AH, INSURANCE.

We all know we need it. But why exactly? And what does it cover?

Insurance can be confusing and, let’s be honest, kind of boring. But here at Seed we are working really hard to change that. Which brings us to this handy little guide to help you understand what it all means in a fun and simplified way!

First Things First | AKA A Disclaimer

Each policy will have stipulations, limits, and exclusions. Extensions, riders, and floaters are available to fill any gaps. The information herein is an overview of the types of insurance you may be able to purchase, but does not comprise full explanations of policy types nor does it guarantee any particular coverage or policy.

Second Things Second | AKA The Basics

Before we get into the nitty gritty of what personal insurance will cover let’s do a very brief, very broad explanation of what insurance protects. Every insurance policy will cover PROPERTY and/or LIABILITY.

  • PROPERTY covers all the physical things you can touch - house, car, clothes, golf clubs, scrapbooking material, that weird little figurine your aunt gave you for Christmas one year, and more!

  • LIABILITY protects your finances if you are on the hook for something happening to someone else or to someone else’s stuff, such as your neighbor trying to take your newspaper and slipping on the ice patch you missed on the sidewalk.

Now, let’s move on to the good stuff!

YOU MOVED OUT OF YOUR PARENTS HOUSE. YAY!

NOW WHAT?

You definitely need one of these two coverages.

HOMEOWNERS: If you live under any roof, and that roof doesn’t drive around on wheels, and you are the one who owns it, then this is what you need.

  • Covers your home, garage, other structures like your She-Shed, and all of your stuff. It also helps you live somewhere else for a bit if something happens to your home.

  • Protects your finances if someone is hurt or someone else’s stuff is damaged while it’s on your property.

  • If you are a landlord, this protects the property and anything on site that belongs to you, as well as your finances if there is an accident because of something you own.

RENTERS: If you are paying someone else to live in their house or apartment or garage or closet under the stairs, then this is the choice for you.

  • Covers all of your stuff, protects you from liability, and pays a bit to help you out if something happens to the home you’re renting.

EXTRAS: Depending on where you live, you may need some extra insurance to cover FLOODS (certain coastal or river areas that the government deems flood-prone) or EARTHQUAKES & VOLCANIC ERUPTIONS (California or the Pacific Northwest are hot spots).

THAT’S ALL GREAT, BUT HOW MUCH COVERAGE DO I NEED?

That’s a fantastic question!

HOME COVERAGE should be based on how much it will cost to totally rebuild, NOT how much you paid for it. Plus, the coverage amount for personal property (furniture, clothes, appliances) and any extra buildings (detached garage, that She-Shed we mentioned) is based on your home coverage.

MEET CHUCK. Chuck bought his nice little home in the suburbs a few years ago. He paid $150,000 - such a steal! Over time he put in nice hardwood floors, granite countertops, an enviable outdoor kitchen, and resort pool. Then Chuck’s home tragically burns down and is a total loss.

Now when Chuck bought the house he made the smart decision insured it for $150,000. The thing is that now his house is worth about $250,000 with all the fancy upgrades and market prices, but he never changed his policy.

MATH TIME! Obviously Chuck wants to rebuild, and his insurance policy pays him to do so - but only up to the $150,000 he was insured for. This means that if Chuck wants the same house he lost, he’s going to have to find an extra $100,000, and how many of us have that lying around?

LESSON? DON’T BE LIKE CHUCK. CHECK YOUR POLICY! When it’s time to renew, ask your insurance agent to go over it with you to make sure you have the right coverage in case the unthinkable happens.

LIFE IS A HIGHWAY, AND YOU WANT TO DRIVE IT ALL NIGHT LONG.

(AS LONG AS YOU ARE ENSURED. SAFETY FIRST!)

If it has wheels and you own it and drive it, then you need insurance on it.

STANDARD AUTO covers your everyday car or truck. From a little bitty Smart Car to a really giant “I’ve got a ranch and cows” diesel powered dually and everything in between - they all need to be covered!

The nice thing about Auto Insurance is that the coverage follows your vehicle AND your person.

  • Nephew borrows your car and jumps a curb? Car is covered!

  • You borrow you brother’s van to take all the kids to the waterpark and accidentally back into the mailbox? You are covered!

  • You and the car are also covered when you drive a rental or have to borrow a dealership car (which you might after the whole curb-jumping incident).

Of course, we have liability to cover the other person’s vehicle or body if the mailbox you hit flies and smashes into someone else.

You also want to make sure you have underinsured and uninsured motorist coverage. This protects you if the other guy causes the mess but doesn’t have insurance, or doesn’t have enough insurance, or just drives away and you can’t catch him (aka Hit & Run).

AGAIN, THAT’S GREAT. BUT WHAT COVERAGE?

And we’ve got that for you here, too!

MINIMUM COVERAGE varies by state. Basically, you have to carry a certain amount of liability on your vehicle to comply with state laws.

BUT we do NOT recommend just getting the bare minimum! Yes, your premium (that pesky payment you have to make to have insurance) may be lower, but insurance is all about INSURING that your finances don’t take a nasty hit if something happens!

LET’S CHECK IN ON CHUCK. Chuck is zipping around getting the pizza and the snacky-snacks and the super flavorful La Croix for movie night, and he pulls out of the parking lot and there is suddenly a car and BAM! He hits it. And that car is a sleek and shiny and brand spanking new Porsche Cayenne. And it’s crunched. And the driver is hurt.

Chuck only has the minimum insurance required in Texas - $25,000 to cover the crunched car, and $30,000 to cover each person (maxed out at $60,000 for everyone).

MATH TIME! That new Porsche costs at least $70,000. Mr. Porsche ends up in the hospital for a few days and needs all of the tests for a bill of $45,000.

That’s $115,000 in damage that Mr. Porsche will have someone pay. Math says that Chuck’s insurance will pay $55,000. That leaves another $60,000 they won’t pay. Where does that come from? If you said Chuck, you would be right!

I HOPE WE’VE LEARNED NOT TO DO WHAT CHUCK DOES. Yes, saving a few hundred bucks a year on a premium for something you might not ever need (which is the hope!) is fine. But in the case that you do need it? That few hundred bucks just translated to THOUSANDS.

MOTORCYCLES AND RVs AND ATVs, OH MY!

Even the “fun” stuff needs insurance!

MOTORCYCLES: Two wheels = double the fun but also double the risks! Insurance for your Harley is pretty similar to the family truckster but takes into account the special risks that go along with your leather jacket! This includes scooters and mopeds - if it has two wheels and it drives on a street, let’s insure it!

OFF-ROAD VEHICLES: ATVs, dune buggies, dirt bikes, Grandma’s golf cart - you can’t drive it on the street, but you can still drive it. This means we still need to insure it!

RV’s: Your home away from home - on wheels! Not only do you need the “auto” portion, but you’ve probably got a lot of personal stuff in it, too.

BOATS: From a speedboat to a party boat to that dream yacht in the Mediterranean. If it floats, it’s a boat, and you need to protect it, the people, and the environment!

BUT WAIT, THERE’S MORE!

The coverage that keeps on, well, covering!

UMBRELLA: Most people don’t think of an umbrella policy as being for your average Joe. (Or Chuck - an umbrella would have made his life easier.) But sometimes, like they say, when it rains, it pours!

If monsoon weather hits you with an accident or incident, this lovely little policy pops open to protect you if your regular liability policies just aren’t enough. And guess what? They are not expensive! Protecting your finances to the fullest if something happens for a few bucks a day? Sign me up!

SPECIALITY COVERAGES: While we’re on the subject of water, let’s mention handy little coverages called INLAND MARINE FLOATERS. Uh, what?

Let’s say you have some priceless art you found behind the wall in the attic or an original Steinway inherited from your great-grandma or you unearthed The Heart of the Ocean. Or you just travel a lot and want the extra protection whilst gallivanting the globe.

Your standard everyday insurance coverage might protect your wedding ring, but that’s about it. If you have super valuable stuff, or stuff that is priceless, get to floatin’ and make sure it’s all covered to the fullest!

MY MOM THINKS I’M SPECIAL.

And so do we, so let’s cover you, too!

LIFE: We don’t want anything to happen to you, but even a life free from accidents eventually gets caught by old age.

No matter what your age, if you have anyone who depends on you to feed or house or clothe them, you really should cover your actual person. It can replace income if something happens to you, create an inheritance for old you’s family, and pay for final expenses.

We recommend TERM LIFE over Whole Life, but either will give you peace of mind for whenever you kick the bucket, which is hopefully a very long time from now.

And There We Have It!

We would love to help you make sure you have the best coverage for you and your family, so give us a call, send a text, drop an email, send a carrier pigeon, or try the Pony Express. We would be thrilled to have you join our Seed family!