Why should we think of insurance as a last resort?

Posted on by AHI Group

To some, having insurance only as a last resort can sound a little odd. You’re paying for it, so why shouldn’t you be using it? In today’s struggle for financial security, it can seem like a slap in the face to keep paying for something you won’t end up using unless you need to.

Treating insurance as a universal safety net, even when it isn’t necessary, can lead to excessive premiums and even more money out of your pocket. Let’s dig into that.

What is insurance used for?

Insurance is a financial product that is designed to protect against specific types of risk. Car insurance, for example, is usually designed to protect against physical repair costs, liability claims, and temporary arrangements for a replacement vehicle. By paying your premiums, the insured transfers over their risk of a larger, more uncertain loss to an insurance company. This model works based on the pooling of risk across many policyholders, allowing the insurer to pay out claims from the accumulated premiums.

Insurance limitations

Insurance isn’t a catch-all. Not all insurance policies are considered the most cost-effective method of reducing risk, especially when considering the risk’s magnitude and likelihood. Policies also have exclusions and limits, so not all scenarios are covered.

Another thing to consider is reliance. Insurance creates a dependency culture, where over-reliance can discourage businesses from managing their risks proactively.

Filing too many claims can increase your premiums

The more claims you file, the more you’ll pay for your insurance. Here’s how that works:

Individuals, entities, and households that have made numerous claims are perceived as likelier to make future claims. This is because they’ve created a pattern of dependence on insurance and are statistically likelier to need to file a claim again. Making plenty of small, unnecessary claims is generally not recommended since this causes your insurance to pay out more, and your insurance company, as a way to combat the risk for themselves, may raise your rates.

You might be thinking, “then what’s the point of insurance?” Well, for one, in many situations, it’s required. Two, it’s meant to be used for losses that would otherwise be financially damaging—not the occasional block of hail breaking a window or two in your home. If your car was destroyed in a wreck when someone T-boned you while running a red light, your insurance would come into play.

The homeowner who filed multiple claims for the hail breaking their windows might end up paying hundreds of dollars more for their insurance down the line, which ultimately outweighs what they would have paid had they simply fixed the windows on their own.

What happens if you file too many claims?

Accidents happen. If you need to file a claim, you should file a claim. However, determining when it’s necessary to file a claim is also a good skill to have.

If you’ve experienced a loss, consult with your insurance agent. This doesn’t mean you’re necessarily starting the process of making a claim. Discuss the full implications with your agent, if the claim is necessary, the estimated damage cost, and how your insurance premiums could be impacted in the future. They’ll advise whether it’s worth filing or if you should pursue other options.

If you have a claims-free discount or accident waiver, you’ll lose those upon filing your first claim. Filing frequent claims will continually reset the clock on these discounts, which you’ll generally receive upon having 3+ years of being claims-free. Again, you should rely on your insurance if it’s a significant loss, but if you’re 50/50 on filing a smaller claim, then you may want to think twice about what it will cost you in the long haul.

Filing numerous claims also has the potential to impact your insurability. Since insurers will need to know your insurance history when buying a new policy, all your past claims in the last 3–6 years will be made known. Your insurer may assess your previous claims and decide to alter the terms of your coverage by reducing limits, increasing your deductible, or even excluding types of coverage that you were previously eligible for. This forces you to bear more of the risk yourself. This can also put you in a bad situation if, say, you were required to carry comprehensive and collision insurance per your dealership’s requirements but your insurer will no longer offer it to you as a result of your claims’ history.

Not sure whether to file a claim? Let’s talk

Experienced a loss but are unsure whether to file a claim? Talk with an agent. They should be able to give you the advice you need on whether it’s worth it to file a claim through your insurer, or if it’s better that you handle the damages yourself to avoid a potential premium increase. It’s always good to know you have insurance to fall back on, but knowing when and where to file a claim is key to keeping your premiums low!

How old is “too old” for a roof?

Posted on by AHI Group

A lot of your home’s features will influence the amount you’ll pay for your home insurance, from its location and ZIP code to when it was made and its construction materials. But did you know that, of these features, your roof is one of the biggest factors? After all, it’s the first line of defense against the elements.

The newer the roof, the better your insurance rates. But there’s more to it than that. Let’s get into it.

Why is roof age a factor in home insurance rates?

Simply put, a newer roof has a likelier chance to hold up against the elements and can have unforeseen issues that can cause deterioration and later snowball into worse problems. As it is with the same way with car insurance, the “safer” something is, the less you’re paying for your auto insurance. Since roofs can be the first line of defense that your home has against things like fire, wind, hail, and rain, they’ll be more important from an insurance perspective when it comes to preventing huge claim payouts.

Roofs 20 years and older may even need to be inspected before an insurance company will offer coverage. This typically means that they’ll send out a team of professionals to check out your property and assess your roof’s “readiness” to handle unexpected issues. Other insurance companies will agree to cover your roof’s actual cash value if it’s a bit older, meaning that they’ll only cover what it’s worth now minus depreciation. And some insurance companies? They’ll just refuse to cover homes with roofs 20+ altogether, as the risk that older roofs pose might just be too great.

Shape of roof

The shape of your roof can affect your costs just as much as the age, but the shape that will save you money is dependent on the environment where you live. If you live in an area that sees a lot of wind or even hurricanes, a hip-style roof is best.

Flat roofs overall are more expensive to insure since they collect water easier and can accumulate damage with time. They also have a shorter lifespan than other roof styles.

Roof materials

Your insurer will also take into account the type of roof material your home has, as some materials can withstand the impact of nature better than others. Some roof materials are also better in certain environments – for example, wood shingles may not be priced favorably in areas prone to fire.

Asphalt shingles are generally an all-around decent choice, as they are easy to install over top of existing roofs. They are, however, slightly more susceptible to decay.

Slate can be a good option for areas that frequently experience high winds and are relatively low maintenance. They are expensive to install and can be more susceptible to impact damage, like from hail. Their high replacement cost can also mean higher premiums.

Metal is another (increasingly more popular) option. It’s durable, fire-resistant, and reflects sunlight, but it also dents easily from impact and has a high replacement cost.

Wood shingles are not a great idea for areas prone to wildfire as some insurance companies will refuse to insure homes with wood shingle roofs, but they are more affordable. Some people always enjoy the cosmetic appeal of them. Yet, on average, wooden roofs cost about $100-$200/year more than any other roof material to insure each year due to their fire risk.

Will renovating my older roof lower my home insurance costs?

How does a new roof affect your home insurance?

In theory, yes. Installing a new roof when your previous roof was 10–20+ years old can save you up to 35% on your homeowners insurance premiums, but discounts will vary depending on the type of roof that was installed (shape and materials). Some roofs are considered “impact-resistant” or have wind mitigation properties, which can qualify you for additional discounts.

Roof replacements themselves can be costly, however. Net savings are not guaranteed, and it’s wise to talk with your agent about how much you’d save by renovating your roof versus keeping the old roof and continuing with your current insurance rates.

Note as well that if you need a new roof due to a disaster, like an unexpected fire, and you replace your roof, it’s possible that your replacement could even increase your rates. This depends on the age and condition of your roof prior to the event.

Is roof replacement covered by my home insurance?

It depends on why your roof needs replacement. A typical replacement over lack of maintenance or because the roof has simply aged out won’t be covered by your home insurance, since home insurance is designed only for unexpected or sudden incidents. For example:

What is covered by home insuranceWhat isn’t covered by home insurance
Falling objects, explosions, and other accidentsPoor maintenance
Nature damage, like fire, storms, hail, etc.Non-functional repairs (cosmetic)
Roofs under 10 years old (full replacement)Older roofs, usually 10 or 20+ years (*)
Table 1. Roof replacement covered by home insurance

*Note that while some companies just won’t cover homes with older roofs, some companies will only cover them for their ACV, and some companies will insure them but only once an inspection has been complete.

If your insurance company says you’ll qualify for a discount upon replacing your roof, that doesn’t mean your roof replacement will be covered. You will, however, get a discount upon doing so as a thank you for prioritizing the safety of your home.

Have further questions about roof replacement and your home? Have you recently renovated your roof in the last 10 years or so? Let us know! We’ll be happy to go over the benefits with you and may be able to help you find eligible discounts and other home insurance savings opportunities, which can save you hundreds of dollars on your insurance each year.

Has climate change impacted your home insurance?

Posted on by AHI Group

According to the Insurance Journal.com, homeowners are finding it more and more difficult to afford insurance on their homes as climate change creates an environment where the yearly cost and frequency of claims is increasing with no end in sight.

In short, climate change-induced weather changes, i.e., the increase in the severity and frequency of storms, wildfires, flooding, and other events, cause insurance companies to pay out more for claims, meaning they need to increase their home insurance premiums to offset the losses. This means that homeowners everywhere pay more for their insurance, even if they themselves have not faced a loss. Let’s explore how that works in further detail.

Assessing risk: Climate change’s influence on underwriting

An increase in severe weather, regardless of how it’s caused, may not directly impact all homeowners. They can impact a specific geographic area or even a city, but the impacts increase the overall “risk profile” for insurers. A risk profile is essentially the likelihood of making a claim; a lot of different things influence your risk profile, but your geographic area and its exposure to damaging events (like fires, storms, flooding, and so on). Other things can affect your risk profile too, like the age of your home, whether or not you’ve updated your roof in the last decade, your insurance history, and so on.

The frequency and severity of weather events can mean that insurance companies insuring the properties where those events have occurred face higher probabilities of having to pay out claims. This prompts them to adjust premiums accordingly. Keep in mind that this can happen on a small scale to a certain geographic area and on a much larger scale, impacting cities or even entire states.

The rising cost of re-insurance

Did you know that insurance companies need insurance too? Reinsurance serves as insurance to help insurance companies protect themselves if there’s a particularly large or sudden loss that their existing pool of payout money can’t cover. Reinsurers are having to pay more claims with rising climate-related disaster frequency and severity, therefore having to increase their insurance costs for primary insurers. Insurance companies may offset these rising costs by passing them on to homeowners through higher premiums as well.

Expanded risk zones and reassessment of property values

With the changing climate, previously considered low-risk areas may now be prone to flooding, wildfires, or other hazards. As a result, insurers are reevaluating risk zones and adjusting premiums accordingly. Homes located in areas now deemed higher risk may experience significant premium hikes, regardless of individual homeowners’ claims histories. This is true of all properties – cottage, seasonal property, and condo insurance rates may be impacted as well.

Sustainability concerns over the long-term

With climate change projections indicating continued increases in extreme weather events, insurers must ensure that their business models remain viable in the face of mounting losses. This may involve restructuring policies, increasing premiums, or even withdrawing coverage from the most vulnerable areas. All insurance companies refuse the right to write new business, so if you have purchased a new home in a wildfire zone, your chances of getting insurance may be much more limited.

Industry standards and regulatory pressures

As the climate change phenomenon evolves, government regulators and industry bodies are putting increasing pressure on insurers’ responses. This can manifest as stricter regulations, requirements for increased reserves, and mandates for companies to disclose their exposure to climate-related risks. Compliance with these standards may necessitate adjustments to premiums, impacting homeowners across the board.

Coverage gaps in your home insurance could cause financial vulnerabilities

Coverage gaps, usually as a result of failing to address shifts in home value over time or after renovations/upgrades, can leave homeowners vulnerable to unexpected expenses. This is even greater of an issue during a period where climate-related losses are so rampant, since insured homeowners may not get back the full value of what it would take to rebuild their home in the event of an unexpected loss.

In the absence of adequate coverage, homeowners could struggle to recover financially from a loss, potentially resulting in debt or financial hardship. Coverage gaps could also mean homeowners are exposed to risks that they might not anticipate.

Mortage lenders typically require homeowners to maintain adequate insurance coverage (even if home insurance isn’t required by their state), and it’s not unlikely that restrictions and regulations will continue to increase as we experience more and more severe weather. Coverage gaps can result in non-compliance with lenders in this case, so we advise working with an insurance agent to review your policy and ensure everything is up to snuff – both in terms of covering your asset and complying with any regulations you may be faced with.

Concerned? Call us

Climate change has had a multifaceted influence on the cost of home insurance for homeowners, even those who haven’t directly experienced a loss. This increase can be confusing, frustrating, and downright distressing for some people, especially with the cost of living so expensive as is.

If you’re confused about a recent increase in your home insurance costs, call us. We’d be happy to go over your policy, discuss home insurance savings opportunities, and provide our expert insight. Give us a call today or request a quote.

Safety tips for April’s upcoming solar eclipse

Posted on by AHI Group

On April 8th, 2024, in many areas of North America, there will be a solar eclipse. Roughly 31.6 million people live in the path of totality, and according to NASA, every contiguous state in the U.S., in addition to parts of Alaska and Hawaii, will witness anywhere from a partial to a total eclipse.

The eclipse is a wondrous, once-in-a-lifetime opportunity for you and your family to witness; it serves as a great opportunity to teach your children about outer space! However, witnessing the solar eclipse comes with some caution. Before you step outside and prepare to watch the show, take the following tips into account to make sure you and your loved ones are safe.

Where will the solar eclipse be visible?

The solar eclipse will cross over North America on April 8th, but only some parts will be able to see the eclipse fully. Around the Kansas City Area, it’s said that the moon will cover about 90% of the sun by 2pm. You can check the exact time the eclipse begins and ends on TimeandDate.com.

Solar eclipses can be dangerous for your eyes

Looking at the sun directly is a no-go, but a solar eclipse is a unique event where many people may feel compelled to look directly into the sky without any protection. A true and total solar eclipse only lasts a few seconds! Once the sun returns into view, just staring at it for a few seconds can permanently damage your retina. The retina has no pain receptors and you may not even notice any damage for a few hours. Retinal burns from the sun are called solar retinopathy, and damage can be either temporary or permanent. Symptoms include loss of vision, altered color vision, and distorted vision.

Unfortunately, there is really no treatment to restore lost vision from staring at the sun. Children may be more at risk than adults, as their eyes tend to transmit more light to the retina than adult eyes. As a result, this may mean their eyes are easily damaged by intense light (like that from a solar eclipse).

Here are our main tips for witnessing a near-total solar eclipse:

  • Be sure to wear special glasses or research ways to witness the eclipse without looking directly at it. NASA has some great tips on their website for homemade eclipse-viewing theatres. Going the homemade route can be a great way to entertain the kids, too.
  • Before heading outside, apply sunscreen with high SPF. If you plan to stay out for a while, make sure to reapply it every few hours.
  • Consider wearing a hat that conceals your ears, face, head, and neck. Wide-brimmed hats do the job best, and a visor is fine for an overcast day.
  • Bring plenty of water to sip on while you watch the show. Again, if you plan to spend a lot of time outdoors during eclipse time, practice proper outdoor safety etiquette and wear protective clothing or seek shade where possible.

Methods to view an eclipse

There are ways to look at the solar eclipse indirectly. You can, of course, watch livestreams online or on TV. You can also try any of the following:

Eclipse sunglasses

You can purchase eclipse sunglasses online. Make sure that eclipse sunglasses are fitted properly, used correctly, in decent condition, and free of any defects. Make sure to put them on before you look towards the eclipse, and turn away before you take them off. Always closely supervise any children using these types of glasses.

It’s also a good idea not to use eclipse sunglasses in combination with other lenses, such cameras, telescopes, binoculars, etc., as these will create more light intensity that the glasses aren’t equipped to handle.

Pinhole projections

You can create a pinhole protection through which to see the solar eclipse. Use a small piece of paper or a card with a single ~1mm diameter hole in its center to create a shadow on an additional screen or card about ~1m away. Make sure to not view the eclipse directly using this method and face away, only observing the event as the image is projected onto the screen/card.

With any method, children are always most at risk, so ensure that they are closely supervised. If you’re unsure if your child is willing to follow instructions or might be unable to use any outdoor viewing methods, consider watching a live stream online or on a TV.

Preparing your home for spring melt

Posted on by AHI Group

As the snow begins to melt and the first signs of spring start to emerge, it’s crucial for homeowners to prepare their properties for the changing seasons.

This period, while often welcomed for its warmer temperatures and renewed outdoor life, also poses unique challenges to your home’s integrity. The annual spring melt can lead to potential water damage, foundation issues, and other costly problems if not properly managed. AHI Group understands the importance of safeguarding your home against seasonal risks, not only for the sake of preserving your investment but also for avoiding future impacts on your home insurance premiums.

Our top tips for protecting homes against spring melt

The transition from winter to spring can bring about an array of challenges, including water damage and structural issues. To ensure your home remains safe and intact during this period, we’ve compiled a list of top tips for effectively protecting your property. These strategies are designed to prevent the common pitfalls associated with the thawing process, helping you avoid unnecessary repairs and insurance claims. Let’s dive into these preventative measures to keep your home in pristine condition.

Clean gutters and downspouts

Ensuring your home’s gutters and downspouts are clear of debris is essential for proper water flow away from your property. Blocked gutters can lead to water overflow, causing damage to your roof, siding, and foundation. Regular cleaning before and during the spring melt can prevent these issues.

Inspect and repair roof damage

Winter weather can be harsh on your roof. Come spring, inspect your roof for any signs of damage such as missing shingles or leaks. Early repairs can prevent water from entering your home, safeguarding against structural damage and mold growth.

If you didn’t already know, recent roof updates – even within the last 10 years – can impact your insurance rates, potentially qualifying you for lower premiums. If you’ve modified or updated your roof within the last decade, give us a call.

Grade your lawn away from your home

Water pooling around your foundation can lead to significant issues. Ensure the ground slopes away from your house, facilitating water runoff to prevent foundation damage. This may involve regrading your lawn or adding soil to certain areas.

Install a sump pump

A sump pump can be a homeowner’s best defense against basement flooding during the spring thaw. If you already have one, test it to ensure it’s in working order. Installing a battery backup is also advisable in case of power outages.

Extend your downspouts away from your home’s foundation

Downspouts should extend at least 5 feet away from your home’s foundation. This helps direct melting snow and rainwater away from your property, preventing water intrusion and protecting your foundation.

Seal gaps and cracks in the foundation of your home

Inspect your home’s foundation for any gaps or cracks. These can be entry points for water, leading to leaks and moisture problems inside your home. Sealing these openings can significantly reduce the risk of water damage.

Insulate your pipes

Freezing temperatures can cause pipes to burst, leading to water damage. Insulating your pipes, especially those in unheated areas like basements and attics, can prevent them from freezing as the temperatures fluctuate during the spring thaw.

Create a clear path for snowmelt

Strategically shovel snow away from your home’s foundation while it’s still winter. Creating paths for snowmelt to flow away from your property can prevent water accumulation and potential damage to your foundation and basement.

How do spring melt insurance claims affect your premiums?

Water damage and foundation damage resulting from the spring melt are among the most common and costly claims homeowners face. When an insurance company receives these claims, it often indicates a higher risk of future claims, which can directly impact your insurance premiums. The rationale behind this is rooted in the way insurance companies calculate risk and determine premium rates. Each insurance company has its own database and statistics for how insurance premiums are gauged.

If a home has a history of water or foundation damage, insurers perceive it as more likely to encounter similar issues in the future. This perceived increase in risk often results in higher premiums for the homeowner, as the insurance company aims to offset the potential cost of future claims. This offset may be greater the more claims you file or even if the few claims you do file are severe in nature.

By taking proactive measures to protect your property, you can minimize the likelihood of damage and the need to file a claim. This can help keep your insurance record clean, which is beneficial for keeping your insurance costs low over time.

Have any questions about protecting your home against spring melt? Report a claim, or ask us about our advice on what to do about recent damages? Recently updated your roof? Give us a call here at AHI Group and we’d be happy to help you.

Does auto insurance follow the car or the person?

Posted on by AHI Group

We’ve all occasionally driven other people’s cars, whether because ours was in the shop awaiting repairs or because we’re visiting another state or even country. You might not have thought too much about it. After all, you have insurance. Isn’t that good enough? But does auto insurance follow the car, or does it follow the person?

In a nutshell: car insurance coverage technically follows the car and not the person, but there are exceptions to this rule, including the state where you live, who’s listed as a driver on your policy, and the kind of endorsements you have.

Is there such a thing as “driver insurance?”

You can be listed on others’ insurance policies as an occasional driver, but there’s technically no such thing as driver insurance. There is also non-owner car insurance for those who don’t own vehicles at all but may regularly borrow/rent them, which can help to satisfy a SR-22 (or FR-44) form. You may also be able to purchase endorsements that will cover you while using rental vehicles or borrowing friends’ vehicles, but that’s limited in duration and applies situationally. Adding endorsements will also increase your car insurance premiums.

Friends and extended family members who don’t have vehicles but might want to take your vehicle out for a spin sporadically can be covered under your policy, but we recommend informing your agent or insurer of this first. They are unlikely to be covered if they were to get into an accident unless they’re included in your policy’s terms, but be mindful of the fact that their actions may impact your insurance.

What is non-owner car insurance?

If you don’t own a car but frequently need to rent cars or borrow the cars of others, you can purchase a liability policy separately known as non-owner car insurance. It’s also helpful if you ever need to show proof of car insurance.

Non-owned car insurance, depending on the state, can include liability coverage as well as other required options, like uninsured motorist or medical payments coverage. Each state has its own requirements for minimum auto insurance (except for the few states that don’t require insurance), and each car must be insured adequately to satisfy the law. The primary focus of non-owned coverage is on liability insurance.

Only one person may be listed on a non-owner car insurance policy. Some companies will apply coverage to a spouse, but many don’t include this option.

Non-owner car insurance offers coverage if you get into an accident in a borrowed vehicle and helps to pay for the damages/injuries of others via the liability coverage provided by the policy. Keep in mind that non-owner car insurance is secondary to any existing coverage on the policy, so if you got into an accident with a friend’s car while having this insurance, and that friend had bodily injury limits of $15,000 but the accident capped out at $30,000 in medical bills, there’d be an outstanding $15,000 to pay. Non-owner car insurance could help cover the remaining amount. In short, non-owner car insurance covers:

  • Bodily injury and medical expenses caused while driving a vehicle owned by someone else
  • Property damages caused while driving a vehicle owned by someone else
  • Legal defense if you are sued for causing an accident in a car owned by someone else

Non-owned car insurance won’t cover damages to the car you’re driving, any injuries you sustain, any injuries sustained by other passengers, business driving, or personal belongings. In fact, that car won’t be covered at all for physical damages unless the registered owner already has a full coverage car policy; non-owned car insurance shouldn’t be depended on to provide protection that doesn’t already exist with the vehicle’s main policy.

Who needs non-owned car insurance?

Here are some reasons why someone might choose to purchase non-owned car insurance:

  • You frequently use car-sharing services. Companies that offer these services, like Zipcar, usually have their own insurance but non-owned car insurance may help in extending the otherwise limited options that the companies provide.
  • You want to avoid having a gap in your car insurance.
  • You frequently rent vehicles while abroad or travelling, or just in general.
  • You’re faced with a state law to file an SR-22 or FR-44 form (which requires you to show proof of car insurance if you’ve ever had a DUI conviction, been caught driving without insurance, license suspension or revocation, etc.) This way you can get auto insurance and show proof of insurance without needing to own a car.

Will my auto insurance cover me if I’m driving another vehicle?

This goes back to the question of, “does auto insurance follow the car or the person?” The short answer is technically no, but if you are listed on the policy of that other vehicle, then you would be covered. It wouldn’t be your auto insurance per se, but you would be covered.

With some insurers, they’ll accept others driving your car as “being covered” assuming that there’s a reasonable belief that you’d have had permission to drive the car. This goes for a lot of situations, such as the following:

  • Borrowing a family member’s car while yours is in the shop for repairs
  • Driving the vehicle of a parent with permission, assuming you haven’t been excluded from their car insurance policy
  • Renting a car from a car rental company or car-sharing marketplace (with some exceptions)

With the above scenarios, your full insurance may not extend to these borrowed/rented vehicles. Generally, all you’ll have is liability coverage, but your comprehensive/collision coverage likely won’t apply. With certain car rental companies or agencies, you’ll often be asked to purchase the insurance that they offer to ensure that their asset and investment is fully protected.

Get unique coverage solutions with AHI Group

Don’t own a car but drive and rent others’ cars often? Own your own car but frequently use rentals when you travel? Lend your car to a friend? Whatever your unique situation is, AHI is happy to discuss your coverage needs with you and find a policy suited to how you drive. Give us a call today.

New House? You Need a Quality Home Insurance Policy

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When you move into your new Olathe, KS house, there are many things to consider. Will your furniture fit? Do you want to repaint the bathroom? There are always questions and considerations. One of the items at the top of your to-do list should be working with an agent at AHI Group to get the right home insurance policy. You also want to have quality coverage that meets your needs and the peace of mind that goes with it. The right agent can help make all that so much easier.

Home coverage is designed to protect you and your belongings in the event of a claim. It can also help you get your home repaired after a disaster and make replacing your personal items easier and less stressful. If you’re buying through a lender, they’ll generally require you to have a policy in place before you can close on the house you’re buying, so they know they’re also being protected.

While it’s possible to shop for insurance on your own, the best option is to work with an agent who can give you quotes from multiple insurers. That makes it much more convenient to compare coverage and options so you can decide which policy is best for your needs. Even if the coverage is the same, the value of the policy can be different depending on which company you choose. Our agents will answer your questions and discuss your options so you can get the right coverage.

Contact us today at AHI Group if you’re buying a new house in the Olathe, KS area. We’re here to make sure you’re happy with your policy and that it gives you the protection you need to enjoy your new home.

Why do insurance companies take so long to settle claims?

Posted on by AHI Group

In the face of an unexpected disaster, it’s good to know you have insurance. Say you got into a fender-bender at the grocery store and now you’re having to submit a claim to your insurance company. Big deal, right? We pay premiums for times like these.

Unfortunately, it’s not so cut and dry. Before you receive your settlement, your insurance company may need to conduct a thorough investigation into the accident to determine your percentage of fault and potential liability. Other factors can contribute to a longer wait time for claim payouts. Here’s why.

The insurance claims process, step-by-step

The process of filing an insurance claim can be pretty complicated by itself. There are several steps, but it all begins with getting in touch with your insurance company (or agent) and letting them know about the accident. Policyholders living in no-fault insurance states will always be in contact with their own insurance company, but policyholders in tort (at-fault) states may need to contact the responsible party’s insurance company to file a claim for their injuries or damages.

First contact

The claims process begins as soon as you get in touch with your insurance company, agent (and have them notify your insurer), or in at-fault states, the responsible party’s insurer. This step acts as the first notice of loss, where you inform your/the insurer of your intention to file a claim.

Claim investigation

The grunt work begins. Insurance companies will sent out their individual agents to investigate the accident and fully determine liability. At this point, providing as much information about the incident as possible is critical. Dashcam footage, images, witness statements, receipts, and any other evidence you can conjure is absolutely critical and can expedite the process. The process proceeds when a claim is deemed valid and liability is more or less determined.

Policy review

At this stage, coverage is evaluated to see if each claimant has applicable insurance and which coverage the claim falls under. If coverage exists and can be identified, the claim can proceed. Policies can be complex, however, so reviewing policies can take time.

Damage evaluation

Adjusters and appraisers will need to analyze the extent of the damages done to either your property or vehicle (whichever you’re making a claim for). In extreme cases with auto claims, this can involve a teardown of the vehicle to investigate internal damages. If the claim is for an injury, numerous medical experts may be involved. Either way, this process can take some time.

Arrangement of payment

Once damages have been fully evaluated, you may begin to have your payment arranged. Payment can come from a few different places, so while this step sounds fairly straightforward, it can also take a fair bit of time to process.

If your insurer disputes the claim, this can delay the process of receiving your settlement even more. You may need to hire a lawyer to provide additional proof or go back and forth with your agent (who will advocate for you during this time).

Insurance claims can be complicated, especially if there is more than one party involved

Filing a claim for a rollover or collision with a highway barrier is pretty straightforward, but things get messier every time there’s an additional party. If you’re the only person involved in the claim, it’s easier to investigate than if there are multiple parties.

With multiple parties, insurance companies need to determine liability or may even need to handle multiple claims at once. This can extend the process even more. But other factors are at play as well, which may be increasing the time it takes to receive your settlement without you even knowing.

There’s a lack of labor in the insurance industry

Appraisers, adjusters, and claims investigators are far and few right now in the insurance industry, making the overall process for claims all the more difficult. It can take longer for these workers to make it out to investigate damaged property and even longer for them to come to a final decision.

According to Insurance Business Magazine, the insurance industry is estimated to lose around 400,000 workers by 2026. This is in part as a result of a huge percentage of workers nearing retirement age, but the labor shortage could also be yet another impact of the COVID-19 pandemic.

Insurance fraud calls for more thorough investigations

The more insurance fraud there is, the more insurance companies will need to strengthen their resolve to catch potential fraudsters. So, even if you’re not intending to commit fraud or have committed in the past, your insurance company may likely want to perform a thorough investigation of your accident to ensure all their bases are covered. This isn’t because they don’t trust you in particular – it’s just become procedure as a result of rising fraud incidents.

Unfortunately for all the honest policyholders, this means that claims can take longer, even if they’ve been a trusted policyholder and always paid their premiums on time. It can seem like you’re getting the short end of the stick despite always doing your part, but it’s unfortunately the price we’re all having to pay.

The insurance claims process can be a confusing time, and it can be especially difficult if you feel like your claim is taking a long time, but until there are major shifts in the insurance industry, this may be the way it is for some time. Claims take, on average, between 30-45 days to settle completely, barring extreme circumstances. If you’re unsure about what next steps to take when processing your claim or want the advocacy of your agent, give us a call.

Honesty is the best policy: Being upfront about your renting habits

Posted on by AHI Group

As of 2022, there were nearly 44 million housing units that were occupied by renters in the United States. This number has steadily increased for a number of reasons, the main of which being the ever-rising cost of living. For many Americans, renting can be a more affordable alternative to home ownership.

At the same time, many homeowners have found themselves in a sticky situation when it comes to rising mortgage rates and general life expenses, and to combat their seemingly endless expenses have turned to renting out a portion or floor of their home. Careful – if your agent doesn’t know about your renting habits, they should. Here’s why.

Standard home insurance is limited when it comes to renting

Home insurance is designed to cover the home, its foundation, four walls, basement, roof, etc., as well as your personal liability (your legal expenses if anyone decides to sue you for injuries or damages to their property), your belongings, and even necessary living expenses if you had to live elsewhere for a time while your home was being repaired or restored.

But home insurance is designed to cover you and other household members, not guests or unrelated (and even related!) individuals renting out a room or floor in your home. It gets especially complicated when you’re renting out parts of your home in exchange for rent payments, which changes the occupancy of your home from simply being your dwelling to now being a commercial operation.

In short, the majority of home insurance companies will not cover homes if they are also being rented out. Some home insurance companies will, under the condition that the homeowner purchases a rental endorsement. Other companies won’t want to stay “on risk” at all, and you’ll need to go elsewhere to find the coverage you need.

Why you need to be honest about your renting habits

Being upfront about all your information, including the primary occupancy of your home, is crucial. Failing to disclose your renting habits to your insurance company borders the line of insurance fraud and can easily land you in hot water if you’re found out. At best, any claims you make will be denied. At worst, your policy could be cancelled, and you’ll later have a much harder time finding coverage.

Speaking strictly from a protection POV, not being honest about your renting habits may mean you won’t acquire the protection you need to cover your rental activities. This includes, but isn’t limited to, any liability associated with your rental habits, any damages your tenant accidentally does to your property, and any fair rental income you’re entitled to that you can’t receive as a result of an insured loss.

Will my rental activities increase my home insurance costs?

Yes, and this is often why homeowners hesitate to inform their insurance company. Adding an endorsement to cover your rental habits or even purchasing landlord insurance can cost more, but you’re likely better off disclosing your activities to your insurance company and paying the slightly increased cost than you are lying about your rental. If you’re found out, or even cancelled, your insurance costs could increase dramatically the next time you go to find coverage, and could end up costing you hundreds more dollars than you’d pay had you simply been honest about your renting habits.

Do you need to have landlord insurance?

If you rent out a part of your home, such as a bedroom or a basement, then no – not usually. Usually what will happen is your home insurance company will have you purchase a rental endorsement, which increases your protection to include landlord liability, dwelling coverage against tenant accidents, and fair income rental coverage.

If you had a second property that you didn’t occupy, such as a condo, you would need to purchase a landlord policy. You would never insure a property twice, i.e., you would never insure a property with both landlord and home insurance. Your primary home with a rental unit (bedroom or floor) can be insured with a home policy but all your rental activities may be covered under an endorsement included in your primary policy.

Do I still need insurance if I rent out my home through Airbnb?

Yes. In fact, many insurance companies will view hosting platforms, like Airbnb, as even riskier than longer-term rentals. Many insurance companies will offer short-term rental insurance as an endorsement, which you can add to your home insurance policy, or you can purchase a standalone policy for a home that is primarily used as an Airbnb property.

Note: many home-sharing platforms will offer their own insurance, which is free, but may be limited. It’s usually recommended that you purchase short-term rental insurance for more comprehensive coverage. Even if you have Airbnb-provided insurance, you’ll still need to loop your insurer in on your rental habits.

Confused?

If you are renting out a part of your home, considering doing so, or are confused about anything we’ve discussed in this article, reach out! Our agents are happy to discuss your home insurance with you and review your policy to ensure you have all the coverage you need.

What is insurance fraud and why should I care?

Posted on by AHI Group

The total cost of insurance fraud in the United States is estimated to exceed $40 billion a year. You might think, “well, that’s a big number, but why should I care?” While you might not know it, unfortunately, insurance fraud impacts everyone, not just the insurance companies. They do the crime, and we all end up paying for it. Data from the FBI suggests that insurance fraud costs the average U.S. family between $400 and $700 in premiums to compensate for losses from fraud.

What is insurance fraud, and how do you recognize it when it’s happening?

Defining insurance fraud

In short, insurance fraud is the intentional misleading or activities that take advantage of an insurer’s agreement to pay claims. This can take many forms, but insurance fraud is always usually divided into two main categories: opportunistic and premeditated fraud. The former occurs when a policyholder takes advantage of an existing claim to exaggerate or mislead in order to receive a higher claim payout whereas the latter is intentional, organized crime that can oftentimes have very real consequences that go beyond the financial losses, including but not limited to severe body injury.

Examples of opportunistic fraud might include:

  • You get into an accident with another vehicle. Your vehicle has minor damages, but you file a claim for damages to your car that predated the event in order to receive a higher payout.
  • After a claim, you exaggerate the extent of your injuries and/or medical treatment needed.

Examples of premeditated fraud might include:

  • Staged collisions, where the other driver is either participating or unsuspecting.
  • Jump ins, where someone later files an injury claim against the unsuspecting driver despite not having been inside any vehicle involved in the collision.
  • Misrepresentation or misinformation regarding one’s primary address, driving habits, etc., to receive lower insurance premiums.

Fraud is fraud, whether it’s premeditated or opportunistic. Both have the potential to greatly impact other policyholders and insurance fraud is a felony that can be punishable with jail time in many states.

What are some common insurance fraud scams?

Here are some examples of common insurance fraud scams that take place in the United States. These fraud scams exist throughout all types of insurance, but are most common with auto.

  • Fake theft claims: Policyholders falsely report items stolen from their homes or vehicles to receive reimbursement from their insurance providers. In some cases, the items claimed as stolen never existed or were intentionally disposed of.
  • Exaggerated claims: We discussed opportunistic fraud in the point above; exaggerated claims are really the most common example of this. Policyholders inflate the extent of damage or injuries suffered in a genuine accident to receive higher payouts from their insurance companies.
  • Property arson: When premeditated fraud goes to the extreme, real damages and potential issues can arise. Property owners intentionally set fire to their homes or businesses to collect insurance money for the damages. Sometimes, they may even destroy valuable possessions before claiming the loss. This can cause damage to neighboring property unintentionally.
  • Worker’s compensation fraud: Both employees and employers may engage in fraudulent activities related to workers’ compensation claims, such as exaggerating injuries or underreporting payroll to reduce premiums.

This is only a few examples of different types of insurance fraud scenarios that take place. Identifying insurance fraud can be difficult, although many insurance companies have fraud detection systems in place intended to mitigate losses and preserve their integrity.

Unfortunately, the same can’t be said for policyholders. It’s hard to detect fraud. With a particular fraud scheme, “staged collisions”, you can end up becoming an unwitting participant in a scam, whether you were aware or not. We recommend familiarizing yourself with the different types of staged collisions that exist to keep yourself and your household safer on the roads.

How does insurance fraud impact me?

While insurance fraud may seem like a victimless crime and just “a few extra dollars” received from an insurance company, it’s more than that. Those extra dollars can amount to hundreds, thousands, and beyond over time and with thousands of criminals participating. The financial implications don’t just impact the insurance industry, but policyholders as a whole.

See, it boils down to the way insurance companies pay claims. Insurance companies use premium payments for a variety of things, including funding their operations, and revenue. Still, most of what premiums are used for is to contribute to a “pool” of funds, which are then later used to make payouts when claims are filed. All insurance companies are typically required to maintain a certain “safety fund” to ensure claims can be paid out in the event of an unexpected disaster in a single geographic region (a huge storm, wildfire, etc.)

When fraud is committed, claim payouts go up, and that pool is diminished. In order to ensure claims can continue to be paid out, insurance companies must raise rates for every policyholder across the board, which can make it seem like your insurance costs have gone up for “no reason.” That’s the unfortunate consequence of insurance fraud. While you may always be honest and upfront with your insurance agent and company, others may be abusing their policies for personal gain – and you end up paying for it.

Stay vigilant. If you have any questions about insurance fraud or its impacts, or are concerned about rising insurance premiums, please give us a call.

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