The latest from an insurance agent convention...

This is not insurance policy specific, but I recently heard this story and thought I should pass it along to you:

A lady goes to her doctor.  The doctor says, "I'm sorry to tell you this, but you only have two weeks to live."

"Oh no!" she exclaims, "Is there anything I can do?"

The doctor says, "Well, you can marry an insurance agent:..."

"Will that make me live longer?"

"No, but those two weeks will feel a lot longer..."  (insert rim shot here)

For all your insurance needs, call us at 925-588-3888 or go to my website:

www.farmersagent.com/mvarhula

Please like us on Facebook:

https://www.facebook.com/pages/Mitchell-Varhula-Agency-Farmers-Insurance/590644470999625

All Homeowners policies are not the same

Many homeowners assume that all homeowners insurance is the same. As long as the coverage limits match, a policy or quote comparison is "apples to apples." But homeowners policies differ substantially even though they may appear to be identical. One major difference between homeowners policies is whether coverage is provided on an HO3 or HO5 form.

The HO3 is the most widely available policy form and often meets a lender's minimum coverage requirements. It covers a broad range of property types, but offers a more limited coverage for your personal belongings:

	HO3		HO5
Dwelling Coverage	Open Perils		Open Perils
Contents Coverage	Named Perils		Open Perils

   Open Perils - Insures against all causes of loss that are not specifically excluded
   Named Perils - Insures against a list of specified causes of loss

These are the named perils that limit the personal property coverage on a HO3:

1. Theft
2. Fire or Lightning
3. Explosion
4. Smoke
5. Freezing
6. Vehicles
7. Falling Objects
8. Volcanic Eruption
9. Windstorm or Hail
10. Riot or Civil Commotion
11. Damage caused by Aircraft
12. Vandalism or Malicious Mischief
13. Damage due to weight of Ice, Snow, or Sleet
14. Sudden & Accidental Tearing Apart, Cracking, Burning, or Bulging
15. Sudden & Accidental Damage from Artificially Generated Electric Current
16. Accidental Discharge or Overflow of Water from Plumbing, Air conditioning etc.

The HO5 Difference

Many coverages that are available only by endorsement on the HO3 are automatically included on the HO5. For example, the HO5 automatically includes replacement cost coverage on contents. 

Another great benefit of the HO5 is that you no longer have to prove that the damage to your property was caused by one of the named perils. This can take a lot of the uncertainty and headache out of adjusting a loss.  Say a family was away on vacation, and raccoons, after entering the crawl space from an open access door, somehow make their way into the house. While foraging for food and shelter, they proceed to destroy things in the living room and kitchen including cabinets, furniture, and some small appliances. This loss would be fully covered under the homeowners HO5. An HO3 would have had this homeowner paying out of pocket to repair and replace the damage. While this is an unlikely scenario, it illustrates that there are countless, unimaginable ways your personal belongings could be damaged by things other than the named perils.

Because the HO5 provides broader coverage, the underwriting guidelines can be more restrictive. Generally insurance providers limit HO5 coverage to new(er) and/or well cared for homes that are in an area protected by a fire department.

Which should you choose?

Assuming that you qualify for both forms, the HO5 is the form of choice. The HO5 not only provides broader coverage, but can also simplify the claims process. While the initial price tag of the HO5 may be higher than the HO3, the total long run costs of an HO5 are generally lower.

The HO3-HO5 difference is one of many differences you could find between seemingly identical quotes or policies. It's important that you know the differences between good, bad, and average policies. Don't wait until you have a claim to learn about your coverage.

Farmers Friendly Review

How do you know if you’re properly covered for homeowners insurance? How much Life insurance¹ should you have? Many consumers find Insurance confusing, but our job is not finished until you fully understand and are comfortable with the coverage you’re paying for.  On our first meeting we’ll review your current insurance coverages to determine your level of risk, and from there we can provide you with a personalized quote/quotes to give you the level of service you deserve and need.  If you’re not satisfied with the level of service provided, then frankly neither are we.  

Located close to the intersection of Highway 24 and Interstate 680 in Walnut Creek, our agency can help you navigate the many options available when choosing Home Insurance, Flood Insurance, Auto Insurance, Classic Car Insurance, Business Insurance, Life Insurance¹ and more.  Not only do we cover Walnut Creek, Lafayette, Pleasant Hill and Concord, we also work extensively in Oakland, Berkeley, Albany and Richmond.  But we're not limited to those cities - if you're in California, we would like to compete for your insurance business. 

Our mission is to help give you piece of mind knowing you’re backed up by a reputable insurance company like Farmers® and that you have an insurance agent to go to that you can trust. 

Contact the Mitch Varhula Agency today at: 925-588-3888 or email us! You may also obtain an Auto Insurance or Renters Insurance quote right on my website.

Life Insurance - what's the right choice?

Like so many things in life, the answer to which life insurance is the right one for you...depends.

First - there are two types of life insurance - "Term"  and "Perm" (for permanent life insurance).

Term is the easiest to understand.  You purchase a set amount of coverage ($300K, $500K, etc) for a limited time period such as 10, 20 or 30 years.  As long as you keep current with the payments, the coverage is in place, but at the end of the term that's it.  Coverage is over and there is no cash value left.

Perm has a lot more moving parts.  It gets it's name because the coverage period for your insurance is permanent; it's for your whole life (technically age 121).  Also, the coverage has a cash value component. To explain this, visualize that each month, your premium goes into a bucket.  From the bottom of the bucket, a portion of the premium goes to pay for the life insurance component.  The rest stays in the bucket and grows tax-deferred.  This is your cash-value.  From here there are lots of options depending on your needs.  You can get whole life which has set payments and a guaranteed rate of return.  Or you can opt for a universal life policy which allows for monthly payment flexibility, and if you can tolerate more risk, you can choose a variable universal life policy, which let's you put your cash value money into select mutual funds of your choosing.  As that money grows you can access it by making a near interest-free loan to yourself.  Whether you repay that loan is up to you, but realize it affects your cash value's growth rate.

Perm is more expensive than term, but has greater flexibility.  Many clients choose a combination of both perm and term policies.

This is just a high-level explanation - for more, please call me at (925) 588-3888.