Mr. Rawles,
Regarding the recent post on homeowner’s insurance: I am an insurance claims professional. Most standard homeowners policies have a stated limit (in your example, $250,000) for the main structure and then 70% of that (or $175,000 in this example) for personal property. This 70% is the amount that would cover all food storage and other gear. Even in total house fires, I rarely see a claim where that limit is exceeded. If someone thinks it would be, then that coverage limit for personal property (called Coverage C) can be increased through your insurance agent. Like you said, the best support in case you need to make a claim, is to video or photo your personal property (all your goods that are not attached to the building) and keep that video or photos at multiple locations. Related to this, most policies have a stated limit for theft of firearms, say $1,000. If you have more than this, you will want to increase your coverage there as well. Finally, if you are storing personal property at locations that you own other than your primary residence, there may be a stated limit (say “$1,000 or 10% of Coverage C, whichever is greater”-which would be $17,500 in your example), so be mindful of that as well. The best way to find out what your policy covers is to call your agent and ask for the phone number of the claims office and talk to a claims adjuster or claims supervisor. The agent is not usually the policy expert, but rather the sales expert. – Panama Ridge
Sir:
I wanted to express my thanks to you for all of your books and this great blog. The information is incredible. I have been in the risk management and insurance business for 30 years. I wanted to respond the Nancy S.’s question about insuring her survival gear.
First, let me say that as a prepper myself, I have been worried about how the insurance industry treats preppers as clients. Credit scoring has made it’s way into the basic rating systems of most, if not, all major insurance companies. This creates a problem for “debt free” survivalist/preppers, because becoming “debt free” may cause your premiums to go up.
Credit scoring is determined on the following factors:
* Payment history – 35%
* Amounts owed – 30%
* Length of credit history – 15%
* New credit – 10%
* Types of credit used – 10%
A good payment history (while carrying the highest weight in the formula) is only 35% of the score. Amounts owed, new credit, and the variety of types of credit make up 50% collectively. Therefore, if you have recently paid off your mortgage or other large debt obligations you may see your premiums go up (even with good payment history and without any claims). If you do, it’s your credit scoring having a negative impact on your insurance rates.
There is no way to know how much insurance companies rely on credit scoring to determine the price of insurance (they consider that a secret). So I can’t give you a list of the ones who rely less on credit scoring. However, I have three suggestions to fight the impact of your credit score on your insurance premiums.
First, discuss with your agent the reduction of your debt. They can sometimes be a positive influence for additional credits, and these additional credits can off set the negative impact of credit scoring.
Second, use smaller or more regional insurance companies. These companies are not as sophisticated as the larger insurance companies, who can and do spend millions of dollars annually to figure how credit score impacts claims. Credit scoring by most insurance companies is done electronically, meaning the credit score is pulled when the application is submitted; and therefore, immediately you are placed in a higher rating model. Smaller companies still use a less sophisticated rating systems; and therefore, may not have access to your credit score as quickly. Always use an insurance companies with an A.M. Best rating of A.
Third, the judicious use of credit cards, by using them for small purchases then paying them off, will help increase your score and lower your premiums. (As against our morals as that may be!)
Now more directly to Nancy’s question, the question of whether they believe you have a year’s worth of food stored when you make your claim, is an easy fix. Documentation rules the day! Everyone should take a video of their personal property, including their stores, and other items as evidence that you owned it.
Someone else should shoot this video, as you walk through your home and narrate the video. You should open cabinets, closets, drawers and any of your hiding places to show what you own. This will produce a record of your personal property including your identify and your address (with a view of the outside of your home) and evidencing your personal property. It will also help you remember what you had after a loss.
This video should be duplicated and stored off site to prevent it from being damaged by the same insurable event that you might be making a claim on. One lesson learned from Katrina, was that the one time in most people’s lifetime when they needed a copy of their insurance policy, it was destroyed. Ask for an electronic copy of your policy and store appropriately.
Don’t forget that many of the items we hold dear such as firearms, artwork, business property, electronic data, jewelry, and money (cash or precious metals) have “built-in” limits as to how much the policy will cover. The limits are very low, sometimes as low as $100 (check with your agent or representative). Therefore, you will need to list these items on a “scheduled basis”. This can get expensive so get quotes before you do it.
As to the question of secrecy, most insurance claims adjusters have had a though background check (including criminal checks) by their employers and don’t pose a huge threat of coming back to get your stuff. As to listing your guns on your policy, beware that if the government passes a law stating that the insurance companies must give up the information about who owns a gun, they will give it up in a minute! And they’ve publicly stated as much in their privacy statements.
As the cost of food goes up and our cash becomes less valuable, being able to replace you home and stores will become more difficult. Insuring those properly should be on our list of “must do”! – Ted G.