UM/UIM… Make sure you have enough.

Every auto insurance policy in the state of Arizona must carry 2 things according to state law; Bodily Injury and Property damage. Bodily Injury coverage is the liability portion of your policy that covers, not you, but a person that you injured in an at-fault collision. It takes care of their medical bills, loss of wages, etc. The property damage portion of the policy will go towards taking care of the physical damage on their vehicle, or even by them a new vehicle if needs be. Something disturbing that I have seen countless agents do in order to offer a better ‘price’ on an insurance policy is either not offering UM/UIM coverage at all or offering very little coverage period. UM/UIM coverage stands for “uninsured motorist” (UM) and “under insured motorist” (UIM) coverage. This is the part of the liability that covers YOU and YOUR FAMILY (or other passengers in your vehicle). Let’s say that you are injured in an auto accident because another drive hit you at a red light. You or someone in your vehicle needs to seek medical treatment but you find out that they don’t even have insurance to begin with. If this is the case, the UM portion of your policy will kick in and take care of your needs up to the designated liability limits. Let’s say that the same person who hit you does indeed have insurance, but they have the state minimum liability coverage and it isn’t enough to cover the medical bills or loss of wages from your job. This is when the UIM portion of your policy comes into play and takes care of the rest of your bills or other qualifying needs up to the selected liability limits.

I can’t even begin to explain how important this coverage is to me, especially since we live in a state with so many uninsured drivers. Make sure that your insurance agent has not only provided you with UM/UIM coverage but that the liability limits are enough to take care of your needs. Cost wise, this is actually the cheapest part of your policy. I always tell my clients that if you are paying for the Bodily Injury limits to insure other people, it only makes sense to have the same coverage for You and Your family.

Revisit Your Home Insurance Policy

All home insurance policies have a 'stated' value to which your home is actually insured. Many policies will pay a certain percentage above and beyond the 'stated' value in the event of a total loss. This additional percentage can range anywhere from 25 to 125 percent. Even fewer policies have a 'Guaranteed Replacement Cost', in other words, if your home is a complete loss there is no limit to what the insurance company will pay above the 'stated' value, as long as your home was properly insured to begin with. However, during the big housing boom a lot of lenders required your home to be insured at or above what ever the balance of your loan was. In all acuality, the market value of your home and the insurable replacement cost are NOT the same figure. This has caused many (and I mean many) homes to be very over insured. For example, let's say that in 2005 a 1800 square foot home was purchased for $315k with a loan for the same amount. The lender more than likely required your insurance company to insure your home for $315,000. But if there were a total loss on the home and the whole thing had to be rebuilt, the insurance company isn't going to cut you a check for $315,000 and tell you to have a nice day. They hire a general contractor and pay for the job as it goes through the process. They will determine how much money will actually be needed to replace your home. And if your home is this over insured, you will probably never see that full $315,000, even though you have been paying a home insurance premium calculated for that large of a payout. A typical home built after 1995 with stucco framing and a tile roof is around $115 per square foot to be adequately insured. Now, if the home has more or less upgrades, this figure may change. Figure out what the 'Replacement Cost' is on your home and make sure you aren't over insured. This is something that your local insurance agent should be able to do. Also, make sure there is some type of 'Extended' or 'Guaranteed' replacement cost coverage included. The bottom line is that if your home is over insured you are paying your insurance company extra premium money that you could be putting back into your bank account.