Face Greater Risks with Pets, Valuable Equipment, At-Home Businesses

Olton, Texas, July, 7, 2006–Almost 25 million U.S. families renting their homes are going bare on insurance coverage, leaving themselves vulnerable to serious property and liability losses, says Jeff Mayo, an agent with the Mayo Agency in Olton, a Trusted Choice^® agency.

What makes matters worse for renters without coverage is that they own valuable, high-tech equipment and face higher risk related to pets, a new national survey conducted by Trusted Choice^® finds.

Trusted Choice^® agencies are insurance and financial services firms that offer consumers a broad selection of insurance policies and financial services products, customized insurance coverages as well as advocacy support. These firms are committed to providing excellent customer service.

The new survey uncovers a persistent lack of awareness or understanding about property and liability risks faced by renters, says Mayo. Two-thirds (67 percent) of U.S. families that rent lack coverage.

Some 35 million homes were rented in 2005, or about 31 percent of all American households, according to the National Multi Housing Council (www.nmhc.org). Renters insurance replaces furnishings and property in an apartment, condominium or other rental home should those items be stolen, destroyed or damaged. The policy also includes liability coverage, a safety net against a lawsuit or claim that potentially could result in a large financial hit on renters.

Among those respondents who said they don’t have renters’ insurance, 26 percent feel that the coverage is too expensive and another 17 percent said they didn’t know they needed it. Moreover, another 8 percent have never heard of renters’ insurance.

“Insurance protection isn’t a ‘nice-to-have’ for renters,” Mayo said. “It’s an essential backup for property losses – such as water and fire damage – as well as today’s liability risks faced by Americans: slips and falls, accidents at parties, pet attacks, and lawsuits by landlords, for example.”

Coverage for renters is widely available and affordable in most parts of the country, with the average annual premium about $20 per month for about $20,000 of property coverage and $500,000 of liability coverage, Mayo said.

Renters sometimes mistakenly believe they’re covered under their landlord’s insurance policy following a loss or claim, Mayo noted. “You’re really on your own. Landlords are interested only in insuring the buildings and the infrastructure for those buildings, such as elevators and heating/cooling systems. They’re not covering the contents or liability of individual tenants.”

Moreover, the actions by another tenant – such as negligence causing fires and water damage, for instance – have obvious implications for the property and safety of other tenants in a building, Mayo said.

Among the Trusted Choice^® survey results:

• Property Concerns: An overwhelming majority (89 percent) of all renters own one or more valuable electronic devices, such as digital recorder devices, desktop and laptop computers, digital and video cameras and home theater systems. More than half (53 percent) of renters own exercise and/or sports equipment such as a bicycle, exercise equipment or skis. Both groups of owners – electronic devices and exercise equipment–are slightly more likely to own renter’s insurance than non-owners.
• Pet Owners: Half of all renters own pets, and these tenants face increased liability exposure, especially with dogs or exotic pets. But surprisingly, renters with pets are less likely to be insured, Mayo said. The likelihood of owning renters insurance is much lower (26 percent) among pet owners overall than it is among those who don’t own any pets (32 percent).
• Business: For entrepreneurs operating a business out of a rented home, renters’ insurance isn’t the only protection they need. They probably should have a separate business policy, Mayo said. But the likelihood of owning renters insurance is not much higher (31 percent) among those who own and operate a firm out of their condo, apartment or other rental property than among those who do not (29 percent), the survey found.  (Only 5 percent of renters surveyed said they own an at-home business.) Specific coverage for an at-home business should be reviewed with us, Mayo said.
• College Implications: College students heading to school this fall could be putting their families at risk, the survey suggests. While homeowners’ coverage typically extends to students living in campus dormitories, coverage applications for off-campus housing are vague and should be discussed with us before moving day, Mayo said. “Often, a separate renters’ insurance policy is the best bet for the risks students and their families assume with an off-campus rental.”

About the research: The omnibus survey was conducted for Trusted Choice^® via telephone by ICR, an independent research company. Interviews were conducted May 5-18, 2006 among a nationally representative sample of 2,030 adults (defined as 18 years of age and older). The margin of error is +/- 2.2 percentage points at the 95% confidence level. Among renters only, the margin of error is +/-5.2 percentage points. More information about ICR can be obtained at www.icrsurvey.com.

SBMP, Inc / Mayo Agency is a local Trusted Choice^® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can help you customize an insurance plan to meet your specialized needs. You can visit Mayo Agency online at www.mayoagency.com or call it at 806-285-2604.

College is expensive enough without finding out too late that an accident or theft isn’t covered under parents’ current policies. So, as you get your children ready to head off to school in the fall, there’s one vital “to-do” to add to your list (other than writing that tuition check): a review of your insurance coverage.

It’s important to keep in mind that policy language varies from state to state, and there are no “one-size-fits-all” situations, but below is a general guide.

HOMEOWNERS (may vary by state)

• Coverage of personal property: Most homeowners policies provide 10 percent of Personal Property for property owned by an insured while it is at a residence other than the insured residence. That means if the contents of a policyholder’s home are insured for $100,000, a student’s property up to $10,000 would be covered if living in a dormitory – provided the damage is caused by a covered peril and the student meets the definition of an insured.  The homeowners insurance deductible would apply.
  • Certain items, such as jewelry or expensive electronics, may require special coverage, or a “rider.” For apartments or houses off-campus, the same coverage generally applies. See your policy for specifics. Of course, renters insurance is strongly recommended if a particular policy does not cover a student’s personal property.
• Liability coverage: There usually is an exclusion for damage to property rented to an insured, so generally damage to a dorm room or apartment would not be covered.
• Ensuring adequate coverage: Creating an inventory of the items your student is taking to school is a good idea, as is keeping photos of and receipts for the items.
• Renters insurance: If a student’s needs can’t be met under their parents’ current policy, Renters Insurance is available. Generally Renters Insurance costs between $200 and $300 a year.

AUTO (may vary by state)

• Coverage without a car at school: If the student will continue to drive while at home on school breaks, they should continue to be listed on an your auto policy. If they are attending school more than 100 miles from home, and are not taking a vehicle with them, the policy may qualify for a distant-student discount.
• Coverage with a car at school: In most instances, a car registered to the parent and listed on their policy will be covered if used by a listed student away at school. But you should make sure that your insurance carrier writes coverage in the college’s state and location.  
• Driving a friend’s car at school: Students generally would be covered while driving a friend’s car if they are listed on their parents’ policy and do not have regular use of the vehicle. The coverage would likely be secondary in this case, as the carrier for the friend’s vehicle likely would be the primary coverage.
• Coverage discounts: In addition to the possible distant-student discount mentioned above, students may qualify for a good-student discount.

In a simplified comparison, let us say that you have damage to a 15 year old roof with a 30 year useful life and your deductible is $500. Say that the cost to replace the roof is $10,000. $5,000 depreciation is withheld and the $500 deductible applied. The initial settlement paid by the insurance company is $4,500.

If your policy is ACV, the claim is closed there. If it is Replacement Cost, you will recover up to the $5,000 depreciation withheld after repairs are completed.

Of course, a Replacement Cost policy will require increased coverage amounts and the premium will be higher. You must weigh the cost versus the benefit and make the choice that is right for you.

Reconstruction cost – the cost to rebuild your home to original specifications with similar materials and craftsmanship – is generally more expensive than building a new home from scratch.  In fact, building experts say that it costs up to 30 percent more to rebuild a house than to build new. *  Why?

Specialized labor costs:  Builders used for reconstruction require a higher  skill set, as they have limited onsite mobility and must work around existing structures, landscaping and power lines using smaller machinery.

New codes:  Rebuilding may require contractors to meet new building codes put in place since your home was originally built.

Don’t rely on market value

Home market values reflect today’s economic conditions, taxes and many other factors that have little to do with home reconstruction costs.  Plus, market value includes the cost of the land, which will still be there if a home is destroyed.  Market value is also influenced by other factors such as the location of the home, the quality of the school systems and the desirability of the neighborhood.

New construction costs explained

Insuring your home  for what it would cost to build it brand new today won’t be enough to rebuild it if it were destroyed.  Here’s why:  Typically, new homes built today are part of a housing development which allows contractors to purchase lumber, electrical and plumbing supplies in bulk at discounted prices.  These large volumes make square foot costs much lower than building just one home at a time.

Keep your coverage up-to-date

You should review your homeowners policy with your agent periodically to verify that all of your coverages are adequate.  Although most companies increase coverage amounts amounts each year to account for inflation, this increase does not reflect any changes or additions you may make to your home.  even common changes such as installing hardwood floors, adding a deck or patio, finishing a basement or updating a kitchen or bath can affect your replacement cost.  That’s why ist’s very important to contact your agent when making any home improvements.

When in doubt, request a review

To determine whether you have enough coverage to rebuild your home, call your agent for a coverage review.

*Researched by Marshall & Swift/Boeckh, 2008

Olton,TX  January 31, 2008–Valentine’s Day accounts for a large percentage of jewelry purchases, yet many consumers don’t know enough about protecting these valuables against costly losses, says Jeff Mayo, an agent with Mayo Agency in Olton.  

Much of this jewelry–particularly diamond engagement rings–will be excluded from full coverage under standard homeowners and renters insurance policies. “Most policies provide as little as $500 for loss by theft, and you will have to pay a deductible on top of that, leaving you with virtually nothing,” says Mayo.  “Worse yet, if your ring simply disappears or if you lose the stone, most homeowners’ and renters’ policies provide little or no protection at all.”

The average engagement ring value in the U.S. is $2,000, according to the most recent statistics from the Diamond Registry. However, for brides over the age of 25, that average climbs to about $3,000. 

“After you have chosen that very special diamond or other valuable jewel, your very next decision needs to be how you will insure it for any unexpected loss,” says Mayo. “An expensive loss could really take the sparkle out of the joyful times these jewels so often commemorate.”

You usually should purchase a policy add-on called a “floater” to insure your fine jewelry against theft and damage. Annually, this coverage should cost about $5 to $10 per $1,000 in value. The best protection, though, is a personal jewelry policy, says Mayo.

You will need an appraisal of the piece to begin this process, but these policies–which provide coverage for loss by theft, damage or disappearance, and will pay for repair or replacement with like kind and quality–are very flexible and will allow you to add more jewelry as your collection increases.

OTHER IMPORTANT TIPS: 

• Some insurance companies require an appraisal by an independent third party, or someone not working at the store where the jewelry was purchased. Ask your agent what your policy requires.
• When shopping for an appraisal, always ask trusted friends and family for a referral and look for credentials from the Gemological Institute of America, the American Society of Appraisers or the Accredited Gemologists Association.
• Fewer than 20 percent of jewelry stores have a properly credentialed gemologist on the premises. Shop around.
• Some insurance companies require that jewelry be stored in a safety deposit box while the owner is traveling or not wearing the item.
• Insurance companies report that most jewelry claims result from theft in the home by friends, family and service workers.
• Don’t forget to have your jewelry re-appraised when upgrading or adding additional stones.

Mayo Agency is a local Trusted Choice^® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your personal or business needs. You can visit Mayo Agency online at www.mayoagency.com or call it at 806-285-2604.

 If you should be at fault in an accident, you would want liability limits that are at least as high as any possible court judgment.  With medical care costs increasing rapidly, you should evaluate your Bodily Injury Liability limits to make certain they are sufficient.

 Since the value of most autos and commercial vehicles easily exceeds the minimum Property Damage Liability limit, this is a very important coverage to carry in an adequate amount.

 Yet life insurance is indispensable. Parents and business owners—indeed, anyone who has people dependent on them financially either at home or at work—can benefit from the unique advantages of life insurance.

In the United States, consumers and businesses owned more than $19 trillion of life insurance as of year-end 2007, reported the American Council of Life Insurers.

Yet a myth persists that life insurance is too costly, falsely contributing to the perception that life insurance is not a necessity. But life insurance has actually declined or flattened in price in the past several years, according to a recent report by the Insurance Information Institute.

 A 2008 survey by the Life and Health Insurance Foundation for Education noted other obstacles for consumers: 23 percent of consumers just had not gotten around to buying it, and 22 percent confessed they did not know enough about it.

 What is life insurance? Life insurance is a financial contract in which a life insurance company agrees to pay an amount of money to a person upon the death of another person, in exchange for regular payments (known as premiums).

 Life insurance serves two key financial functions. First, it’s a tool for prepaying for immediate expenses needed soon after the time of a person’s death. Second, it’s a way to generate substantial investment capital to produce future income (to replace income that an insured person would have been providing if they had not died).

 Because a deceased breadwinner no longer is providing an income stream from salary, commissions or wages, a family needs to have invested funds that can generate replacement income. Likewise, a business owner who passes away leaves behind co-owners and employees who need funds to replace the person’s expertise and revenue-generating capabilities, or to restructure the business.

 Life insurance provides that large sum of capital, at a time (death) that cannot be predicted.

 To determine if and how much life insurance is appropriate, a Trusted Choice^® independent insurance agent or broker can help answer two important questions:

 1) How much cash will be needed upon the death of a parent, business owner, or other individual? These immediate costs often include uninsured medical expenses and funeral expenses. Additionally, many consumers and business owners have financial obligations that do not go away upon death: a mortgage loan, auto loans, business loan or line of credit, credit card debt and college costs, to name the most common.

 2) How much annual income would sustain a household? An estimate of income for a family starts with the amount of income earned in the year prior to a breadwinner’s passing. From there, additional expenses (child care, for example) should be added; while living expenses for the deceased person can be subtracted.

 A Trusted Choice^® agent, like Mayo Agency, can help calculate the amount needed today that would provide an annual income for a certain number of years in the future. That’s the starting point in a decision of how much life insurance you need for your family or business.

 Your Trusted Choice^® agent can help sort out other potential sources of funds, such as Social Security benefits, pension income, group life insurance benefits, and investment income from other assets. These amounts typically reduce a person’s need for life insurance, but don’t eliminate the need.

 Life insurance comes in two broad types: term (or temporary) and permanent (or lifetime). Term life insurance pay benefits if the death of the insured person happens during the “term” of the policy (anywhere from one year to as much as 20 years). Permanent life insurance pays benefits no matter when the insured person dies. (It is known as “whole life” since it is in force the whole lifetime of the insured person.) There are varieties of permanent life insurance, such as universal life, variable life and traditional whole life.

 More than 1,000 licensed life insurance companies in the United States make for a competitive marketplace for consumers. That competition has driven down costs for term life insurance, reported the Insurance Information Institute, while keeping permanent life insurance costs stable.

 Premiums are calculated for each person who applies for life insurance, based on cost tables. Age (the older, the higher the cost) and health status are two key factors life insurers use to set premiums. One lesser-known discount: per-unit cost for life insurance goes down with larger amounts purchased.

 Life insurance is distinct from other financial products because of two key tax advantages: the money paid into a permanent life insurance policy can accumulate free of income taxation; and the benefits paid from a life insurance contract are free of income taxation.

Some people may think they can live without life insurance, but in reality it’s their families and businesses that cannot. If you want to increase the financial security of your family or business, contact a Trusted Choice^® insurance agent or broker to begin a discussion of life insurance needs and solutions.

Liability claims are harder to grasp than property claims, after all property is tangible – I can see it, touch it, I know how much I paid for it.  Liability claims occur far less frequently but are potentially much, much more costly.

So the question then becomes, “How much liability coverage do I need?”  It is a question that unfortunately has no reeady answer.  You need a liability coverage limit that will meet or exceed any possible judgement against you.  In today’s litigious society, we would say that most people should have a liability coverage limit of at least $500,000.

The personal liability coverage discussed so far has applied to Bodily Injury and Property Damage claims against you.  The kinds of claims people make in our modern world are not confined to Bodily Injury and Property Damage, though.  It is highly recommended that you add Personal Injury Coverage to your policy.  This endorsement expands the definition of liability to include coverage for claims alleging libel, slander, false arrest, malicious prosecution, etc.  This coverage also is very reasonably priced.

If you have not done so in a while, check over your policy and make sure that the liability limit is adequate for you and that you have the Personal Injury Coverage endorsement.

We frequently hear this question when a client asks us about Uninsured Motorist coverage.  Many people seem to think that these premiums are pooled together by the state to help poor people purchase insurance.  That is not the case.

The sad fact is that, although the State of Texas requires motorists to have a minimum level of liability insurance, fifteen to twenty percent or more of Texas drivers have no insurance.  Of those that do have insurance, about eighty percent carry only the state-required minimums of $25,000 Bodily Injury per Person, $50,000 Bodily Injury per Accident, and $25,000 Property Damage.

Will it cost more than $25,000 to replace your vehicle?

How many days can you spend in the hospital – how much work could you miss – for $25,000?

Uninsured Motorist coverage protects you from those who either truly can not afford adequate insurance or are so irresponsible as to forego insurance.  That is why we recommend that you carry Uninsured Motorist coverage limits matching your Liability coverage limits.