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Understanding Coinsurance

One way clients try to lower their property insurance premiums is to buy coverage for less than 100 percent of the value of the property. Within certain limits, this can be effective, though you need to remember that when you buy less coverage than your property is worth, you accept financial responsibility for the remaining value. You also need to know that property insurance policies contain a coinsurance clause, and if you violate it, you could receive a lot less money than you’re expecting if you have a claim.

What is coinsurance?

In the property insurance market, coinsurance refers to the percentage of the property’s total value that a policyholder is required to insure.  Coinsurance requirements differ among insurers, but the typical amount is 80 percent, sometimes rising to as much as 90 or 100 percent. That means if your property is worth 500,000 and your coinsurance requirement is 80 percent, your property should be insured for no less than $400,000.

The purpose of coinsurance is to make sure property owners purchase enough coverage to protect their property investment. If you don’t insure your property for the correct amount and have a loss, even a partial loss, you will get less for your claim than you were expecting, making it more difficult for you to rebuild after a loss. This is why it’s important that you don’t violate the coinsurance clause of your policy.

Do the math

Here’s what happens if you violate your coinsurance clause. Let’s say you have a property worth one million dollars. If you have a coinsurance clause of 80 percent, your property should be insured for no less than $800,000 to avoid violating your coinsurance clause. If you purchase coverage lower than that, say $500,000 for example, all claim payouts will be reduced by a formula for settling losses. Here’s a scenario:

The above-mentioned property is damaged by fire, sustaining losses of $100,000. In determining how much to pay you for your claim, the insurance company will look to see if you have met your coinsurance clause responsibility. If you haven’t, they will take what you insured your property for ($500,000) and divide it by the amount you should have insured it for under the coinsurance clause of your policy ($800,000). They take that number (.625) and multiply it by the amount of your loss ($100,000) to arrive at the amount they will reimburse you for your claim. Like this:

$500,000 ÷ $800,000 x $100,000 = $62,500.

In this case, you would receive $62,500 (minus your deductible), rather than the full $100,000 amount of the loss. You’re being penalized $37,500 for violating your coinsurance clause.

We understand that coinsurance can be confusing, so please feel free to ask your L & M Financial Group agent any questions you have about the coinsurance clause of your property insurance policy. We’re also happy to help you review your current policy, or offer you a quote for a new policy if you need one. You may reach us by phone at 813-672-4100, or click here to email us.

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Is Your Homeowners Insurance Rate Going Up? Here’s Why

Central Florida is a great place to live—we have great beaches, warm temperatures, and a laid-back lifestyle. We also have the second highest average homeowners insurance premiums in the U.S., and our rates are most likely about to go up again.

5 Factors for Why Homeowners Insurance Rates are Going Up

Even though Florida homeowners rates are higher than average, they have been stable, or even going down slightly, for the past 10 to 15 years. Insurance companies have not been increasing their premiums at a rate that matches the reality of the Florida homeowners insurance marketplace, and we are now seeing some big rate increases on the horizon. Here are five factors that have contributed to this situation:

Insurance companies have paid out billions in claims and litigation

Despite nearly 15 years of low hurricane activity, in the past couple of years, Florida has been seriously impacted by hurricanes. Hurricane Irma cost insurers $11 billion in claims, and Hurricane Michael cost $7 billion. Insurers are also seeing something called “loss creep,” which means that the loss estimates are increasing considerably over what the insurance companies predicted they would be, not because of poor planning, but because of a rise in lawsuits (see below).

In addition to hurricanes and loss creep, water damage losses and roof replacement fraud have also increased insurance companies’ cost of doing business in Florida.

Potential Demotech downgrades

Demotech rates the financial stability of more than 40 Florida homeowners insurance companies. They recently announced they plan to downgrade a number of these companies if the companies don’t take steps to become more financially stable. One of the recommendations is that carriers raise their rates to an “actuarially sound” level. (Read more about what this downgrade means here.)

Reinsurance costs are rising

Simply put, reinsurance is insurance for insurance companies. When catastrophic losses occur, reinsurance helps insurance companies cover those losses. Like it or not, the worldwide reinsurance market has been affected by disasters all over the globe—not only hurricanes, but also such catastrophes as the recent California and Australian wildfires.

Some reinsurance companies have pulled out of Florida, while others are asking for substantial rate increases. Reinsurance rates are expected to rise by 15 to 20 percent at the June renewal period, and insurance companies, who operate on razor thin margins, are forced to pass this expense on to their policyholders or face going out of business altogether.

Lawsuits have increased

Insurance companies are spending increasingly more money defending themselves against lawsuits. In addition to the expense of assignment of benefits litigation, one homeowners carrier noted that the percentage of claims represented by an attorney has risen from four percent to 36 percent, and another company reported a 727 percent increase in lawsuits.

Legislation recently passed that should help curb assignment of benefits lawsuits, but another aspect of the legal system is still causing insurance companies’ legal costs to rise. Under current law, attorneys can earn up to three times their hourly rate for a basic insurance lawsuit. This was originally intended to help consumers who couldn’t afford to sue an insurance company. However, now some attorneys are using it as an excuse to collect large fees, and many lawsuits are frivolous or fraudulent. Insurance companies who don’t want to risk losing in court wind up settling out of court. Even if they do so, it costs them much more than paying a claim to an individual not represented by a lawyer.

The homeowners market is hardening

More and more companies are pulling out of the Florida homeowners insurance market or tightening their underwriting rules, making it harder for consumers to get insurance at all. As rates rise and coverage options shrink, the market is said to be hardening. That’s what appears to be happening right now.

At L & M Insurance Group, we understand that this may be a challenging time for Florida homeowners. As an independent agency, we remain committed to finding you the best coverage at the most affordable rates. We represent dozens of financially sound insurance companies, not just one. We pride ourselves on offering personalized service to all our clients. Review your homeowners policy when it comes up for renewal, and give us a call at 813-672-4100 if you have any questions, or if you’d like us to compare rates for you. If you prefer, contact us via email by clicking here.

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Consumers Beware: Your Cheap Insurance Is Probably Cheap for a Reason

No one wants to pay too much for their insurance, but Tampa Bay area consumers need to be cautious if they get insurance quotes that seem too cheap. There’s usually a reason for that—such as the cheap insurance policy being quoted is stripped down to the bare minimum. As is the case for many things, with cheap insurance, you get what you pay for.

Financial trouble ahead

In an attempt to bring in business, some agents will quote bare bones, stripped down insurance policies that don’t provide the coverage most people need. We understand that money’s tight and no one really likes to spend money on insurance—a product you hope you’ll never have to use! The reality is, if you buy a stripped down insurance policy that covers only the bare minimum, you may find yourself in major financial trouble.

The purpose of insurance is to protect you financially in the event of an accident or other covered peril—this means replacing your own damaged or destroyed property, paying for your injuries, and paying for any damage you cause or are responsible for, even something as seemingly innocent as a trip and fall accident that takes place on your property. Insurance protects both your physical possessions and your liability.

Cheap Car Insurance Example

In the case of car insurance, for example, the minimum coverage to meet the Florida Financial Responsibility law requirement is bodily injury coverage of $10,000 per person/$20,000 per accident/$10,000 property damage coverage. When you get a car insurance quote, you may be quoted only the bare minimum. Many car accidents easily exceed these limits, especially if multiple vehicles or injured parties are involved, and then what happens? The injured parties are likely to come after you in court.

Cheap Homeowners Insurance Example

You should also be careful when comparing homeowners insurance. If you have a lender, they will require that you carry a certain amount of coverage to protect them. However, will that be enough to enable you to afford to rebuild if your home is completely destroyed? Will you have enough coverage for your contents if you need to replace them? When comparing quotes, ask if you’re being quoted replacement cost or actual cash value.

Compare Apples to Apples

Remember, when you request insurance quotes, make sure each quote is for the same coverage type and for the same limits so you can make a true comparison.

Let L & M Insurance Group help

The good news for you is that more complete coverage might not cost you much more that a stripped down policy. With multiple insurance companies to choose from, L & M Insurance Group is ideally positioned to find you the best coverage at the most cost effective rate. And your L & M Insurance Group agent can also help you find discounts that help lower your costs.

Yes, there are times in everyone’s life when the bare minimum is all you can afford. But during those times, you probably have the “bare minimum” to protect as well. Once you’ve begun to accumulate assets, such as a home, a newer model car, or expensive personal possessions, you’ll want to be sure your insurance coverage keeps pace. Please give us a call at 813-672-4100, or email us, if you’d like a quote, or have any questions about your insurance needs.

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Is Your Homeowners Insurance Company Going Out of Business? Let Us Help

Florida homeowners insurance is some of the most expensive in the nation, and the homeowners market here is one of the most complex for property insurers. Homeowners insurance companies in Florida must deal with many financial challenges, including claims from major hurricanes like Irma and Michael, fraudulent insurance claims, and the high cost of litigation due to Assignment of Benefits abuse.

Demotech, a company that monitors the financial stability of property insurers, reported recently that nearly half of the 40 property insurance companies it monitors face the possibility of having their Financial Stability Rating (FSR) downgraded from A status.

What Losing an A Rating Means for you

Losing their A rating is a serious matter for these companies, indicating that they are in financial trouble. Most companies that lose their A rating eventually go out of business.

These insurance companies, which have not been publicly named, will now have to undertake measures to strengthen their financial position. Companies that don’t improve their financial condition risk failing altogether, reducing the number of options Florida consumers have when choosing a homeowners insurance company. Less choice almost always means higher premiums.

If your homeowners insurance company is downgraded, you may want to or even have to change insurance carriers. For instance, the company that holds your home mortgage may require you to find an insurance carrier that retains an A rating.

What if your insurance company goes out of business?

If your insurance company does go out of business, several different things could happen. If another insurance company has bought or merged with your company, your policy may remain the same as long you continue to pay your premiums. In other cases, you may be notified that your policy will be cancelled or non-renewed. No matter what happens, you should receive notification ahead of time, with instructions of what you should do so that you won’t have a lapse in coverage.

If you have a new or ongoing homeowners insurance claim, it will likely be handled by the Florida Insurance Guaranty Association (FIGA). FIGA handles covered claims for property and casualty insurance companies that have been ordered liquidated. 

If your policy is canceled before the end of the term, if there is any money left over after the insurance company’s financial affairs are wound down, policyholders will receive any applicable refunds.

If your homeowners insurance company goes out of business, or you’re concerned about its financial stability, please give L & M Insurance Group a call. We strive to partner with financially stable, A-rated homeowners insurance companies. As independent agents, we can work with you to find the most cost effective policy for you. We serve Riverview, Brandon, Valrico, Tampa, and surrounding areas. Give us the chance to help you protect your most valuable asset—your home. You can reach us at 813-672-4100, or email us for a no-obligation quote.

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Tips for a Safer Thanksgiving

As you prepare to gather with family and friends for Thanksgiving, L & M Insurance Group wants to thank you for your business, and wish you a happy holiday. We also want to remind you of a few Thanksgiving safety precautions to take to ensure that you also have a safe holiday. Thanksgiving can be a surprisingly perilous day.

While your car and homeowners/renters insurance should protect you financially if you face one of these Thanksgiving mishaps, we hope you will never have to spend any of your holiday time making a claim. Here’s a look at the more common accidents that happen on Thanksgiving, and some tips for avoiding them.

Car accidents

Millions of motorists hit the roads during the four-day Thanksgiving break. Unfortunately, many of them will be distracted or driving while under the influence of alcohol. The National Safety Council estimates that 417 people will die in traffic accidents during the 2019 Thanksgiving holiday, and 47,500 injuries will occur. If you’re driving to a Thanksgiving celebration, take extra care. Buckle those seat belts, put away your phone. If alcohol figures into your Thanksgiving celebrations, make sure you designate a driver, or use a ride service. If you’re the host, don’t be shy about arranging a ride home for a guest who’s had too much to drink. 

Fires

On Thanksgiving Day, cooking fires are three times more common, do more property damage, and claim more lives than on any other day of the year. Unattended cooking is usually the culprit, so keep a close eye on the stove and oven when they’re in use. Have a fire extinguisher on hand, and know how to use it. Check the batteries in smoke detectors and make sure they’re functioning before the festivities start.

Candles left burning are another source of home fires. Be sure to blow them all out before leaving the house or going to sleep. And never leave children unattended in a room with a lit candle.

Falls

To prevent a slip or trip and fall, keep all high traffic areas clear. Watch out for kids playing, toys, purses, or bags where people will be walking. Check handrails for sturdiness, and warn guests of any slippery spots on your driveway or walkways.

Pet problems

Holiday parties can be stressful to pets, and cause even friendly ones to bite or scratch. If you have pets, for both their safety and that of your guests, provide a safe and quiet place for them to retreat while you have company. A dog bite or cat scratch can quickly spoil a party. (Click here for more information on dog bite liability.)

Happy Thanksgiving from all of us here at L & M Insurance Group. We thank you for allowing us to serve you. Please don’t hesitate to call (813-672-4100) or email us if you have questions about your insurance needs. We’re here to help.

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Extra Protection With American Integrity

During October, we’ve introduced you to one of our trusted partners, American Integrity. Not only does American Integrity offer programs for small boat owners and owners of high value homes, they also write coverage for more modest homes, condos, manufactured homes, renters insurance, and more, including:

Coverage for rental properties. If you own rental property, American Integrity writes DP-1 and DP-3 policies.

Umbrella policies.

Cyber attack coverage. In conjunction with a homeowners or renters policy.

Golf cart coverage.

Home Systems Protection. This policy covers repairs or replacement when certain home systems, such as your central air conditioning or conventionally installed water heater, break down and cause physical damage. Most standard homeowners policies don’t cover this kind of damage. Home Systems Protection is included in their Silver, Gold, and Diamond Reserve endorsements for your homeowners or condo insurance, or can be purchased as stand-alone coverage under certain programs.

Identity theft insurance. This coverage includes identity restoration case management as well as reimbursement for the expenses you face when restoring your identity. This coverage is also included in American Integrity’s Silver, Gold, and Diamond endorsement bundles, or as stand-alone coverage for a $25 fee in conjunction with a standard homeowners insurance policy.

Don’t forget the discounts!

American Integrity also offers many different types of discounts, including discounts for newly-built homes (within the past five years), alarm systems, secured communities, recent updates to your roof and/or other major systems like electrical or plumbing—even a discount if the policyholder is 55 or older. Be sure to consult with your L & M Insurance Group agent to see if you’re receiving all the discounts you’re entitled to.

If you have any questions about American Integrity, or any of our other carriers, please call L & M Insurance Group at 813-672-4100 (or click here to email us). As your local independent insurance agency, we want to help you find the insurance coverage that will give you financial peace of mind. 

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Watch Out for Scary Homeowners Insurance Surprises

A standard homeowners insurance policy covers many perils, such as damage or loss caused by theft, fire, or storms. It also protects you if you could be held legally responsible if someone is hurt or killed on your property.  But it doesn’t cover everything. Don’t be caught off-guard by these scary homeowners insurance surprises.

  • No coverage for flood. If your home is damaged by floodwaters, you won’t be covered unless you have a separate flood policy. (If you need a quote for flood insurance, call us at 813-672-4100. We work with several quality private flood insurance carriers.)
  • No coverage for septic or sewer backup. A standard homeowners insurance policy protects against the overflow of water from plumbing, heating, or air conditioning if it originates on your property. But if the backup damage comes from outside your property, such as if heavy rains cause a sewer backup, you might not be covered.  This coverage may often be added by endorsement.

Also be aware that certain types of damage will not be covered at all. For example:

  • If your roof has had an ongoing issue of minor leaking, and you decide to make a claim after a rainstorm causes more serious water damage to your home, you may not have coverage. To be covered, an event has to be sudden and unexpected. Damage caused by lack of proper maintenance won’t be covered.
  • Business activity is not covered under a homeowners insurance policy. If you conduct business out of your home, you’ll need to carry business insurance.
  • A gator breaking into your house. Remember the news story in July about the alligator that crashed through a Clearwater woman’s kitchen windows and damaged her kitchen? Her insurance company denied her claim, noting that damages associated with wildlife were not covered under her policy—and that’s true for most homeowners insurance policies.

One more scary surprise—you may be paying too much for your coverage!

We encourage new and existing clients to review their homeowners insurance policy, as well as all other insurance coverage at least once a year. Make sure all information is up to date, and your coverage is still appropriate for your financial protection.  It’s also a good time to check to make sure you’re still getting the most cost effective deal.

Please let L & M Insurance Group take the fright out of homeowners insurance coverage. Our agents would love to help you with your financial peace of mind—just give us a call at 813-672-4100, or email us with your questions or to request a free quote. We are a locally owned, independent agency based in the Brandon/Riverview area, and our agents have been serving the community for more than 30 years.

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Your Dream Home Is Covered With American Integrity’s High Value Home Program

Your home is your pride and joy. Not only does it shelter your family and welcome your friends, it’s likely your most valuable financial asset. That’s why it’s so important to purchase the right homeowners insurance. And for those of you who own high value homes, you need a program designed especially for the unique needs of high value homeowners.

Do you need high value home coverage?

There are several reasons why you might need high value home coverage, including:

  • The value of your home is $750,000 or greater
  • Your home has unique features or design elements, such as a “green” roof or environmentally-friendly design
  • Your home was professionally decorated by an interior designer, or contains high-priced appliances, fixtures or décor not found at a standard retailer
  • You own priceless art, rugs, jewelry, wine, or another collection worth a great deal of money
  • Your home is considered a heritage home and has unusual construction features

American Integrity, one of L & M Insurance Group’s partner companies, offers a specialized high value home insurance program to give you peace of mind. Their program has Coverage A limits of $750,000 to 10 million dollars, and no minimum premium. Their Silver, Gold, or Diamond Bundle packages offer further upgrades to coverage and limits to more precisely meet your needs.

In addition, their flood endorsement covers up to $5 million in damages, $3 million more than most other companies and there is no waiting period before coverage goes into effect. And unlike many other homeowners insurance companies, American Integrity will write high value beachfront properties (using risk modeling), and will also write X-wind coverage.

Additional benefits

American Integrity also offers additional benefits to policyholders, such as specialized claims adjustors and access to a preferred contractor network.

Suffering damage or destruction of a home could be one of your most devastating financial setbacks. Let L & M Insurance Group help you make the right choice to protect your home with a high value homeowners insurance policy through American Integrity. And if American Integrity is not the best choice for you, we represent many more quality homeowners insurance companies—please call us at 813-672-4100 or email us if you have any questions, or you would like a homeowners insurance quote.

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Just Married? Time to Review Your Insurance Coverage

Now that you’ve opened the presents and returned from your honeymoon, it’s time to consider some of the changes getting married will bring to your financial life. For instance, if you haven’t done so already, you should review, compare and consolidate your insurance policies. Good news—you may get a discount just for being married, because many insurance companies consider married people a better risk than single people.

Review your existing coverage

Car insurance

Compare your car insurance policy limits and coverage. It may be less expensive to combine all your vehicles onto one policy because you will be eligible for a multi-car discount. Get a quote from each of your car insurance companies to see which is the better deal. If you change policies, make sure new coverage goes into effect before the old coverage is cancelled so you don’t have a lapse in coverage.

Homeowners or renters insurance

If you’ve been living separately, you may have both been carrying homeowners or renters insurance. You should be able to cancel one policy if you no longer own or rent that second home, but make sure the policy you’re left with is appropriate for your needs. 

For example, you may need to increase your personal property limits now that all your belongings are under one roof. You may also need special coverage for high value items like your wedding and engagement rings, high-end electronics, or expensive wedding gifts.

And remember to officially add your spouse to your policy!

Health insurance

Now that you’re married, you have a limited time to enroll in a new health plan or join a spouse’s plan—usually 60 days. If either or both of you have employer-based plans offering spousal benefits, you’ll want to compare these three scenarios: you each keep your current plan; you join your spouse’s plan; your spouse joins your plan. Ask questions about monthly premiums, deductibles, and other out-of-pocket costs. If you don’t have health insurance through work, you can buy or change your coverage through your state or federal exchange. See healthcare.gov for more details.

Life Insurance

Consider buying life insurance—even if neither of you have children. The death of one partner could lead to financial difficulties for the surviving spouse if you have bills or a mortgage one person can’t afford on their own.

One more thing: be sure to update your beneficiaries and emergency contacts.

Need help? We’ve got you covered!

Feeling overwhelmed? Don’t be! Your friendly L & M Insurance Group agent can help you make sense of it all. Whether you’re an existing client or a new one, we will be happy to help you sort through your options. As an independent agency, we represent many financially sound insurance companies and will help you make the best choices for your financial situation. Call us today at 813-672-4100, or email us for a car, home, renters, health, or life insurance quote.

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Got Great Credit? Let Us Save You Money on Your Auto and Home Insurance!

What does your credit score have to do with insurance rates? Plenty. Since the 1990s insurance companies have been using consumers’ credit scores to help set insurance premiums. Industry studies have indicated that using credit-based scores helps insurance companies better predict risk.

What does that mean for you? It means that if you have good credit, you’ll likely save money on your home and auto insurance.

“Just as insurance scores help insurance companies assess and price risks, so too can these scores help insurance customers—particularly if they are considered good risks,” according to the Insurance Information Institute (iii.org).

Insurance scores are different from credit scores, though they are both based on your credit report. And each insurance company makes those calculations a little differently. For an insurance score, “Emphasis is placed on those items associated with credit management patterns proven to correlate most closely with insurance risk, such as outstanding debt, length of credit history, late payments, collections and bankruptcies, and new applications for credit,” according to iii.org.

Therefore, the higher your insurance score, the lower your insurance rates.

What if your credit isn’t so good?

If your credit scores could be better, lower insurance rates are one more reason to improve them. If you want to improve your score, start by keeping a closer eye on it. Make sure there are no errors in your credit history. Make payments on time, avoid high “credit utilization” (the amount you owe divided by your credit limit), and don’t make too many applications for new credit. Remember, credit scores aren’t the only factor used in determining insurance rates. For car insurance, driving history and type of vehicle are also crucial. For homeowners insurance, your location, the size and age of your home, as well as your level of coverage will also affect your rates significantly. However, improving your credit score could make a significant difference in your insurance premiums. According to creditkarma.com, improving from one credit tier to the next can save you an average of 17 percent per year. And Consumer Reports noted that drivers who improved their credit score from the “good” level to the best paid an average of $214 less per year for their car insurance.

If you have good credit, let L & M Insurance Group help you reap the benefits with lower car and homeowners insurance rates. Call us today at 813-672-4100 for a free quote, or drop us an email. For more than 30 years, L & M Insurance Group has helped customers within Riverview, Brandon, Gibsonton, Apollo Beach and Tampa. We also work closely with many customers throughout Hillsborough County, Manatee County, Pinellas County, and Clearwater.