Author: Linda Grissett

Understanding Insurance Loss Valuation Options

Posted on by Linda Grissett

Insurance can be a confusing topic, especially when it comes to understanding the different types of coverage and their associated terms. One area that often causes confusion is the difference between actual cash value, replacement cost, stated value, and agreed value. In this blog post, we’ll break down each term to help you better understand your insurance coverage.

Actual Cash Value

Actual cash value (ACV) is the fair market value of an item at the time of loss. It takes into account the item’s age, condition, and depreciation. In the event of a covered loss, the insurance company will typically pay out the actual cash value of the item, which means you may not receive enough money to replace the item with a new one. For example, if you have a 10-year-old TV that is damaged in a covered loss, the insurance company will pay out the current market value of a 10-year-old TV, not the cost to replace it with a new one.

Replacement Cost

Replacement cost is the amount of money it would take to replace an item with a new one of like kind and quality. Unlike actual cash value, replacement cost does not take into account depreciation. In the event of a covered loss, the insurance company will typically pay out the replacement cost of the item, which means you will receive enough money to replace the item with a new one. For example, if you have a 10-year-old TV that is damaged in a covered loss and you have replacement cost coverage, the insurance company will pay out the cost to replace the TV with a new one of like kind and quality.

Stated Value

Stated value is a term used in insurance policies for items that have an agreed-upon value between the policyholder and the insurance company. For example, if you have a classic car that is worth $50,000, you and your insurance company may agree on a stated value of $50,000 for the car. In the event of a covered loss, the insurance company will pay out the stated value of the car, regardless of its actual cash value or replacement cost.

Agreed Value

Agreed value is similar to stated value in that it is an agreed-upon value between the policyholder and the insurance company. However, with agreed value coverage, the value is typically determined at the time the policy is written, and it cannot be changed during the policy term. This means that if the item’s value increases or decreases, the agreed value will not change. Agreed value coverage is often used for items that are difficult to value, such as antiques or art.

In conclusion, understanding insurance terms such as actual cash value, replacement cost, stated value, and agreed value can help you make informed decisions about your insurance coverage. It’s important to review your policy and speak with your insurance agent to ensure you have the appropriate coverage for your needs. Contact LG Insurance Group if you need assistance understanding your coverages or other available options.

How does a percentage deductible on my homeowner’s insurance work?

Posted on by Linda Grissett

A percentage wind hail deductible is a type of insurance policy deductible that is commonly used in areas that are prone to severe weather events, such as hurricanes, tornadoes, and hailstorms. The deductible is the amount of money that the policyholder is required to pay before their insurance coverage kicks in. With a percentage wind hail deductible, the deductible amount is calculated as a percentage of the insured property’s total value (dwelling limit), rather than as a fixed dollar amount.

For example, if a homeowner has a wind hail deductible of 2% and their home is insured for $500,000, then their deductible amount would be $10,000. If their home sustains damage from a hailstorm that costs $20,000 to repair, the homeowner would be responsible for paying the first $10,000 (the deductible), and the insurance company would cover the remaining $10,000.

The percentage wind hail deductible can vary depending on the insurance policy and the location of the property. In areas that are more prone to severe weather events, the percentage deductible may be higher than in areas with lower risk. The deductible may also vary based on the type of damage that occurs. For example, there may be a separate deductible for wind damage and hail damage.

It’s important to note that the percentage deductible applies to the insured property’s value, not the amount of the insurance claim. This means that if the insured property has increased in value since the policy was purchased, the deductible will also increase. It’s also important to understand that the deductible is a separate expense from the insurance premium, so it’s important to factor in the deductible amount when choosing an insurance policy and budgeting for the cost of repairs in the event of damage from severe weather events.

What is ACV or Roof Payment Schedule on my Homeowner’s Insurance?

Posted on by Linda Grissett

First a little history to help consumers understand the issues surrounding roof claims and the struggles facing insurers and consumers. At least 15 years ago when severe storms were constantly pounding the Southeast and Midwest, roof claims skyrocketed. There was a time when insurers would typically pay the full loss repairs upfront before any repairs began. Though not necessarily the majority of roof claims, fraud by homeowners and roofing contractors increased dramatically around this time. Some roofs were either left unrepaired after payment but more so, unscrupulous roofers would entice consumers by offering to “pay their deductibles” by inflating their repair estimates or even worse actually creating or worsening damage to roofs to simulate hail damage and causing full roof replacements. These practices inflated claim payouts significantly and insurers responded to prevent even more dramatic increases in homeowner premiums. In addition to separate wind and hail deductibles, insurers changed handling of claim payouts to hold out a percentage of the repair costs until work was completed, increased scrutiny on roof damage, analyzed roof contractor patterns and started adding discounts as well as acceptability guidelines around roof age. State Insurance Departments also aided efforts by tracking some of these issues within their fraud units.

These events led to variations of coverage options within today’s insurance markets. These options vary by insurer, geographic region, roof type and roof age typically. An insurer may allow a consumer with a newer roof to choose between these options, however, if a home has an older roof, the “option” or coverage endorsement may be mandatory for coverage to be accepted by the carrier.

One of these coverage options is referred to as a roof Payment Schedule which outlines the payment calculation for roof replacement costs in the event of a covered loss. In a roof payment schedule, the insurance company specifies the amount of money that it will pay for roof replacement costs, typically as a percentage of the total cost of the replacement. The payment schedule is based on the type of roof, its age, and other factors that affect the cost of replacement.

For example, an insurance company may have a roof payment schedule that states that it will pay 80% of the cost of replacing a 15-year-old asphalt shingle roof. This means that if the cost of replacing the roof is $10,000, the insurance company will pay $8,000 and the policyholder. The policy deductible will also be applied to the final payout as well, which would lower this amount further by either a flat amount or a percentage of your dwelling limit. It’s important to note that the roof payment schedule may be different for different types of roofs and may be subject to certain limitations and exclusions.

A similar option may simply state that a loss involving roof replacement would be determined on an Actual Cash Value (ACV) basis. This would simply equate to a roof that has a 20-year estimated life span would receive a percentage of the replacement cost value depending upon its age at the time of loss. For example, if this roof had significant covered damage when it was 10-years old, then the insurer’s payout would be 50% of the full replacement cost less the policy deductible. Here a $10,000 roof replacement would result in an evaluation of $5,000 less your applied deductible.

The most robust coverage evaluation remains Replacement Cost, which does not account for depreciation. Only the policy’s applicable deductible would apply to the full cost of roof replacement for a covered loss in determining the amount of insurance paid to the consumer. With the same $10,000 roof repairs from above, you would receive the full $10,000 less your applied deductible.

The difference between these different evaluation methods (in combination with your selected wind/hail deductible) could mean a difference in tens of thousands of dollars at the time of loss. How much are you willing to lose in a claim payout for a little premium savings? Weigh your options carefully and understand the implications of policy choices.

Policyholders should always carefully review their insurance policy and all endorsements to understand their coverage, each and every year. Some insurers may change coverage for a roof at renewal. This means that some insurers will initially offer Replacement Cost for insureds with roofs that are 5, 10 or 15 years old, but at a later renewal date when their roof is of a certain age, their coverage could shift to ACV or a Payment Schedule. Be sure to review your policy each and every year. If you would like a coverage or renewal review, be sure to contact us at LG Insurance Group. We are happy to assist you!

Flood Insurance: Do You Need it?

Posted on by Linda Grissett

Flooding can happen anywhere, and it’s important to be prepared. While properties located in high-risk flood zones are more likely to experience flooding, it can also occur in areas that are not considered high-risk. Even if you are not in a high-risk flood zone, there are other factors that can increase the likelihood of flooding such as nearby bodies of water, heavy rainfall, and poor drainage. Additionally, if you live in an area that has a history of flooding, it may be a good idea to get flood insurance even if you are not in a high-risk flood zone.

It’s important to note that standard homeowners insurance does not cover flood damage. If your home is damaged or destroyed by a flood, you will need to have flood insurance in order to receive financial assistance to repair or rebuild your home.

When determining whether or not you need flood insurance, it’s a good idea to speak with an insurance agent who can provide you with more information about the specific risks associated with your property. They can help you understand the different types of flood insurance that are available, and help you make an informed decision about whether or not to purchase flood insurance.

Keep in mind that if you have a mortgage on your property, your lender may require that you have flood insurance. Even if you own your home outright, it’s still a good idea to consider purchasing flood insurance as a precaution. It’s better to be safe than sorry when it comes to protecting your home and your family from the financial devastation that can result from flooding.

In conclusion, flooding can happen anywhere and it’s important to be prepared. Even if you are not in a high-risk flood zone, you may still want to consider purchasing flood insurance as a precaution. If you have any doubts or concerns about whether or not you should get flood insurance, contact LG Insurance Group and we can provide you with more information about the specific risks associated with your property and help you make an informed decision.

How much does your At-Fault Accident impact your Auto Insurance Premiums?

Posted on by Linda Grissett

The impact of an at-fault accident on your auto insurance premiums can vary widely depending on a variety of factors. Some of the factors that may affect the size of the premium increase include:

The severity of the accident: More serious accidents, such as those involving significant damage or injuries, may result in larger premium increases than less serious accidents.

The amount of damage caused: The amount of damage caused by the accident can also affect the size of the premium increase. If the accident resulted in significant damage to your car or the other party’s car, your premiums may increase more than if the damage was minimal.

Your insurance company’s policies: Different insurance companies have different policies when it comes to handling at-fault accidents, so the impact on your premiums may vary depending on which company you’re with.

Your driving record: If you have a clean driving record prior to the at-fault accident, your premiums may not increase as much as they would if you had multiple accidents or traffic violations on your record.

State laws: Some states have laws that regulate how much insurance companies can increase premiums after an at-fault accident, so the impact on your premiums may vary depending on where you live.

It’s difficult to give a specific estimate of how much an at-fault accident will increase your premiums, as it will depend on these and other factors. However, it’s not uncommon for premiums to increase by hundreds or even thousands of dollars after an at-fault accident.

Why home and auto insurance rates are rising in 2022

Posted on by Linda Grissett

Rising Insurance Costs

Thanks to an unusual convergence of market trends, ushered in by the pandemic and other disruptive events, you may see a bigger change to the cost of your home and auto insurance than usual when it comes time to renew your policies this year.

Insurance rates are based on what an insurer thinks it will cost to make you whole in the event of a loss – whether it’s roof damage during a windstorm or a vehicle totaled during a traffic accident. As you’ve likely noticed, pretty much everything costs more than it did even a few years ago.

What’s driving higher home insurance costs

If you’ve shopped at Home Depot or Lowe’s lately, you’ve certainly seen that the price tags on building materials have risen dramatically. Last year alone, the cost of building materials rose 14.1%, with lumber playing an outsized role in that trend, more than tripling in price since March 2020.

To make matters worse, the home-building industry is facing a shortfall of at least 200,000 skilled laborers, which is driving up construction-related labor costs. Combined with the high cost of construction materials and historically low housing inventory, this has been making home claims much more expensive for insurance companies.

What’s driving higher auto insurance costs

An ongoing shortage of microchips and other critical parts like wiring harnesses, plastics and glass is making it more costly to repair or replace a vehicle after an accident.

Supply chain issues are rapidly depleting inventories of new and used cars. Inventories have reached a critical low-point, falling 87% between 2020 and 2022. As a result, the average price of new cars has risen 14% over the same period, while used car prices have skyrocketed 55%.

At the same time, accidents have become more frequent and severe, increasing the number and cost of auto claims. In the first six months of 2021, nearly 2.5 million people sustained injuries requiring consultation with a medical professional. Accident fatalities in Jan. 2022 were 14% higher than in Jan. 2020.

Focus on value as you explore ways to save

Keep in mind that savings comes in many forms. The value of the coverage you choose today may save you more in the long run than the lowest possible premium. Contact us to review your current coverage. Click here to get an online quote, Compare Quotes | LG Insurance Group (lg-ig.com). We will help you explore opportunities for discounts that could offset higher rates when it comes time to renew your coverage.

Side Hustles & Entrepreneurism Risks: Are You Covered?

Posted on by Linda Grissett

After businesses shuttered and U.S. workers were sent home at the height of the pandemic in 2020, a report from Dollar Sprout revealed that more that 27% of those with a side hustle rely on that income to pay their bills. They might be doing anything from tutoring, freelance writing, offering professional consulting services, walking dogs or delivering groceries, to name a few.

The Dollar Sprout report also revealed that:
• Of those with a side hustle, 18% expect to turn it into a full-time source of income.
• Although 23% lost side-hustle income because of COVID-19, 42% remain hopeful about their prospects.

While the pandemic reshaped the workplace, the prevalence of home-based businesses had already given rise to ETSY, the fourth largest U.S. ecommerce site by monthly visits, where people sell everything from crafts and antiques to handmade toys and items for weddings, among other things.

The community of freelancers is increasing steadily. The Freelancers Union, established in 1995, says:
• There were 57 million U.S. freelancers in 2020.
• Americans rack up more than 1 billion freelance hours each week.
• Freelancers contribute more than $1 trillion annually to the U.S. economy.

New models of work create different insurance requirements. As individuals take on side hustles to generate more income or out of a desire to operate their own businesses, they also take on risks. If you have a side hustle, you need to insure yourself accordingly.

Liability insurance tops the list. Your Trusted Choice Independent Insurance Agent® can help you evaluate your side business, assess your existing coverages, and determine if you need a professional or business liability policy in addition to personal insurance. As a highly trained professional, your Trusted Choice agent can advise you of the specific or often overlooked coverages you should consider, and then assemble competitive product choices for you from the insurance marketplace.

Why is this so important? Even the most benign gig could destroy an individual financially in the absence of appropriate insurance coverage. Imagine a child takes a nasty tumble in your home while there for a piano lesson or a client accuses you of plagiarism: You will be liable. Or consider the costs you would be responsible for if the dog you’re walking breaks loose and attacks a pedestrian. The right policy can protect you.

Cyber insurance is also a growing consideration. If you set up an online store to sell crafts or homemade baked goods and a hacker steals your customers’ credit card data, what would be the cost to you? Would you be able to recoup your losses? Cyber insurance can protect you in the event of a breech whether your computer is hacked or your phone containing private information is stolen.

Auto insurance. Some automotive policies are for personal use only. Others may cover a business-related accident, but with limited coverage. If your side hustle involves driving and you get into an accident, do you know whether your insurance will cover you? If not, check with your Trusted Choice agent before an accident occurs.

Even if you are employed as a delivery driver, you need to know whether the company’s insurance covers you and what the limits are for collision, liability and medical. Talk with your independent agent, so you’ll know if you need a commercial policy for adequate protection.

Fire insurance. You probably have a homeowners or renters policy that provides coverage for losses incurred in a fire. But what happens if you operate a home business and spent thousands of dollars on office equipment? Will the insurance extend beyond your personal belongings to cover that equipment? Or, for that matter, will it cover the materials you purchased to make the items that you sell, or the business inventory you store at home?

Find answers before you need to make a claim, and avoid potentially devastating surprises. Your Trusted Choice agent can explain where your personal coverage ends, and where the gaps are in your business coverage.

As your business grows, be sure to inform your Trusted Choice agent so they can work with you to adjust your coverages and ensure the policies keep pace with your needs — especially if you hire workers or engage a contractor. Your agent can advise you about workers’ compensation insurance and employment practices liability insurance. Your agent also can review your contractor’s proof of insurance to determine if it meets your business’s needs.

Think of your Trusted Choice agent as a business partner who has your interests at heart. Your agent will work with you every step of the way as you grow your side hustle and reap the fruits of your efforts. Contact LG Insurance Group today if you have any questions regarding your insurance needs.