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What is Functional Replacement Cost? | Michigan Home Insurance

posted Aug 10, 2017, 2:23 PM by Jason Grubbs   [ updated Aug 10, 2017, 2:54 PM ]

Functional Replacement Cost - Home Insurance
With functional replacement cost, if this hand-laid stone porch was destroyed, the insurance company would pay to replace the porch with a functionally equivalent porch using conventional construction materials and methods, such as brick or stacked stone.

Older homes, particularly houses built prior to 1945, often have unique construction features.  While the history and uniqueness of these building characteristics add to the allure of the home they can also be extremely difficult and expensive to replace.

The most common example of an obsolete construction feature in older homes are plaster walls.  Most builders and remodelers now routinely use drywall as it is less expensive, easier to install, and has fire-resistant properties that combine to make it a more ideal selection for walls in a home.

Other examples of unique construction features of older homes may include: ornate woodwork, mahogany banisters, hand-laid stone foundations and porches, and imported, individually hand-painted floor tiles.

The replacement provision of home insurance policies customarily specify the insurance company will repair covered damages using like kind and quality materials.  With older homes insurance companies typically amend the policy to instead provide what is known as functional replacement cost coverage.

Functional replacement cost means the insurance company will pay to repair or replace covered damages to an older home with construction materials and methods of construction that are functionally equivalent in condition and appearance to the original construction, but would not be an exact replacement of matching kind and quality materials.

Referring to the earlier cited examples: plaster walls would be replaced with drywall, stone foundations would be replaced with poured concrete, hand-laid stone porches (such as the one pictured above) would be replaced with brick or stacked stone, a mahogany banister may be replaced with a pine banister, and hand-painted individual floor tiles would be replaced with more readily available, high quality tiles.

The end result with functional replacement cost coverage is covered damages will be fully repaired and functionally equivalent to the original construction, but the cost of labor and materials would be substantially less than an exact replacement.  This provision lowers the amount of insurance needed and thereby also lowers the cost for insuring an older home.

What is Disability Insurance? | Michigan Disability Insurance

posted Jun 28, 2017, 8:52 AM by Jason Grubbs   [ updated Jun 28, 2017, 8:57 AM ]

Michigan Disability Insurance

What is your most valuable asset?

When this question is posed most people will think of their home or some other tangible asset they own...perhaps their car, boat, recreational vehicle, personal belongings, or even their accumulated savings and investments.

The reality is your income is more than likely your most valuable asset.  Your ability to work and earn an income is the primary source of funds to pay for your home, vehicles, and other assets as well as paying for groceries, utilities, and other everyday expenses to maintain your standard of living.

What would happen if you became sick or hurt and were unable to keep working?

Disability insurance is a type of insurance designed to replace your income if you are unable to continue working due to an illness or injury.

Disability Probabilities - Michigan Income Insurance
You may be surprised to learn 1 in 4 of today's 20-year-olds will become disabled before they retire.

What resources would protect your income?
  • Workers' Compensation - 90% of long-term disability claims are due to illness and are not work-related, meaning they are not covered by workers' compensation.
  • Savings - Nearly 40% of Americans live paycheck to paycheck. Would your savings be sufficient to cover your expenses for an extended period of time?
  • Government - Social Security may not cover all your expenses if you become disabled. At the beginning of 2017, the average monthly SSDI benefit for workers was $1,170 (source: Social Security Administration fact sheet). And, between 2003 and 2012, Social Security disability claim denials averaged 59%.
  • Spouse's Income - Many families rely on two incomes to cover monthly expenses. Could your family get by with just one income?
  • Employer-provided Disability Insurance - Group coverage furnished by an employer often has limited benefits and is not available to you after leaving the employer.  Also, if your employers pays for the insurance any benefits paid are taxable.
The most flexible and reliable source to protect your income is an individual disability insurance policy you purchase on your own.
  • An individual disability insurance policy is portable, meaning you can take it with you from one job to the next.
  • Disability insurance is flexible - you can customize a policy to meet your specific needs and budget.
  • Individual disability insurance, when purchased with after-tax dollars, provides income-tax free benefits.
There are 3 main components to an individual disability insurance policy:
  • Elimination Period - How long, following a disability, you wait before benefits begin being paid.
  • Benefit Amount - How much of your income a disability policy would replace.
  • Benefit Period - How long benefits would be payable.
Additional options are available that would allow you to increase your coverage in the future regardless of any changes in your health, to have benefits paid increase over time to keep pace with inflation, and to have premiums refunded if you don't use your policy.

While the odds of a disability occurring sometime during the course of your career are significant the good news is most people who suffer an illness or injury are eventually able to return to work.  This is an important consideration to be aware of as the most common mistake I've seen people make when inquiring about disability insurance is narrow their focus solely to purchasing a policy providing ultimate protection - a short elimination period with maximum benefits paid to retirement.  While this may be ideal protection, it can come with a price tag higher than the budget permits - those people often decide disability insurance is unaffordable and go without any coverage whatsoever.

A customized disability insurance policy with a modest elimination period, reasonable benefits to make sure your family can pay the mortgage, buy groceries, and pay for utilities, and with benefits payable from 1 to 5 years can provide an excellent financial safety net without breaking your budget.

What is Insurable Interest? | Michigan Auto Insurance

posted Jun 16, 2017, 9:37 AM by Jason Grubbs   [ updated Jun 28, 2017, 8:58 AM ]

Insurable Interest - Michigan Auto Insurance
Insurable interest is an important concept to understand, particularly as it relates to Michigan auto insurance.

Insurable interest is an insurance term that means the owner of an insurance policy must have a financial interest in any item they insure.

With auto insurance an insurable interest must exist both at the time a vehicle is originally insured and at the time a loss occurs.

On the surface this sounds simple: In order to insure a vehicle, and in order to collect insurance benefits if a loss occurs, you need to be a titled owner or leaseholder of that vehicle.

Unfortunately, insurable interest can become confusing when consumers either don't understand the concept or, misguidedly, attempt to insure vehicles incorrectly.

A husband and wife are considered one legal entity by insurance companies.  Therefore, one or both members of a married couple may be listed as the owner(s) of an insurance policy and either or both individuals may be listed as the titled owner or leaseholder of a vehicle insured on that policy.

Other than a married couple, for any vehicle to be properly insured, the named owner of an auto insurance policy must be a titled owner or leaseholder of the insured vehicle.  This means:
  • A parent cannot insure a child's vehicle if the child is the sole titled owner of that vehicle
  • Unmarried couples cannot combine their separate vehicles on one auto policy, unless the individual specifically named as the insurance policy owner is a titled owner or leaseholder of each vehicle
  • Roommates cannot combine their vehicles on one auto insurance policy
  • An individual cannot insure a "friends" vehicle out of the goodness of their heart - or because the friend is ineligible or unable to afford their own auto insurance
Some of those examples may seem obvious however, having been in the insurance business for over 25 years, I've encountered each of those situations numerous times.

The most common occurrence of individuals incorrectly insuring a vehicle is when a parent attempts to insure a vehicle that is solely owned by their child.

What frequently happens in this situation is ownership of a vehicle is transferred from a parent to a son or daughter when that child strikes out on their own.  The youngster often receives a "sticker shock" when they obtain a quote for their own auto insurance policy - the pricing on their own likely missing some of the favorable advantages of being insured on their parents' auto insurance policy including their parents' good credit history, multi-car, and multi-policy discounts.

In that situation people sometimes mistakenly think a solution is to simply not tell their insurance company and leave the child and their vehicle on the parents auto insurance policy.  Unfortunately this scheme to save on insurance costs can, and very likely will, backfire if there is a significant claim (see Michigan court case "Hoskins vs Miller").

As mentioned earlier, insurable interest must exist both at the time a vehicle is originally insured and at the time a loss occurs.  If there is a significant claim you can be assured your insurance company will review all pertinent details, including whether the policy owner had an insurable interest in the vehicle.

Making certain you are properly insured is a vital step to having the assurance your Michigan auto insurance policy will respond as expected if a loss occurs.

How Do I Cancel My Insurance? | Michigan Insurance

posted May 16, 2017, 9:01 AM by Jason Grubbs   [ updated May 16, 2017, 9:03 AM ]

Insurance Cancellation Grand Rapids
One of the most common mistakes people make involving insurance is simply neglecting to notify their insurance company when they decide either to not renew or cancel an insurance policy.

Whether you're switching insurance companies or simply have sold a vehicle, property, or business and no longer need insurance, you should always notify your insurance company and arrange cancellation of your policy.

Customarily the insurance company will require an authorization, signed by all named insureds, to properly cancel a policy.  A signed cancellation request helps avoid misunderstanding or cancellations in error as well as ensuring all parties with an ownership interest in a policy are in agreement with canceling the policy.

If a request to cancel a policy dates back more than 30 days insurance companies likely will require additional documentation to substantiate the cancellation date, such as proof replacement insurance was purchased or documentation confirming the date the covered vehicle or property was sold.

Once a cancellation request is processed the insurance company will send confirmation along with a final statement of account.  The final statement will detail any premiums owed through the cancellation date or any premiums being refunded as a result of the cancellation.

A common instance when problems can arise is when a person switches insurance companies at a renewal date, doesn't notify their previous insurer, and mistakenly assumes when they don't pay the renewal bill their policy will cancel.  While this eventually does prove true the previous insurer may extend coverage, and bill for coverage provided, through any grace period (the time period following an initial premium due date when the insurance company would accept a late payment and continue the policy with no gap in coverage).

One additional note: If you have only one vehicle insured on a Michigan auto insurance policy that you are selling and intend to replace within a relatively short span of time you should discuss the situation with your insurance agent, rather than simply canceling your auto policy.  You're likely to be best served to either maintain your existing policy, or some type of auto insurance, during a brief period between owning vehicles to avoid a situation where you may become ineligible for a standard auto policy once you acquire another vehicle.

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What is Guaranteed Replacement Cost Coverage? | Michigan Home Insurance

posted May 2, 2017, 11:17 AM by Jason Grubbs   [ updated May 16, 2017, 9:06 AM ]

Home Insurance Grand Rapids
Most consumers purchasing home insurance have an expectation, if their home is destroyed due to a covered loss, their insurance will pay to rebuild their home.  That's a reasonable expectation, particularly if the home is less than 50 years old and well maintained.

In most cases, home insurance policies are designed to provide replacement cost protection.*  This means the insurance company will calculate the cost to rebuild based on the square footage and features of your home and provide coverage based on this replacement cost value.

While insurance companies utilize specialized property valuation software designed to accurately estimate the cost to rebuild a home their calculations are still only an informed estimate.  A natural concern for a homeowner relying on an insurance company's estimate of the cost to rebuild their home is what happens if the insurance company is wrong?

Fortunately, insurance companies have provided a solution to this potential issue by offering guaranteed replacement cost coverage, sometimes referred to as extended replacement or full replacement coverage.  This is a rider that effectively says the insurance company will pay the full cost to rebuild your home even if the cost of doing so exceeds the limit of coverage stated on your policy.

The intention of guaranteed replacement coverage included in a home insurance policy is to alleviate concern for the homeowner of whether the insurance company's calculation of the cost to rebuild their home is accurate.  If your home is insured at a replacement value of $250,000 and wound up costing $275,000 to rebuild, with guaranteed replacement cost coverage, the insurance company would pay the difference.

There is generally a cap, typically an additional 25% - 50% of the dwelling coverage limit, for guaranteed replacement cost coverage on home insurance policies.  There are also customarily stipulations the homeowner must agree to insure their home at the insurance company's calculation of the replacement value and allow annual coverage and premium adjustments based on regional increases in building costs.

Perhaps most importantly, as this provision is often either overlooked or misunderstood by homeowners, there is also usually a requirement the homeowner notify the insurance company of any changes, renovations, or additions they complete that would increase the replacement value of their home.

* If the replacement cost of a home is significantly higher than the purchase price or market value the insurance company may not be willing to offer a replacement cost policy.  In those instances the homeowner may be able to purchase a repair cost policy.

What happens if my classic car is totaled? | Michigan Collector Auto Insurance

posted Apr 18, 2017, 12:37 PM by Jason Grubbs   [ updated Apr 18, 2017, 12:38 PM ]

Michigan Classic Car Insurance
For most automotive enthusiasts a collector vehicle is much that a car, it's a passion - their classic vehicle is a cherished collectible they put a lot of time, effort, and money into maintaining.  These enthusiasts know their vehicle isn't a commonplace automobile that's value can be determined from a generic car valuation site.

With this in mind most collector vehicle owners wisely purchase Agreed Value Coverage for their classic car.  With agreed value coverage you and your insurance company set a predetermined or "agreed" value for your car at the time it is insured - and this is the amount the insurance company will pay if a total loss occurs.

It's worthwhile to mention collector vehicle owners should periodically review their coverage and, as necessary, make any adjustments to the agreed value.  Classic cars get better with age, especially if they are well-maintained, and you want to make sure your insurance keeps pace with any changes in value.

Even if you purchase agreed value coverage it's important to consider what happens if your car is totaled.

Repairing a collector vehicle can be a time-consuming and expensive process.  For this reason, a collector vehicle that suffers even a modest amount of damage in a covered loss may be considered a total loss - it simply depends on what it will cost to repair the vehicle in relations to its value.

It's entirely possible - especially if your collector vehicle has sentimental value - that you may want to keep and restore your classic car if it's been totaled in a loss.  In this event, what amount will your insurance company pay you?

The insurance company will happily sell you back your totaled vehicle in the form of a deduction from your loss settlement.  The amount deducted would be based on the salvage value of your vehicle.  This is where it gets interesting, especially for collector vehicles...

Michigan Collector Auto Insurance
The process of determining salvage value with Hagerty Insurance, the world's leading insurer of collector vehicles, is the insurance company would list the car at www.copart.com for 3 days.  The highest bid for the totaled vehicle would be designated as the salvage value and that amount would be deducted from the agreed value if the owner wishes to retain their totaled car.  Depending on the scarcity of your collector vehicle, it's overall condition, and the value of usable parts the salvage value could be quite significant - leaving you with far less cash than you may have expected if you choose to keep your totaled vehicle.

Fortunately, there is a solution.  Hagerty Insurance offers optional Cherished Salvage Coverage.  This additional coverage, available at a modest cost, allows the collector vehicle owner to retain their vehicle after a covered loss when it is totaled and still received the full agreed value.

to access a free, online classic vehicle valuation guide
and get an instant, online insurance quote
for your collector vehice

Insuring Your Classic Car | Michigan Collector Auto Insurance

posted Apr 11, 2017, 1:39 PM by Jason Grubbs   [ updated Apr 13, 2017, 12:06 PM ]

Michigan Collector Auto Insurance

A collector vehicle is more than just a car - it's a treasured collectible you purchase and invest time and money into because you have an appreciation and passion for a unique, cherished automobile.

While many auto insurance companies in Michigan will insure a wide variety of classic and antique cars on a standard auto insurance policy, it's well worth your consideration to purchase a specialty insurance policy specifically designed for your collector vehicle.

We are proud to partner with Hagerty Insurance, the world's leading insurer of collector vehicles, to offer unparalleled coverage for your special car.

Here are some of the advantages offered by our collector vehicle policies:

Collector Auto Insurance - Michigan
Broad Qualification - In addition to classic & antique cars coverage is available for a wide range of collectible vehicles including modern collector vehicles, modified vehicles, kit & replica, fire trucks and military vehicles.
Expert Valuation - Offering knowledge & expertise to accurately value your collector vehicle.  Access our free valuation tool by clicking here.
Guaranteed Value - Coverage for your car's real value, agreed to beforehand, so you know exactly what amount will be paid in the event of a total covered loss.
Low Rates - Typically saving 40% or more compared to standard auto insurance.
Flexible Use - There aren't fixed use or mileage restrictions, so you can get out and enjoy driving your vehicle.

Claims Expertise - Adjusters with hands-on training in classic car repair and specialists who can help find the right replacement parts for your collector vehicle.
Repair Shop of Your Choice - You get to decide who works on your vehicle, including the option to be paid to repair it yourself!
Guaranteed Flatbed Towing - Providing peace of mind your collector vehicle will be handled with the utmost care.
Extra Coverage Options - Coverage is available for spare parts, automotive tools, automobile memorabilia, personal effects, trip interruption & vehicles under restoration.

What is my classic car worth? | Michigan Collector Auto Insurance

posted Apr 5, 2017, 1:34 PM by Jason Grubbs   [ updated Apr 11, 2017, 7:11 AM ]

Hagerty Collector Vehicle Valuation Tool

For many Michiganders the arrival of spring signals a time to pull their collector vehicles out of storage and put them back on the road.

Or, perhaps, this spring is when you will begin searching for a future beloved classic car.

One of the keys when buying, selling, and insuring collector vehicles is determining the value of these types of vehicles.  In partnership with the good folks at Hagerty Insurance we are pleased to offer - free and with no obligation to provide your email or contact information - a valuation tool specifically designed for collector vehicles.

Our unique valuation tool provides details and data on collector vehicles, including:
  • Current values across four condition ranges
  • Historic values for classic trucks, motorcycles, and cars over time
  • Similar vehicles for sale on eBay
  • Model history that may include specs, standard equipment, number produced, and available images
  • VIN details and decoder

We are proud to offer insurance for your collector vehicle through Hagerty Insurance, the world's leading insurance provider for classic vehicles, offering coverage for classic cars, trucks, motorcycles, boats, tractors, and more.

What is a Repair Cost home insurance policy? | Michigan Home Insurance

posted Mar 21, 2017, 3:10 PM by Jason Grubbs   [ updated Mar 21, 2017, 3:11 PM ]

Grand Rapids Repair Cost Home Insurance
There are two valuations of your home that relate to your property insurance: market value and replacement cost.

The market value is the price a home would sell for in the current real estate market.  It's the figure you're primarily concerned with when buying or selling a home.  The market value of a home is reflective of a variety of factors including supply & demand for houses in the area, the condition of the home, the size & value of the lot, and the desirability of the neighborhood in which a home is located.

The replacement value is what it would cost to rebuild the same house.  This figure is based on the costs of materials and labor to rebuild a home using the same kind and quality of materials as the current construction.

The most common type of home insurance is a replacement cost policy.  This type of home insurance policy provides the most comprehensive coverage and is designed to provide sufficient dollars to rebuild in the event of a total loss.

If the cost of replacing a home is significantly more than what the home is currently worth an insurance company may not be willing to offer a replacement cost policy.  The insurance company may instead offer a repair cost home insurance policy.

The specific guidelines of when a repair cost home insurance policy will be offered instead of a replacement cost policy will be a little different from one insurance company to the next.  Typically, repair cost policies are offered when the market value (or purchase price) of a home is less than 60% of what it would cost to rebuild that home.

A repair cost home insurance policy has two significant differences in comparison to a replacement cost policy:
  1. Partial losses are settled based on the cost to repair, rebuild, or replace covered damage to the home to a condition and appearance similar to that before the loss.  Repair cost policies are often used for older, well maintained homes where unique construction elements contribute to a higher cost to rebuild.  This stipulation means the insurance company is not required to use the same kind and quality of materials allowing them to instead use conventional materials and construction methods where doing so saves money - an example would be replacing plaster walls in an older home with drywall.
  2. The maximum amount the insurance will pay is the market value of the home, which would be stated on a repair cost policy as the dwelling limit.
It's important to understand those coverage distinctions.  For partial losses a repair cost home insurance policy will function much the same as a replacement cost policy, but if you suffer a total loss a repair cost policy will provide limited coverage - only paying the market value of your home, rather than the full cost to rebuild.

What is Rental Reimbursement Coverage? | Michigan Auto Insurance

posted Mar 7, 2017, 8:06 AM by Jason Grubbs   [ updated Mar 7, 2017, 8:07 AM ]

Grand Rapids Car Rental
Imagine you had the misfortune of being in an auto accident and find your car will need to be in the local body shop for a couple of weeks for repairs to be completed.
How will you get around in the meantime?
Can you afford to pay out-of-pocket for a rental car?
If not, you may want to consider purchasing rental reimbursement coverage.

What is rental reimbursement coverage?
Rental reimbursement is an optional coverage you can add to your Michigan auto insurance policy that helps pay for a rental car if your car needs repairs that are covered by your insurance.

It's important to note rental reimbursement coverage only applies when your insurance policy is paying the cost for covered damages to your vehicle, which would involve a comprehensive or collision claim.  Rental reimbursement does not apply if your car is out of service due to routine maintenance.
Grand Rapids Rental Cars

How does rental reimbursement coverage work?
There is no deductible for rental reimbursement coverage; however, there is both a daily dollar limit and a limit to the number of days for which an insurance company will pay for a rental car.  You can choose your daily coverage limit, ranging from $20 - $150 per day, while the time period rental reimbursement benefits are available is typically limited to a maximum of 30 days.

If you have rental reimbursement coverage the insurance adjuster handling your claim can usually make arrangements with the rental company to directly pay the portion of rental car costs covered by your insurance, saving you the inconvenience of paying directly and waiting to be reimbursed.

Is rental reimbursement a worthwhile coverage to buy?
As a general rule, you would come out ahead - if you were in an accident the national average of once every 10 years - to add the cost of rental reimbursement coverage to your emergency fund compared to purchasing this coverage.  The reality, though, is most people don't have a substantial emergency fund.   If you don't have alternate transportation readily available and the cost of a rental car would put a significant dent in your checkbook it may be worthwhile to add rental reimbursement coverage to your auto policy.

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