Cheap Insurance for Your Home, Automobile, Health, & Life: How to Save Thousands While Getting Good Coverage

Cheap Insurance

for Your Home, Automobile, Health, & Life

How to Save Thousands While Getting Good Coverage

By Carla and Lee Rowley

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Cheap Insurance for Your Home, Automobile, Health, & Life: How to Save Thousands While Getting Good Coverage

Copyright © 2007 by Atlantic Publishing Group, Inc.

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No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be sent to Atlantic Publishing Group, Inc., 1210 SW 23rd Place, Ocala, Florida 34471.

ISBN-13: 978-1-60138-006-7 ISBN-10: 1-60138-006-2

Library of Congress Cataloging-in-Publication Data

Rowley, Carla, 1977-

Cheap insurance for your home, automobile, health, and life : how to save thousands while getting good coverage / by Carla and Lee Rowley.

p. cm.

Includes bibliographical references and index.

ISBN-13: 978-1-60138-006-7 (alk. paper)

ISBN-10: 1-60138-006-2 (alk. paper)

1. Insurance--United States. 2. Homeowner’s insurance--United States. 3. Insurance, Automobile--United States. 4. Insurance, Health--United States. 5. Insurance, Life--United States. I. Rowley, Lee, 1973- II. Title.

HG8531.R69 2008

368.00973--dc22

2007052809

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: The publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This work is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If professional assistance is required, the services of a competent professional should be sought. Neither the publisher nor the author shall be liable for damages arising herefrom. The fact that an organization or Web site is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or Web site may provide or recommendations it may make. Further, readers should be aware that Internet Web sites listed in this work may have changed or disappeared between when this work was written and when it is read.

A few years back we lost our beloved pet dog Bear, who was not only our best and dearest friend but also the Vice President of Sunshine here at Atlantic Publishing. He did not receive a salary but worked tirelessly 24 hours a day to please his parents.

Bear was a rescue dog who turned around and showered myself, my wife, Sherri, his grandparents Jean, Bob, and Nancy, and every person and animal he met (well, maybe not rabbits) with friendship and love. He made a lot of people smile every day.

We wanted you to know a portion of the profits of this book will be donated in Bear’s memory to local animal shelters, parks, conservation organizations, and other individuals and nonprofit organizations in need of assistance.

– Douglas and Sherri Brown

PS: We have since adopted two more rescue dogs: first Scout, and the following year, Ginger. They were both mixed golden retrievers who needed a home.

Want to help animals and the world? Here are a dozen easy suggestions you and your family can implement today:

•  Adopt and rescue a pet from a local shelter.

•  Support local and no-kill animal shelters.

•  Plant a tree to honor someone you love.

•  Be a developer — put up some birdhouses.

•  Buy live, potted Christmas trees and replant them.

•  Make sure you spend time with your animals each day.

•  Save natural resources by recycling and buying recycled products.

•  Drink tap water, or filter your own water at home.

•  Whenever possible, limit your use of or do not use pesticides.

•  If you eat seafood, make sustainable choices.

•  Support your local farmers market.

•  Get outside. Visit a park, volunteer, walk your dog, or ride your bike.

Five years ago, Atlantic Publishing signed the Green Press Initiative. These guidelines promote environmentally friendly practices, such as using recycled stock and vegetable-based inks, avoiding waste, choosing energy-efficient resources, and promoting a no-pulping policy. We now use 100-percent recycled stock on all our books. The results: in one year, switching to post-consumer recycled stock saved 24 mature trees, 5,000 gallons of water, the equivalent of the total energy used for one home in a year, and the equivalent of the greenhouse gases from one car driven for a year.

Table of Contents

Introduction

Chapter 1: Why Do You Need Insurance?

Chapter 2: Methods for Obtaining Cheap Insurance

Chapter 3: How to Choose an Insurance Agent

Chapter 4: Home Insurance

Chapter 5: Home Insurance Discounts & Savings

Chapter 6: Obtaining a Home Insurance Quote

Chapter 7: Additional Coverages Available on Your Home Insurance Policy

Chapter 8: Home Insurance & Excluded Natural Disasters

Chapter 9: Home Insurance & Home Businesses

Chapter 10: What to Do When You Have Difficulty Obtaining Home Insurance

Chapter 11: Automobile Insurance

Chapter 12: State Automobile Insurance Requirements

Chapter 13: Basic Automobile Insurance Policies

Chapter 14: How to Shop For Cheap Auto Insurance

Chapter 15: The Automobile Insurance Point System

Chapter 16: Using Discounts to Save Money on Automobile Insurance

Chapter 17: Being Aware of Surcharges

Chapter 18: Automobile Insurance Fees

Chapter 19: Automobile Insurance For High-Risk Drivers

Chapter 20: What to Do If you Cannot Obtain Automobile Insurance

chapter 21: Health Insurance

chapter 22: Types of Health Insurance Policies

chapter 23: Medicare & Medicaid Coverage

chapter 24: Managed Care Plans

chapter 25: Selecting an Employer-Sponsored Health insurance Plan

chapter 26: COBRA — Keeping Your Health Insurance If You Lose Your Job

chapter 27: Health Insurance Benefits for the Self-Employed

chapter 28: Life Insurance

chapter 29: Types of Life Insurance Policies

chapter 30: Ways to Save Money on Life Insurance

Conclusion

Appendix A: Links to Your State Insurance Department Web Site

Appendix B: Glossary

Appendix C: Other Resources

Appendix D: Case Studies

Bibliography

Author Biography

More Books

Introduction

In today’s society, every penny counts when creating and maintaining a monthly budget. For many people, there is little room left for anything extra, and budgeting for the various types of personal insurance necessary to protect your family’s financial well-being can pose a significant challenge. The cost of insurance premiums can take a large bite out of any family’s budget, creating additional strain on already tight finances.

Although carrying personal insurance can be costly, it is not an expense that can reasonably be eliminated from your family’s monthly budget. Failing to maintain adequate personal insurance can prove far more costly than paying premiums for automobile, homeowner’s, life, and health coverage. A single accident, illness, death, or other occurrence can cost you hundreds of thousands of dollars. Without sufficient insurance, the financial consequences of any of these events could prove catastrophic.

Here are examples of the ways the four major types of personal insurance can help protect you and your family from catastrophic financial loss:

• Auto insurance protects you against personal liability for bodily injury or death to other drivers and damage to the property of other people arising from automobile accidents you may cause. It can also protect you against having to pay for your own medical expenses if an uninsured driver causes an accident in which you are injured. If you have a newer car, or one that could not easily be replaced, comprehensive and collision coverages pay for damage, theft, and the total loss of your vehicle.

Also, the majority of states have passed automobile financial responsibility laws that require every driver to maintain sufficient funds to pay for damages caused to other drivers. Although some states allow drivers to place funds on deposit with the Department of Motor Vehicles to demonstrate financial responsibility, automobile insurance is a more cost-effective option for most drivers. Each year, more states pass laws that require insurance companies to report policy cancellations electronically to the Department of Insurance or the Department of Motor Vehicles. If the state receives notification that a driver’s policy has been canceled, the state will require the driver to provide proof of a replacement automobile insurance policy to avoid driver’s license suspension and possible fines and penalties.

• Homeowner’s insurance protects you against substantial financial loss resulting from damage to your home, injury to a visitor while on your property, damage to the contents of your home, and loss of personal property due to theft or vandalism.

Most mortgage companies require that you secure homeowner’s insurance before the purchase of your home can be completed. The mortgage company is listed on the policy and is notified if the policy cancels. If proof of new insurance is not provided, the mortgage company will put insurance on the property and charge the homeowner for the coverage. This insurance is often more costly than if the homeowner had secured coverage from another insurance company on his or her own.

It is also necessary to carry homeowner’s insurance because most of your possessions are stored in your home. If you do not carry homeowner’s insurance, you may not have the financial resources available to replace your personal items or rebuild your home if damage or total loss occurs. If disaster strikes, you could be left homeless and in serious debt.

• Health insurance may not be required by law, but it is a necessity that can be critical to your family’s financial well-being. A single illness can cost your family tens of thousands of dollars and even more if surgery or a hospital stay is required. With the high cost of medical treatment and procedures, you can be left with a tremendous amount of debt if you do not carry personal health insurance.

Do not make the mistake of thinking that if you are healthy today you will be healthy tomorrow. Even if you are seemingly healthy, you could incur an unexpected medical condition, surgery, or hospital stay at any time. By the time this unexpected condition arises, it will be too late to secure health insurance.

• Life insurance protects your family’s finances in the event of your death. Many people assume that, if they died, their family would be able to continue paying the bills. Unfortunately, the loss of an income, along with funeral and burial expenses, can place an unmanageable financial strain on the family members left behind.

Because life insurance is not required by law, it is often overlooked. This is a serious financial mistake, because it is crucial for every family to carry life insurance on anyone that contributes to the family’s finances. Without the proper level of life insurance, the death of a contributor to your family’s income can result in the loss of a home or thousands of dollars in debt that cannot be easily paid.

As important as personal insurance is to your family’s financial well-being, it can be difficult to manage multiple insurance premiums on top of your other financial obligations. Auto insurance premiums can cost thousands of dollars each year, and health insurance premiums rise nearly every year, without providing better coverage for medical expenses. Add life and homeowner’s insurance premiums to your budget, and it can cost you hundreds of dollars each month to protect your family’s finances.

Fortunately, there are many ways you can save money on insurance premiums without skimping on necessary coverages, even if you have had difficulty obtaining insurance in the past. Knowing how to use these techniques will help you properly protect yourself and your family, while leaving more room in your budget for other items.

This book is the key to learning these techniques. It contains tips on how to save hundreds or even thousands of dollars each year on automobile, homeowner’s, health, and life insurance and how to obtain coverage even if you have been denied an insurance policy in the past. It will also provide an overview of each type of insurance and give you tips on choosing what coverage is necessary and which ones are unnecessary.

Knowing how to save on insurance premiums will show your agent you are a savvy insurance consumer, and he or she will be required to have your family’s best interests in mind when helping you select coverages, policy limits, deductibles, and policy terms.

Do not be concerned if the world of personal insurance is new to you. By the time you finish this book, you will have more insurance knowledge than 99 percent of the population. Even better, you will be on even footing with your insurance agent, which puts you in the position to obtain the best coverage possible for the least amount of money.

Before we begin exploring the four major types of personal insurance, let us start with a brief explanation of insurance and why you need it to manage the risks in your life. Understanding this will help you be better prepared when you visit your insurance agent.

Table of Contents

Chapter 1: Why Do You Need Insurance?

Before you learn how to save money on the various types of personal insurance, you need to know the purpose of having insurance. This chapter will describe the fundamental reasons behind the creation and evolution of insurance and describe the applications of insurance to modern life.

AN INTRODUCTION TO RISK MANAGEMENT

There are many risks you face every single day that can affect the financial well-being of you and your family. You maybe do not spend much time thinking about these risks, because they are so interwoven into your daily activities. Here are a few examples of risks that you may face each day:

• Being involved in an automobile accident.

• Damage to or destruction of your home by severe weather.

• Death by an accident or illness.

• Injury to pedestrians while driving an automobile.

• Damage to your home caused by faulty wiring.

• An illness requiring a lengthy hospital stay.

Each of these risks carries not only emotional ramifications, but potentially devastating financial ones as well.

METHODS OF MANAGING RISK

There are several ways you can deal with each of the risks in your life:

• Ignore the risk. This strategy involves doing nothing to try to minimize the effects of the risk in your life. For example, if you smoke cigarettes, make no effort to manage your diet, and do not exercise, you are effectively ignoring the risk of death from heart disease. There are financial ways of ignoring the risk as well — choosing not to save enough money for your family to manage expenses and choosing not to purchase a life insurance policy.

• Mitigate the risk. You can mitigate many of the risks in your life through the choices you make. For example, if your family has a history of high cholesterol, you can mitigate this risk by engaging in cardiovascular exercise, limiting your intake of polyunsaturated fats, and seeing your doctor for regular checkups. You can also financially mitigate the effects of this risk by saving and investing to help your family manage finances in the event that you die or become disabled.

• Avoid the risk. This strategy involves eliminating a risk altogether by avoiding the places, activities, and circumstances that facilitate the risk. For most people, this is not a feasible strategy because almost any activity involves risk. Even if you manage to eliminate one risk, you are likely to create another — for example, if you refuse to drive a car because of the inherent risk of injury from an accident, you will have to take the bus or train or ride your bicycle as an alternate means of transportation. These modes of transportation create an entirely different set of risks, all of which can cause you physical injury.

• Transfer the risk. Transferring a risk means placing the effects of a risk on another person or entity. Most risks themselves cannot be physically transferred — you cannot give someone else your genetics or make them take your place in the hospital — but you can transfer the financial effects of risk through purchasing insurance.

Many people, particularly younger ones, tend to ignore risks — sometimes because they are not yet able to fully appreciate the presence of risk in their lives and other times because the cost of mitigating and transferring the risk seems too great. By balancing these two mechanisms, you can reduce the uncertainty that risk poses to your financial security.

As people mature, they learn to appreciate the role risk plays in their lives. They come to realize they are neither immortal nor invincible, and they begin to understand circumstances in their lives are sometimes beyond their complete control. They begin to see the need for mechanisms to properly manage the risks present in their lives.

MITIGATING RISK

There are two primary ways of mitigating the effects of risk in your life — through your day-to-day actions and through financially accounting for and preparing for risk.

Action-based risk mitigation involves taking steps in your day-to-day life to reduce the chances a risk will occur. The choices you make each day directly influence the risk of negative events that you and your family face. To reduce the chance of personal risk:

• Have the mechanicals in your home inspected regularly to ensure they are in good working order. This will reduce the risk of fire, explosion, water leakage, and gas leakage.

• Install a sprinkler system in your home to reduce the risk of the loss of your personal property, and injury or death to occupants, because of a fire in your home.

• Install a security system in your home to reduce the risk of damage to your home and loss of personal property due to vandalism or break-in.

• Make sure sidewalks and driveways are in good repair and free of snow, ice, or debris. This will reduce the risk that you will be legally liable for the injuries of a guest or passer-by on your property.

• See your physician regularly for checkups. Your physician can often identify symptoms of diseases and conditions that can be easily treated in the early stages.

• Avoid driving an automobile after drinking alcohol, taking sedatives or other judgment-impairing substances, or when you are sleep deprived. This will reduce the risk of an automobile accident, which can cause injury, death, and damage to automobiles and personal property.

• Wear a seat belt while you are in an automobile and insist that the other occupants of the vehicle do the same. Although this will not reduce the risk of a collision, it will reduce the risk of injury or death if an accident does happen.

Financial risk mitigation involves making choices to protect yourself and your family if a negative event