Check out the above video with our talk with Robert Solomon with Farmers Insurance.
You must know these three things about insurance or you could find yourself in trouble. This is Anne Curry and I’m back with my friend Robert Solomon of Farmers Insurance, and he’s going to give us the three most important things you absolutely need to know about insurance. Robert, what are the top-three things?
Well, number one, like anything you spend money on, you really need to know what you’re paying for, line by line, penny by penny. It is not a fun afternoon to sit and review your insurance.
But neither is balancing your checkbook.
No, but it’s necessary.
Okay, to keep you safe, really.
Not only that, but more importantly, you want to know what you are covered for. And most importantly, when it comes to insurance companies, what you are not covered for.
Okay, because those three things are dangerous. Being under insured is a dangerous thing. Talk about that. That would be tip number one, being under insured, correct?
Absolutely. So understanding your coverages first gives you the idea of do I need to have it? Or do I need to purchase something separately? So take for example, I always used a ’97 Honda as an example. The reason I use a ’97 Honda is because it’s a beautiful car.
It will last until kingdom come. So what it is, is if you have a ’97 Honda and you have full coverage, you really don’t understand what your coverages do, because you could be paying more in insurance than you’re ever going to get paid, should anything happen to that vehicle. So you do have to understand your coverages. By understanding your coverages, you understand exactly where your holes are as far as your liabilities are. So take for example, everyone has a certain amount of jewelry in their home and they could be under insured on their jewelry.
Give me an example, a real example, of that.
Absolutely. So most policies will have what’s called a sub-limit for jewelry. What it is, is it’s a rider and they only will cover let’s say $2,500 in jewelry.
That might only cover one, barely one wedding ring, right?
Exactly. For some families, yes. And so you may say, well, I have $100,000 worth of coverage for my stuff. Yes. But sometimes they put another line down there, where they say that jewelry is only 2,500.
So God forbid, somebody breaks into your house, steals all your stuff, you get 2,500 bucks.
You would not be a happy camper.
No, you would not.
If you did not have that discussion beforehand. Now it’s different if you had that discussion and made the choice not to pay for that kind of coverage, and you say, listen, I don’t want to pay extra for that coverage, and I absolutely understand the liability I have should it happen. That’s okay. You made that decision. That’s a more important part.
Okay, give me another example of being under insured and how that’s dangerous.
Well, this is a very, very sad, tragic tale that came out of Florida, where we had an entire condo fall apart.
Yes, we did.
The condo owners and the homeowners association, if they did not have a good insurance agent who made sure that they had an astronomical coverage in liability, they could be looking at absolute bankruptcy.
So there is a real danger to being under insured. And let’s talk about that. Most here in the state of Washington, the liability limits is 25,000 in medical coverage per person and 50,000 overall. Anybody who’s been to the emergency room can tell you…
I can go like that.
That’s one night.
So yes, you can be extremely under covered, because if you have a lot of assets but only have minimum in liability and God forbid, you get into an accident where someone else has to go to the hospital, you can really look down a really dangerous path of losing a lot of your assets to that accident.
Yeah, you could. Okay, being under insured is very dangerous and I agree with you it is. Number two. What’s the number-two thing that is absolutely we need to know about insurance?
Well, this is really easy to tie into the first one, but you have to tailor it to your family, right? So obviously through the last year and in the future, we’re going to see a lot of changes in different families. So what that means is, as you, let’s say, are going to stop driving one car and drive another one completely. Maybe you want to have a storage policy on your other car, right? Maybe it’s time for you if you’re opening a business to start to understand that, hey, I want to put my business auto, my personal auto under business, because that’s what I’m using it for. Okay? Because you can use a business vehicle for personal but you cannot use a personal vehicle for business.
And so if you’re using your personal vehicle for business, and God forbid, you got into an accident and your insurance company found out, could they deny coverage?
Ask any of my Uber drivers or my Uber Eat drivers and DoorDash drivers. Absolutely.
That’s an absolute must know. So, and how could we know? Do we talk to our insurance agent and say, how am I insured? Tell me about my policy.
Okay. So that’s conversation.
Absolutely. Because you need to understand, well, if I am getting tomatoes for my restaurant, is that considered business? It may or may not. It all depends on how often you do it. If this is regular. If I am driving the kids in my truck vehicle, is that personal? Again, it may or may not. Depends on how often it happens and when it happens. Things of that nature. So it’s very important that you know the way your usage of your vehicles and that you understand your agent. One very easy caveat to understand if something’s a business or a personal, if there’s a wrap around it, that’s a business.
Okay. Any wrap, any advertising.
Any advertising. Welcome to the business.
It’s very easy to just, I mean, there is certain ways where you can say, no, it’s not related, and that is very, very rare. But overall, if you have your business splattered on the side of your vehicle, that’s a business. That’s it.
Okay. Number three. What’s the number three, most important tip for understanding insurance?
You don’t have to insure it. I know, weird.
You don’t have to insure it?
Yeah. I know.
What do you mean? But don’t you have to insure it?
An insurance agent telling you you don’t have to insure it.
Yeah, go figure.
There are situations, there are things in our lives that you just have to understand you may not have to pay for the insurance for that. And again, because the payment for it maybe a lot less.
Give me an example of that.
Absolutely. So American Home Shield, it’s a local company. I don’t know if they’re local here in Washington, but they are in Washington. They insure your appliances, right? But if you have low-end appliances and you’re paying $40 a month for this American Shield to cover your washer and dryer that you may only pay $700 to replace.
So over time, you’re almost like rebuying that washer. I mean, $40 times X amount a month equals a new washer and dryer.
Okay, that’s a good one.
So you may not need to do that.
What’s another thing that you don’t have to insure that people are insuring?
The vehicles they don’t drive. Remember, we do have storage policies. The moment you put it away, we can do that.
Which was an epiphany to me. I had never heard that. If you have a classic vehicle or a vehicle that you’re not driving, you can sit it in the storage policy.
But then you could call your agent and say, I want to take it for a drive.
Make sure he answers his phone.
Then they’ll cover it. Yeah, make sure he answers his phone!
Because remember, you can’t do anything over messages. You can’t sell or buy anything over a message. So it’s the same thing for insurance agents. But yes, absolutely. That’s a key aspect.
Also, I mean, we’re not talking about liability. Always protect your liability. We already covered on how dangerous liability can be. How much one night in the hospital is. So this does not go towards liability. This goes towards what we call first party, which is taking care of your stuff or your insurance company paying you for your stuff.
And I’ll make a caveat to this video, is anything that we talk about here, obviously have this conversation with your agent, right? Because they understand what’s going on. But we’re giving them ideas and tips.
Absolutely. And you have to understand, you do not go to court to represent yourself. I always say that’s the worst client. And you don’t perform surgery on yourself. Insurance is just the same way. I would never perform surgery on myself. I would never represent myself in court. Go to the professionals. Talk to someone. If you got to get on hold with your company, get on hold with your company or call someone who won’t put you on hold. Those are the most important aspects.
They say an ounce of prevention is worth I don’t know. I don’t remember what the saying is. It’ll come to me later. But just taking the time to sit down with your insurance professional. Of course, you do this with your clients and would do it with anyone that’s watching this video to have them really understand your life, how you use your stuff, your lifestyle, all of that. So they can tailor that insurance policies with what’s going to protect them in the end. That’s the ultimate goal. It’s the protection. That’s why we buy insurance.
We don’t want if a tragedy hits, and inevitably it will at some point in your life, you will have something that hits, and you want to be properly insured.
Yes. And, like you said, failure to plan is a plan to fail. And so the aspect is, and here’s the fun part, insurance agents work for free. They don’t tell you that.
What do you mean?
You don’t pay anything to sit down, ask questions, and essentially take up hours. And when you buy the policy, you’re paying the insurance company, and then they pay the agent.
They don’t like us to talk about that, because not a whole lot of agents like to spend time without getting something back. But yes, you can sit down for hours with an agent and not have to pay a penny out of pocket.
So it’s free to meet. It’s free to get information. And it’s just so vitally important at the end of the day.
Yeah, thank you, Robert. This has been great.
And thanks for having me.
Tips to protect yourself. Must do insurance. That’s awesome. Thank you.