Over a year ago, I wrote about how we were going to get my lovely wife’s engagement ring appraised and insured that weekend. Well… ha ha, as all things are, it took a little longer than anticipated but we finally got it appraised in May and insured last week (yeah yeah, over a year later).

We eventually had it insured through Jewelers Mutual Insurance, recommended by the appraiser at Edward Arthur (where the piece was appraised). I had called up Traveler’s, our homeowner’s insurance policy underwriter, and received quotes that were similar priced. The logic was that, given the same premium, we should go with a company that deals with jewelry related claims on a regular basis rather than a general insurance company. Another reason was that in this case, a jewelry loss would have no effect on our homeowners insurance premium.

Replacement vs. Dollar Value Coverage

The type of insurance we purchased was for replacement coverage. That meant that if we did suffer a loss, JMI would replace our covered jewelry with something similar or better. The other option is where you get the dollar value of the appraisal. So if your piece was appraised at $5,000 and you somehow lost it, you would be compensated $5,000 for your loss.

Premiums

As I was filling out the form, I started playing with the deductibles, coverage amounts, and “other factors” to see how they would affect the premium. For the sake of simple math, I put in the dollar value of the piece of be $10,000 and found that the difference between a $5000 deductible and a $1000 deductible was a mere $7 a year (8%). The premium went from $84/year for the $1000 deductible to $77/year for the $5000 deductible, though that does represent an 8% difference. This may seem like very little but the reason is because the item covered was an engagement ring/wedding band set that is worn daily. You could have no safe or an 80 lb. anchored floor safe with a digital lock, sharks with lasers, and your premium would not change because the piece is worn daily. (I made up the sharks part, but it’s likely that would have no effect)

That’s when I decided to have some fun and put in a $10,000 necklace that is worn only for special occasions. If you had no alarm, no safe, and just kept it in a hiding place while you weren’t wearing it, the premium would be $131 for a $1000 deductible and $120 for a $5000 deductible (9% difference). However, in changing the “other factors,” the premium didn’t change at all. Keeping the necklace at a safe deposit box at a bank still had a $131 premium. You could have an armed killer robot guard wear your necklace while you weren’t wearing it and it would still cost you $131 a year. It could be that those factors don’t affect the application’s calculator, since they are subject to verification, but it seemed like they should add a note if that was the case.

Unscheduled Jewelry Insurance

The items that you specify for coverage go on a “schedule.” Usually you have your more valuable or expensive pieces put on the schedule because you’ve had them appraised and would like insurance. Unscheduled is everything else and you can get a catch-all coverage for all those. At JMI, the coverage was $1000 with a $100 deductible for $15. If you wanted more coverage, it’s essentially at those intervals ($2000 of coverage with a $100 deductible cost $30/year). We didn’t elect this coverage.

Application Process

The application process was a piece of cake. You can submit all the details online through a slick Flash-like form and then email, fax, or postal mail your appraisal forms to JMI for verification. Within ten minutes we had coverage, very technology friendly so far.

Knock another one off the checklist, albeit a year-plus from when we put it on.

(Photo by dbking)

I had a meeting with my accountant last week to discuss some business related items and we got on the topic of insurance, specifically life and disability insurance. He told me that his personal philosophy was to keep insurance and investments separate. The reason for this is that when you start mixing insurance and investment, you start muddying the waters and things become much more difficult to keep track of.

When it comes to insurance, he buys term life insurance. Term life insurance is the simplest type of insurance, you pay a premium for a set period of time and they pay out if you die. There is not an investment component and it’s a very simple concept. When I looked at four types of life insurance (term, whole, universal, variable), it confused me to no end. Generic terms, that are barely descriptive because they are so generic, tied to specific plans really mess me up.

Is this the most financially efficient method? I don’t know enough to know. Is it a clear, easy to understand, easy to execute plan with little room for error? I believe so. I prefer a plan I fully understand and can execute without problems over one that is half a percentage point more efficient that I could potentially screw up.

You don’t have to be married to take advantage of a multi-car discount with a car insurance company.

One of the best ways to save money in car insurance is to insure multiple cars with one company. Two cars with one company often costs less than if they had their own individual policies. Up until now, I had always thought that doing so required the owners of the two cars to be related in some way, such as through marriage, but that’s not the case.

Two of my friends, who are dating, had been living together in a rowhome and recently bought a house together a few blocks away. They recently changed insurance companies when they were researching homeowners insurance. One of them had a GEICO auto insurance policy and when he called to cancel, GEICO wanted a shot at keeping his business. He told him his situation and GEICO offered the multi-car discount despite them not being married but couldn’t offer a break on the homeowners (its through Travelers and they don’t offer a discount), so they went with Erie Insurance anyway. It appears that you didn’t have to be married to take advantage of the multi-car discount, though I suspect sharing an address may be necessary.

Does anyone else have experience with this?

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On an unrelated note, the 156th Carnival of Personal Finance is available at PT Money and my post on Best Gasoline Cashback Credit Cards was included.

Last month was the return of these monthly net worth reviews and the first time, probably since when we bought our house (closing costs are brutal), that our net worth decreased across the month (taxes are brutal too). This month, we saw our net worth increase by a healthy 8.6% helped along by a mild recovery in the stock market (1.39% increase in retirement assets).

Last month I talked about three things in the future – roof replacement, water heater, and diversification of our investments. The roof is set to be replaced on June 16th, contingent on good weather, at a cost of $4,450. The roofing company offers a six month same as cash option but I think we’re going to put it on the Citi CashReturns card for the 1.2% cashback since interest rates are so low (it’s nearly a wash after taxes, so we figured for simplicity the credit card option was better). We knew the roof needed to be replaced so we were prepared, there won’t be any other financial impact (other than the -$4,450 to the bank account).

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On Sunday, I reviewed Gotcha Capitalism, a powerful and comprehensive guide for consumers, and gave it glowing reviews. Today, I want to talk about a couple stats Bob Sullivan shares with the reader about complaining to companies and success rates (Keep in mind that the book was published in 2007).

The point of the section was to illustrate that the places where you are more likely to succeed are exactly the places that people don’t try. The success rate at a grocery store is 57.1% but only 14% of people ever try, whereas the success rate with a television company is an abysmal 20.2% yet 84% of people complain. If you want to make the most out of your time, go after credit card companies. Ask to have fees removed, refunded, or waived because you’re such an awesome customer.

Here are the numbers:

1. Credit card companies: 64.6% success rate
2. Airlines: 60.0% success rate
3. Grocery stores: 57.1% success rate
4. Retirement: 52.2% success rate
5. Internet: 51.5% success rate
6. Hotels: 37.0% success rate
7. Banks: 33.3% success rate
8. Insurance: 28.9% success rate
9. Cell Phones: 26.8% success rate
10. Television: 20.2% success rate

Here are the rates at which people actually complained:

1. Television: 84% complaint rate
2. Credit card companies: 79% complaint rate
3. Cell Phones: 71% complaint rate
4. Hotels: 54.0% complaint rate
5. Insurance: 38% complaint rate
6. Internet: 33% complaint rate
7. Retirement: 23% complaint rate
8. Banks: 18% complaint rate
9. Airlines: 15% complaint rate
10. Grocery stores: 14% complaint rate

If you have all the time in the world, complain to everyone!

(Photo by aturkus)

One of my good friends has an opportunity to work on a client engagement in London, England, and started asking me about international medical insurance options for his ladyfriend. He will have medical insurance through his employer but his ladyfriend, if she chooses to live in England while he’s on this half-year engagement, will not have any medical insurance because they aren’t married and because she’ll have left her job. So, in chatting it up with him, the question of international medical insurance came up and he asked if I, in my infinite wisdom, could do a little research on his behalf and maybe write about it.

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A few years ago, with my last car, I did a little calculation to help determine the “cost per mile.” I was doing quite a bit of driving back and forth from Baltimore to Pittsburgh, then Baltimore to New Jersey, to visit my girlfriend (now by wife, so I suppose it was worth it ) and so this number was important for me to know. I also found that it helped make other decisions in my life easier because it gave me a very tangible cost associated with driving somewhere, such as to the gas station across town instead of the gas station on my route home.

The Calculation

The cost per mile can be broken up into three major categories and one catch-all:

• Gas: Clearly the dominant value in the calculation, gasoline is something that has to be based on actual costs rather than estimated costs. You can’t take the cost of gasoline, the EPA value for your car’s mileage, and figure out based on that. Ignoring the inaccuracy of EPA values, though they’ve made a push to make them more accurate, your car is probably not the standard car. You have crap in your trunk, your tires are probably not inflated perfectly every single drive, and your maintenance isn’t going to be perfect (get that 30,000 mile checkup exactly at 30,000 miles?). So, keep a log for five fill-ups, reset your B trip odometer, and calculate your gas cost per mile that way.
• Insurance: This value is easy, simply take your premium and divide by the number of miles you drive in a given year. The “rule of thumb” is around 15,000 miles a year, but if you have an especially long commute then you can increase that. You can always just throw in a guesstimate because what you use as your miles driven per year isn’t going to drastically affect this number. For example, if you pay $2,000 a year and you drive 15,000 miles, that’s 13.3 cents a mile. At 20,000 miles a year, it’s 10 cents a mile. Sure the difference is 33% but you’ll ultimately use this value for trips in the tens or hundreds of miles… meaning a difference of only 30 cents – $3.
• Tires: Depending on how expensive your tires are, you might want to go through with this calculation or just consider it part of the noise. I know tires say they can last 30,000 miles, but I believe most of my tires run only maybe 20,000 miles. Either way, this math should be pretty simple. Divide the cost of the tires by the mileage and add it to the running total you’ve been using.
• Everything Else: I always throw in an extra 3-5 cents to cover everything else, from windshield wiper blades to routine maintenance to oil changes. I figure that a $20 oil change put across 3,000 miles (I actually changed my own oil with synthetic but do it once every 10,000 miles) is small enough to be considered noise in the equation so I use the 3-5 cents catch-all value.

So, what’s the final number? The IRS business mileage deduction is 50.5 cents a mile, how close was your value to this one? When I did this calculation a few years ago, I found my value was close to the mileage deduction back then (it was 40-something cents) but that was before the spike in fuel prices. For comparison’s sake, my value for gasoline back then was 7 cents a mile based on a car that was running around ~32 miles to the gallon (Acura Integra and I was doing a significant amount of highway driving).

How do you use this number? Let’s say it’s 280 miles between my home in Maryland and my parent’s in New York. The tolls between Maryland and New York, I believe, are around $60 a round trip. Given the cost of fuel alone (7 cents a mile), the cost of the trip is over $100 compared to the cost of a Southwest flight that can be bought for $39 a round trip. So, driving alone would cost over a hundred dollars and nearly 5 hours – flying would cost ~$100 and 3 hours… it’s a no brainer and the math is facilitated by knowing the cost per mile.

Finally, your car’s cost per mile is only part of the story. In my drives to Pittsburgh or to New Jersey, tolls played an important role and often threw the entire equation out of whack. Back then, the toll for the Pennsylvania Turnpike was around $8 a round trip and nearly $50 a round trip to New Jersey. Another factor was time. I could take a $15 Chinatown bus from Baltimore to Grand Central in NYC, then jump on an Amtrak train out to New Jersey… but it would take me like 15 hours to make the trip and time is money! (and back then, that was time I could spend with my beautiful soon-to-be wife, and yes she reads this blog)

When I first started working several years ago, I was amazed at the idea of a Flexible Spending Account (FSA). I could make tax-deductible contributions and they could be withdrawn tax free for qualified medical expenses and over the counter products. Since then, I’ve become aware of two other types of accounts: Health Savings Accounts (HSA) and Health Reimbursement Accounts (HRA). Each have their benefits and drawbacks and not every employer offers those program so it mostly depends on your luck. In the two employers I’ve had, I’ve only ever had access to the FSA. So, let’s talk about the differences between each of the programs.

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