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TIPS FOR FIRST TIME INSURANCE BUYERS

Decide how much insurance you need
You can't stop bad things from happening. But you can protect yourself financially by purchasing insurance. How much insurance you need depends on a lot of factors including how much you owe and own, how much your assets are worth, whether you have dependents, and how much out-of-pocket cost you could afford to bear. You can estimate your coverage needs using calculators or worksheets available on-line, but it's a good idea to sit down with an insurance agent or broker who can thoroughly evaluate your needs.

Comparison shop
No matter what type of insurance you're buying, the process is essentially the same. Once you've decided what type of insurance and how much coverage you need, you can begin contacting insurance companies online, directly by phone, or through an insurance agent or broker to obtain quotes. Get quotes from several different insurers because premium cost can vary widely.

But compare the coverage offered, too. A policy might cost less because it offers fewer, or different, features and benefits. And make sure the company you've settled on is reputable, with good customer service and claims-paying ability. All insurance companies are rated by major rating agencies (e.g. Standard & Poor's, Moody's, A.M. Best) on their ability to pay claims. You can access these ratings online, through public libraries, or through insurance company literature.

Understand what you're buying
An insurance policy is a legal contract that may be loaded with technical terms that are hard to understand. But read it anyway before you sign on the dotted line to find out about the coverage you're buying. For instance, the policy will tell you:

• Who or what is covered
• What coverage exclusions and limitations apply
• When coverage begins and ends
• How much coverage is provided
• How much you'll pay for coverage (the premium)
• How you report a loss or file a claim

It's always a good idea to ask an insurance professional to explain any terms, conditions, or benefits that you don't understand.

Evaluate your insurance needs periodically
As your life changes, your insurance needs change, too. So every once in a while (annually, some experts suggest), review your insurance to see if you need more (or less) coverage or an additional type of coverage. Here are some times in your life when you'll definitely want to re-evaluate your insurance needs:

• You're getting married or divorced
• You're starting a family
• You're renting an apartment
• You're buying a house or a car, or making a major purchase
• Your child is going off to college
• You're starting a new job or becoming self-employed
• You're buying or selling a business
• Your income increases or decreases substantially
• You're taking care of an aging parent
• You're retiring

Make your insurance policies work for you by taking the time to periodically review your needs and coverages.

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NEW HOMEOWNER INSURANCE BASICS

First-time homebuyers may not realize that homeowners insurance covers more than just the structure of a house. It also protects the homeowner and generally anyone named on the policy, including a spouse, resident, household employee, guest or visitor. Most policies offer three kinds of protection:

1. Structures - A homeowners policy protects a person's dwelling for damage due to common threats like fire and smoke, lightning, theft and extreme weather. Unless it is listed among a policy's exclusions, anything that causes loss to a homeowner or his property is covered. To cover the exclusions, homeowners can often pay to add endorsements to their policy, although some exclusions, such as flood damage, may require the purchase of a separate policy.

• Coverage Amounts - When choosing coverage amounts, people should remember they are protecting the entire home, not simply the amount remaining on the mortgage or their equity in the building.

2. Personal Property - Family possessions and personal property also are covered by homeowners insurance. In most cases, a policyholder will be reimbursed for damage or theft of personal property, whether the loss occurs on the protected premises or elsewhere. Recalling each item in every room can be difficult, however, so policyholders are encouraged to make an inventory of their belongings - recording the serial numbers, as well as the dates and costs of purchases for possessions such as jewelry, artwork, furniture and appliances. Personal inventories should always be stored in a fireproof safe or away from the premises, such as on videotape or a computer that is not in the house.

• Coverage Amounts - Typically, the insurer sets the total value of possessions at half of what the home is insured for. But there are limits for certain items and the amount may not be sufficient to cover the replacement of property, so homeowners may want to purchase additional coverage for their possessions. Review of a homeowner's personal inventory is the best way to determine whether his coverage is sufficient.

3. Liability - Homeowners insurance also provides compensation for liability claims and medical expenses, as well as other claims that result from property damage and personal injury suffered by others. This coverage applies whether an accident occurs on the policyholder's property or while away from home.

• Coverage Amounts - The standard amount of liability coverage is $100,000 on a typical homeowners policy. If a homeowner feels that the standard amount may be insufficient, he should consult an insurance professional about the availability of a higher level of coverage.

After establishing a policy, homeowners should periodically review their existing coverage to make sure that it keeps pace with any major purchases or improvements they make to their homes. Securing the right insurance policy at the right price is an important step in the home buying process, so homebuyers should shop around for a policy that best suits their needs and protects their most valuable asset appropriately.

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INSURANCE TIPS FOR HOME OWNERS

You've unpacked your things and settled into your new home. But have you thought about how this will affect your insurance needs? Buying a home involves more than just making sure you have homeowners insurance coverage. If you've recently purchased a home, here are some types of insurance that may be impacted by your recent move.

Homeowners insurance

If you have a mortgage, your lender probably required you to obtain some level of homeowners insurance coverage. However, you'll want to make sure that the amount of coverage that you have will adequately protect you for all possible losses. Homeowners policies set coverage limits for specific items (e.g., jewelry), so you may want to look into purchasing a separate endorsement or a floater if you feel that you need to increase your coverage. You also need to know if you have "replacement cost" coverage on your personal property and if you are covered for earthquake damage.

Flood insurance

Homeowners insurance does not provide coverage for flood damage. But those living on a riverbank or near the ocean are not the only ones who warrant flood protection. Even if you live in a low-lying area (e.g., near a creek), you may want to look into purchasing flood insurance. Most companies that sell homeowners insurance also sell flood insurance, so try contacting your own insurance company for more information.

Auto insurance

If you think that there is no connection between buying a home and auto insurance, think again. If you're ever in an auto accident that is the result of your negligence, all of your assets (including your home) could be subject to liability claims if the claims exceed the liability limits of your auto insurance policy. So, you should re-evaluate the existing liability limits on your auto insurance policy to make sure that you have adequate coverage to protect your home. If you feel that you need even more coverage, you may want to look into purchasing a separate umbrella liability policy, which would pay for damages that exceed the coverage limits on your auto and/or homeowners insurance policy.

Disability insurance

Would you be able to make your monthly mortgage payments if you were unable to work due to an accident or illness? A disability insurance policy will pay you a monthly benefit to replace a portion of your income until you are able to work again. Many employers provide disability insurance for their employees. If your employer does not offer disability insurance or if you are self-employed, you can purchase an individual disability policy.

Life insurance

What if you were to die before your mortgage was paid off? Would your family be able to keep up with the remaining mortgage payments? Life insurance can provide your family with the funds to pay off their debts, as well as replace a portion of your income. While many employers offer some level of life insurance coverage to their employees, this amount of coverage may not be enough to provide financial security to your family. So, you may want to consult an insurance professional to help you assess your family's life insurance needs.

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PROTECT YOURSELF WHEN RENTING YOUR HOME

(1) you don't need to insure the contents of the house, unless you provide furnished accommodations;

(2) you need to be more concerned about liability issues; and

(3) you need to protect yourself against the loss of rental income. Your tenants may purchase renters insurance, but even if they do, it won't provide any coverage for you as the owner of the property.

Fortunately, there's a policy designed especially to meet the needs of rental property owners. Most insurers who deal in commercial insurance can sell you a policy specifically for rental property. However, there are many variations among rental property policies. Some provide replacement cost coverage, while others only insure property on an actual cash value basis. Some policies only provide coverage for one or two named perils (such as fire), while others provide much broader coverage. Because of these variations, you may have to shop around to find a policy that provides complete coverage. A good rental property policy should provide the following:

• Broad coverage for the physical structure of the house, on a named-peril or open-peril basis
• Coverage for other structures located on the property (garages, sheds, etc.)--this coverage is often limited to 10 percent of the coverage for the house
• Coverage for your property left on the premises (appliances, maintenance equipment, etc.)
• Coverage for loss of use, if you lose rental income as a result of a covered peril
• Liability coverage for injuries or property damage that occur on the insured property
• Medical payments coverage, for medical expenses that arise from injuries to others on the insured property

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UMBRELLA POLICIES EXTEND YOUR COVERAGE

Every day the newspaper has stories about lawsuits filed for every possible reason. They range from serious injuries resulting from tragic accidents to seemingly silly disputes. If the day comes when you're served with legal papers, it's imperative that you have insurance to cover your legal liability.

That's where a personal liability umbrella policy can help you. Umbrella policies, as they're also known, supplement the liability coverage you already have through your home and auto insurance and provide an extra layer of protection.

Umbrella policies aren't just for the wealthy — they're for anyone who has assets that might be at risk if they are responsible for a serious accident.

If you don't have enough liability coverage to resolve a claim or a lawsuit, the person bringing the action might go after your home or your other assets to pay for damage. Umbrella policies cover damage claims that you, your dependents, or even your pets may cause.

How it works

Umbrella policies kick in after the liability insurance in your homeowners and auto policy runs out. For example, if you have a home insurance policy with liability coverage of $300,000, the umbrella policy will pay claims above that amount up to the limit selected.

Jeanne Salvatore, vice president for consumer affairs at the Insurance Information Institute, says that umbrella policies pay in addition to your liability limits. For example, if your liability limit on your auto insurance policy is $250,000 of bodily injury protection per person and $500,000 per accident, your umbrella coverage would kick in after you have exhausted your auto liability coverage.

Most of the risk is assumed under the primary auto or home policy, which is why personal liability umbrella is so inexpensive. You can buy a $1 million or larger umbrella policy for less than $200 a year.

Many companies won't sell you an umbrella policy unless both your auto and home insurance coverage is with them. In addition, your insurer may stipulate that your auto or homeowners liability limits be at least a certain amount, such as $200,000 to $300,000. Umbrella policies are usually sold with a deductible that might run anywhere from $250 to $1,000. If you're on the hook for a multimillion-dollar lawsuit, that's a small price to pay.

More than your average liability coverage

When you buy a personal liability umbrella, you're getting more than just higher liability limits. You're also buying broader coverage in case you're sued. The insurer selling the umbrella policy agrees to cover you if you cause bodily injury, property damage, or personal injury.

The personal injury protection offers coverage not found in your auto and homeowners policy. Generally, personal injury encompasses false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Most primary policies cover bodily injury and property damage, but not personal injury. Certain umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.

Protection against claims and lawsuits does more than simply pay for the damages. Even if a lawsuit is frivolous, you still face the expense of defending yourself. Your liability coverage pays for lawyer fees and defense costs, which can quickly add up.

Even umbrellas aren't waterproof

Even if you buy the top-of-the-line personal liability umbrella policy, you can't protect yourself against every possible claim or lawsuit. There will be exclusions in the umbrella policy, just as there are exclusions in every insurance policy.

Typically, the umbrella won't cover claims arising out of a business endeavor. If you own a business — even a small one — you'll need to buy a business insurance policy to be covered against liability claims.

Depending on the law in your state, the umbrella policy won't necessarily pay for punitive damages, either. These damages, above and beyond any actual monetary losses, are awarded to punish wrongdoers for their conduct and may not be covered by any insurance policy. Also, as a general rule, the umbrella policy won't cover intentional acts, unless there are extenuating circumstances.

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SHOULD I INSTALL A HOME SECURITY SYSTEM?

If you're wondering whether to install a home security system, then consider the following questions:

What are you trying to protect?

If you live alone with little more than a television and some furniture, and have little concern for your own personal safety (perhaps you have a black belt in karate), then your home security needs may be nil. If, however, you have children and/or other family to protect, you fear for your own personal well-being, and/or you own expensive antiques, art, jewelry, and other valuables, then your need for home security is probably much greater. The importance of what you are trying to protect should weigh heavily in your decision to install a home security system. You want to be able to sleep well at night knowing that both your loved ones and your valuable personal belongings are safe. If you can't do that now, then you may need some form of home security system.

Do you live in a high-crime area?

Another way to analyze your home security needs is to consider the likelihood that you will be the target of criminal activity. If you have lived in a neighborhood for a while, you probably already know whether it is safe to leave your doors unlocked at night, or whether you should barricade every window around the clock. If you live in a high-crime area, your need for home security is greater. If you are new in town, you might want to do a little research to find out about the level of crime where you live. The police station, local library, neighbors, and local real estate agents are all potential sources of information about the level of crime in your neighborhood. Use that information when making your decision.

Is your house a natural target for a burglar?

Even if you live in a low-crime area, be aware that there are certain types of homes that are more prone to burglary than others. For example, ground-level apartments are more likely to be targeted than apartments three or more stories up. Homes surrounded by thick bushes, plants, and trees are favored by prowlers because they offer plenty of places to hide. Old, weak, or cracked doors and windows are easier to break into. A house on a darkened street where the owners are seldom home is a very attractive target. In contrast, if your house has a wide-open lawn on a well-lit street that is posted with "Neighborhood Watch" signs, it is probably not the ideal spot for a burglar to ply his or her trade. Does your home invite or deter crime? The answer will help you make a decision about whether you need a home security system.

Does your homeowners insurance carrier offer discounts for home security systems?

Aside from safety, you may have a financial motive to beef up your home security. Most, if not all, insurers will give you a discount on your homeowners policy premium if you install a home security system. The available discount will vary from one insurer to another. It will also vary depending on what kind of security system you choose. Usually, insurers will give you a 5 percent discount merely for installing dead-bolt locks. A simple burglar alarm is likely to get you yet another 5 percent. If you decide to go with a more sophisticated home security system, complete with monitoring services, then you can expect a discount of up to 20 percent. (In addition to discounts for security devices, you can get discounts for installing safety devices such as smoke detectors or sprinkler systems.) Check with your insurance agent to make sure you're currently receiving any discounts you qualify for, and to see if you can save any more on premiums by installing additional security equipment.

Can you afford a system?

The price of a security system depends largely upon how sophisticated the system is. A typical higher tech solution is a full-perimeter system, which usually includes a series of sensors that, when armed, detect when a door or window is opened, broken, or tampered with. These systems typically operate on the principal that whenever one of the detectors is tripped, an alarm of some sort will sound. It may be a horn, bell, or beep and may be accompanied by flashing lights. If the system includes off-site monitoring, local police will be notified. Additionally, there are a host of other systems that can protect you if an intruder bypasses your perimeter system and succeeds in entering your home. Floor sensors can detect an intruder by the weight of his or her footsteps. Motion detectors sense any significant movements within their range.

The technology that goes into many modern systems is truly amazing, and if cost is not an object, very sophisticated systems are available. But don't let money discourage you until you have shopped around. There are many security systems to choose from, in a wide range of prices. Whatever you are trying to protect, you should be able to find something within your budget that will help you sleep better at night. Consult your local yellow pages, the Internet, or community newspapers for security system professionals and dealers.

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RMC Insurance Services

5627Hwy 90 Blvd.

Katy, Texas 77479

281.391.8787