Often the trickiest thing about insurance is knowing what type of insurance you need, and then figuring out how much and where to get it? A Morningstar article has some practical advice on these decisions, broken into categories of insurance. Here is some general advice offered up front: 

When making insurance decisions, one of the best pieces of advice is to not insure yourself against risks you can afford to cover. For example, if you have ample savings, you're not going to be sunk if your computer goes kaput and you need to buy a new one. (Sorry, extended-warranty sellers.) On the flip side, you'll definitely want to insure against bigger, more costly risks.

(Speaking of extended-warranties, I found it very bizarre that as I was copying this text into the file, up pops an email offering me 36% off of a service protection plan on a room air conditioner we bought earlier this summer.)

Homeowners Insurance

What follows are the key points Morningstar made about homeowners insurance.

This insurance covers the bulk of your personal possessions, and includes liability insurance as well, in case of injury on your property. Make sure you ask the following questions about your policy:

1) Would a higher deductible (up to what you could comfortably afford) lower your premiums?

2) Are you getting discounts for safety equipment in your home or security systems?

3) What are the limits on things like computers and instruments? Do you need a rider for valuable jewelry, artwork, or that priceless collection?

4) Is there an inflation clause in your policy, or have you remodeled recently? Perhaps you need to revisit the values.

Regardless of whether you rent or own, it is a good idea to take a video inventory of all of your possessions. (The article’s author is dating him/herself, suggesting you keep a copy of the “video” in your safe deposit box or fireproof safe. Most will keep the video in the “cloud” these days.)

And yes, if you rent your home/apartment, you need renters insurance to cover your personal possessions. Your landlord will only insure the physical property, not your stuff. A college student’s possessions may be covered by their parents’ homeowners policy, but will be subject to their deductible. Some “renters” policies are available designed for dorm living with lower deductibles. The College Investor offers good guidance to making this decision.

The relatively boring business of homeowners’ insurance is entering the digital age and getting pretty interesting. Comcast is financially backing a new home insurer called “Hippo,” which relies on technology and a “smart home” to monitor what’s going on. The theory is that this constant monitoring reduces risk, and along with that, premiums to the insured. It sounds a bit like “big brother” for your house! According for Fortune Magazine:

Hippo is shaking up the dusty insurance market by using Internet-connected sensors, satellite imagery, and automation, among other technologies, to deliver better (and ideally cheaper) insurance policies to homeowners. The company eases the on-boarding process for prospective customers by autofilling answers to questionnaires using public records. It keeps tabs on extensions to customers' property, such as new pools or decks, using aerial photography. And, in partnership with Comcast, another Hippo investor, it gives away free Internet-connected sensor kits to help customers react to and prevent damage from floods, fires, break-ins, and other disasters.

Health Insurance

No one is expecting a great shake up in the health care industry until perhaps after the 2020 election. In the mean time, coverage of the health insurance industry is focusing more on what happen to those who are uninsured, or underinsured.

The Washington Post published an article that was included in a weekend reading list post about three weeks ago that tracks the stories of folks living in rural Missouri, where a trip to the emergency room is often followed up by a trip to court.

Unpaid medical bills are the leading cause of personal debt and bankruptcy in the United States according to credit reports, and what’s happening in rural areas such as Butler County is a main reason why. Patients who visit rural emergency rooms in record numbers are defaulting on their bills at higher rates than ever before. Meanwhile, many of the nation’s 2,000 rural hospitals have begun to buckle under bad debt, with more than 100 closing in the past decade and hundreds more on the brink of insolvency as they fight to squeeze whatever money they’re owed from patients who don’t have it.

This article was soon followed by one in The Atlantic, describing what happens when you don’t pay that medical debt.   This article includes a discussion of what happens to insured people who are sometimes treated by “out-of-network” providers, unbeknownst to them (they are often unconscious at the time), and then stuck with “uncovered” expenses. The article also gives you a good idea of just how confusing the collections system is:     

• When dealing with bills generated by a hospital, do you deal with the hospital or the individual providers to work something out?
• At what point do hospitals sell their debt to collection agencies?
• What are debt collection agencies allowed to do (are there limits to how often and how long they can hound you for debt?)

Auto Insurance

Car insurance is probably the most relevant insurance for most teens. Many insurance companies have technology-based offerings to monitor/modify a teen’s driving, as do the cars themselves.   But the most recent news here is that Tesla has started to offer insurance to those that rent or buy their vehicles for personal use in California.

Tesla Inc. just jumped into auto insurance. The unconventional automaker is selling policies to owners of its vehicles in California, in what may be the company’s first step toward providing coverage for a fleet of driverless taxis.

Musk believes Tesla has learned so much about its cars that it will be able to offer rates as much as 30% lower than traditional insurers’ rates. That probably will appeal to Tesla owners who have been complaining about being charged too much for coverage.

Tesla hopes to eventually offer insurance nationwide as well as to commercial fleets. This would lead the way for them to be able to insure the fleet of driverless cars it hopes to bring to market in the near future.

To make his vision a reality, the driverless cars will need commercial insurance — something no company but Tesla may be willing to provide, given that dispatching a fleet of fully autonomous vehicles to pick up passengers is basically uncharted territory.

Selling insurance also provides Tesla with a new source of revenue as the company tries to prove it can consistently make money.

Other Insurance

I did come across a type of insurance I had never heard of before. Did you know that you care able to buy tuition insurance? For one, Liberty Mutual offers policies that are meant to help recover tuition, and/or room and board if a student becomes impaired and can’t finish the semester. This would cover a student if they became physically or mentally ill, or had an accident.  

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When teaching your students about car insurance, check out the NGPF Teacher Tip Video by Amanda Volz on comparing types of car insurance.

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