This method of paying for fire service in advance — a bit like paying Triple A for their services — has gotten recent national attention due to the aftermath of the dark side of this arrangement: no pay, no spray.  Whether by oversight or by a willful roll of the dice, if your membership isn’t current when your house catches fire, firefighters will arrive and watch your house burn to the ground, and perhaps spray your paid-up neighbors’ properties if the fire on yours gets out of control.

Harsh?  I prefer the term “fair”

I don’t think any reasonable person would wish a house fire on anyone.  To say that what happened to Gene Cranick and more recently to Vicky Bell is unfortunate would be a huge understatement.  But if the fire department made exceptions for anyone, the precedent would be set and no one would pay.  Vicky Bell and her boyfriend “were aware but thought this would never happen to them” and called the fire department, hoping that they were bluffing.  Instead, they were added to the list of examples of what can happen if you don’t keep your fire subscription up to date.

Seventy-five dollars a year works out to less than 21 cents per day.  It’s not free, but it’s hardly unreasonable.  It’s certainly worth having the cavalry come in to save your stuff and perhaps your life.

If this is how your jurisdiction operates, pay it.  It’s a true bargain.  Fire can happen to you.

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My wife has been taking a particular prescription medication for years.  She started out with the name-brand version of the drug, and subsequently moved to the generic version.  Unless a doctor specifically prescribes the name-brand version of the medication to the exclusion of generic substitutes, most insurance companies will pay out for lower-cost generic substitutes.

I had thought that there was little difference between name-brand drugs and generic versions of the same drug, but there can be quite a big difference.  The fillers can be different.  Time-release membranes can be different to the point where the generic ones are ineffective.

My wife had been feeling out of sorts for a fair while, and ran across online evidence that suggested that switching back to the name-brand version of the drug might make her feel better.  She went back to her doctor, and her doctor prescribed the name-brand version of her medication.

CVS employee to the rescue

When she went to have that prescription filled, though, the pharmacy employee said that, because she already had a generic version of the prescription being filled, that our insurance company wasn’t going to pay for the name-brand one until the other one ran out.  My wife then asked how much it would be completely out-of-pocket. $254!

The employee then said, “Let me see if I can get an exception from the insurance company.”  She didn’t ask him to do this.  He volunteered.

The insurance company granted the exception, and the cost of the name-brand dropped to fifty bucks.

It almost never hurts to ask, and this CVS employee saved us $204 by asking.

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Mr. Steuer’s goal was “to use [his] experience to provide you with a useful reference tool.”  The book was not really meant to be read from cover to cover, but to be used as a reference.

I admit myself that I didn’t read the whole book cover to cover (or even a majority of it), but I was very impressed in particular with the completeness of his answer to question 3.  This question was: “How much life insurance do I need?”

An easy answer to this question — one that I had heard of before — is “five to eight times your annual income.”   This is an answer, but it always rang about as true as the statement that “an engagement ring should cost two months’ salary.”  That is, it’s a nice big juicy marketing figure disguised as traditional advice.

Mr. Steuer does mention the “multiple of income” method for estimating the amount of life insurance needed, but quickly classifies this as a “best guess,” and one that is probably too simplistic to be used by itself.  He also classifies the “cover your debts” amount as too simplistic.

In total, he spends twenty-four pages answering this question, complete with worksheets.  The questions and answers take up 300 pages of the book, so he dedicates over ten times the space to this question that a typical question would get (2.2 pages).  He does a bang-up job answering this question.  I really came away feeling that I understood how awfully important it is to take a careful survey of how much life insurance is necessary.  This is good, because missing badly in either direction can be devastating: having too much life insurance is unnecessarily costly, and having too little could result in a world of hurt for the people you’re trying to protect.

His complete, thoughtful answer to this one question is worth the price of the book. And there are 133 other questions he answers!  The ones I did read were surprisingly understandable.

I invite you to put my review to the test and check out Questions and Answers on Life Insurance.

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Planning for stuff like this falls off the radar when put up against all of the more immediate demands like school, work, eating, activities, etc.  When the fire hits, though, you’re either prepared, or you’re not.  It’s that black-and-white simple.

A fire insurance policy can replace just about any stuff:  the house, the garage, the furniture and clothes, the dolls, the computers, even the kitchen sink.  It can’t replace a mother, a father, or children. Nothing can.  That’s why some of the most important fire insurance isn’t insurance at all.  It’s proper escape equipment, and knowing how to get to it and use it when it’s needed.

Here’s what we’ve done in our house:

• We researched and bought a multi-use escape ladder. We found that you do get what you pay for.  Some models of escape ladders go for $40 or so, and they will probably do the trick in a pinch, but they’re usually single-use — that is, once you’ve used them to get your family out, you’re not supposed to use them again.  But this prevents you from practicing with the ladder, which I’ll talk about below.  The Werner ESC220 we got was only slightly more expensive ($119) and was designed to be used more than once.
• We installed it. The ladder is rated for 1200 pounds, but my father-in-law and I made sure to follow the directions.  We tested it before going down the ladder.  The instructions that came with the Werner ladder were clear.
• We each went down the ladder. This is by far the most important part!  My wife was the least scared of us.  She had no problems doing it.  My daughter was scared, but she did it.  I was absolutely terrified, but I got through it as well.  We had to. Doing this accomplished several important things:
  • The ladder gained our trust. Even though the ladder is rated for five times my weight, I didn’t trust it, or my job installing it, until I got down to the bottom.  Far better to get it out of the way in a non-emergency situation.
  • I figured out how to get onto the ladder in the first place. The first couple of times I tried to get onto the ladder, I couldn’t swing both my legs out.  We finally figured out that I could do it much more easily if I knelt on one of the nightstands and backed out that way.  Again, it’s far better to figure out the mechanics of getting onto the ladder in a non-emergency situation.
  • We got past any fear of heights. This got my daughter a little bit, and it got me a lot more than I expected.  It reminds me a bit of what my high school biology teacher did when we were about to dissect a worm.  He said, “OK, everyone!  Worms up!”  We all picked up the worms with our bare hands, and got the grossness out of our system.  Getting on the ladder got some of the fear out of my system.
• We worked on a plan for a couple more escape routes. One extra escape route good, three extra escape routes better.

I hope that everyone who reads this is already prepared.  If not, I highly recommend you give yourself this gift, and I hope and pray that you never have to use it for real, but if you do need to, you’ll be glad that you have it.

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This was a nice gesture.  They didn’t have to do that.  They volunteered the information.  This was a lot more than my previous dentist did.

I didn’t talk for very long with the staff about why they were leaving, but the end result is that the covered amount for services I had been getting will go down after December 1st.  Initially I was disappointed, since this was the very reason I had gone to this dentist.  He’s provided me with excellent service (even to the point of driving up on a Sunday to look at my cheek which had gotten infected after a root canal).  But my previous dentist was excellent as well; the reason I left was because she didn’t accept any insurance that would reduce the big expenses (crowns, root canals, etc.) at all.  It wasn’t a matter of service.  It was a matter of money.  In the best of all worlds money wouldn’t matter, but it does.

Fortunately, I have time to investigate other options without looking for another dentist.  Open season for my insurance selection is coming up within the next couple of months, and the dentist’s staff has already given me a list of insurers for which they will be in the preferred provider network.

Here is a list of things to check when investigating your health and dental insurance coverage:

• Look at your overall health and your oral health. Are you in good shape, or do you know that you’ll have to have a lot of work done?  For example, my teeth suck.  I need coverage for big expenses because many of my teeth already have had minor restorations done to them.  It only gets worse from here for me.  My wife, on the other hand, can still afford to go to my old dentist.  She’s had hardly any dental work done.
• Ask the doctors and dentists what networks they are in and whether they will be continuing this relationship. The key part is “ask the doctors and dentists.”  Don’t depend on the provider list available from the insurance company.  Don’t depend on the website.  Get it straight from the horse’s mouth, because the other sources could be out of date.  Also, be sure to ask specifically about their preferred provider networks, not just whether they take the insurance or not.  That was the mistake I made with my last dentist.
• Now that you have choices, check the coverage on the insurance companies’ ends. Specifically, do they cover the services you need to have covered?  Is there a waiting period for any of the services?  In other words, do you have to “pay in” to the insurance before claiming any big expenses?  What is the maximum coverage?  What is the deductible?  What is the co-pay?
• Verify your findings with the doctor’s office / dentist’s office. If there’s a mismatch, find out why before you start treatment.  Usually the insurance has to be in force when treatment commences for them to pay anything.

The matches are out there, but it requires a bit of planning to take advantage of them.  (Or a little good fortune, as happened to me.)

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Maybe that was just my home town, or maybe it was because it was 25 years ago.  In any case, in some places today, fire service is not only not guaranteed, sometimes fire calls are flat-out refused.

Such was the case for Gene Cranick, whose home caught fire September 29th, 2010.  He hadn’t paid his $75 rural fire subscription, so the fire department did not respond, even after he offered to pay whatever was needed.  His home burned to the ground, and his family lost everything.

A follow-on press conference from fire chief Bob Reavis emphasized the shortcomings of the rural fire subscription model when compared to a tax-based service, but also stated that the subscription model was the one they had to use with the rural areas in Tennessee’s Obion County that did not have their own fire departments.

One house in our subdivision had a fire a couple of weeks ago.  It burned to the ground.  In the days that followed, one of our other neighbors, who was a firefighter himself, told me parts of a conversation he had with one of the fire chiefs that responded to the fire.  Both of them agreed that there were shortcomings even in our fire protection system (which is paid for by our taxes county-wide, unlike that in Obion County) and that there would be discussions soon about what could be done to improve.

Regardless of the method by which the money comes in, residents get what they pay for. Sometimes fire protection is tax-based and everyone is covered.  Other times fire protection is subscription-based because of budgetary constraints imposed on municipalities by those who influence the budgets.  I predict that more and more will go subscription-based as municipal debt starts to weigh on budgets and the economy takes its toll.  When that one-in-a-thousand chance of getting a house fire hits you, you’re either covered or you’re not, and there probably isn’t time to get covered if you aren’t.  The subscription model in Obion County was a “pay before you need it” model, also called a “pay to spray” model.

Here are a couple of tips:

• Don’t assume you will have fire department support.  Verify it. If you’ve moved recently — or even if you haven’t! — please check to see what model your local fire department follows.  It may not be the same as you remember.
• Get a refresher on fire safety. Hopefully you won’t be as lazy as we were and wait until a neighbor gets hit before you plan an escape route from your house, get fire ladders, etc.  Check out FireSafety.gov for more information.
• If your fire department is volunteer, donate. The more that dwindling budgets are shored up with donations, the better the service will be for everyone.
• If your fire department runs on the subscription model, pay it. It’s now clear that some municipalities are defending the model, and you don’t want to be forced to go all-in on a two-three offsuit, if you know what I mean.
• If your fire department runs on the subscription model, do everything you can to make sure that you’re paid up at all times. Apparently Mr. Cranick forgot.  I know myself well enough to know that I could forget, too.  Do everything humanly possible not to forget.
• Petition the budget committee? I always feel a little dirty about swaying the vote, since I’m a laissez-faire kind of guy, but getting involved while fire protection is a hot topic (ahem) might be called for.

Any other tips I may have missed?

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Fortunately, though, we both have some decent options for supplemental dental insurance through our employer.  The downside is that we can only change enrollment once a year; this is often called an “open season.”

The good news for him is that he has a while before the next open season, so he can prepare.  I recently found a dentist in my preferred provider network (after having gotten a rude awakening at my previous dentist) so in the event that does have to have a bunch of work done on his teeth, he can do it on the cheap.

Here’s what I recommended that he get done:

• Go to the dentist for a checkup in advance of open season. Checkups are relatively inexpensive and are partially covered under our health insurance.  This will give him an idea what he’s up against with regard to cost.  He doesn’t actually need to get the work done now — as long as his teeth continue to behave, of course.
• Based on the potential cost, enroll in the appropriate supplemental dental insurance or not. This is an advantage of a group insurance plan: everyone in the group is treated in the same pool.  There’s no disclosure necessary of dental history or anything like that.  You sign up and pay, and you’re covered.  The cost-benefit analysis can be done before the cost.  There’s also enough time to find a dentist in the area who will take the coverage.  (I found mine totally by chance, but it can be more deliberate than that!)

I’ve easily paid for my premiums just in the first four months of this year.  This was after paying through the nose for several years before that, though.  My friend doesn’t have to pay through the nose if he doesn’t want to.

Maybe you won’t either!

(Thanks to Studenomics for including this in the Carnival of Personal Finance!)

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We called the same company that sold us our current house’s homeowner’s policy, as well as our current auto insurance policy.  The agent was able to get us quite a good deal on the homeowner’s policy, and almost as an afterthought, she offered to check around for us on our auto insurance policy.

For several years we didn’t have the best driving record.  Right before I was married (2001), I had a speeding ticket and a fairly serious at-fault accident on my record.  I called my (then) auto insurance carrier about a week before my policy was set to expire and asked why I hadn’t received the renewal notice.  Well, they weren’t going to renew my policy.  (Gee, thanks for letting me know, turds!)  So I scrambled with only a week left before my insurance lapsed, and found a (higher-risk) carrier to sell me a policy.

I haven’t had any more driving mishaps.  In the meantime, though, my wife has had a couple of (not nearly as serious) accidents.  One of them was a 2 MPH collision with a parked car.  But my marks, and her marks, kept points on our policy until last year.

Back to this past week … The insurance agent looked at our current policy and made the comment that “we’ve probably done our time with X” and can get into a better auto insurance policy.  (I’m not saying who “X” is because we were otherwise quite happy with them, and I don’t want to appear ungrateful.  I may have said who “X” is before in another post, so if you want to look, you’re welcome to.)  She ended up finding us an insurance policy that gave us the same coverage for about 15% less than the other carrier.

So if you’ve gotten yourself into second-tier (or lower) auto insurance because of your driving record, and have since gotten better, make it a point to shop around a bit. My wife and I were so happy to see that all of the points were off of our policy, we just saw the relative decrease in our premiums, and didn’t look any further.  We didn’t think of looking outside of our current policy.  But just like I had a good policy before I screwed up, I can get a good one again, and so can my wife.  The good policies are likely better deals than the second-tier ones, even with a clean driving record.

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No, seriously: Who doesn’t want to save money on their car insurance? I don’t know of any good reason why you wouldn’t, so here are some tips for knocking that expense down as much as possible.  Hopefully at least a couple of them are new to you:

• Buy a car that doesn’t cost that much to insure. If you’re in the market for another car, considering the total cost of ownership of the car is a wise thing to do.  Buying used is a good start.  But is the car likely to be driven fast?  Is it likely to be stolen?  Or is it likely to be driven carefully?  This will factor into the insurance cost.  Take it into account as you’re looking.
• As with anything else, shop around for insurance. Some companies give you more insurance (or better policies) for your money.  Look around.
• Don’t be stupid with your driving. Tickets and accidents classify you as more of an insurance risk.  The insurance company may forgive you once, or even twice, but after that, it will cost you for a few years if they have to pay out on your behalf, and it’s your fault.
• Look into car options that reduce insurance costs. This is part of the tip I just mentioned, but things like automatic seatbelts, passenger-side airbags, etc. — things that tend to make vehicles safer — make them less costly to insure.
• Kick the deductible higher. A higher deductible means that the insurance company has less at risk should you file a claim.  They pay whatever they pay, and deduct the deductible.  A higher deductible means a lower payment.  So if you’re a careful driver and can self-insure some part of an accident, this is a good strategy.
• Drop collision on low-value cars. If your car’s value is $1,000, the company pays 75% of that in a total, and you have a $500 deductible, you get a whopping … $250 for your car.  Is it worth paying collision for that?  Probably not.  Now, if your car is worth $15,000, it’s probably worth it to have collision.
• Watch for glass claims. A friend was surprised when the cracked windshield glass claims counted against larger big-ticket claims he wanted to make later.  This is something to consider before taking this extra coverage.
• Ask about other discounts. Good grades?  Multiple policies?  Other types of policies with the same company?  Defensive driving?  Be shameless in getting everything that’s offered to you.
• Pay by automatic electronic funds transfer. Our car insurance company offers a small discount ($20 over six months) just for agreeing to have the payments transferred directly out of our checking account.  They can do this because it saves processing costs.  If I pay by credit card, the insurance company has to pay merchant fees; with EFT, the bank pays the fees.
• Pay all at once. The really big discount, though, comes for us if we pay for six months at a time.  The discount is the equivalent of a full month of insurance.  If you have the cash, this can be a big money-saver right there.
• Pay for small accidents out of pocket? I looked around for the answer to this one, and it’s unlikely that this is proper, so I wouldn’t try it.  I was a little miffed that we had to pay something like $1,500 in increased premiums because of an almost imperceptible “tap” that we made to a parked car.  I thought at the time it might be a win-win if we could pay for their repairs directly, plus a bit for their “trouble,” but it’s likely that it’s either against our policy, against the law, or both.
• Skimp on liability insurance? Though there are minimum levels of liability insurance that need to be purchased in many states, skimping on liability insurance isn’t a good idea. The example that Brian T. Jones uses in his book Getting Started: The Financial Guide for a Younger Generation (read my review here) is hitting a school bus.  Even if you have $500,000 in liability coverage, and the jury awards $1,000,000 to the families of the kids you hit, you’re on the hook for the other $500,000.  Kiss your financial life goodbye.  Not a good idea to skimp on liability.

(Thanks to Taking Charge for including this post in the Carnival of Personal Finance!)

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