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  • The 59½ Retirement Rule Explained: What You Can Do & Shouldn’t

    Turning 59½ might not be a milestone you throw a big party for—but in the world of retirement planning, it’s a big deal. Why? Because this is the age when the IRS finally gives you penalty-free access to the retirement savings you’ve been building for decades.

    But just because you can tap into your funds doesn’t mean you should—at least not without a strategy. Understanding what happens when you turn 59½—and what opportunities it unlocks—can make a big difference in how prepared and confident you feel about your retirement future.

    🔑 Key Takeaways

    • At 59½, you can withdraw retirement funds without the 10% penalty.
    • This milestone opens the door to tax strategies like Roth conversions and in-service rollovers.
    • Different account types have different rules—know what applies to yours.
    • Acting during this window can help reduce taxes, boost income, and prevent mistakes.
    • A financial pro can help you make the most of this window before RMDs begin.

    Why 59½ Matters More Than You Think

    The 59½ retirement rule is more than just being able to access your retirement account penalty free.

    While most people know this rule ends the 10% penalty on IRA and 401(k) withdrawals, few realize it also unlocks powerful planning strategies—like Roth conversions, in-service rollovers, and early income structuring.

    So, how does the 59½ rule work in practice? In short: it opens the door to greater flexibility. You’re no longer penalized for taking withdrawals, giving you a unique window to manage taxes, shift assets, and start building your income strategy—on your terms.

    This window of opportunity won’t last forever. Once Required Minimum Distributions (RMDs) kick in at age 73, your flexibility shrinks. That’s why 59½ is the ideal time to start optimizing your retirement plan.

    What Changes at 59½

    When thinking about retirement, at 59½, the rules—and your options—start to change in meaningful ways.

    This is the age where the rules around your retirement savings start to loosen up, giving you more freedom and flexibility.

    Here’s what happens when you turn 59½ retirement-wise:

    ✅ Penalty-Free Withdrawals Begin

    You can now withdraw from IRAs, 401(k)s, and other qualified retirement accounts without the 10% early withdrawal penalty. While income taxes still apply to traditional accounts, this opens up flexibility for funding early retirement or managing income gaps.

    🔄 In-Service Rollovers May Be Allowed

    If you’re still working, some employer plans allow you to roll over funds from your 401(k) into an IRA without quitting your job. This gives you more control, broader investment options, and better alignment with your retirement goals.

    🔁 Roth Conversion Opportunities Expand

    59½ is a prime time to consider Roth IRA conversions. Strategic conversions—especially in lower-income years—can help reduce your future tax burden and create a pool of tax-free income for your golden years.

    🔓 Income Strategy Becomes Real

    Whether you’re gearing up to retire or just testing the waters, 59½ marks the moment you can start shaping your income strategy the way you want.

    What You Can Do at 59½ (And Should Seriously Consider)

    Now that the door is open, what you do with that new flexibility matters even more.

    The 59½ retirement rule isn’t just about accessing your money penalty free—it’s about making smart, strategic decisions that can set the tone for the rest of your retirement.

    Here are a few high-impact moves to consider:

    • Create a Tax-Smart Withdrawal Plan – Just because you can take money out doesn’t mean you should do it all at once. Think about how withdrawals now might affect your tax bracket, Medicare premiums, and long-term income sustainability.
    • Start Strategic Roth Conversions – Use this window—before RMDs begin at age 73—to convert funds from a traditional IRA to a Roth IRA. This can reduce future tax burdens and help you grow tax-free income.
    • Consolidate or Reposition Retirement Accounts – With in-service rollovers or IRA transfers, now is a great time to consolidate accounts, reduce fees, and align your investments with your retirement timeline.
    • Consider Guaranteed Income Options – If you’re worried about running out of money or market swings, this is the time to look at tools like annuities that can turn part of your savings into predictable monthly income.
    • Plan for Healthcare – If you retire before age 65, make sure you factor in healthcare costs and how withdrawals may affect your eligibility for ACA subsidies.
    • Work With a Financial Pro to Build Your Retirement Game Plan – The years between 59½ and 73 are a golden window for tax planning, income mapping, and legacy building. A professional can help you spot opportunities—like implementing a guardrail strategy to balance income needs and market risk—and avoid costly missteps.

    Don’t Miss Your 59½ Window

    You’ve unlocked new options—but knowing which moves are right for you takes a solid strategy.

    Book Your Free Consultation With a Financial Pro

    Key Considerations: Account-Specific Rules and Nuances

    Not all retirement accounts follow the exact same playbook. Knowing the unique rules for each type of account can help you avoid mistakes and take full advantage of the 59½ retirement rule.

    401(k) and 403(b) Plans

    • Penalty-free withdrawals allowed after age 59½
    • Still working? You may qualify for in-service rollovers to an IRA
    • Retired at 55 or older? You might qualify for the Rule of 55
    • Withdrawals are taxed as ordinary income

    Traditional IRAs

    • Withdrawals after 59½ are penalty-free
    • Still taxed as ordinary income
    • Ideal for Roth conversions during low-income years
    • No employer restrictions—you already have full control

    Roth IRAs

    • Contributions can be withdrawn tax- and penalty-free anytime
    • To withdraw earnings tax-free at 59½, the account must be open at least 5 years
    • If the 5-year rule isn’t met, earnings may still be taxed—even after 59½

    SEP-IRAs and SIMPLE IRAs

    • Follow the same rules as traditional IRAs after age 59½
    • SIMPLE IRA exception: If you withdraw within 2 years of opening, the penalty is 25%—even after 59½
    • After that 2-year mark, standard rules apply

    If you’re comparing your options, it’s worth exploring the distinctions between a SEP IRA vs. Traditional IRA to see which best aligns with your retirement strategy.

    Common Mistakes to Avoid at 59½

    Even with new flexibility, it’s easy to go off course. Here are common pitfalls to watch for:

    • Withdrawing too much, too soon
    • Neglecting long-term growth opportunities
    • Failing to coordinate withdrawals with Social Security or Medicare planning
    • Ignoring Roth conversion windows that could save thousands in future taxes
    • Underestimating healthcare costs as you age
    • Not consulting with a professional before taking action

    Retirement planning after 59½ requires ongoing attention as your situation evolves. Review your withdrawal strategy annually, considering changes in tax laws, investment performance, health status, and personal goals.

    Want to make the most of your options at 59½?

    Schedule a free consultation and learn how to build a tax-efficient, income-secure retirement plan tailored to your goals.

    Frequently Asked Questions

    Do I have to start withdrawing money at 59½?

    No. 59½ is simply the age when the 10% early withdrawal penalty goes away. You’re not required to take money out until Required Minimum Distributions (RMDs) begin at age 73 (for most people). This age just gives you more flexibility and planning opportunities.

    Will I still pay taxes on withdrawals after 59½?

    Yes, if you’re withdrawing from traditional accounts like a 401(k) or Traditional IRA, those funds are still taxed as ordinary income. However, withdrawals from a Roth IRA may be tax-free if the account has been open for at least five years.

    What should I do first when I turn 59½?

    Start by reviewing your current accounts, income needs, and long-term goals. From there, consider talking to a financial professional who can help you create a withdrawal plan, explore Roth conversions, and optimize your tax strategy.

    Is $1 million enough to retire at 59½?

    That depends on your lifestyle, expected longevity, healthcare costs, and income strategy. For a deeper dive, check out our guide on whether $1 million is enough to retire—and how to make it work for your unique goals.

    Are there exceptions to the 59½ retirement rule?

    Yes. While 59½ is the standard age to avoid the 10% early withdrawal penalty, there are several exceptions that may allow penalty-free withdrawals before that age. These include:

    • Disability
    • Substantially equal periodic payments (SEPP rule)
    • Qualified education expenses
    • First-time home purchase (up to $10,000 from an IRA)
    • Unreimbursed medical expenses over 7.5% of AGI
    • Health insurance premiums while unemployed
    • The Rule of 55 (for workplace plans if you separate from your employer at 55 or older)

    These exceptions often still require you to pay income tax, but waive the early withdrawal penalty. Always consult a tax advisor before proceeding.

  • The morning routines of successful people

    A healthy routine might be the key to success; here’s how Marie Kondo, Oprah, and Barack Obama do mornings

    How you spend the first few hours of your morning can set the tone for the rest of your day. Morning routines inevitably lead to efficiency, since they remove the decision-making step, saving you time and energy. Some of the world’s most admired, creative, and successful people rely on their own morning routines to ensure their days are as productive and fruitful as can be. If you resist your morning wake-up call and hit snooze, you might take a tip or two from the routines below to create a better habit.

    10 morning routines highly successful people swear by

    1. Commit to a ritual

    Light a candle, hug your partner, wash your face—whatever you do in the morning, make it a ritual that marks the start of a new day and a fresh start. American dancer Twyla Tharp is a big believer in rituals for both creativity and accountability. In her book The Creative Habit, she writes about her morning routine, which consists of waking up at 5:30 a.m., dressing for her workout, and then hailing a cab to go to the gym.

    “The ritual is not the stretching and weight training I put my body through each morning at the gym; the ritual is the cab. The moment I tell the driver where to go, I have completed the ritual,” Tharp writes. “It’s a simple act, but doing it the same way each morning habitualizes it—makes it repeatable, easy to do. It reduces the chance that I would skip it or do it differently. It is one more item in my arsenal of routines, and one less thing to think about.”

    Marie Kondo, author of The Life-Changing Magic of Tidying Up, also has her own ritual. “When I get up, I open all the windows to let fresh air in and then burn incense,” she writes on her blog. “I strive to keep my home comfortable and filled with clear energy throughout the day, so starting my morning with these rituals keeps me on track.”

    2. Clear your head

    There are plenty of reasons successful people incorporate meditation into their morning routine: The practice can help control anxiety and stress, and it can also boost self-awareness and the ability to concentrate. It’s no wonder so many leaders have incorporated the art of mindfulness into their days. Jen Rubio, co-founder of Away, starts her day with meditation before she does a workout. Arianna Huffington, whose Thrive Global office is located in a headquarters by WeWork space in New York City, practices 20 to 30 minutes of mindfulness in the morning, and she does it deliberately before checking email or touching technology. And before his six-mile run, former Twitter CEO Jack Dorsey takes 30 minutes to meditate. 

    3. Sweat

    Vogue’s editor in chief Anna Wintour starts her morning with an hour-long tennis match, and it’s a very smart move. A study from the University of Bristol found that daily exercisers were more likely to have more energy and a more positive outlook compared to those who didn’t participate in a sweat session. Building exercise into your morning can earn you mental clarity that lasts throughout the day. “Exercise leads to the secretion of neurotransmitters that promote mental clarity and an improved attention span,” says exercise psychologist Jasmin Theard. “You’ll feel a sense of accomplishment as well as rejuvenated and recharged.”Former president Barack Obama made exercise part of his presidential schedule when he was in the White House, lifting weights and doing cardio before he made his way to the Oval Office.

    Mellody Hobson, president of Ariel Investments, incorporates all kinds of movement into her mornings. Her exercise may include running, weight lifting, swimming, or cycling, which is always followed by a bath. “My bath time is essential personal time,” she tells CNBC. “I take a bath every morning, and use the time to decompress and relax. When I’m running outside on cold days in Chicago, I run faster on the return leg, thinking about my bath.”

    4. Practice gratitude

    This may come as a surprise, but after she burns incense in her home, Marie Kondo doesn’t get into a meticulous folding session. Instead, she practices gratitude. “I say a prayer of thanksgiving for my family and team members’ health, and I renew my resolve to do as much as I can that day,” she writes. Writing out her daily to-do’s only comes after this practice. 

    Wealth is not measured by dollars and cents, but by the love we make, the laughter we enjoy, the meals we share, the dreams we experience, and the hopes we create.Oprah Winfrey

    Oprah’s morning routine also involves appreciation. After brushing her teeth and walking her dogs, she reads five cards from her 365 Gathered Truths box, according to Harper’s Bazaar. An item on her 2014 “Favorite Things” list, this box shares pieces of wisdom meant to inspire. “It’s a beautiful way to start the day,” Oprah told Bazaar. An example of a message you might pluck from the box? “Wealth is not measured by dollars and cents, but by the love we make, the laughter we enjoy, the meals we share, the dreams we experience, and the hopes we create.”

    5. Rise with the sun (or even before it)

    A 2008 study published in The Journal of General Psychology found that early risers tend to procrastinate less than night owls with a later alarm clock. It makes sense then that many successful people throughout history have identified as early birds: Apple CEO Tim Cook, for example, emerges from underneath the covers at 3:45 a.m. to go through email before his five o’clock appointment with the gym. Virgin Group founder and chairperson Richard Branson rises at a bit less of an ungodly hour—around 5 a.m.—to exercise and spend some time with his family. 

    “I have always been an early riser,” he writes on a Virgin blog. “Over my 50 years in business, I have learned that if I rise early, I can achieve so much more in a day, and therefore in life.” Branson adds, “I find the period of quiet, before most of the world logs on, to be a great time to catch up on news and reply to emails. These early hours give me the opportunity to start each day with a fresh and organized slate.”

    6. Read a book

    Many people know that reading before bed can help calm the mind and prepare the body for sleep. What you hear less about are the benefits of adding reading to your morning routine. Rather than scrolling through social media in the morning, consider reading a book or an article instead. You get all the benefits of reading first thing in the morning. One study from the University of Sussex found that just six minutes of reading can reduce stress by up to 68 percent. There’s also a wealth of evidence that reading can boost cognitive activity in the brain, which is a great way to prime yourself for the challenges of the day. It’s no surprise that people like Bill Gates and Barack Obama start their days by reading.

    7. Journal

    The act of writing has surprising power. A study conducted in New Zealand found that people who dedicated 20 minutes daily to expressive writing three days in a row after a medically necessary biopsy healed faster than a control group. Why not start your day with journaling? Other studies have shown that the practice helps reduce stress and anxiety, improve job performance, and helps people process troubling experiences. It’s easy to see why people such as Warren Buffett, Richard Branson, and Arianna Huffington swear by this practice. 

    Mellody Hobson, president of Ariel Investments, incorporates all kinds of movement into her mornings. Her exercise may include running, weight lifting, swimming, or cycling, which is always followed by a bath. “My bath time is essential personal time,” she tells CNBC. “I take a bath every morning, and use the time to decompress and relax. When I’m running outside on cold days in Chicago, I run faster on the return leg, thinking about my bath.”

    8. Drink water

    It might sound trivial, but adding a simple glass of water to your morning routine can make a huge difference. Hydration is a critical aspect of health. Water removes waste from the body, regulates your body temperature, lubricates and cushions your joints, and protects sensitive tissues. Our bodies can become dehydrated overnight, so water in the morning helps rehydrate. A morning glass of water has also been shown to reduce calorie intake during the day, improve mental performance during the day, improve the look and health of your skin, and even jump-start your metabolism. 

    It’s no wonder that celebrities from Kim Kardashian to Beyoncé have all touted the benefits of drinking water. In a 2014 interview with Marie Claire, Cameron Diaz spelled it out: “Every night, before I go to sleep, I fill up a big glass bottle with water and put it on my bathroom counter. First thing in the morning, right after I brush my teeth, I drink it, […] I feel it immediately. I go from being a wilted plant to one that has just been rejuvenated by the rain.” 

    9. Eat a real breakfast

    The right breakfast can help power you through the day. While the science behind the benefits of breakfast is less clear than the science behind the benefits of water, many successful people have made breakfast a key part of their morning routine. Kelly Ripa keeps it simple with coffee, yogurt, and granola, while Barack Obama prefers a fuller breakfast of eggs, potatoes, and wheat toast. 

    If you’re short on time, a smoothie is a great option. In 2020 Reese Witherspoon shared her go-to green smoothie recipe that she has had every morning for the last nine years. John Mackey, the founder of Whole Foods, also has a favorite green smoothie for breakfast. Others, like Idris Elba, keep it simple with toast. Whether simple or elaborate, finding your preferred breakfast routine can be a great start to the day.

    10. Make a to-do list

    Planning out the day and making a list of what needs to be done can help prepare your mind for the day ahead. To-do lists may not be for everyone, but successful people like Michelle Obama and Richard Branson are big believers in taking the time to meticulously plan out what needs to get done each day. One key benefit of list-making that both these leaders cite is blocking out time to plan and take care of yourself. Branson once wrote, “Far too many people get weighed down in doing, and never take the time to think and feel.”

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  • 8 Pieces of Financial Advice the Internet Gets Totally Wrong, According to Experts

    Financial decisions can carry a scary amount of weight. The wrong financial choices can negatively impact your credit score, your interest rate when borrowing money, and even determine if you’ll get approved for a loan. Other financial mistakes can determine the size of your nest egg and when you’ll be able to retire. But, treating your finances with too much caution can also cause you to miss out on new financial opportunities. It’s a tricky conundrum that makes it hard to know which choice is the right one.

    If you don’t feel secure in your own financial knowledge it can be tempting to just follow along with what someone else with a larger platform is confidently saying online. And we all know the internet is overflowing with people giving financial advice—but some of it is neither sound nor applicable. So, we asked finance experts to clear up some of the biggest misconceptions and falsehoods about money on the internet.

    “You need a 20 percent down payment and great credit to purchase a house.”

    The idea that you need a 20 percent down payment on a house has been passed on and on—but many experts say it’s time to retire that belief. “People are often shocked when I tell them that yes, they can buy a house with 3 percent down,” says Jennifer Beeston, SVP of mortgage lending at Guaranteed Rate in San Francisco, California. “You do not need 20 percent down; I repeat you do not need 20 percent down.” She recommends chatting with a mortgage expert to discover the various low down payment options that can help you purchase a home.

    Candice Williams, realtor at Coldwell Banker in Houston, Texas, agrees, and adds, “People believe that they need to come up with 20 percent of the purchase price, and they think they need a high credit score to purchase a home.” And as a result, she says that many would-be homeowners are missing out on this experience due to incorrect information.

    “There are a variety of loan options,” Williams says. For example, the FHA, Federal Housing Administration, will accept a 3.5 percent minimum down payment and a credit score in the 580 range. “There are also many homebuyer grants to help buyers on the national, state, and local level, and this money doesn’t have to be repaid,” she adds.

    In addition, Beeston says she often hears from potential buyers who think they need a car loan to qualify for a mortgage. “Generally, these people have seen a credit ‘expert’ video in which that individual has said in order to buy a house you have to show multiple tradelines and an auto loan is one tradeline you need,” she says. But this is “100 percent incorrect,” Beeston says, and you don’t need to have an auto loan on your credit to qualify for a mortgage.

    “You need to buy a house to get ahead.”

    Homeownership may be the American Dream for some people, but according to Jay Zigmont, PhD, CFP, founder of Childfree Wealth in Water Valley, Mississippi, you shouldn’t let the internet make you feel like you’re losing out if you don’t own a home. “Buying a house is one way to get exposure to real estate, but it does not fit everyone,” he says.  In fact, if you tend to move around frequently, he says it’s more than okay to rent. “It is even okay to rent in the long term if you don’t enjoy homeownership or it isn’t right for you.”  So, instead of doing what everyone else recommends, Zigmont recommends thinking long and hard about the decision to own a house.

    “You need to have X amount of money by the age of Y.”

    While there are plenty of articles declaring that you need to have a certain amount of money by age 40, 50, etc., Zigmont warns these rules of thumb may not fit you.  “For example, most of these benchmarks or general rules assume you will have kids, but if you are living a childfree life, these benchmarks won’t fit.” Instead, he recommends measuring your own progress, financial plans and goals. “Make progress each year, and don’t worry about how you compare to others.”

    “You need to be wealthy to start investing.”

    A lot of investing advice on the internet is geared toward high income earners. But you don’t have to be wealthy to start investing, according to Dr. Kortney Ziegler, founder and CEO of Well-Money.com, and a Stanford University Humanities Fellow. “The truth is that anyone can start investing, regardless of their income level—and you don’t need a lot of money either.” Ziegler says you can start investing as little as $5 to $10 per week.  “From small acorns do mighty oaks grow, and regularly investing small fixed sums of money delivers impressive results over time.”

    “Married couples should combine finances.”

    You may have read articles advising couples to keep their financial accounts separate and other articles advising them to combine their money. According to Ziegler, there is no right or wrong answer.  “Some couples prefer to keep their finances separate, while others choose to combine everything into one joint account,” they say. “What works for one couple may not work for another couple.”

    “Cutting expenses is the only way to save money and create a nest egg.”

    The ability to save money is probably the most important tool you can have in your financial toolbox. However, it shouldn’t be the only one. Sometimes, the question is not solely what else can you cut out, but also how you can increase the amount of money coming in, explains Cicely Jones, CEO of MPA Financials in Pleasant Grove, AL. For example, she says it may be time to go to your employer and ask for a raise if you haven’t had one in a while, or if your job performance warrants it.

    Or, it may be time to seek new employment if a salary increase isn’t possible at your current job. “Complacency can keep you from moving on, but needing an increase should be an incentive, so amp up your resume, add skills, get certified, etc., so you can stand out to employers.” Another alternative: Jones also recommends getting a side hustle or part-time job as a short-term way to boost income. “Dive into a talent or craft you might have, something that you are passionate about, and see how it can earn you some extra money.”

    “You don’t need a bank account—just get a prepaid card.”

    Those prepaid cards advertised on the internet may seem like a convenient way to handle your finances, but don’t be fooled by those free-living lifestyle videos, warns Birmingham, Alabama-based financial expert Tae Lee, who created “Game of Fortune: Win in Wealth or Lose in Debt,” a financial literacy game. “Everyone needs a bank account for many reasons such as storing money, saving money, securing money, and having a safe place to store it.” In addition, she says that prepaid cards tend to come with activation and reloading fees—and the cards don’t help you build credit.

    “Your friend’s Medicare coverage is a good plan for you.”

    It’s not uncommon to get advice from people in your social media circles. However, this may not be the best source for information as it relates to Medicare, warns Ari Parker, author of, It’s Not That Complicated: The Three Medicare Decisions to Protect Your Health and Money. He says there’s no single health insurance plan that’s best for everyone. “Do you see the same doctors and take the same prescriptions as your friends? Probably not, so you probably need different plans to meet each of your unique needs,” he says.

    With countless Medicare insurance plans out there, Parker recommends the 3P method to finding a plan for you:

    Providers: “Make sure you note the doctors, pharmacies, and hospitals you plan to access,” Parker says, adding that some plans have limited networks that restrict your choices.

    Prescriptions: “Jot down the medicines you take to stay healthy,” he says. “Prescription drugs are often a considerable household expense, but you may be able to save upwards of $1,100 by matching your prescription needs to the right plan and nearby drug store.”

    Priorities: “Your health care and lifestyle are probably different than your neighbor’s,” he says. “So make sure you’re making decisions based on your personal savings goals and lifestyle choices.”

    One overarching theme from all of this: Your finances are personal. So, as helpful as it can be to get advice, just make sure you’re following the path that makes the most sense for you.

  • Emergency Fund: What It Is and Why It Matters

    What is an emergency fund?

    An emergency fund is a bank account with money set aside to pay for large, unexpected expenses, such as:

    • Unforeseen medical expenses.
    • Home-appliance repair or replacement.
    • Major car fixes.
    • Unemployment.

    Compare top savings accounts

    Find a high-yield savings account with a great rate. Compare rates side-by-side.

    Why do I need an emergency fund?

    Emergency funds create a financial buffer that can keep you afloat in a time of need without having to rely on credit cards or high-interest loans. It can be especially important to have an emergency fund if you have debt, because it can help you avoid borrowing more.

    According to NerdWallet’s April 2026 savings report, an emergency fund was the most commonly cited active savings goal. Nearly half of Americans surveyed, 45%, said they are actively saving money in a bank account for this purpose.

    How much should I save?

    The short answer: If you’re starting out, try to set aside an amount that would cover an important bill, say $500. But keep working your way up. You’ll want to max out at about half a year’s worth of expenses.

    The long answer: The right amount for you depends on your financial circumstances, but a good rule of thumb is to have enough to cover three to six months’ worth of living expenses. (You might need more if you freelance or work seasonally, for example, or if your job would be hard to replace.) If you do lose your job, you could use the money to pay for necessities while you find a new one, or the funds could supplement your unemployment benefits.

    Having savings can get you out of many financial scrapes. Put something away now, and build your fund over time.

    Where do I put my emergency fund?

    Ideally, you’d put your emergency fund into a savings account with a high interest rate and easy access. Because an emergency can strike at any time, having quick access is crucial. So it shouldn’t be tied up in a long-term investment fund. But the account should be separate from the bank account you use daily, so you’re not tempted to dip into your reserves.

    A high-yield savings account is a good place for your money. It is federally insured up to $250,000 per depositor, per ownership category, per financial institution so it’s safe. (Read more on how savings accounts are federally insured through the Federal Deposit Insurance Corp., or FDIC, and the National Credit Union Administration, or NCUA.) In addition, the money earns interest, and you can access your cash quickly when needed, whether through withdrawal or a funds transfer.

    While a savings account is an excellent option, some people may not be able to open one immediately. If a bank closed a previous account of yours, for example, it may have reported the closure to a consumer reporting agency, such as ChexSystems. That can prevent a new bank from approving your account application. If that’s the case, you have options. You can work with the agency to resolve the outstanding issues. At the same time, consider opening a second chance checking account. After a few months building a positive banking history, you’re more likely to be able to open a solid interest-earning account.

    How do I build an emergency fund?

    1. Calculate the total that you want to save. Use the NerdWallet emergency savings calculator below if you need help figuring out your expenses for six months.
    2. Set a monthly savings goal. Instead of focusing on one large savings goal, focus on smaller, attainable monthly goals. Reaching monthly milestones can give you positive momentum and encourage you to keep saving. This can help you keep the habit of saving regularly and make the overall task less daunting.
    3. Move money into your savings account automatically. If your employer offers direct deposit, ask if they can divide your paycheck between checking and savings. That way your monthly savings goal can be taken care of without the funds touching your checking account.
    4. Keep the change. Use mobile technology to save automatically each time you make a purchase. There are savings accounts and savings-focused apps that link with checking or other spending accounts to round up the purchase amounts on your transactions. The extra amount is automatically transferred to a savings account.
    5. Save your tax refund. You get a shot at this once a year — and only if you expect a refund. Saving it can be an easy way to boost your emergency stash. When you file your taxes, consider having your refund deposited directly into your emergency account. Alternatively, you can consider adjusting your W-4 form so that you have less money withheld. If modifying your deductions is a good option for you, you can direct the extra cash into your emergency fund.
    6. Assess and adjust contributions. Check in after a few months to see how much you’re saving, and adjust if needed. When you’ve saved up enough to cover six months of expenses, you might consider putting extra cash in investments.

    When saving, draw a line between emergencies and everything else. In fact, once you’ve hit a reasonable threshold of emergency savings, it’s a good idea to begin another “rainy day” savings account for irregular but inevitable expenses, such as car maintenance and clothing. If you need help staying organized, consider opening separate savings accounts or subaccounts for different financial goals.

    Everyone needs to save for the unexpected. Having something in reserve can mean the difference between weathering a short-term financial storm or going deep into debt.

  • Boat insurance and safety

    Keep your head above water—understand how to protect your seagoing vessel, yourself and your passengers.

    What you need to know about

    • Boat insurance basics
    • Boat insurance coverage
    • Boat insurance discounts
    • Best practices for boat safety
    • Additional resources

    Boats afford recreation and adventure to their owners, but they come with risks, as well. Don’t let an accident or disaster sink you—understand how to insure your prized vessel.

    Boat insurance basics

    The size, type and value of the craft and the water in which you use it factor into what type of insurance you need and how much you will pay for insurance coverage. As with any insurance policy, make sure you understand exactly what perils are covered and what your policy limits are.

    • Small craft may be covered under your standard homeowners policy or renters insurance policy. Most insurers provide limited coverage for property damage for small boats such as canoes, small sailboats or small powerboats with less than 25 mile per hour horsepower. Coverage generally includes the boat, motor and trailer combined. Liability coverage is typically not included, but it can be added as an endorsement to a homeowners policy.
    • Larger and faster boats such as yachts require a separate insurance policy (as do personal watercraft such as jet skis).

    Typical boat insurance policies cover physical damage to the boat itself. They also cover property damage, theft and medical payments, each with different deductibles. Your insurer may offer additional, optional coverage for trailers and boat accessories.

    Boat insurance policies generally provide broader liability protection than a homeowners policy. However, depending on the assets that are at risk, boat owners may also consider purchasing an umbrella liability policy, which will provide additional protection for their boat, home and car.

    Boat insurance coverage

    Boat insurance is available in two types, each with different parameters and different premium costs.

    • Actual Cash Value policies pay for replacement costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the vessel’s approximate market value. Partial losses are settled by taking the total cost of the repair less a percentage for depreciation.
    • Agreed Amount Value policies are based on a valuation of your vessel that you and your insurer have agreed upon; in event of a total loss you will be paid the “agreed amount.” Agreed Amount Value policies will also replace old items with new ones in the event of a partial loss, without any deduction for depreciation.

    Here are some of the common and optional boat coverages. Make sure you understand what exactly your policy will pay for and what the limits are.

    • Physical loss or damage to the actual boat, including the hull, machinery, fittings, furnishings and permanently attached equipment. Physical damage exclusions might include normal wear and tear, damage from insects, mold, animals (such as sharks), zebra mussels, defective machinery or machinery damage.
    • Theft of the boat.
    • Bodily injury to persons other than the boat owner or his or her family.
    • Damage caused to someone else’s property.
    • Guest passenger liability—that is, any legal expenses incurred by someone using the boat with the owner’s permission.
    • Medical payments for injuries to the boat owner and other passengers.
    • Trailer or boat accessories.
    • Loss or theft of belongings may or may not be covered. Your homeowners policy may provide some coverage and boaters should specifically inquire about special equipment kept on the boat, such as fishing gear, to make sure it is covered.
    • Towing in the event of an accident.

    Boat insurance discounts

    If you’re thinking of obtaining boat insurance or changing insurers, inquire about discounts for the following:

    • Diesel powered craft, which are less hazardous than gasoline powered boats as they are less likely to explode
    • Coast Guard approved fire extinguishers
    • Ship-to-shore radios
    • Crew completion of boating and water safety education courses, such as those offered by the Coast Guard Auxiliary, U.S. Power Squadrons, or the American Red Cross.
    • Multi-policies with the same insurer, such as a car, home or umbrella policy.
    • Two years of claims-free experience

    Best practices for boat safety

    There are thousands of recreational boating accidents per year, which can be costly in injuries and damages. Contributing factors to boating disasters include traveling too fast for water or weather conditions, driving under the influence of drugs or alcohol, failing to follow boating rules and regulations, carelessness and inexperience.

    The best way to ensure your years of accident- and claims-free experience is to follow boating safety practices.

    • Properly equip your vessel with required navigation lights and with a whistle, horn or bell. Have on hand plenty life jackets and emergency safety devices such as a paddle or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio. Carry one or more fire extinguishers, matched to the size and type of boat and keep them readily accessible and in condition for immediate use.
    • Before you sail or launch, check weather forecasts before heading out to ensure good boating conditions. Let someone know where you’re going and when you expect to return. Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
    • When you have passengers and/or a load, pay attention when loading. Distribute the load evenly and don’t overload. In a small boat, warn passengers not to stand up or shift weight suddenly. Don’t permit riding on the bow, seatbacks or gunwales. Make sure that every person on board the boat gets and wears a life jacket.
    • Know and obey marine traffic laws; learn distress signals and other boating signals.
    • In shallow waters, keep an alert lookout for other watercraft, swimmers, floating debris and shallow waters.
    • Don’t operate the boat while under the influence of alcohol or drugs, or allow anyone who might be impaired to operate the vessel.

  • What Is Umbrella Insurance, and How Does It Work?

    If someone sues you for damages above your primary liability limits, an umbrella policy helps pay what you owe.

    Before we dive in, do you need umbrella insurance?

    You may want an umbrella policy if you have lots of savings and other assets you could lose in a lawsuit. It may also be a good idea if you’re at a high risk of being sued — for example, if you have a teen driver in your household who might get into an expensive car crash. See more details below.

    Three key takeaways from this article

    • Umbrella insurance is extra liability insurance beyond what’s on your existing policies.
    • An umbrella policy can pay what you owe if you’re at fault for someone else’s injuries or property damage.
    • The cost of umbrella insurance usually starts around $200 per year for $1 million of coverage.

    What is umbrella insurance?

    Umbrella insurance is protection for your savings and other assets. It provides extra liability coverage beyond the limits on your existing policies, such as car or home insurance. If you’re at fault for injuries or damage and your other policies aren’t enough to cover the costs, an umbrella policy helps pay what you owe.

    Umbrella insurance is similar but not necessarily identical to excess liability insurance. What’s the difference?

    • Excess liability coverage typically provides a higher limit on the policies you already have.
    • Umbrella insurance may also add coverage for scenarios your underlying policies don’t include.

    For example, umbrella insurance may pay for legal fees and damages if someone accuses you of slander (a false spoken statement) or libel (a false written statement). A typical homeowners insurance policy doesn’t offer this coverage.

    Umbrella and excess liability policies vary from one company to another. If you’re confused about your coverage, contact your insurance company or agent.Key terms in this article

    How umbrella insurance works

    Umbrella insurance offers extra liability coverage if you reach the limit on an underlying policy. Here’s how it could work.

    Example: You run a red light and T-bone another car. There’s major damage to the vehicle, and several people are hurt. The car needs $25,000 in repairs, and treatment of the injuries totals $275,000. Plus, the driver of the other car is an orthodontist who won’t be able to work for months due to a broken arm. She sues you for $200,000 in lost earnings.

    In this example, you’re on the hook for a total of $500,000. If your auto policy has only $300,000 in liability coverage, the remaining $200,000 will come out of your pocket.

    If you had umbrella insurance, it would pay the difference between what your primary insurance covers and what you still owe. An umbrella policy could also cover your legal costs in the lawsuit.

    What does umbrella insurance cover?

    Umbrella insurance usually covers claims involving anyone in your household, including kids and pets. Depending on your policy, it can cover the following types of liability claims.

    Bodily injury

    Bodily injury is when someone gets hurt on your property or because of something you did. Bodily injury claims may include things like medical bills, lost wages and even funeral expenses.

    Example: A houseguest falls down your stairs and sues you for her medical bills plus pain and suffering, exceeding your homeowners insurance liability limit.

    Property damage

    Someone may file a property damage claim against you to recover the cost of repairing or replacing tangible items. These could include vehicles, household goods and more.

    Example: Your teenage son drives off the road into someone’s house, causing hundreds of thousands of dollars in damage.

    Personal injury

    When it comes to umbrella insurance, personal injury typically refers to scenarios like:

    • Slander or libel.
    • False arrest or imprisonment.
    • Wrongful eviction or entry.
    • Invasion of privacy.

    Example: A restaurant sues you for defamation after you write a negative review online.

    Landlord liability

    Landlords can use an umbrella policy to provide extra liability coverage beyond their underlying landlord insurance. However, you may want to speak with an agent about whether a personal or commercial umbrella policy would be better for your situation.

    Example: A tenant slips on an icy sidewalk outside your rental property and sues you for failing to maintain the property.

    Legal costs

    In addition to paying damages up to your liability limit, your umbrella insurance will typically also cover associated legal costs. Say you have an $1 million umbrella policy, and someone sues you for that full amount. If a court finds you liable, your insurer could pay the $1 million plus provide your legal defense.

    Did you know…

    You might have to pay a “retained limit,” which is similar to a deductible. It’s an amount you may have to cover before your policy begins to pay.

    What umbrella insurance doesn’t cover

    Umbrella insurance doesn’t usually cover your own injuries or property damage. For that, you’ll need other types of coverage (such as health insurance or collision coverage on your auto insurance).

    🤓Nerdy Tip

    Some insurers allow you to add uninsured or underinsured motorist coverage to your umbrella policy. This gives you extra coverage beyond what you already have on your auto policy. It may be useful if you get into a serious accident with someone who doesn’t have enough insurance to pay for your injuries or vehicle damage.

    Your umbrella policy also won’t typically cover:

    Liability associated with your business. For this, you’d need a business umbrella policy rather than a personal one.

    Liability related to the breach of a contract. Say a roofing company sues you because you haven’t paid for the work it’s done under the contract you signed. Your umbrella insurance policy is unlikely to help.

    Crimes or deliberate injury. Umbrella insurance is generally designed for harm you do accidentally, not on purpose.

    Some boating incidents. Umbrella policies may cover certain sizes or types of watercraft only. Other umbrellas don’t cover them at all unless you have an existing boat insurance policy.

    Who needs umbrella insurance?

    There’s no law requiring you to buy umbrella insurance. But if you have a lot of assets or a high chance of being sued, you might want an umbrella policy.

    Consider buying umbrella insurance coverage if you:

    • Own property.
    • Have significant savings or other assets.
    • Are worried about liability claims against you when traveling outside the U.S.
    • Own things that can lead to injury lawsuits, such as pools, trampolines, guns or dogs. (Check with your insurer to make sure the policy covers your dog’s breed.)
    • Are a landlord.
    • Have an inexperienced driver in your household.
    • Coach kids’ sports.
    • Often host parties in your home.
    • Serve on the board of a nonprofit.
    • Regularly post reviews of products and businesses.
    • Take part in sports where you could easily injure others (such as hunting, skiing or surfing).
    • Are a public figure.

  • How Much Does Insurance Increase After an Accident?

    Nerdy takeaways

    • An at-fault accident can increase your auto insurance rates for at least three years, depending on your state and insurer.
    • A driver with a recent at-fault accident pays $1,117 more a year on average for a full coverage policy than a driver with no traffic violations.
    • How much insurance increases after an accident depends on your insurer.
    • Shop around and compare rates to find cheaper car insurance after an accident.




    How an accident affects your car insurance rates

    An accident typically affects your car insurance rates for at least three years, although this varies by state and insurance provider. Even if it was a minor crash, insurers perceive you as a greater risk and will almost always increase your rates.

    NerdWallet did an analysis to see how much car insurance can increase after an accident. We compared average car insurance rates nationwide for 35-year-old drivers with a recent at-fault crash to those with no recent accidents, keeping all other factors the same. We used full coverage insurance policies for a 2023 Toyota Camry LE and a hypothetical accident that resulted in $10,000 worth of property damage and no injuries.

    Type of policyClean recordOne at-fault accident
    Full coverage$2,317$3,434
    Minimum coverage$621$908

    Our analysis found that nationwide, a driver with an at-fault accident pays $1,117 more a year on average for a full-coverage policy than a driver with no traffic violations.

    However, this is based on average rates. Your rate may differ depending on factors like your age, location and insurer.

    Cheap car insurance after an accident by company

    Car insurance companies have wildly different viewpoints on how much to raise rates due to a crash. In some instances, companies might not raise their rates after a small accident. In others, rates can go up an exorbitant amount.

    NerdWallet’s latest analysis of some of the nation’s largest insurers found that average rates for a driver with an at-fault accident can go up as much as 61%, or as little as 26%.

    That’s why it’s essential to compare car insurance rates from several companies to find cheap auto insurance after an accident.

    To see how the largest insurers price policies after at-fault accidents, we looked at median national rates from each of these companies for drivers with an at-fault accident on their record.

    Out of these companies, Travelers returned the lowest average rates for drivers who’d caused an accident. State Farm showed the smallest percentage increase in rates between drivers with a clean record and those with a recent crash.

    Average rates from the biggest auto insurers after an at-fault crash

    CompanyClean recordOne at-fault accident
    Allstate$3,189$4,947
    American Family$2,714$3,535
    Farmers$4,047$6,028
    GEICO$2,057$3,491
    Nationwide$2,768$4,516
    Progressive$2,059$3,116
    State Farm$2,123$2,689
    Travelers$1,664$2,304
    USAA*$1,584$2,250

    *USAA is only available to military, veterans and their families.

    For drivers who qualify, USAA frequently has some of the lowest rates we found, both before and after an accident. But in some cases, USAA is no longer the cheapest option once a driver has caused an accident.

    So whether you’re insured with USAA or another company, it’s smart to compare car insurance rates after an accident.

    Cheap car insurance after an accident by state

    Wondering which companies are the most likely to offer cheap car insurance after a crash? Find your state below to see the cheapest car insurance rates after an accident on average based on where you live.

    StateCheapest companyMedian annual rate after an accident
    AlabamaTravelers$1,573
    AlaskaUmialik$2,199
    ArizonaTravelers$2,215
    ArkansasShelter$1,895
    CaliforniaCSAA$2,041
    ColoradoAmerican National$1,671
    ConnecticutTravelers$1,450
    DelawareDonegal$1,032
    FloridaState Farm$2,717
    GeorgiaDonegal$1,522
    HawaiiGEICO$1,603
    IdahoTravelers$1,103
    IllinoisHastings Mutual$1,768
    IndianaHastings Mutual$1,632
    IowaState Farm$1,873
    KansasShelter$2,302
    KentuckyState Farm$2,502
    LouisianaLouisiana Farm Bureau$3,317
    MaineMMG$1,752
    MarylandDonegal$1,536
    MassachusettsGEICO$1,771
    MichiganWolverine Mutual$2,514
    MinnesotaTravelers$1,689
    MississippiShelter$1,869
    MissouriTravelers$2,104
    MontanaState Farm$1,965
    NebraskaAmerican National$1,154
    NevadaTravelers$2,122
    New HampshireMMG$1,847
    New JerseyGEICO$2,270
    New MexicoCentral Insurance$2,167
    New YorkProgressive$1,287
    North CarolinaProgressive$1,174
    North DakotaState Farm$2,060
    OhioState Farm$1,646
    OklahomaAmerican Farmers & Ranchers$1,952
    OregonState Farm$1,643
    PennsylvaniaEncova$1,942
    Rhode IslandTravelers$1,770
    South CarolinaAmerican National$1,172
    South DakotaKemper$1,724
    TennesseeTravelers$1,644
    TexasState Farm$1,914
    UtahAuto-Owners$2,680
    VermontUnion Mutual$989
    VirginiaVirginia Farm Bureau$940
    WashingtonKemper$1,500
    Washington, D.C.Erie$2,446
    West VirginiaEncova$1,772
    WisconsinAmerican Family$1,256
    WyomingState Farm$1,439

    To find the cheapest insurer after a crash in each state, NerdWallet’s analysis looked at full coverage rates for all ZIP codes in all 50 states and Washington, D.C., for a 35-year-old driver with good credit and a recent at-fault accident. Although USAA is the cheapest option in many states, we didn’t include the company in this table since its policies are available only to active military members, veterans and their families.

    It’s possible to get a lower rate after an accident

    Shopping around after an accident is the best way to ensure you are getting the cheapest rate, and our analysis shows why:

    • Shopping for the cheapest car insurance after a crash could save you big. Our analysis shows that shopping for the cheapest possible rate after a crash could potentially save you thousands a year, depending on your state and insurer.
    • No single car insurance company is cheapest for everyone. Your rate will be determined based on your personal characteristics and your specific situation.
    • The cheapest insurer before an accident may not be the cheapest afterward. In some of the states we looked at, some drivers who were insured with the cheapest company available would need to switch insurers to continue getting the lowest possible rates after an accident.
    • Big-name insurance companies aren’t always cheapest. Although the nation’s 10 largest car insurance companies together account for around 75% of the car insurance market, smaller companies sometimes offer the lowest rates after an accident.

    How to find cheap car insurance after an accident

    Shopping around is the best way to find the cheapest rate, but there are other ways to ensure you are getting the lowest rate possible. You may be able to avoid an insurance rate increase after an accident by:

    • Raising your deductible, which is the amount reduced from a potential claim check from comprehensive or collision insurance. This will cause a greater out-of-pocket cost to repair your own car if you get into an accident in the future.
    • Adding discounts to your policy. Discounts could help offset the increase in your rate from the accident. Check with your insurer or agent to see if any more are available to you.
    • Improving your credit. While improving credit is a long-term strategy, a healthy credit report will likely result in a more affordable car insurance rate in most states.

    Do insurance rates go up after a no-fault accident?

    If you weren’t to blame for an accident, you might see an increase in your auto insurance rate anyway. A 2017 study by the Consumer Federation of America, the most recent data available, found that some companies raise rates 10% or more for not-at-fault accidents.

    In no-fault states, everyone involved in an accident files a claim to their own insurer for injuries. Because of this, residents of those states may see rate increases after an accident, no matter who is at fault.

    A few states, including Oklahoma and California, don’t allow insurers to increase your rates if a crash was not your fault. Some companies, such as USAA, even say they usually won’t raise rates if you aren’t responsible for an accident.

    But regardless of whether the accident was your fault, it’s always a good idea to compare car insurance quotes to make sure you’re getting the lowest price.

    Can I keep my car insurance rate from going up after a crash?

    If you have accident forgiveness on your policy and this is your first accident, it’s likely that your rate won’t go up. Accident forgiveness is an optional coverage type many insurers offer that prevents your car insurance premium from increasing after your first accident.

    This coverage typically costs extra, but some insurers offer free accident forgiveness to drivers who have gone without an accident for a certain period, often around five years.

    Alternative car insurance for high-risk drivers

    If you have multiple accidents or other serious marks on your record, you may be classified as a high-risk driver. High-risk drivers generally have a harder time finding coverage because they are considered risky to insure.

    If no one will sell you a policy, you may need to look for a state-run assigned risk plan. To find an insurer, locate your state in the directory of the Automobile Insurance Plan Service Office, an industry organization, or ask your auto insurance agent for help. This is considered a “high-risk insurance pool,” in which the state assigns an insurer to you.

    Frequently Asked QuestionsDo insurance rates go up after a no-fault accident?What happens if you get insurance after an accident?Will a hit-and-run claim raise my insurance?

    Methodology

    NerdWallet averaged rates based on public filings obtained by pricing analytics company Quadrant Information Services. We examined rates for men and women for all ZIP codes in all of the 50 states and Washington, D.C. Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our rates analysis due to a lack of publicly available information.

    In our analysis, “good drivers” had no moving violations on record; a “good driving” discount was included for this profile. Our “good” and “poor” credit rates are based on credit score approximations and do not account for proprietary scoring criteria used by insurance providers.

    These are average rates, and your rate will vary based on your personal details, state and insurance provider.

    Sample drivers had the following coverage limits:

    • $100,000 bodily injury liability coverage per person.
    • $300,000 bodily injury liability coverage per crash.
    • $50,000 property damage liability coverage per crash.
    • $100,000 uninsured motorist bodily injury coverage per person.
    • $300,000 uninsured motorist bodily injury coverage per crash.
    • Collision coverage with $1,000 deductible.
    • Comprehensive coverage with $1,000 deductible.

    In states where required, minimum additional coverages were added. We used the same assumptions for all other driver profiles, with the following exceptions:

    • For drivers with minimum coverage, we adjusted the numbers above to reflect only the minimum coverage required by law in the state.
    • We changed the credit tier from “good” to “poor” as reported to the insurer to see rates for drivers with poor credit. In states where credit isn’t taken into account, we only used rates for “good credit.”
    • For drivers with one at-fault crash, we added a single at-fault crash costing $10,000 in property damage.
    • For drivers with a DUI, we added a single drunken-driving violation.
    • For drivers with a ticket, we added a single speeding violation for driving 16 mph over the speed limit.

    We used a 2020 Toyota Camry L in all cases and assumed 12,000 annual miles driven. We analyzed rates for drivers of the following ages: 20, 30, 35, 40, 50, 60 and 70.

    These are rates generated through Quadrant Information Services. Your own rates will be different.

  • How To Get Your CLUE Insurance Report

    Insurance companies set rates by looking at numerous factors, such as your credit score, claims history, and location, as well as the replacement cost of the insured asset. But one important rating factor you may not know about is your CLUE insurance report. Insurers use these reports as part of their risk assessment process, and you have separate CLUE reports for your home and auto claims history.

    It’s imperative to verify your CLUE report is correct; inaccurate information could keep you from getting the best rates, or even mean you’re denied a policy. Below, we’ll break down this report in more detail so that you understand how it affects you. We’ll also explain how to get your free copy.

    What Is a CLUE Report?

    CLUE stands for “Comprehensive Loss Underwriting Exchange.” It’s a claims-history database created by LexisNexis, a consumer reporting agency that uses data and advanced analytics to help its customers make informed decisions and better manage risk.

    A CLUE report compiles your claims information to provide data about your home and auto insurance coverage and losses. It’s only available to you, your insurer, and the lender for your property. If you want to know what your report shows, you can request a free copy from LexisNexis (keep reading for instructions on how to do this).

    What Your CLUE Report Includes

    Your insurance company reports policy information to the CLUE database, including your:

    • Name
    • Birthday
    • Policy number
    • Claims information (dates and types of losses, amounts paid, etc.)
    • Covered property’s description
    • Property address (homeowners claims)
    • Vehicle information (auto claims)

    The CLUE database doesn’t store any other data sources like credit reports, criminal records, legal judgments, or civil lawsuits, and it only retains up to seven years of your home and auto claims history.

    Note

    Your report can include claims information even when a payout wasn’t made. That’s because insurance companies report all claims they paid money for, created a file for, or formally denied.

    Only insurance companies that subscribe to CLUE can contribute or access CLUE reports, but it’s likely that yours does; LexisNexis reports that 99% of auto insurers and 96% of property insurers subscribe.

    Note

    CLUE reports only show actual claims you initiated. They do not display inquiries you made to find out about possible coverage or costs when you’re deciding whether to file a claim. However, if you’re calling about an actual loss, such as a broken water pipe, specify explicitly that you’re only making an inquiry and not a claim.

    How Insurance Companies Use Your CLUE Report

    Insurance companies and their agents only use your CLUE report to underwrite and rate a new policy. Most insurers won’t pull another CLUE report at renewal because their database already includes any claims you’ve filed with them since your policy started.

    The Fair Credit Reporting Act gives LexisNexis the right to generate one when the information is used to underwrite a policy you applied for or when an insurance company requests it.

    Getting a Copy of Your Report

    It’s essential to request a copy of your report so you can check for inaccurate or irrelevant information that might negatively affect your insurance premium or eligibility. The Fair Credit Reporting Act was amended in 2003 by the Fair and Accurate Credit Transactions Act, and it allows you to request a free CLUE report for your auto and home claims history every 12 months. You can request your CLUE reports from LexisNexis by:

    • Applying online
    • Calling 800-456-6004 or 866-897-8126
    • Mailing a request form to LexisNexis Risk Solutions Consumer Center, P.O. Box 105108, Atlanta, GA, 30348-5108

    Note

    Asking for a CLUE report will never hurt your credit score.

    You can also get a free copy of your report if your insurer sent you an adverse action letter—a letter stating you were not given the best insurance rate, were denied coverage, or had your coverage limited. If the insurer canceled your policy or increased your rates, it will also send one. Regardless of the specific reason, contact LexisNexis Consumer Center at 800-456-6004 for your free CLUE report. Be prepared to provide basic personal information, Social Security number, driver’s license number, and your letter reference number (if applicable).

    Note

    If you’re interested in a property and want to know its claims history, you can ask your real estate agent to request a report from the property’s current owner. When a CLUE report is requested for a real estate transaction, the seller’s personal information is removed.14

    How To Correct Mistakes on Your Insurance Report

    If you notice an error on your CLUE report, call the LexisNexis Consumer Center at 866-897-8126 or 800-456-6004. LexisNexis will contact the insurer on your behalf, then the insurer has 30 days to provide LexisNexis with evidence that the information in question is accurate. If the company fails to respond on time or provide sufficient proof, LexisNexis will remove the data from the database.

    You can also add notes to your CLUE report for other insurance companies to see. For example, if your home report includes a claim for damage from a fallen tree branch, you can note that the entire tree was removed. However, insurers aren’t allowed to add notations to your report or to the database.

  • Vacant Home Insurance: Do You Need It? What Does It Cover?

    What Is Vacant Home Insurance?

    Vacant home insurance covers homes that aren’t being lived in full-time and have no belongings inside. You should consider this insurance if you own an empty house. It’s different from a standard homeowners insurance policy, which covers a home you or a tenant lives in. 

    Vacant home insurance is sold as a standalone policy or an endorsement for an existing homeowners policy. 

    Key Takeaways

    • Vacant home insurance fills the gap when a home is empty and unoccupied. Standard homeowners policies often reduce or cancel coverage after 30 to 60 days of vacancy. 
    • Vacancy insurance generally only covers structural damage from specific risks such as fire, wind, and explosions, with optional add-ons for theft, liability, and other structures.
    • You can buy this insurance as an endorsement or a standalone policy. If adding as an endorsement, be sure to secure coverage before the vacancy clause in your current policy is triggered.
    • These policies can be costly—sometimes as much as 60% more than a standard home insurance policy.

    How Vacant Home Insurance Works

    A house is considered vacant if it’s unoccupied and unfurnished. That means there’s no furniture or personal belongings inside and no people live there. It’s different from being unoccupied, which is when a house is furnished but no one resides inside.

    Standard homeowners insurance policies typically have a vacancy clause that kicks in after the home has been vacant for 30 to 60 days. At that point, your policy’s coverage may be pared down to only protect the structure from specific perils. 

    Depending on your contract, insurers can cancel your insurance or deny claims once the vacancy clause is triggered. However, they may not do this if you inform them beforehand and take precautions to secure the house. This could include making sure the heat or air conditioner is running, installing a security system, or having someone periodically pass by the house to check on it. 

    Vacant policies can vary in length, depending on what the insurer offers. Some renew every three to six months, while others renew annually. If you cancel early, you may be able to get a prorated refund. Some insurers can change a vacant home policy to a landlord or owner-occupied policy once tenants move in.

    When Do I Need Vacant Home Insurance? 

    Vacant home insurance should be considered any time a home will sit vacant for a month or two, or long enough to trigger the vacancy clause in your policy. Many situations can cause this, such as if you:

    • Move into a new home when you haven’t sold your old one
    • Own a rental property but are between renters
    • Are in the middle of a full-scale home renovation and have completely cleared out your house
    • Move to an assisted care facility, emptying your home before selling
    • Have a home you’re set to inherit tied up in probate after a parent passes away
    • Are temporarily relocated for a job on a short-term assignment
    • Are away on military leave, and your family moves with you to a base or nearby housing 
    • Buy a home you plan on flipping and won’t be living in

    What Does Vacant Home Insurance Cover?

    Vacant home insurance typically covers the house’s structure from specific threats, such as fire and lightning. Exact coverage varies by policy, but other perils it may cover include:

    • Explosions
    • Windstorms
    • Hail
    • Smoke
    • Water intrusion (sprinkler, leaky pipes)

    These policies may provide named-perils coverage, so only perils specifically listed on the policy are covered. Some insurers allow you to customize your policy. Optional coverages that may be available as add-ons include:

    • Vandalism and malicious mischief
    • Theft
    • Liability
    • Other structures and assets (garage, surrounding land)

    Important

    Insurance for unoccupied homes may be covered under a vacant home policy, but not always. Make sure your home has the right coverage for your situation.

    What Does Vacant Home Insurance Not Cover?

    Vacant home insurance typically doesn’t cover anything beyond the home’s structure, unless you add additional coverage. As previously mentioned, insurers may also ask that you meet certain requirements to be eligible for insurance claims, such as keeping the home at a minimum temperature.

    Note

    You might be unable to add liability coverage if your home has certain risks, such as a swing set, trampoline, or swimming pool.

    How to Get Vacant Home Insurance 

    You can get vacant home insurance as a policy endorsement (if your insurer offers it) or as a standalone policy. The endorsement is sometimes called a vacancy permit. Endorsements can change some of your current policy’s coverage until people live in the home again. Your home will be insured for some, but not all, of the perils covered in the standard policy.

    Important

    You must request a vacancy permit endorsement before your policy’s vacancy clause kicks in.

    If you need to buy a standalone policy, shop around and get quotes to compare prices. Companies such as Farmers, Foremost, and American Family Insurance offer vacant home insurance. 

    How Much Does Vacant Home Insurance Cost?

    Vacant home insurance policies could cost as much as 60% more than a standard home insurance policy. The latest report from the Federal Insurance Office showed the average national premium for an occupied home to be $1,737 after adjusting for inflation. Add 60% to that and it means an average vacant home policy could cost about $2,779—surprising, considering the home is empty of people and things. 

    However, insurers see vacant homes as high risk. For instance, there’s no one there to turn off the water if a pipe breaks. Empty houses can also attract vandals and intruders who damage the property. 

    The Bottom Line 

    An empty house might look peaceful, but to insurers, it’s a magnet for trouble. Whether you’re flipping a house, relocating, or just in between life chapters, vacant home insurance can save you from financial problems arising from an unattended house. Most standard homeowners policies have a vacancy clause, making this insurance essential for continued home protection. 

    If you know your home will be unoccupied for a while, talk to your insurer to see if they offer a policy endorsement and under what terms. If they don’t provide one, shop around for a policy, as they can be pricey.

  • Understanding Hurricane Insurance: What Coverage You Really Need

    Key Takeaways

    • Hurricane insurance is not a separate policy but involves specific deductibles on homeowners’ insurance.
    • Homeowners in states prone to hurricanes need flood and windstorm insurance coverage that can be separate or bundled together.
    • Hurricane deductibles are based on a percentage of the property’s insured value and vary by state.
    • Windstorm insurance may cover wind damage from various storm types, including hurricanes, tornadoes, derechos, and other high-wind storms.
    • In some states, making home improvements can lower insurance premiums in hurricane-prone areas.

    What Is Hurricane Insurance?

    Hurricane insurance doesn’t exist as a separate type of policy. The term usually means a hurricane deductible on a homeowners insurance policy, which is the amount a homeowner pays before the insurer covers hurricane damage. This deductible, based on a state-mandated percentage of the property’s value, is common in 19 hurricane-prone states and the District of Columbia.1

    It can also mean particular types of catastrophe insurance that cover flooding or extreme winds. No state requires homeowners to have this coverage; however, mortgage providers in high-risk states such as Florida, Louisiana, North Carolina, Texas, and others typically require it.

    Exploring Hurricane Deductibles and Their Impact

    Hurricane deductibles are separate from other perils or regular homeowners insurance deductibles and are based on a percentage of the home’s value. While the other peril portions of a homeowners insurance policy deductible are a fixed dollar amount—say, $500 or $2,000—a hurricane deductible might be 2% to 5% of a home’s insured value, or $2,000 to $5,000 for every $100,000 in coverage. The deductible varies by state and the property’s exposure to possible risk.

    Hurricane deductibles first developed in 1992 after Hurricane Andrew inflicted major losses on homeowners insurance companies in Florida, but they became more widespread in 2005, in the wake of Hurricane Katrina. Insurance companies turn to reinsurers when they’re having trouble paying large amounts of claims all at once, but even reinsurance companies struggled to cope with such enormous losses. As a result, insurance companies began requiring hurricane deductibles in 19 states and Washington, D.C. Homes in these states, which are all on the Gulf of Mexico or Atlantic Coast, are susceptible to hurricane damage.

    A homeowner is usually required to pay a hurricane deductible if there is a named hurricane in the area. Sometimes, a severe tropical storm triggers the deductible. The hurricane deductible applies to any damage until the storm is downgraded. Again, rules vary slightly by state.

    Even when a hurricane deductible doesn’t apply, a windstorm deductible might. A windstorm deductible applies to damage from any kind of high wind, such as from tornadoes, hailstorms, and hurricanes. The windstorm deductible can run slightly lower than a hurricane deductible, sometimes as low as 1% of the property’s insured value.

    States Where Hurricane Deductibles Apply

    The states/regions where hurricane deductibles apply are:

    • Alabama
    • Connecticut
    • Delaware
    • Florida
    • Georgia
    • Hawaii
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Mississippi
    • New Jersey
    • New York
    • North Carolina
    • Pennsylvania
    • Rhode Island
    • South Carolina
    • Texas
    • Virginia
    • Washington D.C.

    Insurance Policies Covering Hurricane Damage

    Homeowners should also be aware that even if they pay a hurricane deductible, gaps in their coverage might exist. Most homeowners policies don’t cover flooding caused by an outside natural event, like a hurricane. Property owners need a separate flood insurance policy to cover such water-related destruction or damage.2

    Important

    Most standard homeowners policies will cover some damage caused by hurricanes—mostly related to the heavy wind that, say, rips shingles off a roof or causes a tree branch to snap and crash into a window.

    Also, homeowners insurance policies in some hurricane-prone states won’t pay for wind-related damage. So, if you want to protect your property, you must purchase separate windstorm insurance. In this case, all wind damage or destruction would fall under this policy instead of the traditional homeowners policy. On top of hurricane coverage, windstorm insurance applies to problems stemming from tornadoes, cyclones, and other types of high-speed winds.2

    Calculating Hurricane Deductibles: Factors and Formulas

    To some degree, depending on the state, insurance companies dictate the level of the hurricane deductible and where it should apply. However, insurers’ hurricane deductible plans are subject to state regulations. Rhode Island, for example, sets a cap of 5% on hurricane and windstorm deductibles.

    In hurricane-prone Florida, the state requires homeowners to have the option of a $500 flat-rate hurricane deductible. Premiums may, of course, be higher than if you choose one of the other mandated options: 2%, 5%, or 10% of the insured value of the residence.

    In some states, homeowners may pay lower insurance premiums if they make improvements to their home to minimize damage from a hurricane, such as installing storm shutters or hurricane-resistant laminated glass windows and doors.

    Are Wind and Hurricane Insurance the Same?

    A windstorm insurance policy may be different than a hurricane insurance policy. With windstorm insurance, coverage is for damage caused by wind only. While there is no specific “hurricane insurance,” this insurance may refer a a combination of a windstorm policy, flood insurance, and homeowners insurance.

    Is Hurricane Insurance the Same As Flood Insurance?

    Hurricane insurance and flood insurance may sometimes be considered the same. Flood insurance covers damage from flooding, which may include flooding caused by hurricanes, but could also cover damage from other causes, like a leaked pipe. Hurricane insurance is typically a combination of flood and windstorm insurance, which covers damage caused by wind, such as from hurricanes.

    Are Hurricanes Usually Part of Homeowners Insurance?

    You may have to get separate flood insurance and windstorm insurance to cover hurricane damage. These policies may not be part of homeowners insurance; however, some policies may include windstorm insurance. Most standard homeowners insurance won’t cover flood damage.

    The Bottom Line

    Hurricane insurance can be a valuable tool to protect you from financial hardship in the event your home suffers damage from a hurricane. Whether hurricane insurance is right for you will depend on several factors, including the risk that a hurricane will damage your home and your financial situation. Consider consulting a financial advisor for guidance with your specific needs.