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Regain Control – Uninsured/Underinsured Motorist Coverage

The Insurance Research Council estimates that approximately one out of every eight drivers  in the United States is uninsured. The odds aren’t in your favor when you think about how many people you pass on the highway during your morning commute. However, with the appropriate coverage, there are ways to prevent your run in with an uninsured/underinsured driver from being a costly experience.

How does it work?

Uninsured/underinsured motorist coverage will help protect you if you are in an accident in which the other driver is at fault. If they are uninsured or don’t have enough auto insurance, this coverage will help you pay the bills for the damage they’ve caused.

If the person at fault in underinsured, their insurance company will usually pay for the damages they’ve caused up to the person’s liability limits, and then your provider will cover you for the remaining expenses up to the liability limits of your policy.

If you do file an uninsured/underinsured motorist claim, your insurance company will pursue the third party that caused the insurance loss to the person that is insured. Ideally, this would be the end of it; but recovering may not be possible, as many people who don’t have the proper insurance coverage also don’t have collectible assets. This is why it’s important to have uninsured/underinsured motorist coverage.

Additionally, when you file an uninsured/underinsured motorist claim, you become a third party to your insurance company. This means that you will get be reimbursed as if you were filing in opposition to your provider.

What’s covered?

Uninsured motorist coverage will most likely cover you and your passengers for medical expenses, pain and suffering and lost wages that occur as the result of the auto accident. This coverage also extends to victims of hit-and-runs and can also help cover personal property that was damaged in the accident (such as your vehicle, house or fence).

What are my options?

Much like your personal auto coverage, there are usually two types of uninsured/underinsured motorist coverage that are offered: underinsured motorist bodily injury coverage and underinsured motorist property damage coverage. Bodily injury coverage tends to be more common and some states, including Minnesota, require it as part of the overall auto policy. Property damage coverage is not offered everywhere, but when it is, it’s a good idea to get.

When deciding on your bodily injury coverage, you will need to pick what limits you would like: split limits or combined single limits. For split limits, your coverage will differ based on how many people are injured. A combined single limit is a single amount that your insurance company will pay for all bodily injury as a result of the accident.

It’s wise to have uninsured/underinsured motorist coverage limits that are higher than your at-fault driver’s bodily injury liability coverage limits. Otherwise, you many not receive the benefits you’re seeking. When deciding on the limit that is best for you, look at how much your car is worth, what kind of medical insurance you have, and if you have access to short and long term disability at work.

In Minnesota, the minimum limits are 25,000 dollars per person and 50,000 dollars per accident. Just like with your own liability limits, increasing your uninsured/underinsured motorist limits beyond the minimums is a good way to make sure that you are protected.

Regain control.

You never know when you could be involved with an uninsured/underinsured driver. It’s unfortunate, but many people aren’t adequately insured and this can create circumstances that are out of your control. Uninsured/underinsured motorist coverage can help you regain some of that control.

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Coming of Age – Transitioning Off of Your Parents’ Insurance

There are many reasons why kids want to stay on their parents’ insurance plan for as long as possible: Parents tend to have better credit, live in a more favorable zip code and have a better insurance score; and all of these factors contribute to lower rates. However, the good times don’t always last.

Once you’ve reached a certain age, you can no longer receive the benefit of your parents’ coverage. This is most notable with health insurance under the Affordable Care Act where children can stay on a parent’s health insurance plan up until the age of 26. With other insurances, such as auto insurance where the length of coverage under a parent account is more vague, companies have a way of getting you off your parents’ plan eventually. For example, in the event that a claim is filed on account of the child or if there is a loss, the insurance company will make an underwriting request to properly represent the policy/household. This will often come down to writing the child out of the policy and on to their own.

Alas, the time will come where you can no longer be covered under your parents’ insurance plan and you’ll have to buy your own. *Dramatic Sigh* Now, how do you prepare for this feat of adulthood?

Things to Consider…

Let’s say you’re going out to buy a TV for the first time. You’ve worked, you’ve saved, and you’re ready to start watching Netflix on a screen that isn’t your laptop. Are you going to just buy the first TV you see at the lowest price, or are you going to do some research to make sure you’re getting the most bang for your buck? Unless you want to go back to the store in six months to replace your TV, you’re probably going to want to do some research and make sure that you’re getting the best deal and quality that you can.

The same should go for your insurance. You don’t want to grab the lowest price policy and get out of there; you should shop around and make sure that you are getting the right amount of coverage. If you just jump to the lowest price, you’re poorly representing yourself to insurance companies. This will keep you paying more for insurance for the rest of your life and will put you at a greater financial risk if you have to file a claim.

Sure, stepping out on your own will be a bit of shock. Being cushioned by your parents’ good credit score and insurance history kept your prices low. But, let’s face it, a young, single adult driver will inevitably look like more of a risk than a 50 year old, financially stable, suburban dwelling parent, leading to higher premiums.

Just because you don’t want to pay more, doesn’t mean you should settle for less coverage though. It is recommended to at least match the coverage your parents’ policy provided, assuming that they were at an adequate liability limit of at least 100/300. Don’t risk the financial independence that you’ve worked so hard to achieve by having insufficient insurance. Upping your coverage from a minimum limit to a more sufficient one will only cost you a few extra dollars per month. A small price to pay for greater protection.

Remember…

When transitioning off of your parents’ insurance plan, remember to do your research and not settle for low limits because they look cheap and you don’t plan on filing a claim any time soon. What looks cheap now, can be incredibly expensive down the line when you unexpectedly have to file a claim and your parents aren’t there to bail you out. By getting an adequate policy now, you will help protect yourself and your family’s future.

Getting new coverage is one thing, understanding what you’re getting and why you’re getting it is another. Take the time to learn about different plans and contact an insurance professional to make sure your transition toward insurance independence is a smooth one.

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A Life Guard For the Risk Pool – Why did my rates increase even though I didn’t file a claim?

Ancient Romans gave us more than just the plot for Gladiator; they also provided us with an early understanding of insurance. In Roman culture, receiving a proper burial was incredibly important, but also expensive. An individual soldier would not be able to afford the cost of the burial in the event of his death. Therefore, each soldier would regularly chip in a small amount of money to a community soldier fund. The money would then be put towards the burial ceremony after a soldier’s death. This is known as a risk pool. Millions of people pay a small amount into a risk pool so that the same risk pool can pay out millions of dollars to one person if needed.

This leads us to our next point, why did your rates increase even though you didn’t make any claims?

Inflation Happens

An insurance company is, above all, a business. It’s not a bottomless pit of money and needs to generate revenue so that it can accommodate claims and continue to insure you. If 500 million dollars worth of claims were filed one year, the company better hope that, at the very least, 500 million dollars are coming in to offset this, despite the fact that expenses don’t just stop short of claims filed.

Insurance covers many things: medical costs, property damages, lawsuits, etc. However, due to inflation, those expenses don’t stay constant from year to year. An item purchased for 2,000 dollars in 2006 will cost you close to 2,352 dollars in 2016, about a 17.6 percent rise over 10 years. In order to account for these increased prices, your money that goes into the risk pool will also need to increase so that the insurance company has enough money to cover all aspects of a claim that most likely have increased in price since your initial quote.

Risky Business

Insurance companies evaluate the risk that they will have to pay off a claim and take steps to manage that risk. Your credit score can be indicative of how prone to risk you are and predictive of your financial responsibility. If your score has taken a turn for the worse, your insurance company will factor this into your rate because they see it as something that can increase the likelihood of you filing a claim with them.

Additionally, insurance companies use statistical measurements to analyze external factors such as the frequency of collision claims in your neighborhood, probability of insurance fraud or if your car type is more likely to be stolen. These numbers can cause an increase in premiums even though the circumstances are completely out of your control. To be equipped for this increased risk, the insurance company may increase your rates to prepare for them to have to pay off a potential claim.

It’s Only Natural

It’s only natural that your insurance rates increase. Your insurance company needs to take into account ways to keep up with demand, rising prices and increased risk. And raising premiums are usually the answer, even if you didn’t file a claim specifically. Contributing more money to the risk pool helps make sure that you’re covered when you need it most.

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The Limit Does Exist – The Importance and Minimal Cost of High Liability Limits

Nobody expects to be an at-fault driver, but with over 4 million licensed drivers in Minnesota, and the average driver getting into an accident every 17.9 years, having to pay off a liability claim has a realistic probability.

Let’s start with liability insurance. What is it? In the chance that you’re at fault in an auto accident, liability insurance helps cover you for the bodily injuries and property damage that the other person sustained. The liability limit is the maximum amount of money that the insurance company will pay to cover these expenses. The higher the limit, the more coverage you receive in a claim, lowering the risk of your personal assets being seized.

Why go for a higher limit?

Along with the auto insurance policy you choose, Minnesota law requires a minimum amount of liability coverage for all licensed vehicles.  These minimums cover 30,000 dollars per injured person with up to 60,000 dollars per accident, along with 10,000 dollars for property damage (30/60/10). This may seem like a lot of money, but many times this only covers a small fraction of the total cost. According to data gathered by Thomson Reuters, in 2012, the average vehicle liability award was 298,731 dollars.

By purchasing a higher limit, you protect your assets from potentially being seized if the claim exceeds your limit. It is recommended to get a liability insurance policy that covers at the very least 100,000 dollars per person and 300,000 dollars per accident, along with 35,000 dollars to cover property damage (100/300/35). These are more valuable as your minimum limits and should only go up from there.

This property damage number has been established to cover the average price of a car (around 35,000 dollars); and therefore, the property damage limit will cover the average car on the road. Makes sense. However, not every car on the road is the “average car.” There are Mercedes and Bentleys roaming around too, valuing over 100,000 dollars. Not only that, but there is the possibility of a multi-car crash, which could add up to the price of these luxury cars, if not surpass it very quickly. That 35,000 dollars in property damage isn’t going to cut it.

To account for these realistic and expensive scenarios, a more adequate liability limit would be 250,000 dollars per person and 500,000 dollars per accident, along with 250,000 dollars in property damage (250/500/250). Often times a car accident isn’t as simple as hitting one low-value car. In 2014, there were 78,396 reported traffic accidents in Minnesota, involving around 190,700 people. Crashes can easily become multi-vehicle and multi-person.

By paying just an extra three to five dollars per month to get from a 100/300 plan to a 250/500 plan, you could be saving yourself hundreds of thousands of dollars in liability claims. The five dollar latte that you buy every morning isn’t worth 500,000 dollars of out of pocket cost. By putting those five dollars towards your auto insurance policy, you can help kick that caffeine addiction and contribute to your financial stability.

What is at risk?

When considering the limit you want as part of your auto insurance policy, think about how much your assets are worth. In the instance that you cause an accident, the insurance company will only pay up to your limit in a claim; the rest is your responsibility. Even if you feel as though you have nothing to lose, liability claims can take more than just your current assets. You could be affected in your future income as well.

Future Wages: Your ability to work is one of your strongest assets. A court can take 25 percent of your future earnings for as long as it takes to pay off a judgment. Saving up for a vacation? Trying to pay off your student loans? Well, those plans could be put on hold if your limit isn’t high enough.

Liquid Assets: Cash, checking account, savings account, stocks, certificates of deposit. These are all vulnerable in a liability case. Luckily, your 401(k) and Roth IRA are usually exempt. Nonetheless, your life savings could be gone in the blink of an eye.

Personal Property: Anything that belongs to the at-fault driver, from furniture to appliances, that have a cumulative value that exceeds 10,350 dollars are at risk. Additionally, wedding rings and any other symbols of marriage in your possession that value around 2,817 dollars can be taken. Not only will you probably be sleeping on the couch, but you may not even have a couch to sleep on afterward.

Real Estate Property: Your home has value. If it is worth more than 390,000 dollars and is less than 160 acres of land, your property is at risk of being seized to pay off the claim. Real estate is a good investment and by getting a higher liability limit, you help secure that investment.

Auto: If you’re trying to get from point A to point B, an auto accident can make sure you’re taking public transportation to get to point B in the future. If your car is worth over 4,600 dollars, it can be taken to contribute to the claim.

By increasing your liability limits, you are also adding to the protection you have over your current and future assets. Increasing the liability limit in your policy from state mandated minimums to a comprehensive high limit liability of 250/500 can be between 10 and 20 extra dollars per month. This small adjustment can help save you thousands of dollars down the line and maintain your financial future.

The Five Steps to Take After an Accident

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Step 1:  Take stock of your condition and the condition of your passengers.  If it’s an emergency, step one is obviously “Call 911”. 

Step 2:  If possible, move your vehicle to the shoulder or place of relative safety.  This is especially important in the winter months, where many accidents occur due to icy conditions.  If your car slipped and lost control, it stands to reason that you’re in a lot of danger from other cars suffering a similar fate if you don’t get out of the way.

Step 3:  If there is another driver involved, try to collect as much information from him/her as possible.  A full name, phone number, insurance company and policy number is ideal, but even getting the name of the other driver and his/her insurance carrier can be the difference between getting your claim taken care of and suffering what basically amounts to a hit and run if you can’t find the other driver in the future.  It can also be important in this step to not admit any fault, regardless of how the accident came about.

Step 4:  If you’re not at fault, it’s especially crucial that you wait for the police and file a report.  When drivers are shaken up they might be gracious enough to admit to you on the spot that it was “totally their fault!” but recollections after the fact can be extremely defensive and unhelpful.  If you were indeed not at fault like you claim, a police report is an official record of events that tells your insurance company how to file it.  The industry these days is getting much better about not charging insureds for “no fault” accidents.

Step 5:  Call your agent!  It is your agent’s job to be the middle man between you and your giant, bureaucratic insurance company.  Call your agent and fill him/her in on what happened, even if both drivers walked away deciding that there wasn’t any need to get the companies involved.  The more information we have, the more we can represent you if the other driver’s company comes calling.  This also allows the agent to talk you through whether or not it’s worth filing a claim or not.  If you have a $1000 deductible and it’s going to cost $950 to fix your fender, you shouldn’t be filing a claim.  You’d be surprised how many of these come in!

 

Ten Summer Road Trip Driving Safety Tips

 

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Source: Jerry Wang Photography.

Ten Summer Road Trip Driving Safety Tips

 

Before You Go

  1. Check the pressure on your vehicles’ tires, including the spare, monthly. A good way to do this is to use a tire pressure gauge that you keep in your car. The correct pressure for your tires is listed on the driver’s doorframe and in the vehicle’s owner manual.
  2. Make sure to inspect your tires for signs of excessive or irregular wear. One nifty test for this is the Lincoln’s head test. Simply place in the tire’s tread with his head upside down and facing you. If you can see the top of his head, you have less than 1/16 of an inch of tread and need to replace your tires. Likewise, if you find irregular wear tread patterns, you need to rotate and/or realign your tires before you leave
  3. Summer can be a harsh time for wiper blades with the often intense summer heat. Ensure that you examine your blades for wear and tear before you leave and replace them if necessary.
  4. Check the level on the cooling system and flush or refill it if the level isn’t adequate. You should see markings on the side of the coolant overflow tank indicating the high and low levels for your car. Additionally, a low coolant level can actually cause your car to have no heat.
  5. Check your oil, brake fluid, automatic transmission, and power steering levels before you leave. Ensure that each of these fluid levels are full and take your vehicle in to be serviced if any fluid leakage is present.

Children Safety

  1. Heatstroke is one of the leading causes of death among children, so ensure that you check for your children in the back seat every time that you leave your car. A car’s temperature can rise over 20 degrees in ten minutes and that temperature can reach 110 degrees at an outside temperature of 60 degrees. Additionally, a child dies when his/her body temperature reaches 107 degrees which makes bringing them with you essential.
  2. Power windows cause many injuries to children’s fingers, wrists, and hands. To ensure that your kids are safe, teach them not to play with the window switches and not to stand on passenger arm rests. Also, properly restrain your kids in car seats or seat belts and check that their limbs are clear from the windows before raising them. If possible, utilize your vehicle’s power window lock switch to prevent them from playing with the windows.
  3. Unused seat belts and belts that have a retractor that locks if pulled all the way out can lead to some kids being entangled within the belt. To ensure that this doesn’t happen to your child, always ensure that they are properly restrained and make sure to teach them not to play with seat belts. You can also buckle unused seat belts, pull the belt out the way to the end without yanking, to ensure that they cannot play with unused seat belts.
  4. Younger children often enjoy playing in or around cars where they can end up trapped in a trunk which can lead to heatstroke or asphyxiation since temperatures can rise very quickly. Always supervise your children when they are in or around vehicles and lock your car doors and trunks as well as ensure that your keys are away from your kids. Additionally, teach your children that trunks are made for carrying cargo and not for playing and keep your rear fold-down seats closed/locked to keep them from climbing into the trunk from inside the car.
  5. When the key is in the ignition and turned to accessory mode, it is possible for the vehicle to be set in motion if a child moves the gear selector while alone in the car. This occurrence can frighten children and cause them to jump out of the car which can lead to injury. To prevent this, teach your children not to play in or around cars and never leave keys in the car. For extra precaution, engage your emergency brake every time you park.

Suggested Emergency Roadside Kit

  • Cell phone
  • First aid kit
  • Flashlight
  • Flares and a white flag
  • Jumper cables
  • Jack (and ground mat) for changing a tire
  • Work gloves and a change of clothes
  • Basic repair tools and some duct tape (for temporarily repairing a hose leak!)
  • A jug of water and paper towels for cleaning up
  • Nonperishable food, drinking water, and medicines
  • Extra windshield washer fluid
  • Maps

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Bad Coverage = Bad Rates! (And that’s WITHOUT an accident!)

When somebody asks for an insurance review or a quote, one of the most important pieces of information to gather is the driver’s license number.  This is because the license will usually allow the quoting system to look up and corroborate the prospect’s prior insurance coverage and liability limits.  When this information isn’t pulled up, I have to go off of what the prospect tells me, or I have to guess until I can confirm the prior carrier information.  This situation allows me to reiterate an extremely valuable point:  Your prior liability limits are a huge determining factor in the rate you’ll pay when you try to switch carriers, and it’s DRASTIC.   

Back to my scenario above:  when this happens, I’ll essentially give three quotes to the prospect and say that depending upon the current liability limits being A, B or C, the rate will be approximately X, Y or Z.  As I continued to enter improved prior limits in the system, from 50/100 to 100/300 to 250/500, the quote was improving by over $10 a month for each tier.  Here’s a table of this particular situation for easy viewing:

Prior Limits     Estimated Quote

50/100                 $115/mo

100/300               $91/mo

250/500               $79/mo

 

Generally speaking, the higher your liability limits, the more favorably the insurance company views you as a risk.  Oh, and by the way, Having better coverage also helps if you get in an at-fault accident.  The $50,000 check that the insurance company will write on your behalf when you have 50/100 coverage has to cover the $200,000 in medical bills and the $500,000 civil suit that’s filed against you.

For a further breakdown of these liability limits and what they all mean, check out the AUTO page.

In summary:

If you don’t improve your coverage for the sake of being adequately covered, improve your coverage for the sake of saving hundreds of dollars.

 

Bump up your current insurance coverages and call me in six months!