Insurance – Weighing Risk, Cost and Value

By Hannah Haltom

You work hard to build the life you want and that takes a lot of time, effort and financial investment. It is not something that is easy to replace whenever you experience a loss. Insurance is how you can protect against life’s uncertainties. It provides a buffer against the unexpected with the goal of returning you to the state of life before the loss occurred.

In insurance, it pays to be an educated, wise consumer and to understand your policy. Not all insurance policies are created equal. However, here are some basic coverages that are in most policies:

Liability Coverage – This is one of the most common coverages. Liability coverage helps protect you from potential lawsuits in relation to what is being insured. It pays compensation to an injured third party. It can be for bodily injury or property damage that may or may not result from your negligence.

Property Coverage – This is the portion of your policy that covers your property. In auto insurance it is referred to as comprehensive or collision coverage. Home insurance uses cost estimators to determine the dwelling value. On a commercial policy, it may be called business personal property. Insurance companies use a variety of tools to assist with the valuation of the property being insured. There are a few valuation methods to consider when determining how to insure your property:

Actual Cash Value – This valuation method uses depreciation to determine what insurance would pay on a claim. It is common in auto claims and older homes. For example, a television was purchased for $1,000 and its life expectancy was 10 years. If a loss occurred after year 3, insurance may pay approximately $700 on the claim if it was insured at actual cost value.

Replacement Cost – This valuation method looks at what it would cost to rebuild or repair the damaged property with like materials in today’s market. It looks at the current cost of materials and takes into account market inflation. The replacement cost method of valuation is used commonly on newer homes or personal property.

Deductible – A deductible is the portion of a claim that you, the insured, pay when  there is a claim. By assuming part of the financial risk, it helps keep the overall cost of insurance down.

Insurance policies can be lengthy, but make sure you read through it. Policies often have exclusions (specific causes of loss that are not covered). Homeowner Policy A may cover fire, windstorms, hail and theft. However, Policy B may cover all of the perils of Policy A plus water leakage from plumbing. Floods and earthquakes are almost never covered under a standard insurance policy. You would need to purchase a separate policy to cover those risks if you live in an area prone to flooding and earthquakes.

Some policies have extra coverages that can be added, such as underground service line or backup of sewer coverage. Also, if you own an expensive diamond ring, a commercial mower or a high dollar amount of firearms, you will want to consider scheduling those items separately on your insurance policy. Do you have tools that travel with you to job sites? If so, most of the time your standard commercial auto policy will not cover the tools or special equipment unless they are scheduled.

Selecting the right insurance coverage is specific to your individual needs. This is why it is important to pair yourself with a knowledgeable agent who takes time to understand and address your specific exposure risks. A good agent will ask you questions about your business, property and liability exposure. They can walk you through your policy and help you understand the coverages, terminology and exclusions. Your agent can also help service your policy as your insurance needs change or in the event you need help submitting a claim.

There are different types of agencies – captive and independent. A captive agent usually sells for only one insurance company. An independent agent has the advantage of accessing multiple insurance companies, allowing one point of contact the ability to shop for the best rate. Every few years, it is a good idea to check with your agent and make sure you are still getting the best rate. Paying more does not mean you are getting more value. Insurance companies commonly have rate increases depending on losses in their coverage areas and inflation of material costs.

Insurance does not have to feel overwhelming. Find a good agent and build a relationship with them. They can give you peace of mind and security, as well as arm you with the knowledge you need to confidently pursue and protect your dreams and goals. It is worth it to protect your investment and the life that you are working hard to build.

Hannah Haltom is a licensed insurance agent at Haltom Insurance Agency with offices in Alva and Fairview, Okla. Haltom Insurance is an independent, family-owned agency specializing in farm, home, auto, commercial, health and Medicare-related insurance throughout Oklahoma, Kansas and Texas. Hannah graduated from Northwestern Oklahoma State University with a Bachelor of Science degree in Business Administration in 2007 and obtained a Master in Business Administration from Oklahoma Wesleyan University in 2011. She resides in Alva with her two children, Arianna, 9, and Ezra, 4.


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