There are companies out there, such as A.M. Best and Standard & Poor’s, which rate life insurance providers on various financial strengths in order to help consumers make more informed decisions (insurance company ratings).

Each state in our great nation also has a department of insurance that monitors the financial status of life insurance companies and regulates their practices.

If you’re in the market for life insurance, you should look for an organization that’s been around a while, with a proven ability to pay claims to your beneficiaries in the event of your death.

After all, it’s a lot more likely an insurer will pay your claim if they’re still in business…

It’s also not a bad idea to determine how much life insurance you need prior to beginning your search.

That said, here are the top 10 largest writers of life insurance in the United States, along with their AM Best rating as of 2007, per the III.

Top 10 Life Insurance Companies in the United States

1. MetLife – rated A+, Superior
2. Prudential Financial – rated A+, Superior
3. New York Life Insurance – rated A++, Superior
4. TIAA-CREF – rated A++ , Superior
5. Massachusetts Mutual Life Insurance – A++, Superior
6. Northwestern Mutual – rated A++, Superior
7. AFLAC – A+, Superior
8. Genworth Financial – A+, Superior
9. Principal Financial – A+, Superior
10. Lincoln National – A+, Superior

Some of the insurance companies listed above may offer a combination of life, property, casualty, and/or health insurance coverage.

Life insurance companies, much like other large corporations, don’t always specialize in just one thing, though they tend to stick to insurance and financial services.

Keep in mind that there are thousands of insurance companies out there to choose from; some focus on only one type of insurance or one specific region of the United States, while others offer a wide array of services to customers nationwide.

But it’s not necessary to purchase a life insurance policy from one of the companies listed above to ensure you receive adequate coverage or service.

Be sure to get insurance quotes online and/or contact an independent insurance agent to compare different plans, coverage, and rates.

Most people cringe at the thought of purchasing insurance. Home, auto, health, life…Where does it end?

A better question is where should it end?

Insurance can be a valuable tool to protect our health, financial future, and property.

Many types of insurance policies are highly recommended, if not mandatory, and well worth the miniscule cost to protect our interests. Unfortunately, there are organizations out there playing into our fear of the unknown to sell us insurance coverage we may not need.

These insurance flops may not be necessary either because the odds are astronomical you’d suffer a loss from the event insured against, or there is another policy you may (or should) already have in place to cover you against the specified peril in question.

Let’s take a look at the top 10 insurance policies you could probably do without:

1. Rental Car Insurance

Also known a collision damage waiver, or CDW, this is not really insurance; rather, a promise from your rental car company stating they won’t make you pay for damage to a rented vehicle. This coverage is actually provided in most personal auto policies (check before you rent) under your liability limits. Additionally, many credit card companies will provide this coverage, up to a specified limit, when using their card for purchase.

2. Life Insurance for Your Children

This is typically sold under the guise that rates can be very low for a child and you may get to keep the low rates throughout their lifetime (and build value if you purchase a whole life policy). Think this one through. The reason the rates are so low is because the odds are slim your child will not grow up to be a healthy adult. The insurance companies make big money, because they don’t pay out many claims (that alone is an indicator it might not be a great value for you). It may be a better idea to start putting money away for a college fund or any other investment account.

3. Flood Insurance

Read this one carefully. You either REALLY need flood insurance or your REALLY don’t. Don’t take this article to say flood insurance doesn’t have its place in the legitimate insurance arena. However, if you do not live in a flood plain or near a waterway or coastline, this might not be necessary for you. You’ll probably know if you need flood insurance if your lender requires you to purchase it to get your mortgage approved. A flood certification is part of the loan process. Not sure? Call your lender.

4. Mortgage Life Insurance

You’ve probably received junk mail regarding this type of insurance if you own a home. This falls under the category, “either have or should have” as mentioned above. A good life insurance policy, whether term or whole, already incorporates the cost of your mortgage, in addition to many other bills you will likely leave behind. No need to double up on this one by adding the mortgage life policy. Click here to read more about how much life insurance you should purchase.

5. Private Mortgage Insurance – PMI

If you finance over 80% of the value of your home purchase in one loan, PMI is mandatory to protect the bank or lender against default. PMI can also be avoided by borrowing no more than 80% of the value of your home, or by taking out two concurrent loans, with the first capped at 80% and the second for any amount above that.

6. Credit Card Balance Insurance

Eerily similar to PMI, discussed above, this is insurance you can purchase for something you should avoid in the first place. Look; if you have to buy insurance, which costs you more money, to cover you against money you shouldn’t be spending, you might be making a mistake. Think twice!

7. Unemployment Insurance

Unemployment insurance is already offered by the state you reside in, but this type of coverage (sold as a separate policy) may be necessary for those who earn large salaries, not typically replaced by state provided unemployment benefits. Financial planners will probably suggest you start and maintain a rainy day fund to cover you in the event you lose your income rather than pay more money for insuring yourself against it. We are not trying to beat a dead horse here, but it may be better to save and plan for some negative events than purchase insurance against them.

8. Personal Injury Protection – PIP

Many in the insurance world share the opinion that this coverage is not necessary for those who are already covered by an existing health insurance plan. The case can be made that PIP is nothing more than health insurance for you while in your car. Speak with your independent insurance agent before cancelling or deciding not to purchase this type of coverage.

9. Accidental Death

Also commonly offered on as additional coverage on an auto insurance policy, accidental death insurance is another example of insurance you “either have or should have,” in the form of a life insurance policy. Many life insurance policies already contain language that provides additional benefits if your death is the result of an accident.

10. Auto Physical Damage Coverage

This coverage is typically mandatory if you lease or take out a loan for your vehicle. Your lender requires it to protect their financial interest in your car. However, if you own your car outright and it’s not very valuable, you might consider dropping this coverage from your auto policy to save some money. It doesn’t make sense to pay for insurance in the event your car is damaged or totaled if you would just purchase a new car rather than fix your existing one.

In summary, insurance can protect your health and financial future, but certain types, discussed above, may slowly eat away at it as well.

It’s important to speak with an insurance agent prior to reducing or removing coverage from an existing policy.

One of the main points of this article should be that it’s important to be informed prior to making insurance decisions. You might find that having good health, life, homeowner’s/renters and auto insurance will cover your needs if you are the “average Joe.”

Get online quotes or speak to an independent agent if you have any questions about your insurance coverage or premium.

Insurance is a numbers game…bottom line. There is a simple answer to every insurance question that begins with, “why is insurance so expensive for X?”

The short answer is because the group in question causes, and/or is involved in more auto accidents and receives more tickets than the average driver. Period.

The same goes for why car insurance is so expensive for teenagers.

You may ask what tickets have to do with it? Same deal; drivers with more tickets are more likely to get into accidents.

But in order to completely understand it all, you need to know how insurance rates are determined.

Let’s focus on one particular piece of the equation to demonstrate why rates are higher for people less than 25 years of age.

Insurance companies keep track of every claim they have to pay for (because it is money they actually lose).

Additionally, there is an organization, known as Insurance Services Organization (ISO) that allows insurance companies to access their compiled data about claims from other companies.

What do they do with this information?

The next step in the process, simplified for the purpose of this article, is to plot the data on a graph and look for certain trends that stand out from “the norm.”

When the information is plotted, it becomes obvious who has more accidents. Naturally, insurers charge those individuals higher insurance premiums.

For example, newly licensed individuals, people under 25 years of age, and those who aren’t married.

Conversely, those with historically fewer auto accidents are charged lower premiums for coverage.

This is also the reason insurance companies review your MVR, C.L.U.E. report and even vehicle history records to determine exactly what type of driver, or “risk,” you represent in terms of filing a claim.

It is worth noting that insurance companies are not allowed to evaluate us based on attributes that can be considered discriminatory, such as race or religion.

What is this information leading to?

Nowadays, insurers are attempting to segment their potential insured into as many different identifiable attributes as possible. This will ensure that those who deserve cheap car insurance get it, and those who are likely to file a claim will pay more. It’s really a way to make it more equitable for everybody.

This pricing model gave rise to the new craze of providing discounts to drivers (good student discount, good driver discount).

For example, if you’re part of a group that normally pays higher car insurance premiums, you may still be able to achieve a lower overall premium for having a good insurance score, maintaining continuous coverage, or being accident free for a specified period of time, perhaps three to five years (how can I lower my car insurance rate?).

Get online insurance quotes or visit your local independent insurance agent to obtain quotes from multiple insurers. The premium you pay may be greatly reduced by seeking coverage from the type of insurer who has an appetite for your particular “risk group.”

The good news is that when it comes to life and health insurance, the younger you are, the more likely you are to pay a lower premium for coverage…so you’ve got that going for you!

(photo: cappellmeister)

If you’ve ever been in a car accident, you know it can be a lot of drama. Aside from any health-related issues, you’ll probably also have to deal with damage to your vehicle.

Whether the accident was your fault or caused by another party, you’ll want your car repaired or replaced as soon as possible.

This is where things can get messy. In the unfortunate event your car is totaled, you are typically at the mercy of the insurance company’s adjuster, who ultimately determines the value of your car.

Which companies are used to determine a car’s value?

This isn’t really an industry secret. There are three companies an insurance adjuster typically relies on to determine a vehicle’s value:

1.Kelly Blue Book

2.Edmunds

3.Nada

Loss Valuation Methods

However, each company uses a slightly different valuation technique. Who is the best? It’s hard to say. But whichever company determines your car’s value to be the highest is likely the company you would agree with.

Often times, your opinion will differ from that of your insurer, and how much money you receive for the totaled vehicle will depend on your policy language. Specifically, the valuation method you agreed to; either replacement cost or actual cash value.

Replacement Cost

Unlike homeowner’s insurance, replacement cost is not an option for every car on an auto policy. On the typical policy, replacement cost is only offered on newer vehicles.

Usually your car can’t be more than two years old, or in some cases, three years old (the latter being rare).

This is basically because a car’s value depreciates quickly. Insurance companies would lose quite a bit of money if they were to agree to replace a three or four year old car with a new one. If this were common practice, we would all be paying much higher insurance premiums than we do now.

Actual Cash Value (ACV)

Actual Cash Value is determined by taking a vehicle’s replacement cost minus depreciation. This is the most common valuation method employed by auto insurance companies.

For example, say you purchased a $20,000 car in 2007. In 2010, your car is totaled and needs to be replaced. Since cars lose most of their value in the first couple years, your $20,000 car is now only worth $14,000…no matter what you still owe on it, which would likely be in the $15,000-$17,000 range after three years, depending on down payment.

That could put you in a precarious position. A check from your insurance company for $14,000 would leave you with as much as a $3,000 auto loan or lease balance deficit.

This is where gap coverage, also known as loan or lease coverage, would come into play. If you have a newer vehicle, less than two years old, it might be a good idea for you. For an additional premium, your insurer will pay the difference between what your car is worth and the outstanding balance on your current loan.

Stated Value:

Finally, there is stated value physical damage coverage, which is normally reserved for classic cars or any other vehicle whose value may be hard to determine. Ultimately, you and your insurer agree on the vehicle’s value prior to policy inception. You will likely have to produce an appraisal from a reputable source to back up your proposed value.

Tip: Keep in mind that if the accident is your fault, you would need to have physical damage coverage in place to ensure your car is repaired or replaced by the insurance company.  That includes both collision and comprehensive coverage, assuming the accident was the result of anything other than a collision.

Anyone who has ever shopped for or purchased insurance has surely asked this question.

Many of us feel like we don’t really need insurance, and only purchase it because it is mandatory to operate a motor vehicle or necessary if we carry a mortgage.

Insurance agents regularly hear the complaint from clients who have paid for insurance for “X” amount of years without ever having an accident or filing a single claim.

Insurance is a Cheap Risk Management Tool

The reality of the situation is insurance is an extremely cheap tool for transferring risk. For every one of us who hasn’t had an accident, we know of someone who totaled a brand new car, had a tree fall on the roof of their house, had something stolen out of their car, or worse, caused a car accident where someone was injured and needed expensive medical attention.

All of the above are “risks” we take every day by operating a car or owning property. That said, where would those who suffered one of these losses be had they not had an insurance policy to cover their liability or property damage?

Depending on the severity of the loss, the answer is likely bankrupt! Better yet; ask the individual who suffered the loss and was reimbursed, how they feel about it. Their point of view has probably changed drastically regarding the matter.

Insurance Costs Are Spread Among a Group

It is important to understand how insurance rates are determined to fully grasp why the costs are what they are. Insurance is a social tool. This means that everyone in the group “pitches in,” or pays a small premium to benefit the group as a whole.

In exchange for the small premium, the insurer might pay out a vast sum of money at any given time as a result of your negligence or to replace your property if it is stolen or otherwise damaged. The amount the insurer pays out would likely be much more than the average individual could afford at any given time, which is exactly what makes insurance so important.

Some people pay into the “pool” and don’t get benefits (file claims) while others do. The problem is you never know when your time to “get something out” will be, therefore, we must continually pay into the “pool” to ensure we get the benefits when they become necessary.

Cost of Insurance Varies Based on Individual Characteristics

The cost of insurance depends greatly on individual characteristics, some of which are under our control, and others that aren’t.

For example, you cannot help what age you are at any given time (such as a teenager), but you can certainly control how fast you drive, or how expensive of a home or car you purchase or how you manage your personal finances (insurance score).

There are also several discounts available to us (good drivers discount, good student discount) as insured that we can take advantage of when trying to snag a cheap rate.

It Pays to Shop Around

Independent insurance agents know one of the biggest reasons a person pays too much for insurance is their loyalty to a particular insurance company, which stops them from shopping their rate every few years.

Often times, insured will mistakenly believe that one particular insurance company is more dependable than another, based on limited knowledge of the industry, or simply by believing in a television ad campaign.

Tip: This leads to blindly accepting higher rates each year from your insurance company. Many of the largest insurance companies in the U.S. also have the highest insurance rates!

While there are less-than-reputable insurers in the U.S., they are few and far between. Each State Department of Insurance aggressively regulates insurance companies who conduct business within their borders.

Insurers must meet strict financial guidelines to ensure they can pay claims and answer to any consumer complaints filed against them. Additionally, a reputable insurance agent will not sell insurance for a company that has a history of poor customer service. It’s bad for their business!

Get online insurance quotes or contact your local independent insurance agent if you feel like you’re paying too much for your insurance. It’s the best way to ensure you get the coverage you need at the price you want.

Insurance Q&A: “Do insurance companies check driving records?”

Well, some do…and some don’t. The answer depends on the risk profile of the insurance company you most closely match up with.

But it’s a safe bet your driving record will be ordered as part of the underwriting and pricing review for your insurance policy.

The companies that don’t regularly order driving records probably won’t tell you, as they hope you’ll fess up about the tickets and accidents you’ve had – that way they won’t have to pony up the money to pay for the reports, which can cost between $1 and $7 each.

It may not sound like much, but if a company is paying for thousands of reports on a daily basis, with no guarantee of issuing a policy, it can add up quickly!

And while you might be able to fib about your driving history to lock in a lower rate, if the company decides to review your records after the policy is issued, they may raise your premium mid-term or go as far as to drop you or not renew your policy.

What do the driving records reveal about you?

A Motor Vehicle Record (MVR) details your tickets and accidents, while a C.L.U.E report documents your claims history. Insurers also review Motor Vehicle History reports.  Typically, your driving history is reviewed as far back as five years for standard and preferred insurers and three years for non-standard companies.

How do insurance companies use your driving records?

Underwriting:

For underwriting purposes, you driving record, comprised of your MVR and/or C.L.U.E. report, may be checked to determine if you are an eligible candidate for their program. For example, standard and preferred insurance companies may not offer a policy to a driver who exceeds their acceptable underwriting guidelines.

On the other hand, non-standard insurers may allow any number of tickets and/or accidents for a driver (or household), but will charge accordingly. Their “appetite” is much broader than that of the standard and preferred carriers. These insurers are much more comfortable with below average driving records.

Pricing:

The other purpose of the driving record review is to determine how much money to charge you for insurance. It’s a big part of how car insurance rates are determined. Put simply, the more tickets, accidents and claims you have on your record, the more you can expect to pay.

It should make perfect sense, but it also helps to understand how insurance companies make money to better understand the pricing of your insurance policy.

What if I can’t obtain insurance because of a poor driving record?

If you are deemed uninsurable by even the most lenient of insurance companies as a result of your driving records, you can still obtain insurance via an assigned risk program.

Assigned risk programs are usually state run insurance programs that will insure any driver. These programs are necessary mostly because car insurance is mandatory in nearly all states.

After all, it wouldn’t make sense for a state to force you to have insurance, but not provide an option for you to purchase it.

In order to qualify for such a program, you must typically demonstrate that you have attempted to get insurance in the regular marketplace, but have been turned down by at least two non-standard companies.

This type of insurance is not designed for those who cannot AFFORD a policy from a non-standard company, but rather for those who have been denied coverage. And yes, you can expect to pay a very high premium for this type of car insurance.

Similar to credit reports, driving records aren’t error free by any stretch, so be sure to ask for the results to verify you are charged accordingly.

Tip: Be sure to shop around, as your current company may be charging you for a ticket received as far back as five years ago, while others only look back three years.

(photo: specialkrb)

State Farm apparently has too much money to spend on advertising…which should make their policyholders pretty upset.

After all, if they are the largest personal lines insurer in the United States, why don’t they offer the lowest rates? Isn’t that how the concept of bulk sales works?

But I digress. State Farm, which is focused on the increasing trend of individuals buying insurance from direct insurers like Progressive and Geico, has launched a campaign to remind us all why we need an insurance agent.

I visited the whyagent.com website to see why I needed an agent, and was disappointed to find they don’t really offer any solid reasons, rather than make a weak attempt at comedy.

State Farm’s overall point appears to be that we need an agent so we have a live, local person to answer our questions and “take care” of our insurance needs.

Of course, that’s really only half the story. The other half of the story won’t be addressed by State Farm because it won’t help them sell any insurance. Just having “an agent” might not do you any good.

The fact is, using an independent insurance agent, rather than a captive State Farm agent, is the best route to ensure you get the best deal on your insurance (independent agent vs captive agent).

A captive agent only has one pricing option for your policy. No choices…other than take it or leave it.

The only way to get a “better deal” from a captive agent is to reduce coverage.

If you buy a State Farm insurance policy and they raise their rates, your agent can’t do anything for you, other than tell you that “rates are going up everywhere,” which is an outright lie. Insurance rates have been dropping for nearly six years.

On the other hand, an independent insurance agent can “be there for you” and shop your rates with several different insurance companies to ensure you get the best rate, without sacrificing coverage to snag a better deal.

If the insurer you choose raises their rate, an independent insurance agent can simply shop your rate again and move your policy to a company who isn’t raising rates to take more of your money.

Remember, State Farm, like any other national corporation with a multi-million dollar television advertising budget, is selling an image. I can’t blame them, it’s proven to work.

But what most consumers aren’t aware of is the fact that many captive insurance agents had ZERO insurance experience prior to becoming agents.

In fact, that is one of the main recruiting strategies for captive insurers. They can give you a turnkey insurance agency. That’s a pretty scary thought.

Conversely, independent agents almost always have multiple years of insurance industry experience because they cannot get contracts with insurance companies without proving they know what they’re doing.

Do yourself a favor. If you’re currently insured through one of the large insurance companies that advertise on television every waking second, at least consider contacting an independent agent to obtain a quote or two.

You might be shocked to see how much you are overpaying for your insurance.

Although car insurance rates are cheaper for women than men, new technologies seem to be making teen girls a greater risk behind the wheel, according the Allstate 2009 State of Teen Driving survey.

Of the 1,063 teens who participated, 51% of girls said they were likely to use a cell a phone to talk, text, or e-mail while driving, compared to just 38% of male respondents.

And 84% of girls said they were likely to adjust music selections or volume while driving, versus 69% of boys.

Technology aside, 48% of girls said they were likely to speed more than 10 mph over the limit, compared to 36% of boys.

Additionally, 16% of girls described their driving as “aggressive,” nearly double the 9% rate seen in 2005.

Girls are also less likely to speak up if they feel the person behind the wheel is driving unsafely.

Of course, women typically have fewer accidents than men, so their car insurance rates are lower.  And there’s a good chance the boys in the survey are fibbing more than the girls.

But it appears as if the gap is narrowing, so don’t be surprised if you’re stuck paying an arm and a leg to insure your 16-year old daughter.

To keep car insurance rates in check (car insurance is expensive for teens), the best thing your teen can do is maintain a healthy credit score, get good grades in school, obey traffic laws, and drive defensively.

By doing so, your teen will have a better chance of being eligible for discounts offered by car insurance companies, such as the good student discount and the good driver discount.

They’ll also be a whole lot safer out there on the road!

Search for car insurance quotes online or get in contact with your car insurance company or independent agent to determine if your teen qualifies for such discounts.

Insurance can be a tricky business to understand. There are thousands of insurance companies in the United States, and many are vying for your homeowner’s insurance policy.

Each company’s policy will offer basic coverage types and a host of different endorsements, which are additions and exclusions of coverage.

Because there are so many different types, it can be difficult to understand exactly what is and isn’t covered by your homeowner’s policy.

But the last thing you’d want to do with your largest investment is stick your head in the sand and assume your policy covers everything that can go wrong.

The best way to know exactly what’s covered is to review your policy with your insurance agent.

Below is a list of the top 10 losses (many water-related) your homeowner’s policy may not insure against depending on which state you live in, what type of policy you purchased, and what endorsements have been added.

Note that endorsements don’t only add coverage, but can restrict it as well.

1. Flood

No homeowner’s insurance policy covers you against a flood. Flood losses are insured exclusively by the government through FEMA and the National Flood Insurance Program, or NFIP. Insurance companies and agents can sell these policies for the NFIP, but are not the entities actually insuring the damage. If you have not specifically purchased a flood insurance policy, you are not covered. Many lenders will require you to have a flood policy if your home is subject to a flood based on maps created by the government agency. Check out more flood insurance FAQs.

2. Continuous or Repeated leakage from plumbing, heating, or air conditioning

This coverage is not included in every homeowner’s policy. In fact, it must be added as an endorsement to your policy in many states. If your sink has a slow leak for three months and rots your wood cabinets, you will not be reimbursed for the cost of repairs unless your policy specifically covers this peril.

3. Sudden and Accidental discharge or overflow of water or steam from a plumbing, heating, or air conditioning system

Again, depending on which type of policy you purchased, this may not be covered. The good news is, unless you went for the bare bones policy, this is typically included.

4. Backup of sewers/drains

You don’t want to discover the hard way that you had no coverage for this unfortunate event. Take note, many policies only cover the damages if the backup occurs within a sewer or drain on your property, versus in a pipe or sewer down the street from your home.

5. Freezing of plumbing or heating system

Almost all but the lowest level of homeowner’s insurance policies will protect you against damages from this type of loss. However, almost every policy includes a condition requiring the owner to take certain necessary precautions to avoid such an event. For example, if you live in an area of the U.S. where temperatures can dip below freezing for longer periods of time, you must maintain adequate heat in your home to avoid the pipes freezing. If you left your home for a two-week vacation and turned the heat off, causing your pipes to freeze, you would have to pay for it out of your own pocket.

6. Mold, Fungi or Other Microbes

Mold damage is covered, but the coverage is typically restricted to mold on property that has been damaged by accidental or sudden discharge of water (if that is a covered cause of loss on your policy: see #3). An additional restriction usually requires the damage to be reported within thirty days of the covered loss if it is hidden or otherwise concealed, within a wall for example.

7. Cost of Testing, Remediation, and Living Expenses due to Mold, Fungi or Other Microbes

Insurance companies typically view this process as a different peril than #6 above. While many policies do not insure this cause of financial loss, they do offer an endorsement that may provide coverage in the amount of your policy limits. Living expenses refers to the cost of living somewhere other than your home while the testing and remediation are being completed.

8. Damage to Foundation/Slab

If you did not specifically discuss this coverage with your agent, you may not have it. Depending on where you live in the U.S., this may not affect your terribly. In areas with poor soil that can expand and contract regularly, foundation damage may be a big concern to you. Purchasing this coverage is not a “fix all.” Typically, only damage caused by a covered water leak (see #2, 3 and 4 above) is covered. Damage resulting from a flood would only be covered by a flood insurance policy obtained through FEMA or the NFIP.

9. Damage resulting from Construction Defects

While this is not covered by your homeowner’s policy, there is a silver lining to this cloud. Damage resulting from construction defects would be covered by the commercial general liability policy insuring the company that built your home. There is no guarantee you would be able to collect from the company, but that is where you would start the process of attempting to get reimbursed for damages.

10. Earthquake

Depending where you live in the U.S., you may scoff at the perceived need for this coverage on your policy. In California, you’d be crazy not to have it. Be reminded Midwesterners, the largest fault line in the continent is the New Madrid Fault Line, which stretches south from Illinois to Arkansas. If there is a quake and it destroys your home, no coverage could mean a potential bankruptcy filing.

It can be tough to make time in your life to evaluate your insurance needs. However, this list demonstrates the necessity to do so. Saving money is important, but not at the risk of losing your biggest investment.

It’s also worth pointing out that adding the coverage discussed above will almost assuredly cost less than a daily Starbucks or your new iPhone.

Contact your local independent insurance agent or insurance company if you have specific questions about your coverage.

(photo: U.S. Geological Survey)

The “Chinese drywall” problem is just starting to snowball. According to Independent Agent Magazine, “the property loss from Chinese drywall could exceed every U.S. hurricane except Katrina (2005) and Andrew (1992).”

How much is that? The expected property loss settlements could top $20 to $30 billion dollars.

An estimated 500 million pounds of tainted drywall came into the United States from 2004 to 2006 — that is about 7.1 million 4’x8’ sheets of drywall and it may be in more than 100,000 homes.

While the number of homes affected is greatest in Florida, Louisiana, Mississippi, Alabama and Virginia, the drywall supplies have affected all but 12 states.

The image below shows the impact of Chinese drywall will be widespread based on complaints received as of May 12, 2010 at the Consumer Products Safety Commission.

We’ve only seen the tip of the iceberg on this ordeal with regard to claims and claim settlement. To date, only three home builders have settled minor lawsuits with the Chinese drywall manufacturing companies. Additionally, individual homeowners are currently consulting attorneys to determine their possible courses of action in recouping money spent on the defective drywall.

There are really two separate issues here from an insurance standpoint. At the moment, property losses are the top concern. That is; tearing out and replacing the tainted drywall, technically described as a pollutant. We have not even scratched the surface for potential health-related claims associated with exposure to the “polluted” product.

Does My Homeowner’s Insurance Cover the Cost to Remove and Replace the Drywall?

Unfortunately, the likely answer is “NO.” Almost every homeowner’s insurance policy contains a “pollution exclusion.” Odds are, you haven’t heard of the exclusion, as most insured are typically concerned only with the overall premium of a policy versus the exact coverage afforded (or not).

This basically means there is no coverage available for any pollution related claims. Of course, this will likely be argued in courts for some time.

What Options Do I Have?

If the pollution exclusion defense holds up in courts for your insurance company, seeking damages via a lawsuit from your home builder, the contractor who performed the installation in your home or business, or the company who sold you the drywall (if you installed it yourself) may be your only option.

All parties referenced above should have their own commercial general liability insurance (CGL), which covers products and completed operations, or in this case, the actual drywall and its installation.

But the odds of getting money out of these companies may be slim. The aforementioned “pollution exclusion” exists on the CGL policy as well. While insurance companies do offer pollution liability, the odds your local contractor or hardware store has this coverage is about the same as you having it.

This doesn’t mean you can’t recoup damages from these organizations, it just means you can’t get money from their insurance companies. Unfortunately, many of these companies may simply file bankruptcy to avoid paying for these damages out of their own pockets.

(top photo: iluvrhinestones)