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Significant Insurance Updates for Early 2006
Last month, I briefly described some of the insurance changes that will be affecting homeowners. But changes have also been occurring over the last several years affecting life insurance contract holders. How will these affect our clients?
In helping you prepare for addressing these changes, let’s examine each of these two types of insurance in more detail.
Mounting losses and claims in the state of Florida will affect our clients insuring homes there. While we cannot control the rates and rules that are rapidly changing, we can offer some advice on how best to react.
Depending on the location of the home in Florida, you will need to address four specific coverages to adequately cover the risks:
- A standard home insurance policy.
- “Wind/hurricane” coverage will be required if an insurance company excludes losses resulting from wind. The vast majority of these policies are issued by Citizen’s Property Insurance Corporation (Citizen’s).
- Flood insurance coverage may be required if the home is located near water – especially if there is a mortgage on the property. And in general, the closer a home is to water, the more expensive the flood insurance.
- Excess flood insurance coverage to provide additional flood insurance once the basic coverage “runs out” on the home and contents. (Note: Basic flood policy limits coverage to $250,000 on the dwelling and $100,000 on personal property.)
Given these dynamics in Florida, we ask that you contact our office as early as possible when considering a Florida home purchase. Additional time would also allow us to arrange for an insurance “pre-appraisal” of the property which will expedite the process and help us determine the best options for coverage.
Over the years life insurance has become a much more sophisticated and strategic planning solution. Further, mortality assumptions, economics, interest rates and contract innovation has made it almost a necessity to review your policies every 3-5 years; especially term insurance.
Equally important are the life changes that could affect beneficiary and/or ownership designations. Consider contacting our office for a life insurance audit to address:
- Insurance company ratings
- Policy performance
- Ownership and beneficiary designations
- Tax planning implications
- Cost and benefits with respect to needs analysis
As always, we stand ready to assist with all your risk management and planning needs.