Personal Perspective

When the threat of earthquakes arises, most Americans think only about California, or more recently, Haiti. For many years, the San Andreas Fault Line has been the recipient of much of the press concerning earthquakes in the U.S. Furthermore, predictions concerning the ultimate cataclysm believed by many to be centered there have given it a mythical stature unrivalled by fault lines elsewhere in the country.

Despite all the focus on the San Andreas Fault, California does not have a monopoly on earthquakes. The New Madrid Fault Line, centered in Missouri, has been cited by the U.S. Geological Survey as being a potential source of a significant earthquake threat. The USGS also notes that earthquakes in the central and eastern parts of the country usually have a broader range than their western counterparts. One such earthquake along the New Madrid Fault Line in 1811 rang church bells as far away as Boston, Massachusetts, about 1,000 miles away from the epicenter! More recently, in April 2003, a quake measuring 4.9 on the Richter Scale hit Alabama. A year earlier, a slightly more powerful quake hit Plattsburgh, NY. In January 2002, a 5.0 quake hit Evansville, Indiana. These quakes all shook neighboring states and caused significant damage to businesses, homes, and infrastructure in and around their epicenters.

Although none of these quakes equaled the intensity and resulting damage caused by the Northridge Earthquake of 1994, they do serve to support the idea that it might be wise to consider adding Earthquake coverage to your property policy even if you are not located in close proximity to a known fault line.

Since Earthquake insurance is generally an elective coverage, it might prove to be beneficial to do a quick review to determine whether or not it is a covered peril. Also, look at any scheduled property endorsements or personal property floaters to see if specific items are covered for earthquake-related damage regardless of whether or not the earthquake coverage endorsement has been purchased. If the answer is no� to any of these questions and you would like to obtain a quote, contact our office for details.

With more than 34,000 car crash fatalities in the U.S. annually, there’s no question that driving can be dangerous any day of the year. However, research shows that holidays are often the deadliest days to be behind the wheel.

Turkey Day = High-Risk Roads

It turns out that Thanksgiving Day is the most lethal driving holiday. As a matter of fact, 502 people died in car accidents on Thanksgiving Day in 2008 — that’s a whopping 400 more car-related deaths than a typical day. The vast majority of these fatal car crashes occurred at night.

Believe it or not, that number is down from previous Thanksgivings. The DOT started tracking traffic fatalities in 1982, and the 26-year average of Thanksgiving Day deaths had been 556. Some experts say fatalities dropped partly because sky-high gas prices kept many drivers off the road.

It’s no wonder why Thanksgiving ranks as the most fatal driving day. According to the National Safety Administration, Thanksgiving weekend is the most traveled holiday period of the year, and nearly 90% of Turkey Day trekkers travel by car. Although the DOT has not yet released 2009 Thanksgiving stats, some experts predicted fatalities would be higher because lower gas prices would lead to more drivers on the road.

Eat, drink, and be merry — but don’t drive

One reason holiday driving is so hazardous is because many drivers enjoy a few too many festive drinks before they hit the road on these special days. Based on National Highway Traffic Safety Administration statistics, nearly half of all traffic fatalities on New Year’s Day are alcohol-related — the highest number of any holiday.

Other hazardous holidays

Based on DOT research, the following are the top five most dangerous holidays for drivers heading out the highway:

No. 1: Thanksgiving Day
Number of Fatalities in 2008: 502
Average Number of Annual Fatalities since 1982: 567

No. 2: Labor Day
Number of Fatalities in 2008: 487
Average Number of Annual Fatalities since 1982: 544

No. 3: July 4th
Number of Fatalities in 2008: 491
Average Number of Annual Fatalities since 1982: 542

No. 4: Memorial Day
Number of Fatalities in 2008: 425
Average Number of Annual Fatalities since 1982: 508

No. 5: Christmas Day
Number of Fatalities in 2008: 420
Average Number of Annual Fatalities since 1982: 414

Buckle up

If you’re planning to hit the road on one of these holidays (or any other day) be sure to buckle up. According to The National Safety Commission, more than two-thirds (67%) of car occupants who died on Thanksgiving 2008 were not wearing their seat belts.

Many states have more stringent seat belt laws these days for this very reason. In most states, law enforcement officers can pull you over and cite you simply for not wearing a seat belt regardless of whether you’ve broken any other traffic laws. In recent years, the National Highway Safety Administration (NHTSA) has sponsored a nationwide “Click-It-Or-Ticket”� campaign on Thanksgiving weekend. This is all the more reason to stay buckled up on holidays, and every other day.

Slow down

Another thing you can do to protect yourself on the road is to watch your speed. Speeding is one of the most common causes of traffic crashes. That’s because when you speed, you have less time to react to an emergency on the road. Plus, high speeds increase the crash force of a collision.

Although you should remain vigilant on these high-traffic holidays, it’s important to buckle up, watch your speed, and keep your eyes on the road every time you get behind the wheel. After all, holidays aren’t the only days when car crashes occur. So, drive safely, on holidays and every day.

Standard Auto, Homeowners and Boat insurance policies cover liability a person might have for injuries or property damage suffered by someone else. Insurance companies design them to cover accidents for which the insured person might owe tens or even hundreds of thousands of dollars. However, sometimes the person might be responsible for an accident so catastrophic that the damages are $1 million or more. To cover financially devastating events such as these, insurance companies offer Personal Umbrella policies. These policies provide additional protection when an accident uses up the amounts of insurance provided by the other policies. They might also cover some types of losses these other policies do not cover.

There is not a “standard”� Umbrella policy; each company’s offering will be different. Therefore, it helps to have a checklist of considerations when evaluating a policy.

First, identify those things that could expose you to a catastrophic loss. How many cars do you own? Do you have inexperienced drivers in your household? Household attractions like swimming pools, trampolines, and swing-sets present an exposure to severe losses. Boats, like cars, can cause serious injuries and damage if the operators are inattentive, intoxicated, or inexperienced.

Next, identify other exposures you might have that do not involve potential physical injury or illness or property damage or that might require different coverage. Do you or any members of your family participate in social media Web sites or online discussion forums? Does anyone coach a youth sports team, belong to the governing board of a non-profit organization, write computer code as a hobby, or give music lessons? These activities present different exposures to legal liability.

Review your insurance policies. How much will your Auto insurance pay for injuries to one other person? How much will it pay collectively for injuries to more than one? How much will it pay for property damage? How much will your Homeowners policy pay for your personal liability for an accident? Does it cover any business activities? Does it cover family members accused of slander, libel, or defamation of character in online postings? Does it cover you for allegedly causing mental anguish to a kid who didn’t get much playing time on a team you coached, or trouble caused by a computer program you wrote? How much will your Boat policy pay for your liability for boating accidents? The answers to these questions will tell you where an Umbrella policy can help.

For example, if your Auto policy will pay up to $250,000 for injuries to one person and $500,000 for injuries to multiple people, an Umbrella with a $1 million limit will give you insurance equaling $1.5 million for injuries to two or more people. If your Homeowners policy will pay up to $300,000 for your liability, the same Umbrella will afford $1.3 million if someone gets seriously hurt at your home. The Umbrella limit of insurance also applies on top of the limit on the Boat policy.

In addition, the Umbrella might cover such things as volunteer activities, statements made online, and certain business activities that a Homeowners or Auto policy might not cover. Normally, the insurance company will require you to pay a deductible amount (such as $250 or $500) before it will pay for a loss that one of these other policies does not cover.

One of our professional insurance agents can help you sort out what your current insurance does and does not cover and what additional coverages an Umbrella will provide. It is important to compare all the coverages the policies provide and not just their prices. Fortunately, catastrophic accidents are extremely rare, but having an Umbrella policy when they happen can make it easier to get through them.

Because your home is probably the biggest investment you’ll ever make, you’ll want to take measures to safeguard that valuable investment. The best way to protect your home investment is through Homeowners insurance. However, you shouldn’t settle for just any policy. The type and amount of insurance you need depends on your specific home, what’s in it, and your personal requirements. But how much insurance is enough? Here are a few ways to determine how much insurance coverage you need.

Market value might not be enough. Although you might be tempted to purchase just enough Homeowners insurance to cover the market or resale value of your home, this might not be enough. Although the market value might be enough coverage for some homeowners, that’s typically not the case. Your home’s market value is not the same as what’s known as its “replacement cost.”� The replacement cost of your home is the amount of money you would need to rebuild your home to its previous condition if a loss were to occur. This amount is different from your home’s market value, purchase price, or the outstanding amount of your mortgage loan. Especially right now, when property values are falling throughout much of the nation, the market value of your home is probably much lower than its replacement value. Therefore, you should not use market value to determine how much insurance coverage you need.

Calculate the replacement cost. So, how do you figure out the replacement cost of your home? Your Homeowners insurance company can calculate how much it would cost to rebuild your home based on:

• Square footage of your home
• Type and quality of your home’s construction
• Any updates, special features, or add-ons to your home
• Quality and cost of materials used in your home

Read the fine print. Before you purchase a policy, read all the fine print so you know exactly what the policy covers. Homeowners insurance generally covers damages to your home and “other structures”� on your property, such as a shed, detached garage, gazebo, or pool. In most policies, the amount of insurance coverage you receive for other structures is 10% of the amount of coverage you receive on your home. For example, if your insurance policy covers $100,000 on your home, the coverage you would receive for your other structures would be $10,000 combined. If you believe that the structures on your property are worth more than 10% of your home coverage, you might want to request additional coverage.

Take a look at your personal liability coverage. Most Homeowners policies also include personal liability and medical expense coverage. Generally, your Homeowners insurance company will pay up to $100,000 on a legitimate civil claim against you for an injury that occurred on your property. However, this still might not be enough to cover a major lawsuit. You might consider purchasing a separate Personal Umbrella Liability policy, which can offer additional protection. This type of policy offers a higher level of liability coverage and ensures that you and your family’s assets will be protected if someone sues you for damages. Umbrella policies typically pay up to a predetermined limit, which is usually $1 million, for liability claims made against you and your family.

Protect your valuables. If you have particularly valuable jewelry, artwork, or collectibles in your home, you might want to opt for even more Homeowners insurance coverage for additional protection. You might assume your valuables are fully covered by your Homeowners insurance, but that’s not always the case. It all comes down to what’s called thesublimit — this is the limit on the amount the insurance company will pay for specific types of personal property. Although your policy’s total personal property limit might be $75,000, the sublimit for jewelry might be as low as $1,500. Read through your contract and find your policy’s sublimit for artwork, jewelry, and collectibles. If your valuables are worth more than the sublimit, you might want to purchase additional insurance to cover them. You can purchase what’s called a “floater”� and have this worked into your Homeowners policy. Insurance floaters typically cover one specific item, so if you have multiple valuables, you might need to purchase floaters for each item you want to insure.

Talk to a professional. Discuss your unique Homeowners insurance needs with one of our insurance agents. We can help you determine what kind of policy will best fit your needs and whether or not you might require additional coverage.

As the housekeeper is vacuuming your living room, she trips over one of your daughter’s toys and seriously injures her back. While your neighbor’s teenage son is mowing your front lawn, he steps in a large hole and sprains his ankle. Will your Homeowners insurance cover you if one of these workers decides to file a lawsuit? Many homeowners do not realize that they could be held financially liable if a maid, landscaper, nanny, or another house worker were to suffer from an injury on their property. Here are some things you should keep in mind before you hire a home worker.

Is that worker an employee or a contractor? When you hire someone to help out around the house, you should figure out whether he or she is an employee or a contractor. This is one of the factors that determines whether or not you are liable for a worker’s injury. So, how do you know if the worker is considered your employee or a contractor? It all comes down to how much control you have over the worker.

Let’s say you hire a nanny named Lisa to take care of your children and do some light cleaning in your home. Lisa follows your instructions about how to care for your kids and how to complete certain household tasks. You provide Lisa with the supplies and tools she needs to do her job. Because you have control over how Lisa works, she is most likely considered your employee.

On the other hand, let’s say you hire a professional landscaper named Bob to fertilize and mow your grass, trim the hedges, and plant flowers in your yard. Bob uses his own lawn mower and yard tools and he does yard work for other homeowners, as well. Bob also has a team of workers who help him with his business, and he pays these workers. In this case, Bob probably would be considered an independent contractor.

Of course, these are two fairly simple examples. If you are uncertain about whether a worker in your home is considered a contractor or an employee, consult a lawyer or tax professional.

Understanding Workers Comp insurance. Some states require homeowners who have house worker employees� to carry Workers Compensation insurance coverage for them. However, even if your state does not require this, you should still consider purchasing this insurance for your employees. Why? Because if one of your employees is injured on your property, you might have to pay for their medical bills and other expenses out of your own pocket. However, with Workers Compensation coverage, the insurance company will cover the costs.

Alternatively, if you hire a house contractor, such as a landscaper, carpenter or plumber, they should be covered by their own Workers Compensation insurance. If a contractor is injured while doing work on your property, he or she will be covered under that policy. If the contractor doesn’t have enough coverage, you might be held financially liable. However, depending on the circumstances, you might be able to file a lawsuit against the contractor, as they are required by law to have sufficient Workers Compensation coverage.

If you are looking to hire a house contractor, it’s important to ensure they are covered for worker injuries, property damage, and uninstalled materials. Don’t just take their word for it. Ask for written proof that they have a contractor’s license, Workers Compensation insurance for themselves and any subcontractors, and General Liability coverage.

Know what your Homeowners insurance covers. When it comes to coverage for home workers, every Homeowners insurance policy is different. Depending on your home state, your policy might include a provision that provides limited coverage for minor workers performing lawn mowing or other tasks that require the use of power tools on your property. On the other hand, your policy might specifically exclude domestic workers such as nannies or maids. Your policy might cover the injuries of household employees, but only after a lawsuit is filed against you. Because Homeowners policies vary widely, it’s important to read through your contract and talk to one of our insurance agents before you hire a home worker.

Consider an Umbrella policy. If you discover that your Homeowners policy offers limited or no liability coverage for workers, you might consider purchasing additional Liability insurance. Although you might have some personal liability coverage through your Homeowners policy, it’s probably not nearly enough to cover a major lawsuit from a home worker. If someone were to file a lawsuit against you, you could end up losing hundreds of thousands of dollars or more-even if you win.

You can further protect yourself with what’s known as an Umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages. Umbrella policies are typically sold in million dollar increments, and you can obtain a policy once your Home and Auto insurance policies meet a minimum attachment point� — typically a liability limit of $250,000 or $500,000.

Check with the Better Business Bureau. Before you hire a home worker, you should contact the Better Business Bureau for more information. They can tell you if any consumers have filed complaints against the worker. Visit the bureau’s Web site at www.bbb.org.

Imagine waking up on a frigid winter morning, throwing on your bathrobe and stumbling down the stairs to make a pot of coffee — only to find your kitchen is filled with water. Each winter, about a quarter of a million families find themselves in scenarios like this, all because of water pipes that freeze and burst.

Not only can a pipe eruption ruin your day, but it can also cause thousands of dollars of damage to your home. Your furniture, carpet, photos, and floors could be water-logged and even ruined from a single bursting pipe. As a matter of fact, just a three millimeter crack in a pipe can dump up to 250 gallons of water in your house in a single day. Whether your home is outfitted with copper or plastic PVC pipes, no one is immune to pipe bursts — both of these pipes can rupture. Fortunately, you can take a few precautions to protect your pipes and avoid the hassle of a messy, expensive pipe burst. If you want to steer clear of the rising flood waters, follow these simple steps.

Bundle up those pipes: Before winter arrives, take time to insulate all the exposed pipes in your crawl spaces, garage, and attic. Because these pipes are open to the elements, they are more vulnerable to freezing. Don’t be shy with the insulation, the more you use, the less likely your pipes will freeze and burst. Use heat tape or thermostatically-controlled heat cables to wrap your high-risk pipes. Make sure the product is approved by an independent testing organization, such as Underwriters Laboratories, Inc. Use exterior tape for outside pipes and interior tape for indoor pipes, and follow all the installation instructions carefully.

Seal the cracks: Look for air leaks near your pipes. If arctic air seeps through even a tiny crack, your pipes can quickly freeze and burst. To keep the cold out and the heat in, seal up every leak with caulk or insulation.

Put the garden hose away: Before the temperature plummets below freezing, disconnect your garden hose and shut off the indoor valve.

Bump up the thermostat: Never set your thermostat below 65 degrees in the winter. The temperature inside the walls and attic, where your pipes are located, is much colder than the inside of your house. If you let the indoor temperature drop below 65 degrees, your exterior wall pipes are at high risk of freezing and bursting.

Let the water trickle: Turn on one faucet in your home and let warm water drip throughout the night. Even a tiny trickle of water can help prevent your pipes from freezing. If possible, use a faucet on an outside wall.

Protect your home when you’re gone: If you’re going out of town, ask a friend or neighbor to check your house each day. Tell them to look for any signs of a burst pipe and make sure it’s warm enough to prevent pipes from freezing. If you don’t have anyone who can check your home, consider shutting off and draining your water system before you leave. Keep in mind that if you have a fire protection sprinkler system in your house, it will be disabled when you shut off the water.

Know the signs of a pipe freeze: If you turn on your faucet and no water comes out, this could be a sign that your pipe is frozen. Leave the faucet on and call a plumber. You might be able to thaw the frozen pipe yourself with a hair dryer. Start warming the pipe as close to the faucet as possible, working toward the coldest part of the pipe. Never try to thaw pipe with a torch or open flame.

Deal with the pipe burst: If your pipes freeze and burst, turn off your water at the main shut-off valve and leave the water faucets on. Call a plumber right away. You should also call us as soon as possible. Although your insurance adjuster doesn’t need to see the spill before you clean it up, you should at least inform us of your situation. Move electronics, furniture, carpet, and other items away from the water. Start mopping up the water and try to make temporary repairs to protect your home from further damage. Be sure to save all of your receipts for any money you spend related to the pipe burst. The insurance company might be able to reimburse you for temporary repairs. Try to avoid making expensive permanent repairs until the insurance adjuster has a chance to assess the damage.

Obviously, no one wants to deal with the costly and messy aggravation of a pipe burst. To avoid this nightmare, take the proper measures to protect your pipes and your home. However, it’s also important to ensure your family is prepared to act swiftly and smartly if a pipe does rupture.

About two out of three U.S. homes are underinsured, according to a 2008 survey by Marshall & Swift/Boeckh LLC (MSB), a leading provider of building replacement cost data. Based on this new data, the average Homeowners policy only insures the home to about 82% of the projected replacement cost of the home. Over the past decade, this point has been driven home as the U.S. has endured hurricanes, wildfires, and tornadoes. Throughout the course of natural disasters, thousands of homeowners were left without enough coverage.

Although the study did not show results regionally, nationwide the average policy falls 18% short of the projected cost to rebuild the house. Put in other terms, the owner of a house insured for $200,000 would be short by $36,000 of the funds needed to rebuild, if the averages held true.

Why do thousands of Americans find themselves in this predicament? The most common reason for all of this is quite innocuous: Homeowners often forget to update their policies. For instance, suppose a homeowner decides to put an addition onto their home, which would drive up the value of the property beyond the stated policy limits. If the home improvement is never reported to the insurance company, no additional coverage is added to the policy. Additionally, rising construction costs and ever-changing building codes are raising the price tag to rebuild.

To avoid this problem, homeowners should re-assess policies as they renew each year. If a homeowner suspects a change in the value of their home, this suspicion should be communicated to their insurance agent. Although not every homeowner wants to insure to the full replacement cost of the home, this possibility should at least be examined and considered.

Is Your Home Properly Insured?

Here are some tips to help you evaluate your Homeowners insurance:

• Understand what your policy does and does not cover. Remember that just because your bank requires your policy to cover the mortgage at a minimum, this does not mean your insurance should be based on this amount. You need to insure your home, not the mortgage on your home.
• If available, consider adding an inflation guard to your policy. Although this will cost extra money, it will help offset the rising cost of rebuilding, should disaster strike.
• If building codes change, which they inevitably do over time, you will most likely be required to rebuild according to the new laws. The older the home, the more expensive it will be to bring it up to code. In most cases, policies will not pay for these extra costs. An “Ordinance or Law Endorsement” can help pay these hidden costs.
• Talk to builders in your area to get an approximation of replacement costs. The going rate per square foot for new construction should be considered in estimating replacement costs. Current appraisals are also an excellent source to utilize.

You just bought a new car, and now you’re searching for affordable Auto insurance. Once you supply an insurance company with some information, including the make and model of your car, your age, your address, etc., they give you a quote for your monthly premium. But how exactly do they calculate that number? Read on to learn how insurance companies determine your rate and how you can save money by shopping around.

Different companies, different rates. Many drivers mistakenly believe that insurance rates are set by the state. Although Auto insurance companies must follow certain laws when calculating rates, the rates themselves are not set by law. When you ask for a quote, the insurance company considers many different factors as they figure out your rate. However, because each insurance company uses their own unique calculation method, you could receive widely varying rates from different insurance providers.

Crunching the numbers. Depending on the laws in your state, insurance companies typically determine your rate based on some or all of the following factors:

• The year, make, model, body type, engine size, and safety features of your car
• Your age and gender
• Your marital status
• Your personal credit history
• Your driving record
• Your usage of the car (such as if you are using the car for work, pleasure, or as a collectible)
• Home ownership status and occupation
• How many drivers will be using the car and their ages
• How many vehicles you own
• What kind of coverage limits you want
• Where you live
• Your weekly, monthly or annual mileage

Generally, your insurance agent will enter all of this information into a computerized system. The system automatically places you into a price group based on your personal information. The insurance company then subtracts any discounts for which you qualify from your group’s rate and you’re left with the resulting quote.

Where your money goes. If you think the quote is fair and decide to purchase a policy with the Auto insurance company, you’ll start paying a monthly insurance premium. But what exactly does your monthly premium cover? Here’s a typical insurance premium breakdown:

• About 70% of your premium pays for losses and loss expenses
• About 26% of your premium goes toward marketing, commissions, and administrative costs
• About 4% of your premium contributes to the insurance company’s profits

You better shop around. Every insurance company has differing sets of claim payments and expenses, and they set rates for each “price group” accordingly. That’s why you’ll likely receive varying quotes from each insurance company. This is why it’s so important to take the time to shop around and find the best rate. Plus, although insurance companies are prohibited by law from calculating rates based on race and religion, they are allowed to consider your age, gender, and marital status. However, each company places emphasis on different factors. For example, while one insurance company might place more weight on a driver’s gender, another company might think their driving record is more important.

This is yet another reason to request plenty of quotes before you settle on an insurance company. In addition to the rate, you should also consider which company offers the type of coverage you desire. Do your homework and find the best fit for your unique Auto insurance needs. Call our office today!

Even if you’ve been lucky enough to avoid car mechanic nightmares yourself, you’ve probably heard plenty of horror stories from your friends and co-workers — whether it’s the mechanic who charged your sister for a new carburetor when she just needed an oil change, or the jerk who convinced your boss to purchase a brand new set of tires when a good patch job would have done the trick. Despite these horror stories, there are plenty of good car mechanics out there. It just takes some research to find them.

Don’t wait until your next breakdown to hunt down a good auto shop. Find a top-notch mechanic now so you’ll know who to call the next time you need help. Here are a few tips to help you pinpoint a truly trustworthy car mechanic.

Ask for recommendations. Ask your family members, friends, and co-workers if they can recommend a great mechanic. After all, if your brother or best friend was happy with an auto repair shop, odds are you’ll be satisfied with them, too. Of course, you might be better off asking for recommendations from people who have some auto expertise. Although Aunt Betty might heartily recommend ABC Auto Shop, she might not realize they’ve been ripping her off all along because she simply doesn’t know much about cars.

Decide on a dealer vs. independent shop. You might be more comfortable working with a mechanic at your car dealership. That’s fine, but you should keep in mind that dealerships generally charge more for repair services. Remember that any well-trained mechanic can perform first-rate repairs, whether they work for a dealer or a small mom and pop shop. Many independent repair shops can offer a warranty on parts and repairs and use factory parts recommended by your carmaker. This can save you loads of money in the end. On the other hand, if you require repairs associated with a recall or have an extremely unusual problem that is specific to your type of vehicle, you might be better off going to your car dealership.

Look up online ratings and reviews. Search for repair shop ratings and reviews on sites like Women-Drivers.com or mechanicratingz.com to find out how other customers rank local car mechanics. However, keep in mind that just because a shop receives two good reviews doesn’t mean they always do a great job. By the same token, if a mechanic earns two bad reviews, that doesn’t necessarily mean they’re terrible. Although online reviews can be helpful, you should take them with a grain of salt. Visit the shop before you make your final decision.

Do a trial run. If you want to try out a new mechanic, take your car in for regular service, such as an oil change or tune-up. This will give you an idea of how quickly and effectively the shop works, the level of customer service they offer, and how much they charge. When you visit the shop, take notice of how the business runs. See if the shop seems neat and organized and if the staff seems friendly and knowledgeable. Ask if they have certified technicians on-staff and the most cutting-edge equipment. You should also ask whether or not they have credentials, such as Automotive Service Excellence (ASE) certification, or AAA approval. Find out if they concentrate in body or mechanical work and if they specialize in certain vehicle makes and models. Also ask if they offer a warranty and customer satisfaction policy. Also, take note if they have clearly posted labor rates. If so, compare these rates to other shops in the area.

If the staff seems annoyed by your questions or if they don’t offer clear answers, you might want to steer clear. After all, if they have nothing to hide, they’ll be more than willing to answer your questions — especially if they want to earn your business.

Homeowners insurance policyholders usually have the option to insure to actual cash value (ACV) or replacement cost value (RCV). To make the best decision, the individual first needs to gain a clear understanding of the difference between the two policy options.

In a nutshell, the difference between RCV and ACV is wear and tear; otherwise known as depreciation. ACV considers that the lost property has most likely depreciated over time, and endeavors to insert depreciation into the equation. For instance, suppose the ruined property was a sofa that would cost $700 to replace. Even though the sofa was in good shape for a 10-year-old piece of furniture, it was definitely not brand new. In 10 years time, some wear and tear inevitably occurred. With ACV, the insurance company might determine that $30 of depreciation occurred each year since the sofa was purchased. In this case, the sofa would only be valued at $400 at the time of the loss. The company would pay you $400 minus any applicable deductible. In a sense, you would be paying an increased deductible in the form of the $300 of depreciation. To summarize ACV, the insured would pay the difference between the replacement cost, the amount the old sofa depreciated by, and any deductible. In essence, the policyholder is “co-insuring” that amount.

On the other hand, RCV is simply the cost of replacing the lost property with either an identical or similar piece of property. Using our sofa example, if it costs $700 to replace the sofa, the insurance company will pay you the $700 minus any applicable deductible. Even though the ruined sofa was showing its age, and could never be sold for $700, RCV allows the policyholder to recoup the value of a brand new replacement sofa.

Which option is best? This question cuts to the core of what insurance is all about: Making the insured whole again. In some cases, ACV falls short. Conversely, RCV can create an overly beneficial situation for the insured. Not including sentimental value, if the sofa is old and dilapidated, but the insurance covers RCV, it is obvious that the policyholder will benefit greatly by receiving enough funds to purchase a brand new sofa to replace the old one.

An old house that has been damaged severely by a fire could provide a more dramatic example of RCV. At the time of the fire, the house might have only been worth $200,000, because the components of the house (such as roof, flooring, HVAC etc.) were approaching the end of their life span. In this case, the house would increase in value as the old worn-out components were replaced with brand new ones. So the homeowner would be better off in terms of the value of their home, than if the fire had never occurred at all.

Some insurers stipulate that all repairs must be completed in order to obtain the full replacement cost of the property. They might decide to pay the ACV up front, and have the rest of the payment (the difference between RCV and ACV) contingent on all repair work being completed. This keeps the insured from pocketing the money and gaining financially from the loss.

There is at least one caveat regarding the benefits of RCV, however. Since the real estate market can fluctuate quite a bit, sometimes RCV turns out to be less than ACV. When the housing market is strong, and home prices are high, the actual cash value can be higher than the cost of replacing a home with one that has similar features and qualities. Therefore, the additional cost of purchasing RCV might be a bad decision. As always, consult with our agents to see which option is right for you.