ATVs and Boats Not Covered On Your Home Insurance
March 31, 2008
A few years ago, my old neighbor left his garage open when he went to the store. In the garage was a trailer with a couple of nice ATVs resting comfortably. They sat there most of the time but he took them frequently to the dunes to play. When he came back from the store, a quick 15 minute trip, the trailer and the ATVs were gone.
Do you keep your ATV or boat stored in the garage when you’re not using it? Do you think it’s insured Read more
Yes! You Can Monitor Your Teen’s Driving Even When You’re Not There
March 28, 2008
According to an article by the Insurance Information Institute, drivers age 15-20 are responsible for 12.9% of all fatal crashes. They Also have the highest rate of fatal of all age groups and motor vehicle crashes is the number one cause of death for this age group.
How can we protect our kids?
- Limit passengers allowed when driving. Drivers with passengers age 8-17 are more likely to get in an accident then driving without a passenger or with passengers age 25 and older.
- Limit where they’re allowed to drive to streets with lower speed limits.
- Encourage them to wear their seat belts.
We can’t be with them all the time so it’s difficult to monitor what they’re doing. Or is it?
There are products out there now that allow you to monitor your child’s driving behavior. They’re fairly inexpensive worth every penny for the peace of mind they provide. GPS Technologies Safetrack is one you can look into. Depending on how much detail you want to monitor it can alert you on your cell phone when they exceed a certain speed set, travel outside a certain distance from home, even locate them on a map via GPS with your computer.
Wouldn’t it be nice to know your teen is actually at the movies tonight and arrived safe? Now you can.
Insurance For Your Condo, What Are The Basics?
March 27, 2008
If you own a condo, there are often many questions about what your association’s insurance will cover and what it won’t cover. Also, we often hear, “Why do I need insurance when the association has insurance?”
What a unit owner policy covers:
Personal Property: This is your stuff. Turn your home upside down and shake it. Everything that falls out is your Personal Property. Your clothing, furniture, dishes, etc. and practically everything else not physically attached to the building.
Dwelling: This is the stuff attached to the building and the building. You could be responsible for carpet, drywall, cabinets, light fixtures, bath fixtures, etc. You have to read the CC&Rs to determine how much is your responsibility. Every association is different so be very careful here.
Loss of use: If you cannot live in your home because of a covered loss the unit owner policy can pay for reasonable additional living expenses you experience because of the loss.
Guest medical payments: This pays for the medical payments, regardless of fault, to guests that are hurt on your property or in your care and control.
Liability: Pays for bodily injury and personal property damage to other people that you are legally liable. If someone comes onto your property and trips and is injured because of your negligence to take care of the property, this will pay the claim (bodily injury). If you are cutting down your tree on your property and it falls onto the neighbor’s home and damages their home it would pay to repair the damaged portion of their home (property damage). There are many other examples that fall into these categories so open your mind. This also pays for legal defense costs above and beyond the actual claim paid if you are sued.
If you own a condo but rent it out, there is a similar policy to protect your interest and liability as a landlord.
If you own a condo, your association policy does not cover these items. It’s that simple. It’s up to you to pay for these if something happens, that’s why there’s insurance.
Hulk Hogan And Parents With Teenage Drivers
March 25, 2008
Hulk Hogan and his wife are being sued for their 17-year-old son’s car accident. Hogan’s 17 year old son Nick was in a car accident on Aug. 26, 2007. Nick lost control and ran into a tree. The passenger is critically injured and will require care for the rest of his life. The lawsuit hopes to prove Hulk and his wife Linda are liable for the negligence of their son.
As a parent, it’s scary when your kids start driving. You’re worried about their safety. You pray they behave responsibly. Plus, the price of your car insurance almost doubles.
Some people try to save money by placing the title of a car in the teenager’s name and making their teenage driver buy their own car insurance with minimum liability limits. The parents then exclude the child on the parent’s policy. This seems like a good idea because the child has little or no assets and a minimum liability only policy would lower their cost.
However, in Arizona we have something called the “Family Purpose Doctrine.” It has been held up in the courts that a parent is responsible for their teenage driver’s accidents (Click here to read the court opinion of Country Mutual Insurance v Hartley).
Now, only the court can determine what constitutes “Family Purpose” in a teenager’s accident. But, as a parent you may be better served to insure the child on your policy. And, if they carry their own insurance you don’t want to exclude them from your policy. If you exclude the teen driver on your auto insurance policy and the teen driver has an accident then you have no insurance company to pay for your defense costs or any portion of the claim.
If you have any doubt or still want to insure your child on a separate policy, consult your attorney. This practice will not insulate you from the actions of your child, as shown by Hulk Hogan’s son Nick. Their accident was in Florida so it will be interesting to learn the outcome of this case.
Or, get a quote from our agency and let us shop our “teen friendly” insurance companies to find better rates.
What Is Uninsured and Underinsured Motorist Coverage?
March 24, 2008
Uninsured Motorist and Underinsured Motorist Coverage (UM/UIM) have to be two of the more misunderstood coverage options available on your auto insurance policy. While they do protect you if you are hit by an uninsured or underinsured driver, the type of damage it actually pays for is where the misunderstanding takes place.Recently I wrote about what Auto Liability Insurance on your auto policy covers. There are two basic categories: Bodily Injury and Property Damage Liability. Bodily Injury pays when you hurt or kill other people. Property Damage Liability pays when you hurt or break other people’s property (cars, mailboxes, light poles, homes, etc.). Please see that article for more details on Auto Liability Insurance.
UM/UIM pays for Bodily Injury damage when the other person does not have any or does not have enough Bodily Injury Liability insurance to pay for your damages. If you are the victim of a hit and run or the person simply has no insurance and you’re injured or killed, your Uninsured Motorist could pay you damages. If the person does not carry enough Bodily Injury Liability Insurance to pay for your damages, your Underinsured Motorist could pay. Of course, the most it will pay is determined by your policy limits.
A comment we often hear is, “Well, I just paid off my car, I want to remove collision coverage. If I get in an accident that’s my fault I’ll pay for the damage to my car. If someone hits me, I have Uninsured and Underinsured Motorist to pay for the car if they don’t have insurance.”
Remember: UM/UIM pays for Bodily Injury only. These will not pay for Property Damage to your car. If you want coverage to pay for damage to your car, even if it’s not your fault, you need to keep collision and comprehensive (other than collision) coverage on your car.
Do You Own A Vacant Home?
March 21, 2008
The change in the real estate market has caused some people to move and vacate their previous home while leaving it on the market. Or, they have listed the home for rent and are unable to find a renter to lease.If your home is vacant you need to make sure your policy is up to date. A homeowner insurance policy or landlord insurance policy will not provide coverage for vandalism and malicious mischief when a dwelling has been vacant for more than 60 consecutive days before a loss. With many ‘on the corner’ insurance companies, vandalism and malicious mischief is excluded if it’s vacant for only 30 days.
This may not seen too important because if your home is vandalized you may be able to repair small damages. However, if the vandals decide to take the lighter fluid they found and set the home on fire as they’re leaving, you have no coverage and a totally destroyed home!
A second (or third) home is not considered a vacant home/dwelling. Since you usually have furniture and keep it in good condition to visit frequently, it’s considered an occupied home for insurance purposes.
Now, if it really isn’t a second home and the home is vacant, you need to buy a vacant home policy. There are companies that provide policies specifically for vacant homes. Vacant home insurance policies are usually very competitively priced to a homeowner policy. This is what these insurance companies specialize in writing and they do it well.
If you have a vacant home and are slightly unsure what to do, contact your agent. They can tell you what meets their insurance company’s guidelines and then you’ll know how to proceed.
Do I Really Need This Insurance For My Business?
March 19, 2008
This is a question I hear a lot when it comes to lesser known policies like Professional Liability (E&O), Employment Practice Liability (EPLI), and Directors & Officers (D&O) Liability Insurance. However, it happens a lot with General Liability too. My answer when a person asks, “Do I really need this insurance?” is usually “No. You don’t need any insurance. However, do you want the protection it provides? You can weigh this protection against the cost.”
People buy insurance because they want to transfer the potential cost of large losses to someone else. It’s the same reason we finance the purchase of cars and homes. Since you don’t want, or have the ability, to shell out a large chunk of cash to make a purchase now you opt to borrow and make smaller monthly payments.
I don’t care how perfect you are, you can be faced with a lawsuit. If you don’t have insurance, you get to pay the attorneys. At $150 to $250 an hour, needing your attorney to simply write a letter can cost you thousands. Now, the legal process can take months or years and one lawsuit can quickly add up to hundreds of thousands of dollars in legal fees. This is before the lawsuit is settled, ruled on, or dismissed! Can you afford this?
This is where the liability insurance policies shine brightly. Most people look at the coverage type and policy limit and think, “I’ll never have a claim like that.” And, you may be right. However, one lawsuit could bankrupt your company with legal fees, even if you’re right. I heard Bill Clinton’s defense costs against Paula Jones were over $1.5 million until it was finally settled and Jones received $700,000 in her sexual harassment case (I’m going from memory so please forgive me if my numbers are off slightly. And I’m not saying he was right either. It’s just a well known example.).
A good policy provides defense costs outside the policy limits. The insurance company can spend millions defending you and you still have the policy limits to pay if the judge rules in favor of the other party. However, be careful, some policies defense costs are inside policy limits and will reduce the amount the policy can pay if you lose.
So, do you need a policy? That’s up to you. How much risk do you like to take? What’s the cost over time versus the potential claim? Often, it’s much easier to pay a little each year than risk paying a large claim and legal fees. The answer is up to you.
A Critical Home Insurance Coverage Option You Want To Have
March 17, 2008
A typical home insurance policy has many built in limitations on coverage. One is a limitation on rebuilding costs. A basic home insurance policy will pay, up to the policy limits, only the amount to repair or rebuild your home to its original condition. This does not take into account any additional rebuilding costs which would be required by changes in laws and building codes.
There is an endorsement to help protect against this additional cost. It’s call ordinance or law coverage. It may be called building ordinance, building code, or other similar name depending on the insurance company you’re using.
So, what’s the big deal?
Well, building codes change. . .Often. Since the increased cost is not covered in your base home insurance policy this optional coverage adds coverage for three common building law requirements: demolition of the undamaged portion of a building, the increased cost of construction required for superior materials, and cost to clear land of debris after demolition.
Here’s an example. Just over 50% of a home is destroyed from a fire (or any other covered loss, it doesn’t have to be just fire). The base policy would only pay to rebuild the damaged portion. Without this endorsement you would have to pay for:
- The cost to demolish the rest of the home, where required by law.
- The cost to clean up the land after demolition.
- The increased cost to rebuild with superior material because of changes in building codes (examples could be needing to add fire sprinklers, upgrade electrical wiring, upgrade plumbing, etc.).
This is an optional coverage. Don’t assume it’s in your policy. If you don’t see it on your policy declarations page, ask your agent why. If they don’t know what you’re talking about, it’s time to find another agent.
Do I Need To Buy Insurance When I Rent A Car?
March 14, 2008
When renting a car there is no black or white answer to buying the rental car company’s insurance. Like all insurance, you need to look at the contract, the coverage, and the price to benefit provided. Now, with that said, there is good reason to buy and not to buy certain coverage from the rental car companies.
Liability Coverage - If you don’t carry your own personal auto insurance then you need to buy their liability insurance. This is legally required in most states and will help defend and protect you if you’re at fault in an accident. If you carry a personal auto policy, and are a named insured, then your liability coverage follows you in other autos for personal use (many court cases have held that this applies to U-Haul types and motor homes used for personal use only).
Physical damage to the auto - Here’s where it becomes messy. Physical damage can occur because of “acts of God,” accidents caused by you or accidents caused by other drivers. The rental car company doesn’t make a difference between these. They’re YOUR fault and they require you to pay for things like: loss of rental income, the vehicle’s “full value,” and immediate reimbursement for damages. What does all this mean to you?
Loss of rental income is the money the rental car company could be charging other people if the car wasn’t in the shop being repaired. Since they’re potentially losing money while the car is in the shop; they still want to earn their potential income. This is a hypothetical and your auto insurance does not pay for hypothetical situations.
A personal auto policy only covers vehicles up to “actual cash value” or the amount “necessary” to repair or replace the vehicle. Since you’re signing a contract to insure the vehicle’s “full value” you could fall drastically short if the car is a total loss. If the car you’re driving is one year old with 50,000 miles on it, you’re agreeing to buy them a brand new car with zero miles on it. You have to make up the difference personally because your auto policy will only pay to buy them another one year old car with 50,000 miles on it. This could mean thousands of dollars out of your pocket.
When you sign the rental car contract, you’re agreeing to immediately reimburse them for any damages. Your auto policy can take days to adjust a claim and finish the process. The moment there is damage the rental car companies will often charge your credit card the amount they think the claim will be and they may begin litigation to receive payment. Even though you gave them “proof” of your insurance they want to make sure they receive some payment for the damage in case your policy just lapsed from non-payment. Obviously, this could cause many problems for you especially if it takes a month to repair the car and now you have to pay your credit card bills.
If you’re renting a U-Haul, motorcycle, trailer or motor home, physical damage under your personal auto policy won’t be covered or is very limited (usually less than $1500 total). You’re best bet is to buy their physical damage coverage!
If you’re renting a passenger car, van or truck on your vacation, should you buy the insurance from the rental car company? That’s up to you. It could be a small price to pay for the ability to simply walk away and never to think about it again.
Your Insurance Agent Could Save You Thousands Of Dollars
March 13, 2008
Buying insurance is about as much fun as a rash.
There are companies that sell via internet, toll-free 800 numbers, through associations, and whatever manner they can . Insurance companies think if they cut out the agent their distribution costs are less. Many consumers like this option. That’s fine.
The more I see of these companies tactics, the less I like what they do. As a consumer, you need to be aware. We’ve had customers tell us they shopped and found better rates at some of these companies. When we compare coverage, the direct insurance companies often only give state minimum liability limits and remove important coverage options.
Imagine having an accident and finding out you’re not covered adequately for the lawsuit against you, you’re not covered for the medical bills, and you have to pay for your rental car.
One company’s website has an option for ‘lowest price’ when shopping. If you click that option it automatically defaults to minimum liability limits, doesn’t include common coverage options which creates gaps for many customers.
Anyone can remove coverage to lower rates. I’ll say it again and again…
“THE REAL COST OF INSURANCE IS THE PREMIUM PLUS THE COST OF ANY UNPAID CLAIMS!”
A good, knowledgeable agent can save you thousands…not only at claim but at policy inception too. When we go back with the customer and add in all the removed coverage options, the insurance companies we represent are usually less expensive than these direct insurance sources. And, you get an agent.
Buyer beware when using direct shopping companies. You have no recourse when you make the mistakes.
“How Much Should I Insure My Home For?”
March 12, 2008
It depends on who you ask. If you ask your Realtor®, they may say you have to insure your home for the market value. If you ask your mortgage broker, they will say it has to be enough to cover your mortgage. If you ask your insurance agent, they’ll say your home insurance needs to cover the replacement cost of your home if it’s a total loss.
You don’t need to insure your home for the market value because it’s just not necessary. The market value or appraisal value of your home is going to include the cost of land. Insurance companies don’t need to insure land. It doesn’t need to be replaced if your house burns down.
So how do you determine the replacement cost of your home? Insurance companies feed the construction details of your home into a replacement cost calculator. These details are the zip code, style, square footage, flooring, number of bathrooms, and other things. It also takes into account demolition, architectural, and other costs involved with rebuilding. In our office we use a third party cost estimator by one of the best companies in this business, Marshal & Swift.
Just like in the Three Bears, you don’t want to have a policy that’s too big and waste money. You definitely don’t want to have too little insurance on your home. You need to make sure your home insurance policy is just right.
Give Yourself An Umbrella Of Insurance Protection
March 10, 2008
A friend of mine is an insurance agent for one of those ‘on the corner’ insurance companies. He faxed me a copy of a letter that was being sent to his client from the claims department. It was a letter I showed everyone in our office to emphasize the importance of the protection we offer at our firm. Here is what the ‘meat’ of the letter said:
I am writing to inform you that our investigation has revealed that those claims being presented have a potential value which may exceed your policy limits of $250,000 per claim under your auto policy. XYZ Insurance Company (name changed) is not obligated to pay any amounts which exceed your policy limits. You may wish to consult legal counsel, at your own expense to advise you on this issue. (Bold added for emphasis)
I assure you that we will continue to make every effort to protect your interest in this matter, and to attempt to settle this claim within your policy limits. In this regard please be advised that we recently received a phone call from the hospital treating Jane Smith (name changed), who was rear ended by your son. They have indicated that her medical bills exceed $700,000.
If this was sent to you, how would you manage to find legal help? How would you find the way to pay the amount above the $250,000 that their policy will cover? What assets do you have to lose now?
While this auto policy already has good limits, an umbrella policy would easily and inexpensively add additional coverage above the base auto policy. It also extends above your home, boat, motorcycle and other policies you may carry. A $1 million umbrella policy starts at around $15 per month. We highly recommend it if you:
- Have young drivers in family
- Own swimming pool
- Own recreational vehicle or ATV
- Own boat or other watercraft
- Own more than one home
- Own a dog
- Want to protect your assets & wages
You can easily get a quote on an umbrella policy from our website at www.AutoHomeLifeBusiness.com/umbrella.html.
Business Insurance And Signing Contracts, What You Need To Know Now
March 8, 2008
As a business owner, when you sign a lease or other contract there is usually a clause about your responsibility to carry insurance. It could require commercial general liability, workers comp, business auto liability and/or professional liability insurance. Too often we business owners, out of their eagerness to just get it over with, sign the contract without really reviewing this clause.
Then you call me, the insurance agent, and tell me you need a certificate of insurance to meet the requirements of your contract. And this is where problems start.
Recently, we’ve seen a handful of wrong or difficult to place requests in these insurance clauses. Here are a couple of examples I’ve recently read:
- $2 million combined single limit commercial general liability.
- $2 million per occurance/$5 million aggregate commercial general liability.
The first one is actually a description of business auto liability coverage, even though it’s asking for commercial general liability (a huge difference in the two).
The second is simply difficult to place because a standard commercial general liability policy would be $2 million per occurrence/$4 million aggregate. Now I have to ask the underwriter to make exceptions. If they won’t make the exception then I have to find a company that will. The client also gets to pay for the extra $1 million aggregate above the ‘typical’ policy.
Naturally, you want to have attorneys review your contracts before you sign them. These were reviewed and missed. Not all attorneys understand insurance language or what insurance industry standards exist.
I would also recommend you have your insurance agent review any insurance clause before you sign any contract. At least then you’ll have any idea how difficult or expensive it will be to fulfill the contractual obligations you’re agreeing with when you sign.
Is Your Insurance Agent Letting You Down?
March 7, 2008
Arizona is one of a few states where insurance agents are not required to take continuing education classes to keep their license. On one hand I think this should be changed because of the great disservice so many agents give to their customers. On the other hand I love it because we constantly find little mistakes that other agents miss that help me gain customers for life.
When quoting policies all day we seem to run into the same mistakes from other agents over and over. It’s little coverage options like building ordinance/code, jewelry riders, water backup, personal injury liability, recreational vehicles/ATVs, boats, the list goes on. Missing one could be a huge cost to you when a claim occurs.
Now, you may be thinking, “Well, you’re just trying to sell me more insurance.” And, you would be right. However, wouldn’t you rather have the coverage at claim time? Wouldn’t you at least like to have the opportunity to accept or reject the coverage? Often the coverage missing is only a few bucks a year, maybe $10, $50 or $100 more to add and it will give you $1000, $10,000 or $100,000 in protection.
Unfortunately, since there is so little education required in the insurance industry most agents don’t think about it. Insurance policies are constantly updated, exclusions are added or changed. And so many agents don’t really understand what’s there. They quote what you said because you just want the lowest price. Right?
I can’t imagine the anger someone experiences when the claims adjuster says, “If you read your policy you would know it’s not covered.”
Be careful and remember, your agent only needed to pass the test with 70% to earn an insurance license…10 years ago.
Home Insurance, Don’t Be Fooled By The Use Of “Replacement Cost”
March 5, 2008
When I’m talking with prospective clients, I’m often surprised at how many people don’t realize that your home insurance does not guarantee the rebuilding of your home. The typical policy issued by almost all insurance companies including Allstate, State Farm, Farmers, Nationwide, and the many other ‘on the corner’ insurance companies will only pay up to the policy limits. They then add an additional percentage for “Extended Replacement Cost.”What is this “Extended Replacement Cost?”
When you buy your homeowner insurance there is an amount listed for dwelling coverage. This is the maximum amount the insurance company will pay to repair or replace your home (assuming it’s insured to the proper value but that’s another article). The “Extended Replacement Cost,” or similar term, simply adds an additional 20% to 50% to the dwelling coverage to help pay to replace your home.
So, if you have a home insured for $200,000 with a 25% extended replacement cost, the most it will pay is $250,000. Any claim above that amount is going to come out of your pocket. This also doesn’t cover some of the other issues you’ll have to pay for like increased cost due to the changes in building codes. Your home policy only pays to rebuild to original condition.
There are still policies out there that do guarantee replacement cost if there is a total loss. A handful of insurance companies are willing to take this risk. The best part…generally it’s not any more expensive than these “extended replacement” policies.
Read your policy carefully. If you don’t know what you’re reading, find someone that can explain it to you. As I like to say, “The true cost of your policy is the premium plus the amount of any unpaid claims.”