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It may not be the most exciting topic to talk about, but it really is an important thing to think about in all phases and steps of life. Yes. Even divorce.
It may begin when we are young, and start driving. We are typically added to our parents auto policy. Sometimes we have our own, individual policy. Then, as we step out on our own, we begin to look at renters insurance and maybe a home owners policy if we choose to purchase a home. Once we have families we’ll also look at Life Insurance polices. There are many others types of policies such as an umbrella policy and additional considerations like riders.
I had started going through this process upon sorting out my finances, and first setting up a budget.
Upon going through a refinance of my home mortgage, I had reached out to my insurance agent at the time. This was back in 2011-2012. I had asked to review my home owner’s policy. I then asked a few of my neighbors who they had used, if they were happy, and what they are paying for an annual home owner’s policy premium. To my shock and dismay I had been paying almost twice the premium for similar coverages available through different insurance companies. If you add this up over the time I’ve lived in this home, I had overspent almost ten thousand dollars!. Let’s say that again. TEN GRAND! I was sick to my stomach. I tried working with my existing agent, who I had used since I was 17 years old! I had asked for an explanation, and looked to lower my premium. They didn’t budge, so the search as begun for a new insurance agent and company. Since I had been going through the mortgage refinance, I had received a recommendation from my friend and mortgage broker.
This is an example why it’s very important to work with someone you can trust, and will also look out for your best interest. Since then, I review all my policies and coverages annually. I work together with my insurance agent to get the best coverage at the most reasonable premiums. Not only do we do this at least every year but also if there is any other significant change in your life, or major asset. I feel It is important to find, and work with an insurance agent or broker whom understands you, your goals and what is important to you and what you value.
I recently was able to sit down with my insurance agent, Jason Kochevar, who had guided me through the, sometimes, overwhelming and scary process of choosing the right policy, with the appropriate coverages for myself, my assets, and my family! I had the opportunity to ask Jason some questions, and he shared some things to consider when choosing insurance.
It’s good idea to review and update policies and coverages in any major life change. Maybe this is a new job, a new child, a new vehicle, a wedding, as well as a divorce. Jason, What are a couple things to consider when getting divorced when it comes to your insurance policy?
“Getting divorced touches all aspects of your life including insurance. You are splitting everything and breaking things apart. So when you are looking at insurance that means splitting someone out of the household along with their vehicle. Sometimes one person will stay in the existing house and sometimes the home will be sold but no matter how it happens making sure all parties retain coverage is very important. As an agent, I always have conversations with both people before making any changes… transparency is key. Also, life insurance comes into play quite often. If people have existing policies then beneficiaries may need to be changed and that is easy, but if no life insurance is in place then I have had many couples have life insurance written into their divorce decrees to cover their dependents.”
I’ve heard of people being sued, after a auto accident. How can someone make sure they are protected if something like that happens?
“People do get sued after accidents quite often. This is when your insurance company can stand up for you and protect your liability. It is so important to have good coverage in place. One quick accident can change the financial course of your life if you are under insured. Please consider that the state minimum for auto coverage in MN is 30/60/10. That is $30,000 of bodily injury per person with a total of $60,000 of bodily injury per accident and $10,000 of property damage. Those bodily injury dollars get eaten up very quickly if someone has to go to the hospital and the property damage is ridiculously low. How many vehicles are on the road worth more than $10,000? After the policy limits are met the policy no longer pays and then you are financially liable. Having proper coverages and potentially an umbrella in place can cover a lot of worries for very little money.”
Can you talk about coverage that can help if you are involved in an auto accident, by no fault of your own, and the other party does not have insurance?
“Here in Minnesota we have mandated coverages that will cover you in case of an accident. They are called uninsured and underinsured motorist coverages. Typically these coverages match the liability limits on your policy. As an example, you are sitting at a red light and someone rear ends you and they do not have an auto policy or if the policy they have does not have enough liability coverage to cover your injuries then your own policy will kick in to cover your bodily injuries. There are a surprisingly high number of cars driving on our roads with either no coverage or the state minimums. Being responsible on your own policy will help you. These are the coverage we buy for ourselves.”
What happens if something happens to me? Typically life insurance is in place to provide my family or my children the ability to carry on with, food, shelter, clothing as well as the cost of living that I had provided in the event I’m fatally injured in an accident or otherwise die due to an illness. What are some things people should consider, if they need Life Insurance, and what kind of life insurance coverage is best?
“There is an old joke that the best life insurance is the one that is in force. I do not mean to make light of it but it is somewhat true. So many people have no fallback on life insurance at all. We have all been to fund raisers for families to help pay bills for someone who has recently passed away. They are sad and there is a better way. Life insurance always gets a bad rap unless you have ever known someone who has had a claim and watched to see how the money has changed peoples lives. There are probably a hundred different types of policies and countless ways to figure out what face amount you may need, but I always tell people to not get bogged down in the details. Figure out a budget that you can afford, what you need the policy for, and a time frame is always a good place to start. Term insurance is what most people can afford and it allows you to cover more liability. There is no blanket best policy but talking about it and having something in place is a great first step.”
Any final thoughts you’d like to share, and advice for those looking to review policies?
“As a final thought, I would say that the biggest compliment I can get is exactly what you have mentioned earlier in this article… sitting down and going over policies and making sure things are correct. You can only do this if you have an agent. Insurance is very complicated and trying to figure it out on your own sitting in your pajamas at 3 AM on your computer is not the best way. Just because coverage numbers match from one policy to another does NOT make them the same policy. What things are covered and what are not? What is ACV versus RC? Why have higher liability limits than the state minimum? I can’t figure out this life insurance so I will just forget about it. These are all things that can lead you down the wrong path.”
I’d like to thank Jason, at Farmer’s insurance for his time, and for the guidance he has provided over the last several years. If you’d like to learn more, and are looking to review your insurance needs feel free to reach out to him at: (763) 390-4714.