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Coverage for the Big Stuff: Insurance for When Life Gets Tough

In my latest podcast episode, I was fortunate enough to sit down with Doug Kniffin of Viking Agency Incorporated. With Hurricane Florence battering down our Eastern shores, the autumn always brings to mind the value of good insurance.

In today’s blog post, I’m going to be covering some of the key takeaways from my talk with Doug. If you’re looking for more information on your coverage or are needing to upgrade your current policy, be sure to check out Doug’s website at http://vikingagency.com/.

Insurance Preparedness
The unfortunate nature of insurance is that often by the time we think of it… it’s too late. If you’re currently living in the Carolina’s and Hurricane Florence has appeared on your local news station, at that point it’s too late to go out and grab yourself those extra policies such as flood insurance. However, if you’re sitting safe in San Francisco right now, this is a great opportunity to take some time for review.

To ensure you’re insured there are a few key variables you’ll want to be aware of. Most homeowner policies are a hundred-page documents listing thousands of variables, and each insurance company brings unique variables to the table. For example, in some policies a hurricane or windstorm deductible is triggered if a hurricane makes landfall in your county. While others could be triggered if it makes landfall anywhere in New York State. Therefore, it’s important to have someone counselling you who understands the policy differences.

After you have the policy, and understand it, there is still the factor of a deductible. When it comes to storms such as hurricanes or windstorms, your usual $1,000 deductible is going to convert into a $50,000 deductible, or a percentage of your coverage (say 5% of $1,000,000). So, it’s very important that as a homeowner you get some help when it comes to understanding all the insurance intricacies.

Policy Oversights
There are many subtle things people expect their homeowners’ policies to do, that ultimately aren’t covered. Additionally, there are many ways to get insurance for the little things in life we often forget about. When someone handles your insurance, it is important for them to be aware of all your major life milestones.

For example, if you’re sending your kid off to college, it’s important to consider the insurance options there. If they’re living in a large home with other people, who has tenant insurance? Who’s got a policy in case the house gets damaged? We all know about auto insurance because we can’t drive without it, but what about insurance for your bicycle? Accidents happen, and cyclists can end up injuring pedestrians, and the cyclist will be left footing the bill. We always think about the big-time policies (home, life, and auto) but there are many other ways we can be left unprotected.

Umbrella Asset Policies
Sometimes we simply don’t have enough insurance. If you ever find yourself being sued or suffering severe damages, your auto and home insurance can run out.

An umbrella policy is designed to pick up the slack of your other insurance policies. While we’re sitting pretty, 300,000 to 500,000 in insurance can seem plenty adequate. But as time progresses, your assets accumulate, and bigger problems can occur. Those policies you picked up in your 30's may not be enough. For example, if you own a vintage car, which you yourself tinker with, and one day take it into a specialty body shop for a paint job, and the next day the shop burns down because of something that fired off from your car… well that 300,000 - 500,000 is no longer going to cut it.

If you were to ever use all your home or auto insurance, your umbrella asset policy would be there to provide the remainder you need. It’s available in million-dollar increments and is fairly cheap, averaging at about $250 per million.

New York-Specific Policies
As many of you likely know, New York State is super aggressive for employment laws. Therefore, if you’re a business owner, a great policy to have is employment practice liability insurance, just in case along the way you make a mistake and you’re being audited.

The other policy Doug recommends is cyber liability insurance. If your business is completely and permanently responsible for personal identifiable information, whether on paper or hard drive, if any of that were to get out, you’re responsible. Having that extra form of insurance can help cover the cost of damages if a rogue employee ever leaked your files.
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Anything to do with insurance is critical information, but Doug and I only had a half hour, and your life and policies deserve a lot more attention. Make sure your policies are up to date, and if you have any questions or concerns reach out to myself or Doug.
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Larry Heller, Not Your Average Advisor.

 

A CFP® (Certified Financial Planner) and a former CPA.

Has helped solve complex financial planning for 20+ yrs.

Member of Wealth Management Think Tank.

A financial advisor think tank that meets monthly to discuss investment strategies and planning opportunities.

Larry is approached regularly by the respected journals.

“Journal of Financial Planning”, and “The Wall Street Journal”.