Does Your Insurance Cover Water Damage?

During a cold snap, the pipes in your building freeze and burst. While doing a load of laundry, your washing machine overflows. A heavy rainstorm causes water to leak through the roof of your building--and you live on the top floor. Water damage occurs frequently, so it's a good idea to know what is (and isn't) covered by insurance.

Won't my landlord's insurance cover the damage?

Your landlord's insurance will provide coverage for damage to the building itself, but it won't provide coverage for damage to your personal property. And if your landlord's policy only provides coverage for damage to the exterior of the building (you can find this information in your rental agreement), it won't cover the cost of replacing pipes, carpeting, wall coverings, etc. inside your rental unit. (Depending on the circumstances, your landlord may still be liable for repairs, even if the damage is not covered by insurance.)

What about renters insurance?

A good renters policy will provide coverage for most water damage. Just make sure that it is specifically mentioned in the policy--that way both your damaged belongings and the cost to repair the rental unit itself (e.g., new pipes, carpeting, wall coverings) will be covered. One possible exception: whatever causes the water damage (e.g., dishwasher, washing machine) may not be covered by your renters policy if you failed to maintain it properly.

What if the water damage is the result of a flood?

Basic renters insurance doesn't provide coverage for water damage that is a result of a flood. If you live in a flood-prone area, you'll need to purchase a separate policy or add a rider onto your renters policy for this type of coverage.

What if I can't live in my apartment as a result of the water damage?

Most renters insurance policies will provide coverage for additional living expenses incurred if your rental unit is unlivable. In other words, the insurance company will pay for you to live at another location (at a price similar to your old apartment) while your apartment is being repaired.

Talking to Your Parents About Insurance

Are your parents adequately protected against financial loss? What if your parents' home burns down and there is insufficient insurance to cover the entire loss--can they come live with you? What if one of your parents is held liable for someone's injuries, but does not have liability insurance--will he or she be financially ruined? What if a parent becomes seriously ill and needs long-term care--will he or she have the financial resources to pay for this contingency? What if one of your parents dies unexpectedly--will the surviving parent have enough money to live on?
If you're a member of the baby-boom generation, your parents may be of an age where these concerns may be troubling you. The only way to get the answers and ease your worries is to have a heart-to-heart talk with your mother and father. This may not be easy for some people, but if you shy away from this topic, the consequences could be devastating. Your parents were there to talk to you about the tough issues--now you need to be there for them. How you choose to approach them will depend on the type of relationship you share (e.g. adversarial, open and warm). Here are some tips on how to break the ice:

Prepare for resistance

Your parents may find inquiries regarding insurance intrusive, regardless of the fact that you're trying to help. They may feel it's none of your business, or that it's demeaning for you to assume they haven't made the proper arrangements. Be prepared to explain that you're simply concerned about their well-being and don't mean to be nosy or presumptuous.

Keep it private

A discussion about insurance involves issues that are personal. Broaching the subject in a restaurant or other public setting is inappropriate. Keep the conversation private, and choose a setting where your parents feel comfortable--at their own kitchen table over a cup of coffee, for instance. Also, don't rush the conversation. Even though you shouldn't expect to finish or resolve anything during the initial exchange, be sure you've set aside enough time to comfortably address everyone's concerns.

There's safety in numbers

If you have siblings, encourage a group discussion. If your parents see that all of you feel strongly, they may be more amenable to talking openly and considering your advice. If that's not possible, at least talk to your siblings about your parents' situation. Of course, if you have a sibling who is particularly good at rubbing your parents the wrong way, then perhaps you will want to exclude him or her from the discussion.

Be direct

Sometimes, the best approach is to put all your cards on the table from the get-go. If this is an option for you, find the right time and place, then just say, "Mom and Dad, we need to talk . . ."

The "I have a friend" approach

If a more subtle method is to your liking, you might describe an experience (real or hypothetical) that illustrates the consequences of not being adequately insured. For example, you could say something like: "Joe's father went into a nursing home a few years ago. His father didn't have long-term care insurance, so now Joe has to sell his father's house."

Discuss your own plans

Another indirect strategy is to talk about your own insurance needs or plans. Once the discussion is under way, you can steer the subject in the direction of your parents' insurance needs.

Ask for their advice

Parents are used to giving advice to their kids, not getting it from them. Start by asking them what they think you should do about a particular insurance issue. For example, you might ask if they think you should increase your life insurance now that a grandchild has been born, or drop the collision coverage on your 10-year-old car. From there, you can divert the topic to their own insurance needs.

Ask a simple question

Another "lead-in" approach involves asking a seemingly innocent question, such as: "Who is your insurance agent?" or "do you keep your insurance policies in case of an emergency?" Whatever answer your parents give will be an opening for you to ask other questions that are on your mind.

Bring in the big guns

Perhaps not during the first discussion, but at some point in time you may want to make an appointment with your (or your parents') insurance agent for an evaluation of your parents' insurance situation and needs.

Be patient

Realize that this process takes time. Your parents may need to think things over, and it may take several discussion sessions to work out all the details.

Follow your parents' wishes

Finally, remember that just because your parents have agreed to let you help doesn't mean that you can take charge and do things your own way. You should act only when and how your parents want you to.

Issues to talk about

Once you have successfully begun a dialogue with your parents about insurance, make sure you cover all the pertinent issues. Here are some you should not miss:

• What policies do they currently have?
• What policies do they have, but no longer need?
• What policies don't they have, but need?
• What are the details of their current policies?
• Do their current policies provide adequate coverage? too much coverage?
• How much can they afford to pay for premiums?
• If there are beneficiaries, are the proper persons named? Have the proper designation forms been completed?
• Who should be responsible for paying the premiums (you or your parents)?
• Where are the policies kept?
• Who is their insurance agent?

In addition, make sure you address each type of insurance that may be important for your parents, which may include:

• Health insurance
• Long-term care insurance
• Life insurance
• Homeowners insurance
• Auto insurance
• Disability insurance (though this may not be important if your parents do not have job earnings to replace)

Insuring Your Wedding Ring

It's more than just a fashion statement. A wedding ring is a symbol of everlasting love and commitment. So it goes without saying that insurance is probably not the first thing that comes to mind when you glance down at the wedding ring on your finger. But while insurance can never replace the sentimental value of a wedding ring, it can give you some peace of mind in knowing that it would be covered if something ever happened to it.

Making sure you have proper coverage

Your homeowners/renters insurance policy won't cover your wedding ring if it is lost. However, it will probably cover your wedding ring to some extent if it is stolen. Keep in mind that you'll need to check your policy, since a coverage limit may apply for certain types of personal property (in this case, your ring). If you want to make sure that your wedding ring is covered for loss, or if the value of your wedding ring exceeds the coverage limits on your homeowners/renters insurance policy, you may want to look into purchasing either a floater or a stand-alone policy.



A floater provides you with a specific amount of coverage for your ring based on its appraised value. With a floater, the insurance company has the option of paying the appraised amount or replacing the ring. Keep in mind that more often than not, your insurer will replace the ring.
A stand-alone policy is a type of insurance that is specially designed to protect valuable items. If you purchase a floater or stand-alone policy, however, your insurance company will probably require you to have your ring appraised by a certified jeweler.


Finally, while you're at it, now may be a good time to review the adequacy of your insurance coverage for all of your valuable items (e.g., your engagement ring, china, silver, or crystal). If you need help finding out if your valuables are properly insured, contact your insurance agent or insurance company for more information.


Keeping your ring safe

• Have a jeweler periodically check your ring for loose prongs, worn mountings, etc.


• Whenever you take off your ring, always put it in the same place. That way, you won't ever forget where you put it!


• If you remove your ring when you wash your hands, be careful not to leave it by the sink where it can accidentally fall down the drain.


• Be careful while cleaning or doing household chores. Harsh chemicals can damage precious stones and metals, and a rough blow can easily dislodge a stone from its setting.


• Be careful not to lose your ring when you go for a swim, especially if your fingers are slippery from tanning lotion or sunscreen.

Kids Off to College? Make Sure They're Protected

Sending your kids off to college can be hard. All along, you've shielded them from injury and danger, but now they're on their own. Fortunately, you can still help protect them by making sure that they have the appropriate coverage.

Health insurance coverage is a must

Health insurance coverage is just as important for your college-bound child as it was when he or she lived at home. Accidents, illnesses, unexpected emergencies, and routine conditions may require expensive medical treatment. Many colleges even require health insurance coverage as a condition of enrollment.

In most cases, you can continue to insure your child under your own family health insurance plan. Most plans will continue to cover full-time students who meet the age requirements of the policy (e.g. under age 21 or 24). If your plan is a health maintenance organization with coverage restricted to local doctors and hospitals, you may need a separate plan for your child if he or she is going out of state. You may be able to buy an individual policy from a private insurance company.

Another option is to buy health insurance directly from your child's college (if offered). Since plans vary, pay close attention to cost and coverage provided. When reviewing a plan, consider the following:

• Amount of deductible and co-payment
• Extent of coverage
• Types of services covered
• Exclusions and limitations, especially if there are pre-existing conditions
• Maximum benefit amount provided
• Flexibility regarding choice of health-care providers and specialists

Make sure that your child is covered by auto insurance, both at home and away

When your child goes off to college, it's time to review your auto insurance coverage. Your insurance agent can tell you how your coverage and premiums will be affected.

For instance, if your child owns a car and is taking it to school, your insurance company may require that the auto insurance policy be issued in your child's name. Or, if your child borrows one of your cars for school, you'll probably want to list him or her on your insurance policy as either a principal driver or an occasional driver.

What if your child isn't taking a car to college? If you expect him or her to use your car during school breaks and summer vacations, it may be wise to list your child on your policy. But if your child won't be using the car regularly, ask your insurance agent if you're eligible for a premium discount.

Protect your child's possessions at college with homeowners or renters insurance

Like many college students, your child may be bringing a personal computer and printer, stereo, and other personal items to school. If your child commutes or lives in a dormitory (or other college housing), your homeowners insurance should provide a certain amount of protection for his or her personal possessions. But if your child lives off-campus, you'll need to purchase a renters insurance policy to cover his or her belongings. A renters policy may also provide liability coverage if your child injures someone or causes property damage. Your insurance agent can help you determine the amount and type of coverage you need.

New Pool & Your Homeowner's Policy

You've lined up the contractor and the pool supplies, maybe even planned a pool party or two. In all your excitement as a new pool owner, however, it's easy to overlook a more serious matter -- the adequacy of your insurance coverage.

When you install a new pool, you should re-examine your existing homeowners policy in order to determine what additional coverage you may need. Many people fail to tell their insurance agents that they have a new pool, an omission that may prove troublesome in the future should they need insurance coverage as a result of the pool.

Generally speaking, your home insurance provides two basic things: (1) coverage for damages to your home and other structures on the premises (e.g., pools), and (2) liability protection in the event someone sues you. When you install a pool in your backyard, you increase the likelihood that you will need to call on your insurance company to cover you in one or both of these situations.

Damages to your pool

A pool is considered separate from your dwelling and, as such, is covered under the "other structures" portion of your homeowners policy. Comparable structures include sheds, detached garages, and gazebos. The standard amount of insurance for such items is 10 percent of the amount written for your dwelling, though some policies provide 20 percent of your dwelling coverage for the other structures on your property.

For example, assume your insurance policy provides $100,000 worth of coverage on your home and you have the standard 10 percent coverage for other structures. Consequently, your other structures coverage would be $10,000.

If you have several detached structures on your premises and/or if you spent a lot of money on your new pool, the standard 10 percent coverage may not be adequate. In this case, higher amounts of this coverage can be written for specific structures.

Continuing with the above example, if your pool cost $14,000 and you also have a detached garage worth $10,000 and a gazebo overlooking your pool worth $6,000, you might decide to raise the coverage on your pool.

To obtain a higher amount of coverage for your pool, contact your insurance agent.

What types of damages are covered?

The damages you are covered for depend on what type of insurance policy you have. The most common homeowners policy in the United States will protect your pool from all perils except those specifically excluded in the insurance contract. It is the broadest coverage you can obtain. By contrast, under a less common type of homeowners policy, your pool is protected only against the 17 named perils specifically listed in the contract. Make sure you know what policy type you have.

One somewhat common occurrence for which you are not covered -- no matter what policy type you have -- is damage to your pool by freezing, thawing, pressure, or weight of ice or water. If you live in colder climates, make sure your pool is properly "winterized," especially if you have an above-ground pool.

Liability issues relating to your pool

Liability issues relating to your pool are what give insurance underwriters the biggest headache. We've all seen the headlines: "Child drowns in backyard pool." Though this may be the last thing on your mind, it's a fact that a pool presents dangers, not only to your own family members and friends but also to uninvited guests, particularly children. Every year approximately 45,000 people are injured in swimming pools and nearly 300 people drown in backyard pools. So great is the risk of death or injury that some companies won't even write a policy if your pool has a diving board or slide.

The liability portion of your homeowners policy is designed to protect your assets if someone sues you. When you install a pool, you increase the chance that you will be sued if someone is injured or killed as a result of using your pool (even if such use was without your permission).

Consider increasing your liability coverage

Most homeowners policies pay up to $100,000 each time someone makes a legitimate civil claim against you (though some companies offer $200,000 or $300,000 of coverage as part of their basic policy). If the claim against you is more than $100,000, then you are responsible for the difference. As a pool owner, you should strongly consider increasing your liability coverage above $100,000.

There are two ways to increase your liability coverage. First, you can simply purchase higher liability coverage limits on your existing policy. Such coverage is relatively inexpensive; for example, you should be able to increase your coverage from $100,000 to $300,000 for less than $50 per year. Second, you can buy a stand-alone liability insurance policy that is separate from your homeowners policy called an "umbrella liability" policy. An umbrella liability policy pays up to a predetermined limit (usually $1 million) for liability claims made against you or your family. It is more than likely that you will qualify for an umbrella liability policy due to the risks associated with your new pool. Most agents will recommend that you obtain one.

Pool safety rules

There are several safety rules that go hand-in-hand with owning a pool. If you follow these rules, you will likely decrease your potential liability exposure.

• Install a fence around the pool area to prevent people from using the pool without your knowledge
• Never leave small children unsupervised in or around the pool -- even for a minute
• Keep children away from pool filters because the suction may injure them or prevent them from reaching the surface
• Be sure all pool users know how to swim
• Don't swim alone or allow others to swim alone
• Don't allow anyone who has been drinking alcohol to swim in the pool
• Don't swim if you're tired
• Never dive into an above-ground pool and always check the water depth before plunging into an in-ground pool
• Don't allow your children to let their friends use the pool without your permission and/or supervision
• Check the pool area regularly for glasses, bottles, or other potential hazards
• Keep radios, CD players, blow dryers, and other electrical devices away from the pool
• Keep a secure cover on the pool during the offseason
• Comply with any additional local regulations

Contractor/building issuesInsurance for your contractor

In your excitement at getting your new pool installed before summer, don't forget to make sure that your pool contractor has sufficient liability insurance of his or her own. Otherwise, you may end up in trouble if a worker gets hurt on the job.

Comply with local permits, other regulations

Your city or town may also have its own rules regarding the installation of pools. For example, you may be required to obtain a permit for the installation work, or you may be required to install some type of fence or barrier around your pool to prevent it from being accessible to uninvited guests. Check with your local town or city hall to see if any such regulations exist.

Does Roommate's Renters Policy Cover Me?

This is an increasingly common question among young singles and other unmarried individuals who choose to share a house or apartment. Unfortunately, renter's insurance and other homeowners insurance policies are designed for single individuals and traditional families. So when unrelated individuals share a residence, insurance coverage can become complicated.

Insurance laws on this topic vary from state to state, and homeowners and renters insurance policies vary from one company to the next. However, most insurance companies recommend that each tenant maintain a separate renters insurance policy to cover his or her personal property. You should each create an inventory of your possessions, so there are no questions about which policy covers which items if you ever have to file a claim.

Some insurance companies allow multiple roommates to be listed on a single renters insurance policy. If your insurance company structures policies in this way, you and your roommates can purchase one renters insurance policy to cover all of your collective possessions. Each person's name should be listed on the policy, and you should make sure you purchase enough insurance to cover everyone's property. You'll have to remember to change your policy, however, if a roommate moves out or if a new roommate moves in.

Things become even more complicated in the case of unmarried couples living together. Some renters insurance policies automatically extend coverage to any resident of the policyholder's household who fits the definition of "domestic partner." But these policies are the exception, not the rule. In most cases, each partner will need to have a separate renters insurance policy to cover their personal property. But this is not a perfect solution, because even unmarried couples often have joint property. The best option in this case may be to keep detailed records of who actually purchased what, allowing you to make an accurate claim if the need arises.

Tips on Renting a Vacation Home

Many travelers head off on vacation each year without giving any thought to their insurance needs. Are you one of them? You may think that you've planned your vacation down to the last detail, but there's always something that gets left behind. Don't let it be your insurance.

What if the weather takes your vacation by storm?

A big bad storm can huff and puff and blow the house down, but it's probably not your problem. Similarly, if faulty wiring in the house causes a fire, the owner of your vacation home will need to contact his or her insurer. But in certain circumstances, you could be held responsible for damages, so review your liability coverage before you go.

It needn't be a total loss

You've been saving for months and planning the perfect getaway. But what if the luxurious beachfront home you've rented gets washed away with the tide, right in the middle of your vacation? Your vacation would likely come to an abrupt halt, but it doesn't have to be a total loss. You can purchase trip interruption insurance before you go. It's designed to reimburse you up to the amount you paid for your vacation home. But before buying it (perhaps through the agency that rented you the home), read the policy so you'll know what's covered.

There's no place like home

Homeowners insurance is designed to protect your home and many of the personal items inside. But what if you're staying in another person's home or a rental property--will you still be covered? Most basic homeowners policies will pay up to 10 percent of your policy's limit (e.g., $10,000 on a $100,000 policy) for damage to your personal property that occurs away from home. But if you're traveling for more than two weeks, you should contact your insurer to see if you need any additional coverage.

Protecting the family jewels

If you have any special or high-value items (e.g., jewelry, computer or video equipment) with you, consider adding a special endorsement to your homeowners policy to specifically cover these items. This coverage is important whether you travel or not. You'll see a slight rise in your premium, but it's a small price to pay compared with the cost of replacing that three-carat diamond you wear every day.

Does Roommate's Renters Policy Cover Me?

This is an increasingly common question among young singles and other unmarried individuals who choose to share a house or apartment. Unfortunately, renter's insurance and other homeowners insurance policies are designed for single individuals and traditional families. So when unrelated individuals share a residence, insurance coverage can become complicated.

Insurance laws on this topic vary from state to state, and homeowners and renters insurance policies vary from one company to the next. However, most insurance companies recommend that each tenant maintain a separate renters insurance policy to cover his or her personal property. You should each create an inventory of your possessions, so there are no questions about which policy covers which items if you ever have to file a claim.

Some insurance companies allow multiple roommates to be listed on a single renters insurance policy. If your insurance company structures policies in this way, you and your roommates can purchase one renters insurance policy to cover all of your collective possessions. Each person's name should be listed on the policy, and you should make sure you purchase enough insurance to cover everyone's property. You'll have to remember to change your policy, however, if a roommate moves out or if a new roommate moves in.

Things become even more complicated in the case of unmarried couples living together. Some renters insurance policies automatically extend coverage to any resident of the policyholder's household who fits the definition of "domestic partner." But these policies are the exception, not the rule. In most cases, each partner will need to have a separate renters insurance policy to cover their personal property. But this is not a perfect solution, because even unmarried couples often have joint property. The best option in this case may be to keep detailed records of who actually purchased what, allowing you to make an accurate claim if the need arises.

How Long Does Insurer Have to Pay My Claim?

How long does an insurance company have to pay on a theft (for my renters insurance)? Are there laws stating a certain period of time that a company would have?

Your state has some form of regulation that defines what is acceptable conduct in the insurance industry. Many states have enacted an "Unfair Insurance Practices Act" or an "Unfair Claims Settlement Practices Act", or the regulations may be found in a broader law that encompasses all trade practices. The specifics of these regulations vary widely from state to state, but, generally speaking, an insurer is required to: (1) acknowledge your claim within a certain time frame, such as 15 days, (2) investigate your claim promptly, and (3) make a good faith attempt to process a prompt, fair, and equitable settlement of claims in which liability is reasonably clear. Additionally, an insurer may not refuse to pay your claim without a valid reason.

If you feel that your insurance company's agent or claims adjuster has violated your state's regulations, talk to that person's supervisor. If you get no satisfaction, file a complaint with your state's insurance department. If the department receives enough similar complaints, it will conduct an investigation. If it finds that the insurance company has a pattern of misconduct, it may impose a fine, punitive damages, or, for especially grievous offenses, revoke the company's license.

A minority of states allow you to sue an insurance company privately for a regulations violation against you individually. If you find yourself in such a dispute, some legal rules may help you, such as: (1) coverage provisions will be construed broadly, (2) limitation and exclusion provisions will be construed narrowly, and (3) ambiguities in the policy will be interpreted in your favor. In some states, if you are successful in court, you may only recover the amount of your claim. But, in other states, you may also be awarded legal fees and punitive damages.

Here are a few tips which may be useful for dealing with an insurer about a claim.

Before you buy the policy:

• 
  Take notes while the agent is explaining the proposed coverages, and save them for future reference
• Read the proposed policy and understand the key terms, such as deductibles, exclusions, and limitations
• Complete the application form honestly and thoroughly

Before you have a claim:

• Read your actual policy

When you have a claim:

• Review your policy and notes
• Promptly notify the insurance company of the loss
• Do not exaggerate the claim
• Keep a log of all correspondence with the insurance company (especially telephone calls)
• Gather materials to prove your claim (e.g., receipts)
• Always keep copies of any documents you give to the insurance company
• Get your own estimate of the loss
• Do not submit to an "examination under oath" without legal representation
• Do not sign a check or release until you are satisfied it is fair

Empty Nesters: Tips For Downsizing Your Home

You've waited patiently, 18, 25, maybe even 30 years, and it's finally happened--all of your kids are out of the house. Now that you've had some time to enjoy your freedom, you may have discovered that all of those extra bedrooms make your home feel a little empty, and you're thinking about moving. Whether you're moving to a smaller house, a condo, or an apartment, your home insurance needs are going to change.

When size matters

If you've chosen to buy another single-family home, you'll be looking at the same type of homeowners policy as you have now. However, you're likely to see a change in your premium (i.e., the amount you pay). That is because the amount of protection you choose is based in part on your home's value, which in turn affects your premium.

Life in a condo

Moving from a house to a condominium can be a big adjustment. When you buy a condo, it typically means that you own your individual unit and a percentage of the common areas. Review (or have an attorney review) the condo documents before you purchase your condo. These documents include:

• Bylaws
• Rules and regulations
• Master deed
• Master insurance policy
• Financial statements

Don't just browse through these documents. Read them carefully, because they'll answer important questions like:

• Where does my sole ownership end (i.e., bare walls or studs in)?
• What is covered under the master insurance policy? (You may need loss assessment coverage to pick up the shortfalls of the master policy.)
• How large is the operating budget?
• How large are the financial reserves?
• How are trustees elected?

Show the master insurance policy to your insurance agent to get the right amount of coverage. You're likely to find that your condo insurance is less expensive than your homeowners insurance. That is because you're no longer paying to insure an entire building. Now, you're paying only to insure your unit.

Renting has its advantages

As a renter, you'll enjoy greater freedom than you did as a homeowner. If you sign a typical one-year lease, you're responsible for paying rent (and not causing damage) and your landlord is responsible for maintaining the building. So if something breaks (e.g., plumbing, windows, appliances), you call your landlord, and hopefully the problem will get fixed in a short amount of time, costing you nothing.

You'll even get a break on your insurance. That's right--even as a renter, you should still consider buying insurance. Although your landlord typically has insurance to cover the physical structure, it won't cover your personal property or protect you against liability claims. To get these coverages, you need to buy a renters policy. And fortunately, since you don't have to insure the building, your premiums should be quite manageable.

Get a move on

Hiring movers can make your moving experience more pleasant, but it can be very expensive. Still, when compared to the cost of doing it yourself (time and pain), it may be worthwhile. Whether you hire movers or do it yourself, consider buying moving insurance. Different plans are available, so talk to your moving company or truck rental company for more information.

Thinking About Remodeling?

You may be looking for ways to improve your home. Perhaps you want to upgrade your heating system or replace a leaky roof. Or add on that sunroom you’ve always wanted. Before you get started, however, you'll want to know how that remodeling project can affect your insurance needs.

Update your homeowners insurance

Whether you're updating your kitchen or adding on another room, a remodeling project will likely add value to your home. As a result, you'll want to check the property coverage limits on your homeowners policy to make sure that they reflect any changes you make to your home, no matter how small or large the improvements may be.

And if you're adding on to your house, you'll want the addition specifically mentioned in your policy. If it's not, your insurance company may not provide coverage for damages that occur to the new room.

If you hire someone to do the remodeling . . .

If you hire someone to do the remodeling, you'll want to make sure that he or she is properly insured. Any contractor that you hire should have a certificate of coverage for both workers' compensation and contractor's liability insurance.

Workers' compensation coverage protects you from liability claims that can result from a contractor (or his or her employees) getting hurt on the job. Contractor's liability insurance provides coverage for damages to your property caused by the contractor during remodeling.

If you hire a general contractor who is planning on handing off some of the work to a subcontractor (or if you plan on acting as a general contractor yourself), you'll also want to get a copy of the subcontractor's proof of insurance.

For the do-it-yourself remodeling project . . .

Before jumping into a home improvement project, make sure that you're prepared in case an accident occurs. If someone helping you on a remodeling project is hurt, his or her injuries will be covered under the liability portion of your homeowners policy. You may also want to look into a personal umbrella liability policy, which provides coverage above and beyond your regular homeowners insurance and is especially important if you have significant assets that you need to protect.

Other tips

• Some additional remodeling tips:
• Before you get started, make sure that your remodeling project meets local building codes--otherwise, damages may not be covered by insurance
• Check with your local Better Business Bureau to find out if any complaints have been filed against any contractor you are hiring, and ask to see the contractor's license
• Get copies of the contractor's insurance coverage--have the insurance agency or company send the certificate directly to you
• Check your homeowners policy (or your contractor's insurance policy) to make sure that building materials and other uninstalled items (e.g., carpet, tile, cabinets) stored on your property are covered against theft and vandalism
• Keep your insurance agent up-to-date about any improvements to your home--he or she can help make sure that you are adequately covered at all times

Protection From Winter Storm Damage

Winter's here, and with it comes inclement weather. Here are some questions and answers on how to make sure your property is insured against winter storm damage.

Won't my landlord's insurance provide coverage for damage to my personal property?

No. Your landlord's insurance will provide coverage only for damage to the building itself, not to your personal property. As a result, you may want to purchase renters insurance to protect your property from winter storm damage.

What type of winter storm damage does renters insurance cover?

Standard renters insurance provides coverage for damage to your personal property that results from any of the named perils that are listed on your policy (e.g., hail, wind, fire). As long as the winter storm damage results from one of these named perils, your personal property should be covered.

What if the damage is the result of a flood?

Basic renters insurance doesn't provide coverage for damage that is the result of a flood. If you live in a flood-prone area, you'll need to purchase a separate policy or add a rider to your renters policy for this type of coverage.

What is the difference between replacement cost and actual cash value coverage?

When you purchase renters insurance, you'll want to know whether the policy provides replacement cost or actual cash value coverage for damaged property. Replacement cost coverage pays the actual amount of what it costs to replace the items that are damaged. Actual cash value coverage pays an amount equal to the depreciated value of the item that is damaged. Premiums for replacement cost coverage are higher than those for actual cash value coverage.

Are there any coverage limits for damage to my property?

Most renters insurance policies have coverage limits for certain items, such as jewelry. As a result, you should consider adding a rider to your policy or purchasing a separate policy that is specifically designed to protect your valuables.

How much will it cost?

The cost of renters insurance varies, and depends on factors such as where you live and the coverage amount, but most people are surprised at how low premiums are. So it's important to shop around and compare policies to make sure you're getting the absolute best deal.

Preparing for winter storm damage claims
There are some steps you can take to prepare yourself in case you ever need to file a claim for winter storm damage:

• 
  Prepare a household inventory by photographing or videotaping items
• Keep receipts for valuable items
• Have insurance information handy (e.g., insurance company phone numbers, insurance policy numbers)
• Keep copies of the documents and information you've compiled in a safe place outside the house

Are You Liable if Your Guests Get Too Jolly?

Whether you're rockin' with Dick Clark on New Year's Eve or cooking a Thanksgiving dinner for 25 of your closest friends, you need to be careful when it comes to serving alcohol. In many states, you could be held legally responsible for the actions of anyone who drinks in your home.



Your responsibilities as host


As the "social host," you may have a duty under the law to prevent your partygoers from drinking too much and then getting behind the wheel or engaging in other possibly hazardous activities. For instance, if your friend hurts someone because he drank too much at your party, the person he injured could sue you for things like medical expenses, vehicle repairs, lost wages, and pain and suffering, simply because the driver drank at your party. In some states, you can also be held criminally responsible. You could also be held liable for property damage. So if your guest breaks a window or runs over a tree in someone's front yard, you could end up paying the bill for that as well.


Once your guests begin to drink, their judgment may become impaired. It is up to you as the host to either take away their car keys and call a cab, or take away their beer and brew some coffee. And although it probably goes without saying, never serve alcoholic beverages to guests who are younger than your state's legal drinking age.


Note: Laws vary from state to state. Whether you could be held liable for the actions of an intoxicated guest depends upon state law and individual facts and circumstances. Contact an attorney to find out more about your legal responsibilities in your state.


Insurance considerations


Protecting yourself against liability claims



Before you throw your next party, check your insurance policy (e.g., homeowners, renters, condominium) to be sure you are covered for property damage and liability. You'll be glad you did if one of your partygoers decides to get behind the wheel after one too many cocktails. Ask your insurance agent to interpret the policy language and explain what coverages you have and what coverages you might need. Your agent may suggest that you purchase a personal liability umbrella policy for added protection.



An umbrella policy is referred to as an "excess policy." This means that if you were to suffer a loss, your homeowners policy (primary policy) would pay first. Typically, umbrella policies require that you carry a minimum liability limit of $100,000 per individual and $300,000 per event (even higher in some states) on your primary policy. Once damages exceed this limit, your umbrella policy should kick in to cover the excess. Umbrella policy liability limits generally start at $1 million and can climb to $10 million or even $20 million. Based on some of the large verdicts being handed down by juries today, these limits are not unreasonable--especially if you possess sizable assets. Remember, it doesn't matter whether you invite 1 guest or 100 guests to your gathering--you'll want to be sure you have adequate coverage.



Special considerations for renters/condominium owners



If you rent an apartment or own a condo or co-op apartment, don't assume that you'll be covered by the building policy. In most cases, the building policy covers common areas for liability and physical damage. It will not provide coverage for your personal property or protect you against personal liability claims that result from a party you've held.



If you are a renter, consider purchasing renters insurance. It is generally less expensive than a homeowners policy, because you are not paying to insure the building. The policy you choose should protect both you and your belongings in case of theft, damage, personal injuries, and lawsuits (e.g., personal injury), up to the limits you select.
If you own a condominium or a co-op, you'll need to purchase a homeowners policy tailored to your needs (type HO-6). You should also review your condominium or co-op association's master policy to find out what your responsibilities are in the event an accident occurs.



Hiring professionals



Most professional party workers (e.g., bartenders, caterers) have liability insurance to protect them, but those policies may not protect you. Typically, these policies state that you must be specifically named on the policy to be covered in the event of an accident. For instance, if one of your guests has too much to drink and goes out and injures someone, the injured person could sue you, your guest, and the bartender who served the drinks. But if you are named on your bartender's liability policy, your bartender's insurance company should defend you in the event you are sued. Otherwise, you would need to rely on your homeowners and umbrella liability policies.


Before hiring professional party workers, find out how much insurance coverage they have and whether you can be named as an additional insured on their policy. You should also determine what specific situations are covered and what exclusions may apply. Don't take their word for it--ask to see a certificate of insurance, then call the insurer to confirm that the information is current.


Should an incident occur, make sure you notify your insurer right away, even if you believe you are covered under a professional liability policy. If you don't provide "timely notice," your insurer may have grounds to disclaim coverage. This means you could be left with no protection against a pending lawsuit.



Preventing accidents
Accidents happen every day. But even though you can't plan for every eventuality, you can take some precautions. Consider the following when planning your next social gathering:

• Don't serve any alcohol


• If you do serve alcohol, ask your guests for their keys as they walk in the door


• Stay sober yourself so that you can monitor the actions of others


• Don't serve people alcohol if you think they've had too much to drink


• Serve food--it can shift the focus away from drinking


• Appoint designated drivers or arrange for cab service if necessary

Is your Pool Childproof?

Along with the fun of owning a pool comes the responsibility of making it safe, especially for young children. It's an unfortunate statistic that drowning is a leading cause of death for children across the United States and the number one cause of death for children in warm-weather states such as Florida and Arizona.

Safety in numbers

Although the most important rule of pool safety is to never leave a young child alone in or near the pool area, it's a big mistake to think that you can prevent drownings simply by closely supervising a child in your care. Children can easily slip out of view, and a few seconds is all it takes for an accident to occur. To adequately protect children, you'll also need to install barriers and other safety devices.

Installing a fence around your pool or relying on an alarm may give you a false sense of security. Instead of relying on one form of protection, the National Pool and Spa Institute recommends installing several barriers or devices (layers of protection). Here are several ways you can make your pool safer:

• Surround the entire pool with a permanent fence that is tall enough to prevent children from easily climbing it. Your state or local authorities may require your pool fence to be a specific height (six to eight feet is a frequently recommended minimum).
• Make sure all gates are self-closing and self-latching. If the gate can be opened from the outside, make sure it is securely locked so that children can't get inside by themselves.
• Install extra locks on the doors and windows of your home that lead to the pool area. These locks should be high enough to prevent small children from reaching them.
• Install a removable pool fence inside the permanent fence or screen enclosure that surrounds your pool. This is a good option if you need an additional layer of protection temporarily (e.g., while children are young or while grandchildren are visiting).
• Attach an alarm to the side of the pool or use one that floats.
• Have a licensed professional install a safety cover that complies with industry standards and completely remove it before using the pool to prevent someone from becoming trapped underneath.
• Don't confuse a safety cover with a flimsier pool cover designed only to keep the pool cleaner or warmer--these offer no protection and may even be a safety hazard if water accumulates on them or if children slip beneath.

Other pool safety tips

• 
  Don't rely solely on flotation devices or swimming lessons to protect a child who is within the pool enclosure or in the water.
• Clear all toys from the pool when it is not in use. Toys floating on the surface or under the water can attract young children.
• Don't allow children to play poolside with wheeled toys.
• Don't put chairs, tables, or other items close to the pool fence that can enable children to climb over the fence.
• Make sure children understand pool safety rules (e.g., teach them never to go into the pool area alone).
• Never leave your child alone in the pool area, even if it is just for a moment (e.g., when you need to answer the phone or doorbell).
• Be prepared for emergencies by mounting lifesaving devices and a phone within the pool area.
• Teach children how to dial 911 in case of an emergency.
• Keep pool chemicals out of the reach of children.
• Inspect your pool equipment regularly and make sure it operates properly. Grates, skimmers, drains, and heaters are particular areas of concern.
• If you're having a party or entertaining guests and the pool area will be open, make sure someone is posted poolside who can watch the area at all times.

Is Your Home Alone For The Winter?

Winter weather can wreak havoc on a home--especially if you're not there to look after it. And a vacant house can be an open invitation to burglars. Before you leave your home alone, take precautions to make sure your home makes it safely through the winter.

Take a look at your homeowners insurance

Check your policy to make sure you're covered even if the house is going to be unoccupied for an extended period.

• Conduct a home inventory (including photographs or video of important items) and take it with you. If an item in your home is damaged, destroyed, or stolen while you're away, you'll be able to support an insurance claim.
• Make sure your valuables are adequately insured. You may want to purchase a rider to increase coverage on collectibles, jewelry, antiques, or other expensive items.
• Talk to your insurance agent if you have any questions about your coverage.

Winterize your home

• Clean gutters--remove leaves and other debris from gutters to allow melted snow and ice to properly flow away from the house and prevent ice dams from forming
• Trim trees and branches--inclement weather can cause overgrown trees and dead branches to break, resulting in property damage and/or injury
• Maintain pipes--make sure exposed pipes in basements and garages are properly insulated; check for cracks and leaks; consider having your water system drained by a professional
• Drain exterior faucets and remove garden hoses (you can turn off the water supply by using the shutoff valve)
• Set the thermostat in your house to at least 50 degrees--anything lower won't prevent your pipes from freezing
• Prevent cold air from seeping into your home--replace cracked or peeled caulking on windows and apply weather stripping to doors
• Have your heating system inspected--check the furnace to make sure the filter does not need to be replaced, the thermostat is working, and so on; make sure your chimney is free from debris (e.g., leaves)
• Repair broken stairs and railings--even if you're not home, mail carriers, utility employees, and delivery persons may need to come onto your property
• Add extra insulation to prevent heat from escaping and pipes from freezing, and pay special attention to attics and basements
• Ask a neighbor or friend to stop by periodically to check for potential weather-related problems--the earlier a problem is detected, the easier it usually is to fix Safeguard your home against burglars
• Give the appearance that your house is occupied--use timers for indoor and outdoor lights; have mail forwarded and postpone newspaper and magazine delivery, or ask a neighbor or friend to take in your mail; arrange to have someone shovel your driveway/walkway when it snows
• Store valuables (e.g., electronics, antiques) out of view
• Secure all doors and windows with locks; consider installing a security system with motion sensors and glass-breakage detectors with a local service provider that will follow up if the alarm goes off

Safeguard your home against burglars

• Give the appearance that your house is occupied--use timers for indoor and outdoor lights; have mail forwarded and postpone newspaper and magazine delivery, or ask a neighbor or friend to take in your mail; arrange to have someone shovel your driveway/walkway when it snows
• Store valuables (e.g., electronics, antiques) out of view
• Secure all doors and windows with locks; consider installing a security system with motion sensors and glass-breakage detectors with a local service provider that will follow up if the alarm goes off

Hiring a Home Inspectorssss

You're thinking of buying a house. But how do you know whether you are buying a home in good condition or a money pit? You can go a long way toward getting an answer by hiring a qualified home inspector to scrutinize the property before you buy.

Why hire a home inspector?

If you're like most people, the purchase of a home will be your biggest investment by far. So, as with other big investments, you should be knowledgeable about what you are buying. Although you can examine the home yourself, most people simply don't have the expertise of a qualified home inspector. A good home inspector is knowledgeable about construction practices in the area and about what holds up over time. He or she will spot problems not apparent to an untrained eye, and will provide you with a full report on the condition of the property.

When does the inspection take place, and what do I do with the report?

An inspection will usually take place after the parties have agreed on a selling price. Any offer or purchase agreement (typically called a P&S) that you sign should require a satisfactory home inspection. If the purchase contract is contingent on an inspector's review of the property, you should be able to negotiate a price adjustment or ask the sellers to make repairs if unexpected problems are found. If your inspector finds significant problems, you should be able to get out of the deal and have your deposits refunded. Of course, it's a good idea to have a lawyer review any agreements before you sign them to make sure that you are adequately protected.

If the inspector does not discover any significant problems, you will have the benefit of a more thorough understanding of the property. Inspection reports usually provide a lot of helpful maintenance information, so a detailed report is like having an owner's manual for your home.

Note: You should be present when the inspector is doing the inspection. You will learn a great deal about your new home and how to maintain it by accompanying the inspector and asking questions throughout the inspection.

You can expect a home inspector to report on the major components of a home, including:

• The structure of the house, including the foundation, walls, ceilings, and stairs
• The exterior, including chimneys, roofing, flashing, siding, gutters, grading, patios, decks, and driveway
• The interior, including visible insulation and ventilation, steps, counters, railings, cabinetry, and finishes
• Plumbing, including visible piping, fixtures, drains, and water heater
• Electrical system components, including wiring, fixtures, and overload protection
• Heating and air conditioning systems, including type, capacity, condition, and safety
• The basement or crawl space, including construction, stability, settling, water damage, and visible termite or rot damage
• The attic, including access, ventilation, insulation, and signs of leakage

The inspector may also take samples for laboratory tests, or recommend a specialist to test for such things as water quality and levels of radon gas. You might have to hire separate experts to inspect for termites or other pests, or inspect special home features such as septic systems, wells, or swimming pools.

After the home inspector completes the review of the property, a detailed home inspection report should be generated that discusses the condition of the property and each of its major components.

When does the inspection take place, and what do I do with the report?

An inspection will usually take place after the parties have agreed on a selling price. Any offer or purchase agreement (typically called a P&S) that you sign should require a satisfactory home inspection. If the purchase contract is contingent on an inspector's review of the property, you should be able to negotiate a price adjustment or ask the sellers to make repairs if unexpected problems are found. If your inspector finds significant problems, you should be able to get out of the deal and have your deposits refunded. Of course, it's a good idea to have a lawyer review any agreements before you sign them to make sure that you are adequately protected.

If the inspector does not discover any significant problems, you will have the benefit of a more thorough understanding of the property. Inspection reports usually provide a lot of helpful maintenance information, so a detailed report is like having an owner's manual for your home.

Note: You should be present when the inspector is doing the inspection. You will learn a great deal about your new home and how to maintain it by accompanying the inspector and asking questions throughout the inspection.

How do I find a good home inspector?

Most states do not license home inspectors, so you will have to do all the screening to find a good one. Ask for referrals from friends, relatives, or your attorney. Because of the potential for a conflict of interest, be wary of inspectors who are referred to you by a real estate agent involved in the transaction. While a real estate agent may refer you to a qualified inspector, remember that real estate agents (both traditional seller's agents and buyer's agents) often get paid only after the sale is completed. An agent might therefore be tempted to steer you to a less-than-thorough home inspector to keep the sale on track.

Home inspectors' credentials

Ask whether the home inspector is a member of the American Society of Home Inspectors (ASHI). ASHI is a national organization that enforces a code of conduct and practice standards. ASHI also tests applicants and requires that they possess a certain amount of experience before they are granted membership. In addition to ASHI membership, ask your home inspector candidates the following questions:

• If licensing is required in your state, is the inspector licensed to perform inspections?
• How long has the inspector been in business?
• How many inspections has the inspector conducted?
• Can you go with the inspector on the inspection?
• Can you review a sample report for thoroughness?
• Can you have references from previous clients? (Call several to ask their opinion of the candidate.)

Ask about errors and omissions insurance

Ask whether a home inspector candidate carries errors and omissions insurance or is bonded. An insurance policy or a bond will help protect you if the inspector misses a problem that should have been discovered during the inspection. Home inspectors who do not carry insurance will be less likely to pay a claim than those who do. Even among the states that require home inspectors to be licensed, only a few mandate that they purchase insurance or post a bond. So, in most states, errors and omissions coverage or bonding is optional.

Although not all good inspectors carry insurance, inspectors who are unconcerned with protecting their customers are less likely to be insured. Consequently, insurance coverage is one indication that an inspector intends to be in business for the long haul and wants to satisfy every customer to maintain a good reputation.

Legal Liability for Landscaping Help

Many homeowners who hire help are not aware of the potential legal hassles that can ensue when an accident occurs on their property. Workers, such as the kid mowing the lawn, the housekeeper tidying up your home for a big party, or the landscaper planting your annuals, could suffer an injury while on your property. After an accident, you may be financially liable for the worker's injuries and disabilities, and your homeowners insurance policy may not cover you in the event of a lawsuit.

Employees vs. independent contractors

One of the factors used to determine if you are liable for a worker's injury is whether the person is considered your employee or is a contractor (or subcontractor). As a general rule, whether a person is considered an employee or a contractor hinges on the amount of control you have over the worker. If you have the right to control what must be done and the manner in which it is to be done, the worker is probably your employee.

For example, you hire someone to care for your children and do light housework in your home. This worker follows your instructions about childcare and household duties, and you provide the supplies used to do the work. This person is your employee.

Generally, if the worker can control how the work is done, the worker is a contractor. A contractor usually uses his or her own tools and offers services to the general public in an independent business.

For example, you hire someone to care for your lawn. This person provides their lawn care services to other homeowners, uses their own tools and supplies, and hires and pays any helpers they need. Your lawn care provider is an independent contractor, not your employee.

Note: This is an oversimplification. The rules regarding employee and independent contractor status are very complex. If you have any uncertainty regarding a worker's status, you should consult a tax professional.

Workers' compensation insurance for employees

If you have employees (such as a housekeeper, gardener, nanny, cook, etc.), your state may require that you carry workers' compensation insurance coverage for them. Even if you are not required by state law to carry workers' compensation insurance, it may be wise to do so anyway. If an employee is injured, and if you have hired the worker legally and paid for workers' compensation insurance, an injury claim would fall under that policy's coverage. Otherwise, the claim would fall on you. Your homeowners insurance policy is not likely to offer any coverage in this event. If you are hiring regular help who could be considered employees, make sure you consult your insurance agent and/or your state Workers' Compensation Agency about coverage.

Workers' compensation insurance for independent contractors

Contractors, such as builders, landscapers, or other tradespeople who work on or around your home, should be covered through their own (mandatory) workers' compensation insurance, and any injury claims would be covered under that policy. If, for some reason, the contractor does not have coverage or has discontinued the policy to save on the premiums, you would be next in line to pay for a worker's injuries and/or disabilities that occurred on your property (although you may be able to file a lawsuit against the contractor).

If you are hiring a contractor for a job on your property, ask for written proof of the following to cover worker injuries, property damage, and uninstalled materials:

• Contractor's license
• Workers' compensation insurance
• General liability coverage
• Proof of workers' compensation insurance for any subcontractors working on your project

Check with the carrier listed on the proof-of-insurance certificate that the coverage is still in force. Verifying the contractor's insurance coverage before the work begins can allow time for the contractor to correct any problem with lapsed insurance, or for you to find another contractor.

What your homeowners policy may cover

In some states, homeowners insurance policies contain a provision or endorsement providing limited coverage for minors performing lawn mowing or other similar tasks requiring the use of power tools. Some policies specifically exclude domestic workers such as nannies or housekeepers, while others cover injuries of household employees only under the liability coverage section, so a lawsuit may be required before a claim is paid. Check with your insurance agent.

You may need extra liability coverage

In addition to the liability coverage provided under your homeowners policy, you may want to consider additional liability coverage to protect your assets in the event of a liability judgment that exceeds the limits of your homeowners insurance. Such coverage may be called an excess liability policy, or a personal umbrella liability policy. This type of coverage supplements the liability coverage provided under your homeowners policy.

Check references

Don't forget to do reference checks on people you are considering hiring to work on your property. Reputable tradespeople should be willing to provide you with customer references. In addition, you can check with the Better Business Bureau to see if a business has received complaints (and if the problems were rectified). Your local building department can tell you if a particular trade requires certification or licensing, as well as the name of the local licensing body or official. Don't forget to verify that any insurance policies held by a contractor under consideration are still in force.

Can my credit score affect my home insurance premiums?

It pays to have a good credit history. Case in point: Homeowner insurance companies tend to give their better rates and terms to consumers who pay their bills and loans, in full, on time. A number of homeowner insurers weigh your credit history in making underwriting decisions, confirms Selective Insurance spokeswoman Cynthia B. Heismeyer who explains why.

“Insurance scores, based partially or wholly on your credit information, help insurers assess risk and charge the appropriate rate based upon that level of risk,” observes Heismeyer, Selective Insurance’s assistant vice president of corporate communications.

“Statistically, it has been proven that people with poor insurance scores are more likely to file a claim,” notes Heismeyer. “Historically, homeowners rates had been based on the characteristics of the structure itself. The insurance industry is now shifting the focus to include characteristics of the occupants, and insurance scores are one of those factors.”

Heismeyer says that a credit-based “insurance score” from a consumer’s credit report is used to predict how often he or she is likely to file claims, and/or how expensive those claims will be. Heismeyer indicates that studies by insurance regulators, universities, independent auditors and insurance companies all have shown that an individual's credit history is a proven, strong indicator of how likely that person is to file a future claim.Here are some basic facts about credit-based insurance scores, according to the Insurance Information Institute, of New York:

• They allow insurers to charge lower premiums to customers who are better risks.
• These types of scores are totally objective and "blind" - insurance scores never factor in a consumer's income, race, address, marital status, age or nationality.
• They promote competition, which means more choice for consumers.

Chubb doesn’t use credit-based scores in homeowners insurance underwriting decisions, but Chubb spokesman Mark Schussel points out that his company has “other ways to determine the acceptability of a risk.” Chubb goes “beyond what’s contained in the insurance application,” said Schussel who then gave an example.

For instance, Schussel says, the application doesn’t provide enough detailed information about the type of materials and craftsmanship used in a home as well as specific exposures a home faces and what steps a customer has taken to mitigate those exposures. That’s why we visit many of the homes that we insure.”

Credit-based insurance scores are “blind” and objective, points out Lynn Knauf, director of personal lines for the Property Casualty Insurers Association of America, in Des Plaines, Ill. She stressed that credit-based insurance scores don’t consider a consumer’s race, nationality, income, marital status or location.

American Insurance Association’s Dave Snyder focused on what he described as one of the benefits of credit scores in the homeowners insurance equation. “They enable insurers to offer many more pricing levels than before,” Snyder says. Citing example, Snyder noted that those with “good credit-based insurance scores can get lower premiums on their homeowners insurance than they could have, say, 10 years ago before credit scoring came to the forefront."
“The addition of credit scoring gives the homeowners insurance company a clearer idea on how to price a particular risk and in the process gives consumers assurance that they’re not paying more than they should for coverage,” says Snyder, assistant general counsel for AIA in Washington, D.C.

Snyder believes that experience has shown that fiscally responsible consumers who have solid credit histories have fewer losses than those with spotty or poor financial track records. “From the insurer’s standpoint,” observes Snyder, “credit information serves as an indicator as to how well a person manages financial risk. A person who keeps his finances in order tends to keep his or her home in good shape, and probably drive more safely as well. In addition, homeowners insurance losses for people with the worst credit tend to run much higher than that of consumers with the best insurance credit scores.”

A final thought on credit scores comes from Safeco Insurance spokesman Paul Hollie. “Personal credit reports are available from several organizations, including Experian, Equifax and TransUnion. Reviewing your credit and cleaning up inaccuracies should be an annual ritual, no different than checking on your personal retirement accounts or checking your fire alarm batteries,” says Hollie.