HOME AND AUTOMOBILE INSURANCE

Jamie Lee and Ross have had several milestones in the past year. They got married, recently purchased their first home, and now have twins on the way!

Jamie Lee and Ross have to seriously consider their insurance needs. Since they have family, a home, and, now, babies on the way, they need to develop a risk management plan to help them should an unexpected event arise.

Current Financial Situation

Assets (Jamie Lee and Ross combined):

Checking account, $4,300

Savings account, $22,200

Emergency fund savings account, $20,500

IRA balance, $26,000

Cars, $10,000 (Jamie Lee) and $18,000 (Ross)

Liabilities (Jamie Lee and Ross combined):

Student loan balance, $0

Credit card balance, $2,000

Car loans, $6,000

Income:

Jamie Lee, $50,000 gross income ($37,500 net income after taxes)

Ross, $75,000 gross income ($64,000 net income after taxes)

Monthly Expenses (Jamie Lee and Ross combined):

Mortgage, $1,252

Property taxes and insurance, $500

Utilities, $195

Food, $400

Gas/Maintenance, $275

Credit card payment, $250

Car loan payment, $289

Entertainment, $300

5.Mr. Ferrell, Jamie Lee and Rosss insurance agent, suggested a flood insurance policy in addition to their regular homeowners policy. Jamie Lee and Ross looked quizzically at the agent, as they do not live within two miles of a body of water. What is the basis for Mr. Ferrells claim for the necessity of the flood policy?

7.Considering the value of Jamie Lee and Rosss automobiles, what type of automobile insurance coverage would you suggest for them?

8.What financial strategy would you suggest to Jamie Lee and Ross to enable them to save money on their insurance premiums?