Frees Advice: Auto Insurance

Non-Owned Auto Coverage

So, I don’t own a car. Do I still need coverage?

When you own a car and carry car insurance protection, the policy typically has two very important sections of coverage. The first is liability and physical damage. Liability protects you in the event you are sued by others for injuring them or damaging their property. Physical damage is also known as collision and other than collision and these protect the car in case you damage it. These coverages follow the car. If you are driving, you are protected. If you loan the car, you are still protected for what others might do. Hit a parked car and the liability pays for the damage to the car you hit and collision pays to fix your car. If you loan your car and the other driver strikes a parked car, the same claim settlement occurs. (If you have loaned the car, the other person’s insurance does not get involved.)

The second area of protection follows you. This includes the coverage for medical bills related to car accidents and Uninsured, UM, and Underinsured Motorist, UIM, coverage. Pennsylvania is a “No-fault State.” This means that regardless of who is at fault for an accident, you are responsible for your medical bills. You must have the first $5,000 under your car insurance and can buy coverage up to $1.1 million. Uninsured and Underinsured Motorist protection provides coverage for you if you are seriously injured by someone else who has no coverage, uninsured, or insufficient coverage, underinsured.

If you don’t own a car, you probably don’t need liability coverage or physical damage coverage. But if you EVER ride in a car belonging to your children, the neighbor, a fellow church member, Uber or Lyft, you have the potential exposure of being injured and needing the medical coverage, or needing the uninsured and underinsured if you are seriously injured.

Remember, I started by saying you need to weigh the risk of exposure against the cost of coverage. Fortunately, the insurance industry has a policy designed to protect people who don’t own cars but still have the medical and UM/UIM exposure. Believe it or not, it is called “Non-owned Auto Coverage.” On average, it costs about $150-$175 for $500,000 of UM/UIM and the maximum medical. (This can vary based on locations and drivers).

Want to learn more about this important protection? Contact your insurance professional. Don’t have an insurance professional? Please call us at 610-933-4950.

COVID-19: Dude, Where’s My Car?

We’ve all seen the photos of the lack of smog and pollution over Los Angeles since the COVID-19 Stay-at-Home orders were put in place. Those who have quarantined may not have driven anywhere except the grocery store, if you even did that. So, what does all of this mean for your car and your car insurance? Most insurance carriers are providing monthly refunds since people are not driving. These have typically been issued for April and May with carriers reviewing this for any additional credits that may be issued because of the lock-down orders. What else should you be doing?

For some, you continue to drive to and from work without any changes. You are experiencing less traffic on the road and less congestion. (I grew up and learned to drive around here in 1976. Traffic levels now are similar to what I remember all those many years ago.) For some, you may be driving more. Healthcare workers, people in the medical fields, and others are working more to help protect us, keep us fed, and make sure we remain safe. (A big thank you to all of you.) Others may not be driving at all. Does any of this matter? Be sure to call your insurance professional to review all options on your coverage to see if you can make any additional cost saving changes, especially if you are no longer commuting.

Don’t have an insurance professional? Give us a call at 610-933-4950. Be safe. Stay healthy.

Children Moving Out of the House

Details. Details. Details…

They can be annoying in life, but they are VERY important in insurance. Who is an insured is defined within all policies. Most policies define an insured to include the named insured and “resident relatives.” This eliminates the need to add all of your children, aunts, parents, etc. But it also excludes coverage for children when they move out and establish another residence (typically, this is not while they are simply students away at school).

If your son or daughter moves out and takes one of your cars with them, you are still covered, but they have NO protection. There is no coverage for their medical bills and no coverage for their uninsured or underinsured motorist protection. What should you do? Put the car and the insurance in their name. What if they move out and don’t take a car? They should buy coverage called “Non-owned” coverage to protect them while riding in taxis, Ubers, etc.

What if they move out? Renters insurance provides them coverage for their personal liability exposure, protection for their personal belongings, and coverage for them to live someplace else if their apartment is damaged by a covered loss.

Questions about this? Call your insurance professional. Don’t have an insurance professional? Please contact us or call us at 610-933-4950.

COVID-19: Ways to Save

This year has gotten off to quite in interesting start with the COVID-19 pandemic. Cancellation of school, weddings, sports, and even the Olympics makes for challenging times. While these times have certainly been difficult, I like to think that they have also brought out the best in people.  We continue to look for ways to support the residents of Phoenixville and our local economy. This will certainly have a financial impact on many of the local businesses. It has also caused some of us to review our personal finances and find ways to save some money when possible. Here is a list of things that can be done to save money on your auto policy…

  • Electronic Funds Transfer: EFT payments don’t carry a $5.00 or $7.00 a month installment fee when billed by mail.
  • Recurring Credit Card: Most companies offer a discount for placing your auto policy on recurring credit card payments.
  • Paperless Document Delivery: Some companies, like Progressive, are providing small discounts for paperless delivery. Not to mention it is more eco-friendly.
  • Paid in Full: Our companies offer anywhere from 5% to 15% discount for paying your auto policy in full. If you can take advantage of this, it is the easiest way to save.
  • Multi-Policy Discount: Let us provide your homeowners, condo, or renters insurance. Every company provides a multi-policy discount for insuring your home and auto together.
  • Defensive Driving: If you are 55 or older, you can take a defensive driving course for a 5% discount on your auto policy.
  • Telematics Programs: Think you’re a safe driver? Insurance companies offer discounts for safe drivers through smartphone apps that track driving habits. Your discount is based off of your driving performance.
  • Review Collision and Other than Collision Deductibles: Increasing deductibles is an easy way to reduce your auto premium.

While you may be taking advantage of some of these discounts already, they are all great options to save some money. If you would like to setup Recurring Credit Card payments or Electronic Funds Transfer, or if you would like to discuss any of these money saving options, please give us a call.

Excess UMUIM

That could never happen to me, right?

For the first 30 years of my career, we have had insureds involved in serious accidents. Some paid the total amount of liability coverage under the policy. In those cases, it was $300,000 or $500,000. There was one loss, from about 10 years ago, that the total paid out for our insured was $4.5 million. Fortunately, they had a great insurance professional who made sure they had a liability umbrella and they were protected. But, how much is enough? If the judgment from 10 years ago was worth $4.5 million, how much would that settlement cost today?

In the last 5 years, the amount of litigation from car accidents and slip-and-falls has increased dramatically. At this time, we have 3 different claims where the demand is in excess of the policy limits even with a liability umbrella. The largest demand is $8 million. Most liability umbrellas have a maximum level of protection of $5 million. What is you want more coverage than that? You can buy what is called an excess umbrella. It is an additional policy designed to pay after your house or car policy, and umbrella have paid.

Buying liability coverage is one of the easiest decisions anyone can make. How much is enough? Buy what you can afford but understand that there could always be a claim in excess of your coverage. Run into a school bus and injury 42 children, the $500,000 of coverage you have on our auto policy will not be enough. Even if you had an additional $1 million, you still would not have sufficient protection.

The average cost of a $5 million policy for 2 cars, 2 drivers, and a house is about $600. The cost for the additional excess umbrella costs about $150 for each additional $1 million of protection. Ask your insurance professional to review all of your liability exposures and coverage options. Need an insurance professional? Call us at 610-933-4950.

Never Assume

As 2019 quickly comes to a close, we thought it would be good to revisit this year’s annual insurance review letter. The points addressed in the letter remain just as important as they were when we wrote this. Please come to us with any questions as we are happy to answer them before any issues arise.

Never Assume. (We all know what happens when we do…)

The insurance world is dynamic. Your life is dynamic. It is vital that you understand what coverage is available and how your coverage works. The purpose of this review is to let you know what you have and what is available. We ask that you review this and let us know what is changing in your life.

  • Never assume that there is coverage for renting a car while on vacation. Going on vacation and renting a car? Contact us to discuss the potentially uninsured exposures.
  • Never assume that the car dealer called to tell us you got a new car. Getting a new car? There are many new coverages that are available including Loan Gap and Replacement coverage we need to review.
  • Never assume your home or auto policy covers everything. For example, there are significant coverage exclusions for flood and surface water. You cannot even buy coverage for some exposures.
  • Never assume that your Uber, Lyft, VRBO, or Airbnb is covered. Do you earn money in the “sharing” economy? Call us to discuss the huge gaps in your protection.
  • Never assume your newly finished basement is protected if the sump pump fails. Renovating any aspect of your home should prompt a call to us to review the possible coverage change.
  • Never assume the level of liability protection on your home or car policy will give you enough protection in a serious loss. Have you spoken with us about an umbrella?
  • Never assume that your hair stylist, neighbor, plumber, butcher, or dentist know more about your insurance than we do. Call us if you have questions about what protection you have or what you need.
  • Never assume that your engagement ring and jewelry are properly insured. Homeowners insurance affords VERY little coverage for stolen jewelry and NONE for broken jewelry.

Thanks for taking the time to review all of this. Hopefully, it provides you with a better understanding of your
protection. We appreciate your business.

The Future of Insurance – Pt. III

“The only constant is change.” – Heraclitus
The future of insurance will be greatly affected by everything, and in my opinion, nothing. Insurance deals with the sudden and accidental loss both in your car and in your home. There are emerging technologies that will make for a “smart” house or they tout “accident avoidance.” It is important to recognize that it isn’t called a “brilliant” or “genius” house. Maybe they should call it “Just smart enough.” The auto technology is called “accident avoidance,” not accident prevention or elimination.
When losses occur, there can be two sides to claims. The first is when property gets damaged. There are new water meters that register how much water you use and when you use it throughout the day. If you spring a leak and extra water starts flowing the water meter shuts off the water in the house until you identify what is happening. Basically, you do not come home to an indoor pool. This is terrific and reduces water claims, but technology will never reduce lightning, wind, or hurricanes. Will the new technology reduce the cost of your insurance? Maybe. Will the cost of adding this new technology to homes increase the cost of home ownership? That’s almost a guarantee.
Self-driving cars. Back-up cameras. Accident avoidance radar. These are all wonderful innovations. They will REDUCE the likelihood of a claim, but not eliminate it. Trees will still fall on cars. Deer will continue to run into the sides of vehicles and no technology in the world can stop that. In spite of all of these advances, the frequency and severity of claims is on the rise. The cost of all of this technology has increased the average cost of an American made car to just over $28,000. Technology and safety features drive some of this increased cost, but the accidents just keep occurring. The costs of repairs of these increasingly advanced technological vehicles will continue to climb and continue to drive up the cost of insurance. The collision and other than collision costs will be directly affected.
 Even when “self-driving cars” do show up on the road, we will not escape being liable for things that happen with the cars. This is the other side of the coin when it comes to losses. These are the liability claims that will continue to occur with people texting while they are driving, or walking out into traffic while they are on their phones. All of those nifty words like reduction, avoidance, and prevention never translate to ELIMINATE. Until then, expect the cost of your insurance to continue to be subject to rising due to the amount of money that is paid in claims.

The Future of Insurance – Pt. II

Information storage occurs in bytes. First there were bytes, then kilobytes. Now? We have moved through terabytes and exabytes and we now measure data storage in yottabytes. What does all of this mean for insurance? Insurance loves the science of actuary. Actuary is the theory of large numbers. Give an actuary a sample with 1 million or more records, and they can reasonably predict things. They can tell you how many people will die, how many people will be in car accidents, and how many fires will occur. Historically, the theory of large numbers could tell you how many of these events would occur, but not to whom they would occur. Enter data storage and actuaries have more data around to plumb and review. They have determined new factors about traits we possess to better predict not only what will happen, but to whom.

When I first started to drive, car insurance was based on my age, where I lived, what I drove, and what my motor vehicle report looked like. Those are still important factors, but all of this additional data that can be mined allows carriers to understand characteristics that will make me more, or less, likely to have a loss. I call these “stability factors.’ The longer I go without a claim, the less likely I am to have a claim. This allows for carriers to provide “safe driver” and “accident forgiveness.” Some carriers provide renewal discounts the longer you are with them. Changing insurance carriers? Some carriers give discounts for the time you were with you prior carrier. Insurance companies love stability. Some give discounts if you review your insurance more than 8 days before the policy renews. Why? People who handle things before they are due are the same people who service their cars regularly, change the windshield wipers regularly, and that all translates to fewer claims and fewer claims means a lower premium.

Some carriers use credit while others use education. The average credit score has 350 unique aspects to it. Approximately 10 of those unique aspects tell whether I pay my bills on time. Paying your bills on time indicates stability and stability indicates the possibility of being involved in fewer accidents. On the other hand, some of these don’t make sense to me. I do not understand how I drive changes on whether I went to college. (Some of the brightest people I know didn’t go to college. Some of the dumbest people I know went to college.)

In the end, what we pay gets determined by an ever changing set of “underwriting” characteristics. The more we know about people, the more accurately what we pay will become. Prior to figuring out that smoking causes cancer, life insurance rates were all the same. Once they figured out the impact of smoking, non-smoker rates fell and smoker rates climbed. Those same things will continue as insurance companies continue to gather, store, and utilize all of the information that is available to them.

Stay tuned for the next installment that will deal with the smart house and accident avoidance technologies.

Continue to Part III

The Future of Insurance – Pt. I

It’s 1984 and little has changed in the insurance world. We still use manual typewriters. Insurance policies have $50 deductibles for home insurance and replacement cost protection for houses and contents doesn’t exist yet. Fast forward 35 years and the insurance world is entirely different. The fax machine has come and gone. Regular mail is almost a thing of the past and if it cannot be done on an app, one had better be in the design phase to correct that immediately.

The speed at which things used to get done was, by today’s standards, unbearably slow. Insurance is complex though. It is more complicated now, more than ever before. When I first started, if it wasn’t wind, fire, or lightning, there was a pretty good chance there was no coverage. Now? ID Theft is an increasingly important protection. You can buy coverage for a broken utility line. You can even get a car from Volvo on a subscription basis that has the insurance built right into the subscription. All of society’s changes create the expectation that everything can and should be done faster, yet all of these changes make the process of review and buying insurance more complicated than ever before.

In a series of upcoming blogs, we will address the ever changing landscape of available coverages. We will spend some time reviewing the concept of an insurance score, and I will discuss how technology, like the smart house, the internet of things, and accident avoidance tech will change everything… and nothing.

Continue to Part II

“But My Friend Pays Less”

Have you ever been out to dinner with friends or neighbors and you start talking about auto insurance? It always seems like your friend or neighbor is paying less than you. It doesn’t make sense. You’ve seen the dents in their car; you are definitely a better driver. Why are you paying “more” for your insurance?

We get this question at the office on a weekly basis. Everyone is looking to save money. Here are a few factors to consider when comparing your insurance costs with your friends:

Household Members / Driving Record: You may have more drivers than your friend. You may have a youthful driver. You may even have a son, while your neighbor has a daughter. Yes, young men are more expensive to insure than young women. Someone may have a speeding ticket or an accident. Accidents and violations can be a major driver for premiums in insurance.

Usage: If you have an hour commute to the city while your neighbor works from home, your rate may be different.

Type of Car: Some car insurance companies used to charge more for red cars because they were “faster.” They no longer discriminate based on color, but every vehicle has a different rating “symbol.” This symbol is used to determine the rate for the car. The symbol is determined by a multitude of factors, including value of the vehicle, damage it can cause in an accident, as well as likelihood of being damaged in an accident. We have seen a Chevy Corvette be less expensive to insure than a Honda Accord.

Territory: All insurance carriers breakdown territories, usually by zip code. If you live in a densely populated area, your rates will be higher than if you lived in a rural community.

Type of Coverage: This is the most important difference to consider. You and your neighbor could have the exact same cars, number of kids, work at the same office, and both have a clean driving record. His is still cheaper than yours! In the state of Pennsylvania, the minimum amount of liability insurance you need to carry is $15,000 per accident. You may carry $500,000 per accident. This is a huge difference in coverage and presumably the main reason your insurance may be more expensive. While you are paying more, you carry drastically more protection in the event of an accident. The few extra bucks a month is worth the additional coverage in our opinion.

Discounts: Finally, there are a few discounts that your neighbor may take advantage of that you do not. Many companies offer discounts for being paperless, paying via recurring credit card or EFT, or even paying your premium in full. Give us a call today to ensure you are taking full advantage of these discounts.

Call us today to review your auto insurance.