Homeowners Beware

Know your insurance deductibles this hurricane season.

Many people don’t think about their insurance until after a disaster has happened. It’s important to plan ahead and know what your deductible will be in the time of a hurricane.

The deductible is the amount of loss paid by the policyholder before insurance kicks in. Most homes along the coast of South Carolina have a special percentage deductible for named-storm or hurricane damage. The percentage deductible is higher than a traditional dollar deductible. In return for the higher deductible,  homeowners receive a premium discount on the wind portion of the policy. With a policy that has a $1,000 deductible, for example, the policyholder must pay the first $1,000 out of pocket.

Percentage deductibles are based on the home’s insured value. So if a house is insured for $200,000 and has a two percent deductible, the first $4,000 of a claim must be paid out of the policyholder’s pocket. A new law passed by the South Carolina General Assembly in 2007 enables homeowners to set up special “catastrophe savings accounts” to help pay their deductible. The money can be set aside, state income tax-free, to pay for qualified catastrophe expenses such as an insurance deductible or other uninsured costs associated with a hurricane, flooding or windstorm event.

The account must be labeled as a “catastrophe savings accounts” and can be established at any state or federally chartered bank in an interestbearing account. Depending on the amount of your insurance deductible, you can contribute up to $15,000. If your home is self-insured, you can contribute up to $250,000 or not more than the value of the home. You can save up to seven percent times the amount in the account (less $448) on your taxes. So, it is important that homeowners understand what that deductible amount is and, if possible, set aside these savings from their insurance premium discount to cover the deductible in the event there is damage to their home.

The South Carolina Insurance News Service recommends you check with your insurance agent to find out what your insurance policy says about your deductible when damage is caused by a named storm or hurricane. Also, find out the “trigger” for those deductibles, or the point at which it applies. If you have a separate wind policy, new deductibles apply, depending on where your home is located.

The South Carolina Wind Pool

A customer may also obtain a policy through the South Carolina Wind and Hail Underwriting Association (SCWHUA ) in the event coverage is unavailable through the private market. The SCWHUA offers deductibles of two percent to 10 percent that apply in the time of any qualifying wind or hail event. In Zone One, the minimum deductible starts at three percent with options of four, five and 10 percent. In Zone Two, the minimum deductible starts at two percent with options of three, four, five and 10 percent. For more information  on the SCWHUA, link to: http://www.scwind.com.

Consumer Assistance: The South Carolina Department of Insurance encourages consumers to take advantage of the reforms set forth in the Omnibus Coastal Property Insurance Reform Act of 2007. For example, insurers are required to o er premium discounts for mitigation measures on policies e ective on or after January 1, 2008. Also, tax credits are available for costs incurred in making your home more wind resistant as well as for supplies purchased to retrofit your property.

The Omnibus Coastal Property Insurance Reform Act of 2007 established a grant program for homeowners to help them strengthen their property and make it more resistant to the high winds associated with hurricanes and severe wind storms. For more information about the program, visit http://www.scsafehome.com.

Life Insurance: Reviewing your policy is important to your family’s future.

Life insurance helps secure your family’s financial future after the death of you and/or your spouse. It also helps ensure that the estate that you’ve worked your life to build will be allocated to the beneficiaries you have chosen.

When purchasing life insurance, consider the financial responsibilities that your family will immediately inherit such as a mortgage or car loan. In addition, you’ll want to consider long-term goals such as your spouse’s retirement or your children’s education. If you decide that you need more coverage, determine whether you need term life insurance or a cash value policy.

Term insurance generally has lower premiums in the early years, but does not build up a cash value you can access. Cash value policies come in the form of whole life, universal life or variable life insurance. It’s important to know which type of policy you own, and how the benefits are paid if something happens to you and/or your spouse.

As your life situation changes through the years, so do your insurance needs. A regular review of your life insurance coverage is important.

To begin your review, read your policy carefully. Look for answers to these questions:

  • Do premiums or benefits vary from year to year?
  • How much do the benefits build up in the policy?
  • What part of the premiums or benefits is not guaranteed?
  • What is the effect of interest on money paid and received at different times on the policy?
  • In what situations and through what procedures can cash values be accessed?
  • Can the policy be converted into another form of insurance or annuity?

When reviewing your policy, make sure the benefit covers your current needs. Changes — such as a birth, divorce, remarriage or even a new mortgage or job — are indicators that you might need to make changes to your life insurance policy. In the case of the birth of a child or a new marriage, you might want to increase your death benefit. Check with your agent to see if your insurance company requires a physical exam before increasing your coverage levels.

Tips for lowering your auto insurance premiums

  • Drive safely.
  • Shop around and compare prices.
  • Maintain a good driving record.
  • Take the highest deductible you can afford and also take collision and comprehensive coverage.
  • Before buying a vehicle, determine the cost of insuring it.
  • On cars with a market value less than $1,000, consider carrying only liability coverage.
  • Try to pay your premium well in advance of due date. No grace period applies to automobile insurance.
  • Review your policy periodically and update coverage accordingly.
  • Ask about discounts such as: multiple cars on a policy; completion of driver education courses; good student drivers under age 25; mature driver (between 50 and 65 years of age); airbags and other safety equipment; anti-theft devices; low mileage accident-free record; auto/home insurance with same company.

For a comparison of annual auto insurance premiums visit the S.C. Department of Insurance Web site at www.doi.sc.gov.

Tips on shopping for health insurance from the S.C. Department of Insurance

Health insurance is expensive, so comparison shopping is worth the time it takes to shop around.

A health condition you already have when you buy a policy is called a pre-existing condition. It may include a condition you have recovered from. A pre-existing condition can also be a health condition misrepresented or not revealed in the application, for which symptoms existed prior to the effective date of coverage, causing you to seek diagnosis, care or treatment. It can also be a condition in which medical advice or treatment was recommended by or received from a physician.

One of the main reasons that many claims are denied or payments are delayed is a pre-existing condition exclusion in the policy contract. Even if health questions are not asked on the application, the policy may not cover conditions you already have.

Make sure you understand the definition of pre-existing conditions and how long they will not be covered. Read the limitation and exclusion provisions of your policy very carefully.

Changing an old policy with a new one may or may not be a good idea. A new policy may have waiting periods and pre-existing conditions exclusions that could leave you without coverage, so take the time to weigh all options.

Know if and when an insurer can refuse to renew your policy. Read the renewal provision which is usually found on the first page of the insurance policy.

If you do not give correct and complete answers to medical questions, your claims may be denied or your policy cancelled. If an agent fills out the application for you, read it carefully before signing it.

When you sign an application you are agreeing that it is correct and complete. In addition, have a relative or friend review the application from the agent to make sure it contains the information you provided.

Make sure there is a “free-look” provision. Most companies give you at least 10 days to lookover your policy after you receive it. This means the policyholder has 10 days after receipt of the policy to decide if they want to keep it.