Insurance 101

When we think of insurance, we may feel that since it’s there for us, we should use it whenever needed. While this is partially true, let’s take a deeper look.

The purpose of insurance is to provide a safety net so that if you have a significant loss or damage to your property, you wouldn’t have to pay for it out of pocket.

So that begs the question, when should we use insurance?

It’s not always clear cut, but here’s our suggested rule of thumb.

If the cost to fix the damage caused to your home or vehicle will cause you a financial hardship, consider using insurance.

Here are some questions to help you decide whether to use insurance.

1. How much is your deductible? When you submit an insurance claim, you’re responsible to pay for the deductible. If the cost of your deductible is similar to the cost of the damage, you may consider just paying out of pocket.

2. Could there be a future surcharge? See our video about surcharges to learn more about this topic.

If you’re unsure and would like some advice, please reach out to your Lacher Team. We’d be happy to help you through it.

The bottom line:

If the cost to fix the damage caused to your home or vehicle will cause you a financial hardship, consider using insurance.

When Should I File a Claim?

When you have a loss to your home, property, or automobile, you might think, “hey, I’ll just submit a claim and my insurance company will take care of it.” There’s truth to this statement, but let’s examine it further.

When you submit a claim, while your insurance company may pay it, it affects how the insurance company rates you. Too many claims submitted could mean the insurance company increases your premium, or adds a significant surcharge, or worst case scenario, you could lose coverage altogether. That’s why it’s best to view insurance as a way to receive financial protection or reimbursement against a loss that would present a financial hardship if you paid for it out of pocket. In other words, insurance is not a warranty.

Let’s look at example.

Say you’re driving down the street and hit a pothole, breaking your vehicle’s rim and popping a tire. In this example, let’s say your auto insurance deductible is $500. You take your car to the garage and they say the cost to repair it will be $900. Should you submit a claim? Well, that depends if the $900 will be a financial hardship or not.

But consider this other example. Let’s say this time you’re driving down the road and hit another vehicle. This time the cost to repair your vehicle is $7,500. You can see that in this example, you would most likely incur a financial hardship if you had to pay this amount out of pocket. This would be a scenario in which filing a claim would be best.

If you’re unsure about whether to submit a claim, please reach out to your Lacher Team. We’d be happy to help you.

What is an Auto Insurance Surcharge?

In this video I’m going to discuss what an auto insurance surcharge is.

When you buy auto insurance, your insurance company will assign a rating to you. Generally speaking, you’ll receive a good rating if a good driving record, don’t file any claims, are an experienced driver, that sort of thing.  A good rating could mean that you may be eligible for a discounted rate.

However, if you’ve had several accidents, file many claims, are an inexperienced driver, have traffic violations, pay your bill late, etc., you could have a less than good rating. What this may mean is that your insurance company could add a surcharge to your premium.

A surcharge is an extra fee added to your insurance. Think of it as a penalty.

Now generally speaking, surcharges are temporary. So if you improve your driving record, over time your surcharge will likely go away.

Here are some ways you can avoid a surcharge:

• First and foremost, improve your driving record. Make sure you stop at all stop signs, no texting while driving, no accidents, that sort of thing.

• Consider taking a safe driving class.

• Make sure to pay your insurance bill on time.

• Also, look into Erie’s Rate Lock program. This program can help you avoid car insurance rate increases. Even if you have a claim, your rates won’t change until you make certain changes to your auto insurance policy, such as adding or removing a vehicle or a driver from your policy or changing your primary residence

To learn more about auto surcharges, please reach out to your Lacher Team. We’d be happy to help you.

What is a Home Insurance Surcharge?

There are several reasons that your insurance company may add a surcharge to your homeowners insurance policy, which is basically an additional fee above your premium. Let’s examine these reasons.

1. You filed a claim or multiple claims. Sometimes when you file a claim, your homeowners insurance will increase temporarily. Typically this has to do with the insurance company adjusting the risk associated with insuring you.

2. In addition to the insurance company assigning risk to you as the home or property owner, there are also special risks associated with your home or property. These risks could include things like swimming pools and certain types of pets, for example.

So how can you avoid a surcharge? One way is to decide if you should submit a claim or just pay out of pocket. For example, let’s say you have a broken pipe in your home. In this example, your deductible is $1000. In addition to that, there may be a surcharge of $30 per year for up to 7 years. Thus your total cost could be about $1,200. Or, you could hire a plumber who could repair your pipe for $1,100. In this situation, it may be more advantageous to just hire the plumber.

To learn more about home surcharges, please reach out to your Lacher Team. We’d be happy to help you.