12.03.24 Homeowners Insurance Check-Up / Safe Charitable Giving

Over the past 15 years homeowners insurance has become increasingly unstable, expensive and anti-consumer. But with the run-up in home values, many may be seriously underinsured. Clark has direction for home owners to ensure proper coverage. Also today, the giving season requires a warning about charity scams - a real problem. Know how to make sure your charity dollars are used effectively. Update: Homeowners Insurance: Segment 1 Ask Clark: Segment 2 Safe Charitable Giving: Segment 3 Ask Clark: Segment 4 Mentioned on the show: What Is Homeowners Insurance? How Much Homeowners Insurance Do I Need? Homeowners Insurance Archives - Clark Howard What Is a C. L. U. E Report and Its Impact on Your Insurance How Often Should You Re-Shop Insurance? Clark's Take: Should You Invest in Stocks at All? INVEST & RETIRE - Clark How To Choose the Best Charities for Your Donations (Clark.com) Best 2% Cash Back Credit Cards: 9 Options in 2024 Cash Back Credit Card Calculator Tool Should You Buy an Extended Warranty on Your Car? Clark.com resources Episode transcripts Community. Clark.com Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 00

  At Edward Jones, we believe rich is about taking care of what gives your life meaning. That's why your financial advisor personalizes your plan to help you preserve your progress and create something that lasts. Let's find your rich. Edward Jones. Member SIPC.

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  UKG is the workforce operating platform with unified HR, payroll, and workforce management, built to solve the unique challenges of frontline work. Powered by People First AI and decades of labor data, UKG turns workforce intelligence into real-time decisions around staffing, pay, compliance, and productivity, enabling every worker to confidently take action as work happens. Because when work works, everything works. Learn more at ukg.com/work. UKG, HR, Pay, and Workforce Management.

• 0:50Speaker 02

  It's my pleasure to welcome you here to the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. And in today's episode, I want to talk to you about your homeowner's insurance. There's something that you just gotta know that's a disruption from the last several years that you gotta prepare for, you gotta plan for. Also, here we are in the Christmas season, and charitable solicitations skyrocket, as do donations,

• 1:30Speaker 02

  through the month of December. If you are charitably minded, I got some things I want you to think about, about those donations. So let's talk about the donations those of us that are homeowners aren't asked if we want to make, we gotta make to the homeowner's insurance company. That doesn't really love us back right now. Homeowner's insurance was a pretty dull, predictable business for a long, long time, for, gosh, as far back as I can remember. And then in the last 15 years, has become steadily more unstable and increasingly anti-consumer.

• 2:16Speaker 02

  And so we've talked in the past about the problems with people's homeowner's insurance just willy-nilly being canceled, which they don't call canceled in the homeowner's insurance industry because they use a made up term, non-renew, and that is an ever-present danger for people who live in areas that insurers have decided suddenly are risky for them or not profitable for them. Fortunately, most of us aren't directly impacted by what's going on in fire zone danger areas, going on in Florida and other coastal areas. And

• 3:01Speaker 02

  homeowner's insurance for us remains a fairly predictable thing, except there's something that we may have neglected to take care of. You know, there's this two-edged thing with home values having gone up a whole, whole lot over the last 12 years. Been a crazy run-up since 2012 till today. And so, a lot of us may be dramatically underinsured for our homes, which is fine with the premium you're paying. You're like, how could I be

• 3:43Speaker 02

  underinsured when the premium's gone up so much over the years? But the premium increases have been because insurers have been trying to maintain profitability as claims got larger and more frequent. So, that may have gone up and you're like, now you want me to pay even more? I do, potentially. Because if you have not increased the coverage limits on your homeowner's insurance policy, and you've got a Matt Daddy claim that comes along, major, a major loss, you may be grossly underinsured.

• 4:24Speaker 02

  And not have sufficient resources coming from the insurance company to deal with that claim. So if you have gotten out of nowhere, a letter from your insurer saying, hey, we want you to raise the coverage on your home. And you think there they are just trying to get in my wallet more. The reality is, is ignoring that letter is dangerous for your wallet. If you have not received a letter like that, I want you to do something extra dull. I want you to go online or if you file it away, see what your home is valued at

• 5:03Speaker 02

  for insurance purposes. And it may be substantially below what it needs to be. Now, I'm getting you to think about paying more money for something that's already more expensive. True. But something else you can do, most people with homeowners insurance have crazy low deductibles on the policy. Big mistake. Big mistake. Because you never want to make a homeowner's insurance claim unless it's for a huge thing. Because what will happen next is your insurer will super turbo surcharge your premiums moving forward, or they'll

• 5:44Speaker 02

  say, hey, you made a claim, you're out of here. We don't want you anymore. So raising the deductibles as high if you have a mortgage as your mortgage lender will permit, may save you more than what you're going to pay in increase for making sure you have your home adequately covered if there is a big or major claim on your home.

• 6:08Speaker 03

  Okay, speaking of that, Jamie in Nevada says, I filed a homeowner's insurance claim in 2023 that the insurer fully paid. However, my policy renewal shows a 52% premium increase for

• 6:23Speaker 02

  52%?

• 6:24Speaker 03

  For the upcoming year. Should I shop competitors now to see if I can get a better rate? Or should I wait until more time has elapsed since the claim?

• 6:31Speaker 02

  Okay, so this is a good question. This is a great question, Jamie. All right, so that claim you have is on an industry database, what I call the bad boy, bad girl database, where it shows that you had a claim, which means your insurer thinks they got you right where they want you. But the increase that they imposed is so large, it's worth it for you to shop that homeowner's policy and see what others will write the equivalent coverage for, the same coverages as you have now. The thing you said about time, yes, the impact of that claim being on your record becomes less important with time, but right now you're facing this 52% increase.

• 7:17Speaker 02

  So I think it's well worth you shopping it. Also, I don't know if you've called your insurer and said, hey, what happened here? How did I get this 52% increase? Is there anything we can do about it? And you may qualify, just by asking, you may qualify for something lower than what they're now quoting you.

• 7:40Speaker 03

  By the way, that report, isn't that the Clue report?

• 7:43Speaker 02

  It's called something else now.

• 7:45Speaker 03

  Oh, is it?

• 7:45Speaker 02

  It was, I always called it the Clue report, but I'm trying to, I feel like, maybe it's owned by LexisNexis now or something.

• 7:55Speaker 03

  Maybe our, our team can figure that out. Okay, Terrence in Georgia says, how often should you change homeowner's insurance companies? And also, what are the pros and cons for bundling?

• 8:05Speaker 02

  All right, wonderful question. We had one similar the other day, too, about bundling. So yes, there is a direct advantage to bundling with many insurers, that if you tie in your auto and homeowners together, they will give you a lower premium. If you do not live, you're in Georgia, so unless you're on the Atlantic Ocean coast, you're not subject to the instability in the homeowner's insurance market that people are seeing other places. So in your case, what I say routinely is, I want you to reshop your auto insurance every three years. Reshop your homeowner's insurance every three years and you do them together because

• 8:47Speaker 02

  the idea of that is you're able to see what the benefit is of tying the two of them together with the company you're with or with others by reshopping at that time. And Sally, our managing editor, found the information. So it is Lexus Nexus, but still referred to Sally as the CLUE report.

• 9:09Speaker 03

  C L U E. Thank you, Sally.

• 9:10Speaker 02

  So both are right at the same time, right?

• 9:13Speaker 03

  Scott in Idaho says, I love listening to your podcast. I'm a 22-year-old college student with about $50,000 invested in the stock market. While I keep some cash set aside for potential expenses, most of my money is in investments.

• 9:26Speaker 02

  Okay, stop right there. 22 already has saved $50,000.

• 9:31Speaker 03

  Incredible.

• 9:32Speaker 02

  That's really great.

• 9:34Speaker 03

  I contribute as much as I can to my Roth IRA each year, but I'd love to hear your thoughts on anything I should be doing differently. I know you emphasize consistently contributing to index funds, but since I'm young and I have more time for my investments to grow, do you think I should focus more on individual stocks? I try to do thorough research before investing, but I'm open to any advice you may have.

• 9:54Speaker 02

  So Scott, I'm a big believer in, there actually is a Charles Schwab, Chuck Schwab, who founded the brokerage, and he came up with a philosophy, gosh, maybe decades ago, called Core and Explore. And I'm a big believer in Core and Explore, particularly for someone who is younger. And what you do with Core is you take 75 or 80% of the money you're investing and you put it straight into widely diversified index funds, total stock market index, international index, might put even at 22, a small amount of money in a bond index

• 10:36Speaker 02

  fund, you know, a two or three flavor mix of index funds. And then the rest of your money, the other 20, 25%, if you want to explore individual stocks, great. I want to modify that for you, though, because you're doing a Roth IRA. I liken a Roth IRA for you to go just a simple target index fund, based at 22, 40 years from now.

• 11:09Speaker 02

  You know, 2065, 2070 fund would be the simplest way. And then the reallocation of money over the years is automatic pilot. If you're more comfortable actively managing, then stick with the whole index fund thing that I was talking about. Now, there is an advantage, though, for you. If you are going to follow core and explore that you do index funds in your regular investment account and trade individual stocks inside your Roth IRA. That way, you don't have to worry about capital gains taxes as you might more actively trade

• 11:51Speaker 02

  in individual stocks where index funds, you're just setting and forgetting putting the money in. And that way, you're trading, you can trade stocks without commission pretty easily now. And you wouldn't have to worry about any tax implications on the gains that you might have within the positions of the individual stocks that you would be free to trade as often and as much as you want. Now, I'm going completely opposite my philosophy, which is all about buy and hold. But you do your research, you like owning individual stocks, and I think that that's

• 12:32Speaker 02

  just fine and particularly inside the Roth. Coming up ahead, it's the season to give. And the joy of giving, I believe at core is not a trite phrase, brings more joy to us than receiving. I believe it to be true. But how do you give and know that the money's going to what they say it's going to? We're going to talk about that.

• 13:05Speaker 00

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters, so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.

• 13:34Speaker 01

  UKG is the workforce operating platform with unified HR, payroll, and workforce management. Built to solve the unique challenges of frontline work. Powered by People First AI and decades of labor data, UKG turns workforce intelligence into real-time decisions around staffing, pay, compliance, and productivity, enabling every worker to confidently take action as work happens. Because when work works, everything works. Learn more at ukg.com/work. UKG: HR, Pay, and Workforce Management.

• 14:04Speaker 04

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• 14:47Speaker 02

  I get the greatest joy in my life from being with my family. A close second is being involved as a volunteer or donating to organizations that I believe in. I mean, I just, it brings me such excitement to be able to go volunteer somewhere at Habitat or whatever it is and feel like I'm actually having a positive impact in somebody's life or community or whatever. And...

• 15:23Speaker 02

  I really feel it. And this time of year, more than any other, we're more likely to want to give. The giving spirit is so alive through the Christmas season. It's also an opportunity for scammers to get in your wallet and rip off your hard-earned money that's not going to what they say it's going to go to. Big problem. But do you know that if you're intentional about charitable giving, whether it's through the year, or like most people, it's a December thing you do.

• 16:05Speaker 02

  If you're intentional about it, then you're gonna have a much better sense that your money is working effectively for what you intend for it to do. Starting with, you know, there's that old expression, charity begins at home. But I've got one that I think differently. Charity begins close to home with organizations, causes that you have directly been involved in as a volunteer, board member, donor. If you're giving to an organization you have firsthand knowledge of, you're not going to give to something that you see wastes money. You're going to give to something that you know the impact that it has, the benefit that it creates.

• 16:50Speaker 02

  I think you always start there. But let's say you don't have that kind of knowledge and you're thinking, wow, I got solicited by this, that, or the other. How would I even know if it's any good? Do you know it's so much easier than you might imagine now because of the internet? The same place that people come and try to con you also has the information where you can see whether an organization is on the up and up and is spending your money in a way that's efficient, honest, decent. And I love charitywatch.org, charitynavigator.org, and give.org.

• 17:33Speaker 02

  These three, I'll say them again, charitywatch, charitynavigator, and give, all dot orgs. They each use their own criteria. And they, you might find a charity on one, but not on the other two, or you might find it on all three, but, and they each use a little bit of different criteria, but you'll be able to see, are they efficiently spending the money they receive? Are they on the up and up? I mean, I am amazed how many pseudo charities there are out there that virtually no money

• 18:11Speaker 02

  goes to the supposed named cause, or to the people they're supposedly going to help. Instead, it seems like they're only helping themselves, the people behind the pseudo charity. So making sure that your money is going to where intended is so important. And if you get solicited by phone, not as common now, email, by text, take the time before you give to check the organization out with one of these three organizations I talked about, or all, two of them, or all three of them, so that you know it's going to something legit.

• 18:53Speaker 02

  Somebody solicits you on a street corner, they may be absolutely legit. They also have a much greater chance of not being on the up and up. If you're not a long time listener or viewer, you may not know the experiment I did long ago as a TV reporter, where I stood on a corner in a Santa suit and didn't say a word, just stood there with a bucket, and people were throwing money at me at that corner. I mean, not literally, they were putting it in the bucket. I was amazed, it showed the generosity and kindness of people, how often people were

• 19:34Speaker 02

  giving me money, and how much money people were giving me, but I could have been completely bogus, running off with the money. What I did with it was I donated it to Habitat for Humanity, that I'm involved with as a volunteer and a donor. So the money didn't get swiped by a crook, but the point is, you don't know. I could have been anybody there, asking for money and running off with it, and not giving it to a cause that was worthy. So just know that...

• 20:06Speaker 02

  Your money is precious to you and you want it to have impact? I want you to be careful where you give it.

• 20:14Speaker 03

  And watch out for elderly relatives or neighbors too this time of year especially.

• 20:20Speaker 02

  I think I told the story about my late mom last month, how she got ripped off by a bunch of phony charities.

• 20:28Speaker 03

  Okay, Chris in North Carolina says, I currently use a Prime Visa Rewards credit card. It's okay, but I feel I would benefit from a different rewards program such as the Wells Fargo Autograph Card because the rewards cater more toward my spending habits. I pay my balance off weeks before it's due and my credit score is around 803. I don't want to damage that by opening a new account, but I feel I could maximize my points with the new card. What are your thoughts?

• 20:52Speaker 02

  So the only reason you wouldn't get the card from Wells you're interested in is if you're planning on buying a home in the next six months and you want no new applications for credit at all in the six months leading up to a home purchase. If that's not part of your life and you're in the 800s, the impact to your score is very temporary and tiny for that new application of credit. And I think it's great to go for it. And remember, I want you to have at least two credit cards from at least two different issuers anyway. And if you're happy with the Wells card, go ahead and get it.

• 21:33Speaker 02

  You know, we've had a history of customer service complaints about Wells Fargo and there's been some dishonesty there, criminal behavior over the years. To my knowledge, we have never had a complaint about the user of the Wells Fargo Autograph Card.

• 21:52Speaker 03

  But check out our credit card tool at Clark.com and put in, because we, and we also review tons of rewards cards, so.

• 21:58Speaker 02

  And you can see your pattern, put in what you see as your pattern of use or actually if you've got it down to the numbers, it'll be even more precise information. And we'll show you the best rewards or cash back card out there for your exact situation.

• 22:15Speaker 03

  Wade in California says, should I buy the CarMax Extended Warranty for the car we just purchased? It's a 2023 Mazda CX 50 2.5 Turbo.

• 22:25Speaker 02

  So if you look on reviews, people have posted about the CarMax Extended Warranty.

• 22:33Speaker 02

  It's no better than what people say about others. There are people who've been really happy they had it. But overall, the reviews are not awesome. There's nothing about CarMax that makes it a scam. It's just so often the hype with any kind of extended warranty exceeds what they actually provide as a benefit. My general advice has been when you buy a car at CarMax or Carvana, people think they don't need to have it inspected if they buy it from them.

• 23:07Speaker 03

  That's actually the next question.

• 23:09Speaker 02

  Oh, then I'll hold off and talk about that next.

• 23:12Speaker 03

  That's okay, but you always recommend the manufacturer's warranty, not.

• 23:15Speaker 02

  Manufacturer's warranty. So this is a 23 Mazda. You could, before the Mazda, I guess it's a three-year warranty. You can almost certainly buy an extension of that in the Mazda brand product. And I would compare what it offers versus the CarMax. I don't like third-party warranties. I'm not thrilled with the manufacturer-owned ones, but those have tended to be much more useful for people.

• 23:44Speaker 03

  Okay, and Dan in Florida, what is your opinion about buying an almost new vehicle on CarMax or Carvana sight unseen? Is there a product inspection good enough to be confident in making the purchase?

• 23:55Speaker 02

  That's interesting because I started to, and you stopped me. Yeah, that's not good enough. That, you know, CarMax and Carvana say, we've done blah, blah, blah, blah, blah, blah. This car is great. They may even believe it to be great, but may have missed something. With CarMax and Carvana, depending on which one and where you are in the country, Carvana gives you seven days to return a vehicle for any reason. CarMax, depending on the market, up to 30 days. Use that time to have it inspected. By a mechanic of your choosing. If the vehicle's really new, though, if it's a model year 24, 23, not a lot of miles on it, you're not as worried about the mechanical. You're

• 24:40Speaker 02

  more worried if it's been in an accident that they missed at CarMax or Carvana. Going to a body shop and paying them to check the integrity of the vehicle and check to see if it's been in any kind of serious accident would be really money well spent. But for one that's older, more miles on it, having it checked out by a mechanic of your choosing is money very well spent because you've got that time period. You can wind back the clock, give it back to them and get your money back. And that's really wonderful than later finding out, oops, this vehicle's got a lot of problems with it. So I want to thank you so much for

• 25:22Speaker 02

  joining us today. I hope you have an absolutely wonderful rest of your day. And we are in the back half of the Christmas shopping season. The best bargains are in our rearview mirror in November is when the great deals are. But there are a lot of us who haven't even started Christmas shopping yet, or only partway through. And even though the deals are not as good in December, there are still deals out there and we're helping you with that at Clarkdeals.com where we post bona fide deals that we believe really save you money. We have a daily Clark Deals newsletter, and then you can go to Clarkdeals.com otherwise

• 26:07Speaker 02

  and see what deals we have and know what we're devoted to is you learning ways to save more, spend less, and avoid getting ripped off.

• 26:22Speaker 00

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.