Business February 25, 2009 THE VILLADOM TIMES IV • Page 15 Survey: Economy has many considering insurance changes Many Americans facing financial struggles are considering changes to their insurance policies, according to a new national survey of homeowners by Trusted Choice® and the Independent Insurance Agents & Brokers of America. Almost 24 percent of those surveyed, about 39 million homeowners, said they have made changes to their insurance coverage because of the economy. Although a large percentage of homeowners are considering ways to cut insurance costs, they are also unaware of what their homeowners’ policies cover. Respondents were asked if they had made changes, or were considering changes, to their auto, home, life or health insurance policies. Sixty percent of households that had made changes, or were considering changes, blamed the economy. The survey also asked respondents if they believe they would be covered in the event that they temporarily rented their home and 69 percent mistakenly either did not think they were covered by their current policies in these situations or did not know. Homeowners were also asked if they thought their current policy would protect them if the home was vacant, and a majority thought they were covered when in fact coverage is very limited. “It is imperative that homeowners understand their insurance needs and rights, but this survey shows that many don’t,” said Jeffrey Allen, CPIA, ACSR, owner of the Allen & Allen Insurance Agency in Franklin Lakes, a Trusted Choice® agency. “We advise they consult with their Trusted Choice® independent insurance agent to discuss their current policies and to ask questions when faced with difficult or temporary housing situations.” He pointed out that people who look for ways to trim household expenses, and opt to cut back on insurance, may leave themselves open to greater financial hardship. Trusted Choice® independent agents provide the following tips for insurance consumers. The survey found that more than 18 percent of respondents (over 30 million Americans) have considered reducing their insurance coverage in the last few months. However, Trusted Choice® recommends closely evaluating your policies with your agent before making changes that could leave you underinsured. Of course, there are some areas where consumers often over-pay or are overinsured, such as credit life insurance, deductibles, and computer policies. Trusted Choice® agencies recommend avoiding credit life insurance under most circumstances. These policies, offered by credit card companies and other lenders, extend for the term of the loan and decrease in value over time. They are designed to protect a third party if the consumer dies before the loan is paid off. However, they provide no protection to beneficiaries -- only to the company that offered the credit or loan. Owners of expensive homes need to consider whether a low deductible makes sense. If someone steals the TV, it isn’t going to break the bank. However, the same consumers need lots of insurance for a total catastrophe, or if they get sued. Therefore, they may want to take a $1,000 deductible and use the savings, which can be 10 to 20 percent, and buy a reasonably priced “umbrella liability” policy to give them $1 million or $2 million of coverage. Though many people now have computers at home, a standard homeowners’ policy will cover most basic personal computer equipment. If you have a home with the structure insured for $100,000, you typically have $50,000 of personal property coverage, including computer equipment not used for business. If used for business, the home insurance policy typically provides $1,500 or $2,500 of coverage for computers. Only people with home-based businesses, laptops used for business outside the home, or elaborate high-tech equipment need to consider extra coverage, but it is usually cheaper to buy an endorsement to the home or home-business policy rather than a separate computer policy. The same concept holds true for cancer insurance or trip-specific life insurance, and other specific policies when in fact broader coverage that is cheaper in the long run might be needed. The survey found that about 54 percent of homeowners thought their current policies would cover them if they suddenly had to put their home up for sale during the period of time from which they vacated to when the sale was finalized, or simply did not know if they would be covered. The types of losses that are more likely to occur when homes are unoccupied are typically excluded by homeowners’ policies. For example, there may be no coverage for vandalism, plumbing leaks, and glass breakage. In addition, eligibility for a homeowners’ policy usually requires that the insured persons own and occupy the home. If the homeowners no longer reside in the home, many policies may no longer cover damage to the home and this coverage gap could extend to a mortgage company. This gap could apply even if a family member or tenant has moved into the home or checks it regularly. Consult with your agent prior to vacating a home and ask about the feasibility of purchasing a policy to protect you if your home is vacant. Only 30 percent of homeowners thought their policies covered them if they were to temporarily rent their home. The survey also showed that 53 percent did not think they would be covered and 16 percent admitted they did not know. For the most part, you are covered if your tenants are temporary, and it is not necessary to notify your insurer of the rental situation. However, there may be some limitations on certain kinds of property losses if premises are rented, but not a wholesale lack of coverage. For example, there is no coverage for rental of a detached structure on the premises unless it is used as a private garage. Theft coverage is usually suspended for the area occupied by the renter and there may be no coverage for damage to the renter’s personal property. Allen & Allen Insurance Agency is a Trusted Choice® agency that represents multiple insurance companies, so it offers a variety of personal and business coverage choices and can customize an insurance plan. This firm adheres to a pledge of performance, committing them to providing excellent customer service. Visit Allen & Allen online at or call (201) 891-8790. Break the Highway Trend! ...not your community’s back. Local businesses are the backbone of your community and the trend to shop the big guys on the highway hurts us all.Your local businesses have what you want... at the right price... and close to home. So, why hassle with the highways? Save Time! Save Gas! Save Money! SAVE YOUR COMMUNITY! We Need You SHOP LOCALLY. IT’S SMART. ...and besides, it’s so convenient!