortable conversation!
Insurance is an intangible; you don’t need it until you need it. You pay premiums, sometimes high premiums. And often you never use the coverage. So, when you have a claim under homeowner’s insurance, auto, liability, or worker’s compensation, you want it covered, right? Then why are some claims not covered by insurance? Policies as Contracts
An insurance policy is a legal contract between you, the insured, and the insurance company. You sign the application and pay the premium, and the insurance company sends you a policy. All policies define who the insured is, and they tell what the company is willing to cover. But sometimes coverage and claim do not match. Exclusions
These are specifically noted perils that the company will not cover. For example, some homeowner’s policies exclude coverage of flood damage. Many people in Louisiana did not understand this when Hurricane Katrina hit. You can purchase a separate flood policy, but flood damage is not covered by the basic homeowner’s policy. Conditions
These are general rules or procedures that the insurer and insured agree to follow, under the contract. When you sign the application and pay the premium, you agree to these conditions. For example, did you know you have duties after a loss? In order to claim a loss, you need to promptly notify the insurance company or agent; some policies have specific notification deadlines. If you have theft coverage, you’re required to notify the police. If a tree falls on your home and opens a hole in the roof, you must protect the property from further damage and make reasonable and necessary repairs to protect the property. Most policies require you to cooperate with investigations and settlements. If you don’t meet these conditions, the insurance company can deny the claim.
So what’s the best way to make sure you are properly covered? Simply think about what is important to you:
Do you worry about cost of health care when you get older?
Are you concerned about your 16-year-old son or daughter driving?
Have you inherited an heirloom and wish to pass it on to your family?
Do you have an older home with systems that no longer meet state requirements?
As a business person, have you just signed a contract to build three more homes?
Do you have an office in your home?
Ask your insurance agent how best to cover what is important to you. Taking a proactive approach to insurance may avoid the discomfort of the “you’re not covered” discussion.
Millions of people are sharing real time activities with friends, family and colleagues through online social networks like Twitter and Facebook. If you are one among those millions, be aware that there may be some other parties that find your tweets fascinating, too … such as your local burglar. Recently, an active social networker Twittered about his trip only to find his home had been burglarized while he was away. While this could be coincidence, the victim thinks that it might be related to his public postings – and the news media seems to think so too – see a newsclip about the robbery.
There are likely to be many more reports of this incident since it is being heavily tweeted and it seems to have piqued the “mainstream” media’s interest, too. Although the media likes to hype stories about crimes related to online activity, these types of opportunistic crimes have been going on long before social networks existed. Wiley burglars are often known to target funeral goers based on obituaries printed in newspapers or after seeing families pack the car for a trip. With basic precautions, social networking may be no more unsafe than other “real world” activities. In fact, increasingly, social networks are being harnessed by citizens and police departments to help solve crimes.
So while this incident shouldn’t be blow out of proportion, it should serve as a cautionary tale of the potential downside of real-time transparency in social networks – particularly if you’ve attracted a following of people that you don’t know very well – or at all. Take sensible precautions and think twice about what and when you share – and with whom.
It’s also a wise to take home security precautions when you plan to be away on vacation – there are definite steps you can take to reduce the likelihood of your being victimized. And while nothing can take away the feeling of violation that happens after a burglary, being insured properly can help you to financially recover from a loss. If you have work equipment, antiques, or valuable collections, talk to your insurance agent about whether you need an endorsement or a rider to expand the coverage limits of your existing policy.