Too Busy? Not Really!

Sometimes when I think about years ago, I imagine that I was less busy and that I had more time.  Maybe you think that too from time to time, but it's not true.  We chose to do different things today than we did when we were younger, and sometimes we have more responsibility than we did early in life, but all in all we still get 24 hours each day to spend as we see fit.  My brothers and I are good examples here ... we all seem to be too busy with work and life to visit each other very often but we all somehow manage to squeeze out a movie and dinner out every now and again.

 

Even as I'm writing this I look back and it's been a month or more since my last post, and I'm thinking I just didn't have time to write it.  But that's a lie, I did have time, I just chose to ignore some activities in favor of other ones.  The time we have doesn't change, we just change what we do with it.

Now, don't get me wrong we are all busy, but it is the important stuff that we should pursue and ignore the things that don't mean much to us.  I enjoy fishing, but I rarely get out to fish and I'm always saying I'll go when I have time, but if the truth be told, I could just go fishing and fill in the rest of my life around that time. 

 

So take a moment this week (and every week) and decide what is important, then do that and the rest of your life will still be there when you're done.

 

J

 

Protect what is really important with life insurance, call me for a quick quote!

Secrets Revealed!

I'm often asked how to lower the cost of insurance.  People are quick to point out that their premiums have gone up every year and they want to know why.  I understand and while they don't typically blame me I'm a convenient target for their aggravation.  I try to be patient with folks but really I'd like to point out that everything increases in cost and your insurance is in place to protect that ever increasing replacement value.

 

In other words as the price of auto parts goes up the cost to fix them when the are in an accident will also increase, and like all businesses, the insurance company has to make money or it will go bust.  When repair parts and labor costs start going down the insurance company can begin to look at becoming competitive on pricing.

 

There are only two ways to lower your premium's ... here it is the big secret revealed;

 

1.  Buy less stuff ... if you have 12 cars you are going to pay 12 premiums ... if you have a half million dollar home, you will pay more than the guy with a hundred thousand dollar home.

 

2.  Accept more responsibility for your risk ... we talk about deductibles in the insurance business but really a deductible is just how much are you willing to share in the damage?  If you have a zero deductible or a $100 deductible you are telling the insurance company that you will make a lot of little claims.  If you set your deductibles at $1000 then they know you are not going to ask for their help until you really need it.

I hope this helps everyone!  But I know that rising prices get on our nerves, remember I pay the same insurance rates that you do, so find an agent you trust and have a conversation about the cost verses the benefit.  You may decide to down size or at least shoulder more of the cost of a loss.

J

Call me for all your insurance needs. 

Sometimes life sucks!

Ever have one of those days? weeks? months?  You know the kind of week or month that defies a good attitude, the kind of month that makes you question that there is anything good left in the world?

Yep, me too!  It's like when you drive to the town of Worthington after a big rain and see that 300 foot on the road was under 8 feet of water.  If you live around here you know that means to get to Worthington I had to back track 20 miles to go that final few feet and get into town.

While that was aggravating and it seemed like a big deal at the time (30 minutes of wasted time) it didn't effect me for long.  It's the rest of life that weighs us down, the traumas and conflicts that bite deep into our hearts and minds.  So yes, sometimes life sucks and there is nothing we can do about it.

It's during times like these that I seek the face of my creator ... I know he may not turn back time, or erase the heart sicking events.  But perhaps just seeking his purpose and asking for comfort is enough.  

I don't know ... I don't feel very wise today so take what you can from this ... I hope your month is uneventful.

Insure against what you can!  Pray to avoid that which you can't insure against.

What happened to Customer Service?

This week has been the worst week of customer service for me!  I spent several hours working on getting a phone / internet provider to do what they promised us they would do for our church.  They spend they same amount of time trying to get out of doing what they promised to do.  Plus they tried to make me feel stupid for demanding that they do what they promised to do when we agreed to let them provide the phone and internet services for the church.

Prior to that I spent a great deal of time talking to the bank that is doing the refinance on my home.  After telling me for 80 days that the closing costs would be one figure they proudly informed me on the eve of closing that the closing costs would be double what they originally quoted.  This without the slightest hint of regret or any explanation as to the difference.  They merely gave me the new figure and were puzzled why I told them no, I won't pay that without a reason. 

I struggle with this because I am in the service business, as an insurance Agent I have to take responsibility for the actions of the companies I represent even though I can't control what they do and that is on top of being responsible for what I do.

Think about this ... if gas goes up, we all complain to each other.  If your auto insurance goes up you complain to the agent.  No one ever tells the gas station attendant that they need to sharpen their pencil and give them a better rate on the gas.  Why would you think the insurance agent could make the insurance company lower its price?

I'm not complaining about that perception, I just want to establish that as an agent I have to provide great customer service or people will move on to a new agent ... and they should.  But by the same token, I demand the same level of service in my life that others do from me.

Demand good service and make companies do what they are supposed to do, then be loyal to them so that we can all finally get the service we deserve.  Those of us that provide good service want to know that you appreciate the effort, and those that don't care about their professional image should not be encouraged to continue giving sub par service. 

J

How important is good service when talking about life insurance? I'll be the one giving your loved ones a check when they need it most!

Spending my kid's Inheritance? Heck yeah!

I was riding to Bloomington with my youngest daughter last week when we got behind this truck.  Since Katie was driving I had a chance to really look around and I noticed the words on the back and thought "now there's a guy that's going somewhere!"

 

I hope someday to spend my kids inheritance on a really great truck or a hot tub but my wife insists that we will be spending lots on our kids for years to come, and now I have a grandchild on the way which my wife has decided to spend a chunk of our income on ... I may have to just put a kiddie pool in the back of my old pickup and run a hose from the exhaust to the kiddie pool to make the bubbles.  I'm still working on that idea!

 

But seriously, I had a conversation with a woman in her 70's this week and she has $25,000 in an account that she has set aside for her grand kids.  "It's not much, but maybe they'll get some use out of it."  Well with 3 grand kids that means they'll each get $8,333.  That's pretty great, but it's my job to let her know that they'll be taxed on that amount and if the estate owes anyone when she dies the debts will be settled first and they'll only get their eight grand if it's left after the debts are satisfied. 

One of the best things about my job is being able to help people solve problems like this ... I mean this lady has saved twenty five grand to leave behind and at the very least Uncle Sam is going to take 20% ... not cool!  So I showed her how to take that $25,000 and put it in a single premium life policy which gives her heirs $44,000 at her death and all life insurance proceeds are tax free to the beneficiary.  Oh, and one more GREAT thing about life insurance.  It doesn't matter how long the estate is in probate or tied up in courts and such, life insurance is paid directly to the beneficiary within days of a death certificate being issued.

 

So maybe I can get my truck and hot tub without having to duct tape a hose to my exhaust.  Good luck hiding your money from the kids, I'll talk to you soon.

J

Ask me about life insurance ... I can help!

Never, Never, Never, Never, Never Give up!

Sometimes taking a stand is painful ... no scratch that, it is always painful!  Everyone (even those that stand with you) seem to have a ax to grind with how it is handled.  Some thing you are too strong, some think you are too weak.  Some say don't be so gruff, some say don't be a wimp.

The bottom line is that when you find an issue meaningful enough for you to take a stand on ... you know drawing a line in the sand and saying everything on this side is okay but when you cross this "we've got a problem" ... don't expect that the crowd will rally around you and praise your eloquent handling of those that have an opposing view.

People are often afraid of how the world will judge them if they stand too firm.  They're afraid that someone will "call them out" and make fun of them or argue better than they do.  In short they are afraid of being made a fool of, and that is a powerful deterrent for most folks.

As I age I'm less likely to take a stand on minor things but much less fearful of being made a fool of, in fact I could care less about people that know me thinking I'm being foolish.  The lack of fear is my best asset in a moral battle.  People can sense when you are are solid ground with your understanding and at peace with the consequences of your stance.

Your confidence will shake theirs, your fearlessness will instill fear in them, your calm attitude will shake their resolve.  When you are not worried about the pain of a moral stand ... truth and right will prevail!  So, don't be afraid if you are standing firmly on the side of right, the pain will fade and when the smoke clears the world will be better for your sacrifice!

Email me to see how inexpensive it is to protect you family's future!

Ever need something and not have it?

As an insurance agent, I often review client insurance policies to make sure they have the appropriate type of policies, amount of coverage and most cost effective policy. The most commonly overlooked protections is a personal umbrella policy.
An Umbrella or personal liability policy is usually an all risk, all peril policy with coverage limits that start at $1,000,000. There are some very specific reasons that you might want to consider purchasing an umbrella and there are also some adjustments that you will want to make to your homeowners and auto insurance if you do. How do you know if you need an Umbrella?
Well, do you have youthful drivers in the home? One of the most basic reasons to purchase a liability umbrella is if you have young children that are learning to drive or are under age 25. Young drivers are inexperienced, easily distracted (friends, cell phones, texting, etc.) and statistically are involved in more accidents than any other age group. An umbrella policy will cover them all and protect you from losing everything if one of your children happens to cause a serious accident.
Do you have assets to protect? Most homeowner and auto policies have liability coverage between $300,000 and $500,000. But if you have assets in excess of this amount, you are exposed to a potentially higher liability problem if someone decides to sue you. Maybe you were involved in a car accident or someone slipped on your property, etc. If they sue you for more than the $500,000 and win, the rest will come out of your pocket or you may have to sell some assets (usually at a loss). If your net worth is over this limit, (value of home, land, retirement, autos, investments and all other assets added together) consider purchasing an umbrella policy for the appropriate amount. Think about the last time you heard about a lawsuit for less than a million dollars, how many do you hear about that are below two million these days?
Another reason to consider is if you are in a profession where incomes are typically high. Someone may think that you are wealthier than you are just because of your title or profession and may be more inclined to sue for a larger amount.
Today we live in a sue happy society. Lawyers are suing for larger and larger amounts and if you bear any liability, they are winning. Even if you are not liable, the legal defense fees are expensive. Some say that having a million dollar umbrella causes attorney's to sue for more. This may be true, but if you need the protection, it is better to buy the policy and hope you never use it, than it is to need it and not have it.
For many families today, young drivers, increasing net worth and higher incomes make personal liability protection a necessity rather than an option. The additional cost is not extreme, and if you make increase your deductibles on other policies, you can possibly cut your extra out-of-pocket cost in half.

Email me if you want to discuss your Liability needs

Getting Mixed Signals?

Ever notice how the guy with no money is an expert on making more money?  Sure he is, just ask him.  The fellow with the crappyest car is knows exactly what you need to do in order to get your car working better.  I mean, live is confusiong enough with all the experts on TV and the web giving out conflicting advice ... go left , go right, stay straight, buy, sell, hold ... take the stock market today, one radio expert tells you to buy gold to preserve your principle and get out of stocks so the market doesn't devalue your cash, the next will tell you to buy all the under valued stock you can so when the market rebounds you'll bring home the bacon.


How do you know who to trust? Good question, here's my advice; if they don't know what you want to accomplish with your money then don't trust them.  A good advisor will ask more questions than you want to answer but that is part of the process, if they don't ask you a lot of questions then how do they know what you need.  If they don't know you, how can they give you advice on financing?  Find someone that you trust and talk to them about what your goals are, and let them help you explore your options.  Don't be afraid to say that you want to think about it, because if the advisor has your best interest at heart he will want you to think about it.  Don't be afraid of scheduling a second meeting, if you want to think about it set up the next meeting at the end of the 1st one.  If you're anything like me you won't give it another though unless you have a deadline.  Finally, if you are married involve your spouse, have them go to the meeting with you, they may not trust the advisor like you do or they may have different concerns than you do.  If you are not married then take your mom or dad or if you are older yourself take your kids.

I don't listen to the radio and TV "experts" because well 'they don't know my life' and they don't ask me any questions.  I also don't take cooking advice from a plumber or plumbing advice from a chef ... be sure the people you are listening to are advisors or agents not the guy in line at Walmart or your friend with the minimum wage job and no money for lunch.  Those folks have a lot to say but it's nothing you want to listen to.

Investing is tough because everyone is different in how they handle the stress of risk, and in what they want to accomplish with their money so there is no magic path that everyone can take, just a lot of paths leading in the direction you want, so follow the guide that makes you feel the safest.

J

Let me ask you questions about what you want your money to do!

What would grandpa do if he won the lottery?

You know it's funny to think about what would grandpa do with $650 million dollars.  But most of us have a different perspective on the matter.  Each of us are in a different place in life; young with a family, single, middle aged with college aged children, empty nesters, or grand parents.  Plus we all have different goals; fun life style, secure future, leaving a legacy for the grand kids.

Very few people have any experience with that much money let alone getting it all at once so finding experts to guide you is important and I mean more than one. 

Some advisers will have a plan for all your money but you are far better off having a couple of different advisers and spreading it around so that you can get more than one opinion and get the advantage of multiple perspectives on your money.  Even if you don't win the lottery you should discuss your financial goals with at least two different insurance agents or financial advisers, even agents that offer financial advising differ in their approach from financial advisers so take advantage of the opposing views. 

For example you might have a $10,000 CD and want to leave as much money as you can for the children, the advisor might say take the CD and roll it into a higher yield variable annuity that will grow with the market and the agent might say that advantage of the tax benefits from a single premium life policy and use the $10,000 to buy a $30,000 death benefit.  Each will bring a different perspective to you and give you a clearer path toward your goals.

Good luck on the lottery and call if you win.

Financial products and advice

Beware of falling rocks in Alabama!

On November 30th 1954 Mrs. Elizabeth Hodges, was sleeping on a couch when a meteorite crashed through the roof and into her living room, bounced off a radio, and hit her on the hip. This was the first modern instance of a meteorite striking a human.  It happened in Sylacauga (syl-a-cau-ga), Alabama. The space rock was a sulfide meteorite weighing eight and half pounds and measuring seven inches in length. Mrs. Hodges was not permanently disabled but did suffer from a bruise along her hip and leg.

Sylacauga is roughly 51 miles southeast of Birmingham, it's a small town of about 13,000 and yet it is the sight of one of the most rare injuries in the history of man. This is proof that you never know what's going to happen, so be at peace with your life, don't go to sleep angry and don't with hold forgiveness.  Life is short and if you don't slow down and smell the roses every once in a while you're going to miss it!

By the way the meteorite was eventually returned to Mrs. Hodges, even though the landlord, government and her husband all laid claim to it.  She donated it to the Alabama museum of natural history.

Life is uncertain ... so insure yours for your family's sake!  Call me for low term rates!  812-847-2243

How high should your liability limits be???

People always ask "how much liability do I really need?” Well, just read the news and then you tell me what you think. What happens if you are driving along and the kids in your back seat get a little out of control, you look back for just a second to yell "stop that!" (so they aren't distracting you) ... but when you look back at the road you realize you are running a red light and hitting a car. Did the passenger in the other car get hurt? Did they get air lifted to an ER in a distant town? Did they die? Lawsuits today are seeking higher and higher amounts ... Here's a case filed late last month where a semi ran a light and killed a girl, and the parents are seeking 5 million!

http://www.suntimes.com/news/metro/6733258-417/parents-sue-trucker-over-daughters-death.html

In the next one a hunter (drinking beer and hunting on the property without permission) is suing the homeowner because he fell out of the tree.

http://www.concordmonitor.com/article/269283/hunter-falls-from-tree-sues-property-owner?SESS0cea5da24a95806adb56788ec0433e9c=ysearch

So, in answering the question, you need enough liability insurance to protect your assets in the event you found to be responsible for injuring someone or destroying their property. Your assets are you home, land, autos, boats and other property and you cash, retirement, and income for the next two years. Add it all up and ask yourself this question. "if I hit someone in my car and hurt or killed them, what would the family likely try to get from me?" The answer is that number you just came up with ... in other words 'the most money possible given your personal financial picture.'

Don't think that state minimum coverage for auto liability is enough because it won't help you keep your house if you get in a bind. Keep your homeowners at least as high as your per accident BI limits and always do what is reasonable to protect the general public from injury associated with you and your property. You can't stop someone from suing you, not to mention you can't stop a jury from awarding a settlement from your pocket to theirs.

Some things should not be skimped on.

J

Let Freedom Ring!!!

As we head into the first week of July and celebrate Independence Day I find myself in reflection on the past week.

Last week was VBS (Vacation Bible School) and it is always a long week for all involved.  We plan it for months and put all that we have into a great educational and spiritual week.  But this also afforded me an opportunity to work with our local food pantry.  They loaned us a ton of corn (literally 2000 pounds of canned corn) to draw attention to the needs of the hungry in Greene County.  We built a castle out of the corn in our church that stayed up all week to remind the kids of what God's love could accomplish.

While thinking about the week, I realized that we have a great opportunity to impact the lives of those around us, far more that just a single meal.  The benefit one receives from our local food pantry can be quite literally LIFE CHANGING.

You all know that I am an insurance agent, and I like to say that I sell piece of mind.  My clients sleep better at night knowing that their homes, autos, and families are protected.  The food pantry gives people a sense of hope ... through the food and encouragement that they pass out each week they give people HOPE, and hope is far more valuable than piece of mind, or money in the bank, hope shows us that we are not alone, we do count, our suffering has purpose and there is something better just around the corner.

John, one of the Directors at the food pantry gave the kids a quick lesson each night, it was based around the scripture; John, chapter 21, verses 15 - 19.  In this passage Jesus asks Peter 3 times if he loves him ... each time Peter says, yes he loves the Lord, and each time Jesus tells Peter to "Feed my sheep!" ... our visitor John simplified it by calling out to the kids "Love God" and they would respond with a thunderous "FEED HIS SHEEP!" ... Service to mankind is mandated by our God!  Our service brings hope to those we serve!  Hope brings freedom to everyone!

Remember, if you need piece of mind call me ... if you need food call John ... if you need Hope ... pray.

J

After the Storm!

After a thunderstorm blows through, I always feel lucky.  First off, if I'm there to see the end of the storm then I survived it ... plus there is a feeling of calm once nature is done beating you down.  Of course there are times that I will have damage to deal with and sometimes my community will be suffering in the wake of what ever has blown through Southern Indiana this time.

In recent years because I'm in the insurance field, I find myself looking at the damage done by a storm and accessing the possible cost and such.  Even if I don't know the people who's home, or yard I viewing ... I will still try to imagine the cost and coverage that they would need (or perhaps not need) and what the out come would be for them in different scenarios.

It's a fun exercise for me, but the same thoughts are unnerving for the person with a storm loss.  Are you covered?  How much will this cost you?  How long will you need to wait for the repair?  As an agent I would recommend that you review your coverage each year and ask those questions.  Most of you won't remember the answers at first but it's important that you get your agent thinking about it because it's their advice that you rely on to protect your family from loss.

No one really wants to take time out of life to spend it talking about storms, wrecks, and death, but just an hour a year to review your coverage and ask (or answer) tough questions about the risks you and your family face can make all the difference when something happens to your home, or auto or even the loss of a life.

J

Who will win the Super Bowl?

As one of the biggest sporting events in the world the Super Bowl gets a lot of attention every year.  Both teams get bragging rights for having just made it to the game and the winning team gets one of the most elite pieces of jewelry on the planet.

But who is the real winner on game day?  yep you guessed it ... the advertisers.  In fact I watched a TV show yesterday evening dedicated to the top 10 best Super Bowl commercials of all time, and yes it is an annual show.  Part of the draw is that it is such a shared event that people want to talk about every aspect of it, which includes rehashing the best and worst commercials.

This year ... my company, Indiana Farm Bureau Insurance (the official corporate sponsor of the Indianapolis Colts) will air it's new commercials for all the world to see (well at least in Indiana) and I don't think you'll be disappointed.  It's not like we're going to tackle Betty White or have a bunch of models mud wrestling but we think they are pretty cool.  Just ask yourself, do I know for sure my insurance covers what I need?  No matter who you're with, know what you have!  You shouldn't have to knock on wood every time you think about your coverage.

So enjoy the game (and our cool new commercials) and after it's over check out our new micro site

J

What if ?

In the insurance business you tend to spend a lot of time asking "what if".  None of the fun questions that you asked yourself when you were a teenager.  When I was a teen I asked myself  "what if'", I had a million dollars ... or ... what if I asked her on a date ... what if I became a famous rock star?  No, the questions I ask of myself now are more like, what if you have an accident ... what if you had a fire ... what if you died tonight? 

That's my job, asking myself and my clients, what if?  I am forced to think about the future in a way that most people don't want to think about it.  This makes me an unpopular guy in the moment I ask a client "what if", and they are not ready to consider "what if".  But these big looming questions exist whether I ask them or not and the answers will plague my clients with a great deal of sorrow.

One area that is most uncomfortable is the "what if" that surrounds our children.  What if they crash the car?  What if they hurt someone?  What if they get hurt?  What if they die?  No one ever wants to look at these possibilities, but I speak with parents everyday that have had these questions answered for them in the aftermath of a personal disaster.  Many of these parents had not asked the question before hand and they were caught off guard by an accident.  I want to take just a moment to discuss the most difficult of these questions and illuminate the answer to a question you never want to ask.

Lets imagine that you have a teenager who is in college, maybe Ball State or Indiana State University.  You want them to learn the ethics that makes the Midwest famous so you have them work and take out loans to pay for their college.  Lets imagine that it is working, you have a great kid who is in their 3rd year and has an A- or B+ ... they work they go to school and study, they don't drink and drive and they are very responsible.
But it is Wednesday night and your child is on their way to work, they just aced a test and are feeling good about the world, when BAMM!  They are Tee boned by a drunk driver that ran the light.  Your child is pronounced dead on arrival but not before being life lined to Indianapolis.  On the day after the worst day of your life you will realize that your child will never get to use the education that you will now have to pay for, not to mention the thousands of dollars that will be owed to the medical units that worked on them trying to save their life.

How will you pay for those things?  Will you make payments?  A monthly reminder of that day for 3 years, 5 years? 10 years?  This is not a pleasant thought but it is a thought I want to have now rather than later.  Imagine the worse case scenario now and you'll avoid the pain of discovery if you every have to exercise the contingency plans made while asking "what if?".

This is a simple contingency plan, once your son or daughter starts a college program, figure the final debt load they will have upon graduation if they are attending a state university and borrowing half of what is needed then perhaps $30,000 in term life insurance to cover their note.  Just a few dollars a month while they are in school will save you from ever having to make a payment on a loan for your child's unused education.
This is one "what if" that no one should ever have to experience, if you do ... make sure it is not made worse than the horror it already is and make sure their debt is covered.

J

PS: What college costs in Indiana http://www.collegecosts.com/HotTopics/IndianaCollegeCosts/tabid/102/Default.aspx

What is Full Coverage Anyway?

Ever wonder what all full coverage on your auto covers? If the law only requires liability, then why pay more for full coverage? Well, it all comes down to this ... what do you need to protect and how much are you whiling to pay?

Auto insurance is like most other types of insurance, the more bells and whistles to more it will cost you. At base the liability portion of your auto policy is the most important. But it has the most limited coverage.
Liability covers you from your family's mistakes. For example if your teenage son dropped his cell phone while trying to text and he rams the Smart car in front of him when he ducks down to pick it up. That would probably be his fail (or in the eyes of a potential lawsuit, your fault) so the Smart car driver would be entitled to you paying his medical bills. If you don't have liability coverage equal to or greater than his medical bills he would possibly sue you for the difference. Liability coverage will cover litigation and damages for the other driver if it is your fault.
Comprehensive (Comp for short) pays for damage done to your auto by flying rocks or missiles, falling objects, fire, theft, larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief, vandalism, riot, civil commotion, and hitting or being hit by an animal. This usually has a deductable that you are responsible for before the damage is paid for by your policy.
Collision pays for damage to your vehicle caused by collision (I know, it sounds too simple but that's it!). This also has a deductable that you are responsible for before the damage is paid for by your policy.
Now full coverage is liability plus comprehensive and collision, all in the same package. It covers those around you that may be hurt by your mistakes and it covers the physical damage to your vehicle. But, full coverage on your auto won't pay for maintenance or any damage from lack of maintenance. Full coverage does not necessarily include towing or rental car, so be sure and ask about those. If your vehicle is more than ten years old you should check out it's value, because your insurance company will only pay you up to the value of the vehicle at the time of loss. So if it would take $10,000 to repair your car but it is only worth $2,000, you would get a check for $2,000 and the insurance company would get the wrecked car to salvage (that's what they mean by totaled out).
The most important part of your auto policy is the agent, because he is the one that will help you find what coverage is right for you, and he (or she) will be there to explain coverage when there is a loss. Make sure to buy liability limits that are high enough to protect your assets because sometimes just being legal for less isn't enough.

What makes my Homeowner’s Insurance go up?

You know, everyone asks why their insurance goes up in price and there is not a simple answer. Like most pricing issues there are several factors, and while some are in your control others are not.

The average price of gas at the pumps here in the Midwest is currently $2.64 and this time last year the average for the Midwest was $2.52. Why did it go up 12 cents in a year? The average cost for electricity in Indiana went up about a half cent per kilowatt of power in the last 12 months. Chocolate chip cookies cost an average of 5 cents more this July than they did in July of 2009. Cherries are up 77 cents a pound over their price last July.

In general there are some big reasons for the price increases listed above but in most cases … the price just went up. Homeowners insurance is just like any other product and as the cost of doing business raises the price offered to the public raises. But there are ways that you can control that increase or lessen its impact on your policy.

To begin with, it’s important to understand that homeowners insurance is a business and the only reason that companies get in to the business is to make money. That being said, homeowners insurance like all other insurance policies are contracts and the company is bound by the terms of the contract, and it is very much a one sided contract. The insurance company must provide the coverage that the policy dictates as long as the policy is in force. However, the customer can stop paying premium or cancel the contract anytime they want. So, what makes the company raise premiums? There are four basic events that increase the cost of your homeowners insurance.

First, if you have several claims in a three year period no matter what size those claims are you will see an increase in premium. Each claim, no matter how small has a fixed cost. The company has to pay someone to take the claim and enter it in the system, they have to pay another person to review the claim and determine if it is cover and what the liability is to the company. The amount paid to the client may be just a small portion of the overall cost to the company and so over time a client that has many small claims will be unprofitable.

Second, if you experience a single large loss you will see an increase in premium. If a client has a fire that causes say 20 thousand dollars in damages, and lets say they pay one thousand dollars a year in homeowners premium, the company may increase their premium by a couple hundred dollars a year for three to five years. This means the client will pay extra until the loss is old enough to be ignored then the client can request to be put back in a lower rate category.

Third, if an area that an insurance company has a lot of business in experiences a huge loss in a single year they will raise everyone’s premium to cover the losses in that area. Just like many companies involved in insuring homes in Florida during hurricane season lost a great deal of money rebuilding those homes, so they spread those loses on to clients around the country making everyone’s go up a little bit.

Finally, if the cost of labor, paper, postage or any other business expenses increases the cost of doing business to a point that it impacts the company’s bottom line, all their customers will receive an increase in premium. Just like at the local burger joint the cost of a burger now reflects the higher wages that the help gets paid and the increased cost of the beef used to make those burgers. My dad tells me about buying a burger for something like a nickel, you won’t see that price again just because the cost of materials and labor continues to go up.

So, what do you do if your premium goes up on your homeowner’s insurance? Well, first off realize that price increases happen and if you have had losses like what is described above you will be able to request to have your rate reevaluated after three to five years. If the increase was just an across the board increase do to rising cost of business, or losses elsewhere then everyone is getting those higher premiums and you should discuss with your agent ways to control your cost.

One way to control your premium is to raise the deductable. Your deductable is the amount of money you will pay out of pocket before the insurance company is responsible. As a general rule of thumb, the higher your deductable the lower the premium. Many folks who took out policies twenty years ago had $250 deductibles because that was a reasonable amount to pay out of pocket. Today, most home repairs cost three or four times what they cost in the late eighties, so your deductable should reflect that increase as well.

Nobody likes paying more for anything, but your agent can talk to you about what is the best strategy for controlling your premium while keeping you protected from total loss. Schedule a meeting with your agent and discuss what coverage you need as well as how you can best manage your asset protection. Communication with your agent will answer a lot of your questions and help you achieve the goals that you have for protecting your home and controlling your bills.

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