From: bd670@cleveland.Freenet.Edu (Russell I. Dyreng)
Newsgroups: misc.consumers
Subject: Re: Home & Auto Insurance
Date: 10 Sep 1992 22:18:24 GMT
Organization: Case Western Reserve University, Cleveland, Ohio (USA)
NNTP-Posting-Host: hela.ins.cwru.edu


hemant@cbnewse.cb.att.com (hemant.b.bhatt) writes:

>What's good coverage for Home & Auto insurance?
>
Let me give you my *opinion* on this matter.  Keep in mind that
your bank will have minimum limits that it will impose upon you
for various types of coverage if you owe money on either your
home or your car.

Additionally, most states impose certain minimum coverages for 
automobile policies.  Insurance companies will often try to sell
the types of coverage which bring them the most return on their
dollars.  Your actual insurance needs will vary depending upon 
your individual situation.  Let me give you the guidelines that 
I use for my own situation.  You can take it or leave it as you
wish.

>Home Insurance
>
>Dwelling - $

Usually the bank will tell you what your minimum coverage should
be.  This is often (not always) equal to the amount of money that
you owe them.  

If you bought your home recently you would want to cover about 
80% of the purchase price.  Why not 100%?  Remember that if your 
house burns to the ground in a fire, you still have your land.  
There are also other expenses in the price of the home that won't
be destroyed in a fire such as your driveway and the excavation 
work.  

>Dwelling extension -$

This normally comes in around 10% of the coverage that you have
on the dwelling.

>personal property - $

The best thing that I know to do here is to take a WAG at the 
value of the furniture, clothing and other items in your home
that you would want replaced in the event of a fire or theft.

>loss of use - $

This type of coverage will pay your rent should you need to find
another place to live.  Oftentimes this is a coverage that you 
don't really need.  Before you say "But where am I going to 
live, for cryin' out loud?!?!" hear me out.

Your need to find out how the insurance company will cover you 
should your home suddenly turn into a pile of smoking ashes.  
If your company uses the money to pay off the mortgage, you can 
now use the money that was previously put to the house payment 
for rent.  
--OR--
As is more often the case.  The insurance company instructs you 
to use the money to replace the damaged dwelling.  Sometimes you
are allowed to use a percentage of the money to help make the 
mortgage payment.  My company does this.  I found that it saved 
me money on my premiums to slightly increase the covered amount 
on my home so that this percentage would handle the mortgage 
payment.  This was less expensive than getting the loss of use 
as separate coverage.  Again, with the insurance company making
the mortgage payment for you, you can use your old mortgage 
payment money to cover the rent.  

You will need to have a little bit of a discussion with your 
agent to work this one out.

>personal liability - $

Here you would want to be covered for about twice your net 
worth.

>damage to property of others - $
>medical payments to each person - $

These are actually covered under your personal liability.  
They are duplicate coverage.

>deductable amount - $

You want to get a fairly large deductible.  Unless you say some-
thing, they usually give you a $250 deductible.  A higher 
deductible is better.  Personally I want no less than $500. 
If you can afford it, $1000 is even better.  The reason is that
you should be buying insurance to prevent yourself from being
wiped out in a major catastrophe.  Anything $500 or less you 
*should* be able to handle yourself.  I don't have any exact 
figures handy, but let it be known that you are paying 
disproportianally high premiums for that extra $250 of coverage.
Besides, you wouldn't want to be turning in claims for below 
$500 because your rates will start to go up with the number of 
claims you make.  So if you aren't going to make small claims,
you should adjust your premiums so that you don't have to pay 
as if you are making them.

>Auto Insurance
>
My philosophy is somewhat similar for auto insurance as for 
home insurance.  Insure only those items which you cannot 
cover yourself and eliminate duplicate coverage wherever 
possible.

>bodily injury/property damage liabilty - $

Again go with twice your net worth.

>medical payments - $

If you have medical insurance already you don't need to worry 
about this one.  To get medical coverage through your your 
auto insurance company in addition would do little more than 
cover the deductible from your primary medical carrier.  This is
something that I can self insure.  This covers you and your 
family.  Other passengers in the car are covered by your liabilty
insurance.  

I don't know a good amount if your medical insurance isn't 
already covered.

>comprehensive - deductable - $
>collision - deductable - $

As with the home insurance policy, the larger the deductible the
better.

>uninsured motor vehicle - $
>underinsured motor vehicle - $

If you are hit by an uninsured/underinsured motorist your 
collision coverage takes care of your car regardless.  Your 
medical and liability coverage take care of you and any 
passengers.  This coverage is not needed, but in many states is
required by law.  Either forget the coverage totally or get the 
bare minimum required by law.  Some states allow you a deductible
or allow you to decline these coverages altogether if you sign a
waiver.  Check into it.


>Car rental & Travel expenses - $

These are expenses which are infrequent and within a price range
that they can be self-insured.  Decline these coverages.

Furthermore, I would recommend going to an independent agent.
He can comparison shop various rates from various companies.
This saves you a lot of time on the phone listening to sales 
pitches for things that you don't need.  The independent agent,
IMHO is the best way to go.  

These are all methods that I use myself.  Other people will have
different opinions, but I saved about $350 in premiums over the 
"let the insurance salesman pick your coverages and deductibles 
for you" method.  My independent agent concurred with all of my
reasoning above.  Again the basic philosophy that I follow is:
Insure only those things that aren't already insured, or that
you can't cover yourself.
-- 
Russ
bd670@cleveland.freenet.edu
Remember-any advice that I give you may be worth exactly what
you paid for it.
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