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Home Insurance Claim or Maintenance?

Home Insurance Claim or Maintenance?

A client called me two weeks ago. Their air conditioner died and they wanted to know whether or not it was covered by their home insurance policy. Given the cost of replacing an air conditioning system, I would ask the question too. The answer though, is it just depends on how they answer my next question. I begin our discussion with the question, did something happen to the air conditioner which damaged it. Examples include a power or electrical surge, a lightning strike, a tree limb or tree falling onto it. In a case like this, there is a claimable action, or peril, which occurred. In this case most home insurance policies will cover it, and filing a claim makes sense. In the case where no action, or peril, such as one of the above didn’t happen, then it’s not covered. An insurance company will view this as a maintenance related event related to the normal wear and tear of owning a home. Home insurance policies are not designed to cover heating and cooling units, water heaters, appliances, or other items when they wear out or need to be repaired or replaced. Home insurance policies are designed to cover damage to the home when something happens which is caused by one of the perils they recognize. Perils may include lightning strike, electrical surge, falling objects, etc. When a peril occurs and results in damage to an appliance or home system, repairs or replacement of the unit are covered less any applicable deductible. A related question is what if something fails that damages part of your home. An example of this is a water heater that leaks or ruptures and damages sheetrock or flooring. In this instance, the water heater repair or replacement will be considered a maintenance item, however the damage it causes to carpet, hardwoods, sheetrock, and even contents is covered by the home insurance policy. While home insurance policies do not cover repairs due to normal wear and tear or failure, home warranties and some service agreements do cover these items when they break or fail. When that happens, warranties will usually pay to repair and in some cases replace the appliance or system. Personally, I wish it was covered. My air conditioner unit failed hours before Sheri and I left for vacation. We’re now faced with the expense of replacing our system since no peril or event caused its failure. It’s simply worn out and ready to be replaced. What do you think? Share your comments, questions, and experiences with me on my Google +, Facebook, or LinkedIn pages. I’d love to hear from you! Thanks! Ed Wise Share...

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Car Insurance and College Students

Car Insurance and College Students

When it comes to car insurance and college kids every parent should discuss a couple of topics with their student. These topics have financial ramifications in that they can increase or decrease what you pay for car insurance. Let’s revisit permissive drivers and car insurance discounts. Permissive Drivers: What can go wrong if your son or daughter loans their car to a friend? A lot! If the friend wrecks the car you and your student need to know it will be your car insurance that will pay for damages resulting from their friend’s accident. If someone is hurt or injured, you can be found liable. My advice to any parent of college students living away from home is do not loan their car to a fellow student. The moment a car is loaned to someone else, that driver becomes a permissive driver. Insurance follows the car, not the driver. If the friend is involved in an accident, it will be your policy that’s liable for any damage incurred in an accident, not the friend’s insurance company. A permissive driver can also put you at financial risk if someone is hurt or killed as a result of the accident. Anytime you loan your vehicle to another person you are putting you and your insurance company at risk if something goes wrong. You are risking a law suit or higher car insurance rates for 3 to 5 years. Potential Discounts: There are a few car insurance discounts and strategies that help reduce the amount paid for your student including: Driver away at school Good student Rating the student where they attend If a son or daughter is attending school 100 miles or more away from home and does not take a car with them, most companies offer a nice discount. This discount is available primarily because the student doesn’t have a car with them which reduces their exposure and the rate you pay for car insurance. If your student has an A/B average they will receive a lower rate than if they are partying more than they are studying. If your student is attending graduate school this discount may still be available, but it will run up against a potential age cutoff. Most carriers terminate the good student discount somewhere between the age of 22 and 25. People who live in a smaller city or town pay less for their car insurance than those of us in Houston, Austin, San Antonio, Dallas and Fort Worth. If your student is attending college in College Station, Lubbock, Abilene, Alpine, Waco, or some other smaller community, their car insurance will be less. You’ll have to change the garaging address...

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