A Look At Some Common Flood Insurance Myths

Based in Beaumont, TX, Carruth Insurance serves the community by helping people find the insurance coverage that they need. We strive to ensure that our clients find the individual coverage that they need to secure their futures.

Flood Insurance Myths

A severe flood can cause substantial damage to your property. That’s why it is vital that you have protection. Flood insurance allows you to protect your property and belongings. You’ll be covered if your clothing, electronics, furniture, stove, or furnace is damaged as a result of a severe flood. While you are researching different policies, avoid some of these common flood insurance myths.

I Don’t Need Insurance If I Stay In An Area That Doesn’t Flood.

Even if you do not stay in a high-risk area, it is important that you have protection in the event of an emergency. You never know when there will be an issue with the drainage system in your area. Research shows that your home is more likely to flood than catch on fire, even if you stay in a low-risk area.

I’ll Rely On My Home Or Rental Policy.

This is a mistake, as many homes and rental policies do not contain full flood coverage. While you may be able to protect the unit, the easiest way to ensure that your personal belongings are covered in the event of a flood is to have a separate policy.

I’ll Wait Until Spring.

This is not a wise strategy. While the spring is known for having large amounts of rain in most areas, it is not a good idea to wait until the rainiest season of the year to look at coverage. You may experience a grace period before your coverage starts. Research coverage while things are dry.  

Carruth Insurance Will Assist You Through The Process

For more information on flood insurance policies, please stop by our office in Beaumont, TX, today.

How to Manage Your Personal Risk

This year, I retired from a Fortune 500 Chemical company as a Manufacturing Advisor after 29 years. I learned many things about managing risk during that time. The typical industry approach to risk management is a 6 step process.

  • Step 1: List all assets and assign importance to each one.
  • Step 2: Develop a plan for the most critical assets that identifies all risks associated with each one.
  • Step 3: Evaluate the probability of occurrence and the consequences of each risk.
  • Step 4: Prescribe cost effective actions to eliminate or reduce each risk to an acceptable level.
  • Step 5: Perform these actions on schedule.
  • Step 6: Reassess the plan by evaluating the cost effectiveness of the actions performed and identifying any new risks.

We use a very similar approach when helping our clients manage their personal risks.

We start by getting to know you and your values and creating a list of your assets, needs and goals. Assets include your Home, Autos, Boats, RV, Business, Savings & Investment. Your needs might include Replacement income or final expenses. Your goals may be a College education for your children/grandchildren or funding a favorite charity or endowment.

We work with several Fee Only Financial Advisors and recommend our clients consult with theirs to develop a needs assessment. If you don’t have one, contact us. We’d be happy to recommend a few! Once we have this list, we work with you to understand your order of importance of each. That’s Step 1.

Next, Step 2, we create a plan for each of the most important items identified in the above. Developing this plan starts with identifying the risks to each item.

Typical risks to your home are Fire and Lightning, Wind, and Flood while your Savings & Investments could be threatened by market corrections, liability lawsuits, critical illness, or even criminal charges.

Once the risks are identified, it’s necessary to evaluate the probability and consequence of each and every risk.

Probability is best defined as the ‘likelihood of occurrence‘ while my best definition of Consequence is the ‘impact of an event measured in the cost to restore the prior value of your asset‘.

It’s important to understand probability NEVER changes. The fact that an event has never occurred before, doesn’t decrease it’s likelihood of occurring. Conversely, the recent occurrence of an event does not increase it’s probability of occurring again. Think of it as a coin toss. Because there are 2 sides to a coin, the chances of a coin toss coming up heads is 50% each time time it’s tossed. While it’s possible to for it to come up ‘heads’ twice in a row, the probability remains the same for the subsequent tosses, 50%.

Another common mistake is to confuse the consequence with probability. Scary high consequence does not increase the probability of occurrence.

Lastly, it’s important to understand that consequence, the cost to restore the your prior value, is directly proportional to your net worth. A $100k lawsuit against you is a HIGH consequence if your net worth is only $1M, but it is much lower if you are Jeff Bezos.

Once these two risk factors are evaluated, you could plot them on a matrix like the one below.

Common, medium to large risks with medium to high probability should be addressed with an action. Mitigating HIGH consequence risks with a very LOW probability, like an alien invasion, are unrealistic and expensive to address, while very LOW consequence HIGH probabilities are easy to address but not cost effective. It’s like purchasing a $15 warranty on a $100 microwave. That’s Step 3.

There are 4 methods commonly used to manage risk. Avoidance, Reduction, Retention, and Transfer

For example, here are some options for managing the risk of an auto accident that should be :

  • You might chose to avoid the risk of an auto accident by taking an Uber.
  • You could reduce the risk by only driving on weekend and avoiding traffic.
  • You could retain the risk by depositing $40k with the Texas Department of Insurance and self insure.
  • You could transfer the risk by purchasing an auto insurance policy

Identifying the most cost effective solution is Step 4.

Step 5 includes using an independent agent to transfer as many risks that are affordable and avoiding, reducing or retain the others.

The last step, Step 6, is a periodic or annual reassessment of your plan with your trusted independent insurance agent and financial advisor. Meet with your financial advisor to reassess your net worth, your needs and your goals.

Finally, meet with your independent insurance agent to review your policies current policies for appropriate coverage and better rates.

Call us today at (832)554-9815 or book some time on our calendar today and let’s get to know each other.

All the best,

Richard

Richard Carruth is Principal and Owner of Carruth Insurance.




How to Choose a Life Insurance Policy

Those that are in the Beaumont, TX area will have a lot of different insurance needs. A great type of protection that all residents in this area of Texas should think about getting is life insurance, which is valuable as it can provide protection to your dependants. When you are looking for life insurance here, there are several factors to take into consideration to ensure you choose the best policy for your situation.

Determine Coverage Needs

When you are looking for life insurance, you need to consider your coverage needs carefully. A life insurance policy should protect the financial future of your dependants. Due to this, it should be able to cover all future expenses that they could have, including the costs of housing, education, and living expenses. It would be best if you made a conservative estimate of what these costs could be and then make a decision about your policy limit. 

Consider Policy Type

Another critical factor to consider is the type of insurance policy that you will get. The two most common forms of life insurance are term and whole life. With a term life policy, you will receive coverage for a certain period. This often provides the most affordable coverage. Another good option is whole life insurance. While whole life can cost more, there are long-term investment advantages that come with this form of life insurance as well. 

Choosing a life insurance policy in Beaumont, TX is a big decision. When you are looking for life insurance coverage here, you should call Carruth Insurance. The team at Carruth Insurance can provide you with the support that you need to pick a new life insurance policy. Contact our office to learn how to get started.

Talking to Your Teen About Auto Insurance

There are over 17 million registered drivers in Texas, and every year, tens of thousands of new drivers are added to the list. The roads of Beaumont TX and the surrounding region continues to become increasingly crowded, combing more drivers of varying degrees of experience. If you have a new teen driver, it can be helpful to have a discussion about their new responsibilities and even the role auto insurance plays. Carruth Insurance recommends discussing the following topics with your teen driver.

Talking About Car Insurance

Be upfront with your teen about the necessity of auto insurance and its costs. Make them aware why costs are so high for new drivers and how safe driving can gradually lower these costs over time. Explain the difference between comprehensive and liability coverage and how the automobile they drive impacts choices. If you would like assistance with this discussion, contact the professionals at Carruth Insurance.

Discuss Distracted Driving

One of the major issues with young drivers is the problem of distracted driving. Each day in the United States, over 1,000 people are injured and about 9 people killed as the result of distracted driving. While distracted driving includes cellphone use, it also includes eating and driving, manipulating the infotainment system and more. Stress the importance of focusing on the road ahead and defensive driving.

Explain the Importance of Experience

Getting a driver’s license is not an achievement as much as it is the beginning of building safe driving habits and gaining experience. Auto insurance for teen drivers is so expensive, in part, because they have such little experience. New drivers should be encouraged to complete each driving tasks safely while building upon that experience.

If you are adding a new driver to the family, we invite you to contact us at Carruth Insurance. We serve drivers throughout the Beaumont TX area with competitive auto insurance rates for drivers of all ages. Let us get a no-obligation quote for you today. 

Carruth Insurance, Beaumont TX

Switch TODAY and save !

We’ve all seen the ‘switch and save’ insurance commercials.

“Customers that switched to Company X saved an average of $$$$!”

But, have you ever noticed they all claim to save customers that switch the same average amount?

“How can they all save me ‘$400’ if I switch?”

You may have asked yourself, “How can they all save me ‘$400’ if I switch? Doesn’t it cost about the same to insure the average person?” After all, the risks are similar and advertising costs are too. One company may be more efficient than others, but they all need employees, computers, paper, postage, agents and lawyers, right?

After you switch, I’m sure you’ve also noticed your policy premiums almost always increase when your policy renews. “Dang!, I thought I was going to save money?! Maybe I should try the other company this time?”

The answer is simple, if you think about it.

They all know most of us are going to be disappointed when our insurance costs go up. So, their ‘switch and save’ rates are priced to lure us away from our current carrier. They are paying for your business. They all do it. It’s built into the business model. They’re gambling we’ll stay long enough to recoup their expense because we like their commercials, or their agent is a nice guy, or our father always bought from them. Basically, the same reasons we all tend to buy the same brand of automobile, coffee, kitchen appliance, or blue jeans.

Some may go a step further. Coverage costs money. Some of those quotes you see on-line include ‘suggested’ or ‘recommended’ coverage that may be less than you currently have or need to adequately protect yourself.

So if they all do it, how do you know you’re getting the policy you need at the best rate?

Simple. Find an independent insurance broker you trust that can shop multiple insurance companies when your rate increases.

At Carruth Insurance, we have access to many house-hold insurance names offering Home, Auto, Life and Commercial insurance. We are not obligated to any of them. We are free to do what is best for you, our client.

When your policies renew we’ll always look to see if they increase more than reasonably expected. When they do, we shop all those companies to make sure you’re still getting the coverage you need for the bast price.

Give us a call today, or use our website to get a quote and let’s get to know each other.

Book a meeting with me when your’re ready to talk about your insurance needs.

All the best,

Richard

Richard Carruth is Principal and Owner of Carruth Insurance.

Is commercial insurance required by law in Texas?

Beaumont, TX is a great place to own a small business. Most of the companies in Texas are considered small businesses, with fewer than 100 employees. Texas has a large, strong economy that encourages companies to thrive.

There aren’t many legal requirements in Texas when it comes to commercial insurance. Automobile insurance is treated differently because of its ability to affect others, and a commercial insurance policy must cover all company-owned vehicles in Texas. Keep in mind that if you are using a personal vehicle for company business, your insurance will probably not protect you in the event you are in a motor vehicle crash.

At Carruth Insurance, we understand how important it is to protect your small business. If anything were ever to happen, such as a fire or burglary, you need the protection that insurance provides. Without insurance, you have to pay out of pocket for any damages, including damage to your building, damage to your supplies and equipment, and liability claims from outside parties. One big claim could bankrupt a small business.

Another thing to keep in mind is that you may be required to carry insurance on anything you still owe money on. Whether for personal property, automobiles, or equipment, most loans require the borrower to maintain full coverage until the loan is completely paid off. If you fail to do so, the lender can purchase a policy and add it to the loan amount. The insurance chosen by lenders won’t necessarily be the best deal for you. 

If you have a small business in Beaumont, TX, don’t wait too late to get the protection you need. Call Carruth Insurance today so we can help you find a policy that works for you.

Avoiding common short-sighted insurance mistakes

After your mortgage, your combined home and auto insurance premiums are likely the second largest line item on your monthly budget.

I remember as a young parent struggling to make ends meet, I was tempted to cut expenses where ever I could and insurance seemed like low hanging fruit. I visited my insurance agent and told him I wanted to eliminate any coverage that I wasn’t obligated to purchase.

Fortunately, I had an insurance agent at the time that cared enough to explain my coverage and how it protected me.

Recently, a very good friend called for a quote on an umbrella policy and agreed to let me review his home and auto coverage’s.

My friend has always been a fastidious saver and a generous giver. He and his wife live modestly and have been loyal stewards of what they’ve been given. I can’t recall a single instance where they’ve splurged on anything. Consequently, they are also blessed with an abundant net worth any of us would be proud of.

Instead, now a multi-millionaire, he still carried only minimal liability coverage that protected a very small fraction of the assets he’d sacrificed to accumulate. While he was saving a few hundred dollars a year, we was risking the loss of millions.

Penny-wise and pound-foolish

The temptation to decline discretionary coverage can be great, particularly when times are lean, but it’s important to not make decisions that can work against your own interest. Benjamin Franklin called this “Penny-wise and pound-foolish”.

Insurance is a financial contract that transfers a risk that can not be borne to another in exchange for a premium. If one can afford to bear all their risks, they would be foolish to pay to transfer it. Conversely, if one has a risk that endangers their future and livelihood, they would be wise to insure against it. There may be very good reasons, for some, to carry state minimum coverage’s or decline coverage’s like Personal Injury Protection, Medical Coverage and UN-insured/Under insured motorist. Others could be risking everything they have including the ability to retire.

Each of us are individuals. Our financial circumstances likewise, are peculiar to each of us. Just as there is no single investment that makes sense for all, the vehicles required to protect our future and fortunes must be adequately matched to your needs.

Carruth Insurance is here to help you with these decisions. If you’d like a no-obligation, independent review of your insurance policies we would be honored to get to know you and be that trusted friend and advisor.

Book a meeting with me when your’re ready to talk about your insurance needs.

All the best,

Richard

Richard Carruth is Principal and Owner of Carruth Insurance.

Important questions to ask about your home insurance policy

Most homeowners in the Beaumont, TX area know the importance of carrying a homeowners’ policy for protection. However, not all insurance policies are created equal, so it is critical to ask important questions about the coverage before picking a policy. 

Am I required under my policy to perform specific maintenance tasks?

It is unlikely that your insurance carrier will require you to carry out specific maintenance tasks. You will, however, be required to maintain the home properly. In the event there is a claim, and it is determined that the claim could have been mitigated or avoided through proper maintenance, you could be denied coverage. 

Are my belongings covered?

Yes and no. Most homeowners’ policies will provide you with coverage for your personal belongings up to a specific limit. You must have a reliable inventory of your personal belongings and know how much they are worth to ensure you have enough coverage. It is also important to note that luxury items such as fine art and jewelry will have a small limit under the policy. If you have a significant amount of luxury items, you will want to discuss with your insurance agent at Carruth Insurance about additional coverage.

What is the claims process? 

In the event you need to file a claim under your policy, it is vital to be comfortable in advance with the claims process. You will want to find out if there is a 24-hour number to call for assistance. On the other hand, if you prefer to handle things online, you will want to ensure there is an online process. You should also find out what type of paperwork is required to file a claim in advance. 

If you live in the Beaumont, TX area, and are interested in learning more about homeowner insurance, reach out to an agent at Carruth Insurance today. We are happy to assist with all of your insurance needs. 

Protecting your retirement with Liability Insurance

You and I have worked hard to provide a comfortable life for ourselves and our loved ones into retirement.

Some of us have worked for 40 years to accomplish it. For those of us in good health with good genes, the fruits of our long labor may need to sustain us for 30 years or more.

If you’re like me, you spend a good deal of time planning for what might go wrong.

If you’re like me, you spend a good deal of time planning.

Typically, market corrections come to mind like the recent COVID-19 scare. We might focus on asset allocation, P/E ratios, avoiding unnecessary fees, re-balancing, or diversification.   But, we don’t like to consider the possibility of the unthinkable and its effect on our financial plans.

An associate recently shared a story with me about their client and friend. Like you and I, his friend worked hard for decades and had retired comfortably a few years ago. While on a short driving vacation, they stopped for refreshment. Backing out of their parking spot, they unfortunately had an accident with a motorcycle. Both parties to the accident did everything right, the motorcyclist was hearing a helmet. In spite of all this, the motorcyclist unthinkably died. There were no charges filed, no tickets issued, but they were later sued in civil court by the motorcyclist’s family. I can’t imagine the grief felt by either party.

Their insurance carrier settled out of court. The $300,000 liability limits on their auto policy was insufficient to cover the settlement as you might imagine. Fortunately, they were adequately insured. They were wise to heed the recommendation of their insurance agent to purchase an umbrella policy that covered the difference, protecting their future.

My father once told me that “We can learn something from anyone, even if it’s what not to do.”

Years ago I had an old tree in my front yard. It was an ugly tree. An elderly man would stop by every spring in his old truck. Looking for work, he asked to let him cut it down. He must have been in his 70’s. I admired his tenacity and work ethic and I regretted that he had to work at his age so one day I said “yes”.

He was amazingly strong and healthy and did a great job for a good price! But, I took a risk that I shouldn’t have.

I didn’t ask for his insurance certificate because I was certain he didn’t have one. Without him having General Liability and Workman’s Compensation insurance, I would have been liable if he was hurt. If he was injured, my Homeowners policy would have paid for first aid and medical expenses up to $5000. If he had been disabled or killed my Homeowners liability coverage would be activated. But, that was only good for $300,000, a fraction of my potential liability.

When we hire individuals to work on our property we should always ask for evidence of General Liability and Workman’s Compensation insurance. It may cost a little more to hire a reputable and adequately insured contractor, but protection of your future is included in that cost. Even if no one is hurt, they might unintentionally cause damage to your property that neither party could afford.

My favorite question to ask when I’m looking for a solution is “What would you do if it was yours?”.  

I like to partner with fee-only financial advisors like Justin Brownlee of Brownlee Wealth Management and others like them because they have no commercial obligations with respect to their recommendations. Because you are the only source of their livelihood, they have a fiduciary obligation only to you, their client. When you’re dealing with someone under a fiduciary obligation, you don’t have to ask my favorite question.

Investopedia defines fiduciary as “The highest legal duty of one party to another, being a fiduciary requires being bound ethically to act in the other’s best interests. …”

Carruth Insurance is an independent insurance agency. Because we are independent, we’re not obligated to a single company that dictates what to offer to our clients.  We have access to scores of insurance carriers offering auto, home, life, annuities, health, and all types of commercial insurance. This independence frees us to assume the fiduciary responsibility to our clients, finding them the best coverage at the best price.  At Carruth Insurance, we work with your fee-only financial advisor as part of their extended team to ensure your retirement future is adequately insured and protected with the best policy available regardless of our interests.  

Have a discussion with your advisor soon about your defensive plan for protecting your wealth against risk. Ask them to engage us soon for a complementary insurance review.

Book a meeting with me when your’re ready to talk about your insurance needs.

All the best,

Richard

Richard Carruth is Principal and Owner of Carruth Insurance.