In Depth Review of Homeowner Policy - Term Paper Example

?In Depth Review of Homeowner Policy In Depth Review of Homeowner Policy In Depth Review of Homeowner Policy Insurance policy is a legal contract between the policyholder and the insurance company wherein the insurer has to pay premiums to the insurer in exchange of claims covered in the policy. The policy contract describes the coverage, restrictions and the deductibles applied and the premiums to be paid (Campbell, 2004). Having insurance is like an investment. However, an insurer has to review his policy to update it with the changing times and to know what is really included. An in depth review of auto, homeowner and life insurance policy focuses on these four questions. 1. What types of coverage do you have? 2. How the policies are designed? 3. How were they selected? 4. What things you want to change if any and why? 5. What are the ratings of the insurance company? What type of Coverage do you have? As a policy holder myself, coverage differs from one policy to another. My homeowner policy covers for several things. It includes the physical property damages. In section 1, coverage A of the policy, it states that it pays for a certain percentage of the structure of the home when physically damaged. Included in this section are the roofing, flooring, light fixtures, appliances, kitchen appliances and washers. The policy also covers for the structures that are part of the main house but are considered extensions like the garage and fences however with a small percentage which is about 10 percent of the cost of the main structure insured. Additional living expenses during the peril of fire or lightning, windstorm or hail and explosions are covered too. This is when the owner seeks for a temporary lodging. It takes 20% reimbursement from the structural coverage of the property. My personal property is also covered but scrutinizing it shows some limitations. Jewelleries when not appraised and scheduled separately in a policy will not be all covered when stolen. The amount limit to be paid only is $1000 even if the value of the jewelleries is three times the limit. In addition the policy exercises the limit in the China wares, cash, and firearms when stolen. In this connection, it is always best to protect personal properties. According to William (2007) it is advisable not to keep valuables in the bedroom because it is the most part of the house being searched by burglars. What is good in my policy is that it has an extra endorsement to cover for an expensive loss of personal belongings. However, if the insurance company pays the stolen personal properties, it is going to price it with today’s value and not the former price when you purchased that personal belonging before minus the depreciation value. However, to avail of these inclusions, the insurer has to make sure her policy has the broad form or the all peril coverage. Having this type of coverage would make the policy holder covered for everything with the exception of those within the exclusion of the policy. Most often, policyholders are tricked with this scheme where they believed there are no exceptions. Insurance companies are very tricky in their business that if there is no review done by the policyholder, he will fall into their trap. An example of this situation is the case of Ward Gen. Ins. Svcs. Inc. vs. Employers Fire Ins. Co. (CBS interactive, 2010) who went into hearing to dispute the payment of her loss regarding her data in the computer. The court found out that the loss was not included in the coverage because it was not a direct physical loss. Physical loss means material existence that is tangible (Viau & Kwasniewski, 2001). To this effect, it is clear that the insurer has also to understand the languages used by the insurance companies. The understanding of the term physical loss in the policy is not in congruent to the definition of the insurance company thus fighting the dispute in court is a disappointment on the policy holder’s part. This gives a lesson for policyholders to clarify vague phrases or terms within the policy. Another common exclusion in my policy that is not readily known is the damaged of the property caused by its deterioration. This means that damages caused by the wear and tear are not covered in the policy. For instance, if the floor creaks as a result of old age, the insurance company is not responsible for its repair. However, house damages resulting from water maybe paid. The homeowner policy I have states that it covers for damages caused by water. It allows for $10,000 coverage. This however depends on what category it falls under. If the damage is caused by water then it falls under the limit of general coverage A. Mold damage on the other hand is not included in my policy but there are insurance companies offering limited amount upon endorsement. Mold infestation is considered a poor maintenance of the property and as such insurers excludes it in their coverage. Coverage for auto insurance policy includes not only the property damages but also bodily injury liability where other people directly involved in the accident are paid their death or injuries, medical payment, uninsured drivers, collision, physical damage, theft, and rental reimbursement. Addressing these areas of coverage during claims however requires responsibility of the insured to secure all pertinent papers, records, police reports, and secure witnesses and report the incident as early. This is the irony of having insurances and making claims. Observation has it that it is easy to obtain for auto coverage at a price that suits your lifestyle but it is difficult to make claims. For the life insurance policy, coverage depends on what type of insurance the individual has. Term insurance coverage includes death benefit if the insured dies. This means no benefits are paid as long as the insured lives. Permanent term on the other hand, covers for protection throughout the life of the insured (Jackson, 1997). How are the Polices designed? Equally important to have an in depth review in a policy is how it is designed. The design of the policy is very important to see if the purpose it serves is met. According to Birkland (2005) the design influences the success or the failure of the policy. From observations, the insurance policies whether it is an auto, life or homeowner were designed based on a model for insurance policies. Insurance company has to come up with their organizational chart to include risk analysis, insurance placement, claim administration, loss control, and other services with people assigned to do their own respective functions. For instance, underwriters are task to compose the company’s policy. If the policy is available, then brokers are ready to sell them and transaction begins from the signing of contracts to payments and claims. Perhaps one of the best features in a policy design is the inclusion of insurance agents. Like many policy holders, Fisher (2011) believes that agents are very helpful to assist policy holders in times when unexpected situations happen. Fisher further pointed out that knowing agents well will act as policyholder’s advocate and may plan in their behalf. While this design is basic to insurers, there are companies who structure their policy to cater to national and international clients with innovative technology. In general, the policies are designed to give coverage to the properties and people insured if they suffer damages and injuries when policy holder claims. The design of the homeowner policy I have has a combination of several coverages into one policy making it looks like a package deal. However, some of the features are also found in other policies. The policy design covers for the dwelling, other structures like fences and utility line but with limitations, personal property with limitations, loss of use, and other additional coverages like debris removal and reasonable repairs. Further the policies are also designed by including outline of payments giving the choice to the client to choose which suits his budget. The individual may also select the deductible, part of risks that is to be insured, and the level of maximum limit. The design for life insurance policy on the other hand is unique in that it is like an investment type whether it is a term insurance or permanent one. The two only differ in some aspects. Term policy was design for the insured to change her policy once it is expired with a higher cost. On the other hand, one feature that is true to every permanent life insurance policy is the presence of cash surrender value. The extent to which the insurance policy is designed was dependent on some existing laws. Most often, insurers draft their policies, do inside review, and invite experts to critic. However, it is much to the advantage of the insurance companies. This idea is supported by declarations of some complainants saying policies of insurance companies are sometimes impossible because they are not actually willing to help if claims are filed. How were the policies selected? Selecting a policy is confusing because there are so many forms of it with different coverages and premiums. In auto insurance alone, it has many types to choose from making the selection difficult. Nevertheless, with the help of other people, experts, and computers, selecting policy is still possible. There are evidences that life, auto and homeowner policies are selected after considering some article write ups and reviews. The article by Fowles (2011) suggested that an individual who is under 40 years old and does not have a family may go for a term life insurance policy. She further explained that having the whole life policy is more expensive because insurance companies have to balance for the benefits that go back to the insured. This gives an idea to policy holders their situation before finalising their decision on what policy to select. Another article suggested that selecting an auto policy should be based on the type and make of the auto when selecting for an insurance policy. Other policy holders were guided in their decision making by personal reviews from the internet given by others. They read the pros and cons of people who insured on the same type of policy they are deciding to have. One review written by Sage (2002) stated that after her experience in a car accident, she claims that policy with full coverage was very helpful to her and that she had a peace of mind. The recommendation of friends and family members also helped in the selection. They lay foundation to inexperience prospects. Through their experience with the companies, they will tell you the better options, why, and how to avail it. They will also tell their experiences whether good or bad when it comes to making claims. Other options of selection were based on the integrity of the insurance company. Obtaining insurance involves money, thus it is just but normal for every individual to look for companies that are reputable. This should be a serious undertaking since it is very difficult to recover money once it is given. Experts also recommend calling agents to help you navigate insurance companies with good reputation. Lastly, selecting policies could be a personal choice. The selected policy might be the answer to the needs of the customer. In an article entitled “two steps to choose the right insurance policy”, it suggests that policy selection should be based on the needs. It further suggests that in selecting a policy, the client has to scrutinize what are available in the market for her various needs. For example, if what you need is an auto policy that covers for modification, then either performance or aesthetic policy is needed. Are there any you would change and why? If given the chance to change something in the life, auto and homeowner policy, there are several things I want to change. One is the size of the writing insurers employ. Most of the time, the policy is written in small prints that the eyes may have difficulty reading them. The tendency for the policyholder is just to skim them without the full understanding what is written in it. Small printing applies most especially to crucial information that the insurers do not want their customers to read. Most small prints pertain to exclusions making the policy looks like the best offer. This should be changed because it is a form of cheating. It lures the customers to accept the policy because she/he seems to consider the small prints not important. An example of small prints that could entice policyholders include “If a burglar is able to gain unforced access to your home, your insurer may not pay out on your full claim” (confused.com, 2008). Although, the homeowner has the responsibility to exercise preventive measures against burglars, this type of statement should be written in bigger letters as a reminder for the policyholder to be more careful in all measures to protect her insured property. Furthermore, this could be more understood and effective if it is given as a tip or advisory. It is a friendlier statement if it is stated this way; never leave your doors unlocked or leave a key on the doorknob if you leave your home. If a burglar uses it, your policy will be void. Another change I want is how the insurance companies write, term, and interpret their policies. There are many statements in the policy which is only clear to them but vague to the policyholders causing disappointments on the part of the later. An example of this is the case of Mr. H where he left his car with his keys on his ignition and was taken away by burglars. When he tried to make claim, he was refused because of the phrase “key in car” meaning he should not have left his keys in his ignition. This phrase is confusing because to the driver who do not have the intention to park or stay long in a place find it disturbing to remove the key. This should have been clear to the insured if explained clearly so that car owners would always be on alert even if they will leave their car for some minutes just like what happened with Mr. H. More important change I want is the fairness of insurance agents and inspectors. of the insurance companies should not be bias. What are the ratings of the company? The rating of the company that offered me my insurance is good. The homeowner company shows that from their history, it states that they have a large number of subsidiaries that supply insurance products and services. The company is financially stable showing they can pay policyholders who may make claim. From the reviews of the consumers, it seems the company meets the needs of the insured. They could be rated as 3 out of 5 score. When it comes to their customer service, they are rated as satisfactory. They can answer questions of the client pertaining to her/his policy sufficiently on the phone. One of their clients was quoted as saying “The Company staffs are polite and sound reasonable”. Aside from the fact that they are friendly, they remember their customers. Having a good memory of clients may make clients special. This is compared to a nurse giving special treatment to her patient by treating not only the physical wound but also the psychological and emotional aspect of the patient. This way, their clients feel at ease to reach them when needed. This is a more important aspect of a company as clients feel at home when they visit the office and this encourages communication. Another incident revealing the good rating among their staffs is the report of one of their client who said that their claim to their lost bike was dealt with quickly. They reported the lost in the morning and they were contacted shortly by specialist bike insurers. Over all, they gave the insurance company a very good rating saying they have a hassle free and efficient service. However, there are also other customers not satisfied with the company’s service. Some customers gave the company a failing rate. Most of the reasons cited included issues of claim and payment of premiums. One client mentioned that he left the company because when he renewed his auto insurance, the premium is costly even if he did not file for any claims for the previous years. Others cited some incidences where they were referred from one staff to another without any clear action taken regarding their claim problem. Rating of one company however is not all the same with the others. My life insurance company is rated to be the second largest casualty and personal property insurer and ranked 13th largest life insurer in the United States (review, nd). When it comes to premiums collected, they belong to the top ranks as they were able to sell their insurance products to 17 million households through their many agents and brokers. The company is able to have 14,000 agencies and exclusive specialist in Canada and United States. This shows that the company is financially equipped to go on with insurance business. According to Freeadvice.com, the company is rated as +A. Its rating has been superior for the past five years. The group has earned high marks on a number of level has a good strategy on their investment, very efficient in their operation, and good in selling efforts and underwriting. References Birkland, Thomas. (2005 ). An introduction to policy process: theories, concept, and models. Retrieved from http//books.google.com.ph/books. Campbell, H. (2004). Free Dictionary. Retrieved from http://financial- dictionary.thefreedictionary.com/Insurance Policy. CBS Interactive. (2010). Ward General Insurance Services, Inc. Vs The Employers Fire Insurance Company. Retrieved from http://caselaw.lp.findlaw.com/ca/caapp4th/year/2003_12.html. Confused.com. (2008). Home insurance buyer’s guide page 5: Read your home insurance small prints. Retrieved from www.confused.com/guides/household/home-insurance/home. Fisher, C. (2011). Why it is important to know insurance agents. Ezine. Fowles, D. ( 2011). Understanding and choosing life insurance. About.com. Retrieved from http://financialplan.about.com/cs/insuranc1/a/LifeInsurance.htm Jackson, M. (1997). Understanding life insurance policies. Physicain’s news digests. P. 1 Sage, B. ( 2002). State Farm Review. About.com Viau & Kwasniewski. (2001). Homeowner Insurance Claim Analysis and Insurance Law in California. Retrieved from http://www.vklawyers.com/InsuranceLawHomeownerClaims.html. William. R. (2007). To mistakes that make homeowners prime targets for burglars. Proc. 20, 200–208. Read More