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Employees routinely use their own vehicles in their jobs or just to run errands for their employer. Does your company have protection in case of an accident and both your worker and your company are sued? If your company has a business auto policy, it should include coverage for ‘non-owned’ automobiles. These are vehicles owned by others (such as an employee) that are used in the business of the company. Generally a business auto policy only protects against losses involving company-owned vehicles, so it is important to add “non-owned” coverage.
Basic business auto insurance only covers employees while operating a company-owned vehicle to perform company business. An employee’s personal automobile policy typically excludes business use; so a coverage gap may exist if an employer’s vehicle policy is not modified to handle non-owned vehicles.
Another important consideration is whether the amount of non-owned coverage is sufficient. Any non-owned auto liability limits should be high enough to protect both the business and the employee. A company has to evaluate its particular coverage need in order to determine the proper level of coverage. Including ‘non-owned’ auto liability coverage on the business policy will provide coverage for the business over any deficiency in limit from the employee’s personal auto policy. This is coverage for the BUSINESS, not the employee.
If the company does not own any automobiles, it is possible to purchase business auto liability coverage for only the danger of loss involving its use of ‘hired and non-owned’ vehicles. The ‘hired’ portion would cover business travel and vehicle rentals; the ‘non-owned’ portion would cover employees using their own auto in the business.
Even if a business rarely uses non-owned autos, it only takes one serious accident to create a significant loss for the business. You should find an opportunity to discuss this coverage with an insurance professional.
Has your car ever suffered from diminished value (DV)? DV refers to damage to an auto that reduces its market value and there are several different types of DV:
Inherent DV: Describes a general conviction that a wrecked vehicle, which is then repaired, is less valuable than a vehicle that has never been damaged. This belief is unaffected by having information on the scope of the repairs or by whether there are any visible signs of repair. It is the perception that any significant damage reduces a vehicle’s worth.
Example: Will Prudunt is ready to get a new car. Although his ’07 model has served him well, he’s ready for a change. After finding his dream car, Will wants to make a good trade-in deal. Will and the sales rep looks over his ‘07 and agrees on a $5,950 trade-in. As they discuss the loan papers, the rep asks if the ’07 has ever been in an accident. Will slaps his forehead and says “Oops, I was rear-ended three years ago. My insurer paid about $3,000 in repairs.” The sales rep then picks up the finance paperwork and says that he will have to re-figure the agreement. When he comes back, the rep says that they can only offer him $4,400 on the trade-in. Will points out that he’s never had any problems with the car and that it ran even better after the repairs…the rep won’t budge on the lower trade-in offer.
Claim Related DV: This refers to any instance where an insurer’s action or practice results in an inferior vehicle repair. This is subjective because parties can argue over what is meant by inadequate repair. Insurer actions that could trigger claims-related DV include an insurer’s:
- insistence upon the use of selected auto repair shops
- requirement that a repair facility use after-market, rather than original, equipment and manufacturer parts
- refusal to pay for additional repairs identified by a repair shop
Repair Related DV: This refers to any instance where a repair shop’s action or practice results in an inferior vehicle repair. What is considered a below-standard result that is created by a repair shop may involve:
- completed work which includes below standard labor or improper procedures
- completed repairs where below-standard parts were used when an insurer authorized standard parts
- incomplete repairs when an insurer authorized that all needed repairs be performed.
Now that you have more information on the basics of DV, please be sure to read our companion article, “Is Diminished Value Covered?”
Insurance fraud makes victims out of insurance companies and their customers. In common terms, insurance fraud is lying to or deceiving an insurer in order to make money or to become insured. Some common fraud schemes include:
- “padding” (inflating the true amount of) a claim
- lying or hiding (concealing) important information when applying for insurance
- lying or hiding (concealing) important information when reporting a loss
- submitting false claims
- “staging” accidents
- Failing to report recovered property
- faking theft claims
- committing (home or vehicular) arson for profit
As a consumer, fraud should concern you since the cost is passed directly on to you in the form of higher insurance rates. You can play an important role in reducing fraud.
Fighting Auto Insurance Fraud
Persons attempting to commit insurance fraud often do so by deceiving innocent drivers during actual accidents or by involving innocent drivers in “staged” accidents. Do the following in order to minimize this risk:
- Drive defensively, keeping space between you and surrounding cars.
- When traffic slows, begin braking before the car in front of you does.
- Be careful when turning into a lane that allows two or more autos to turn left at the same time. Victims of insurance fraud are often people who float across the line when turning and then are intentionally sideswiped by a person who is “staging” an accident.
- If you are in an accident, write down license numbers of all cars involved in the accident, get the names and contact information of all persons involved and their insurers. Count the number of passengers in the other cars and get their names, addresses and any other pertinent information.
- Call the police and get a police report even if the damage is minimal. DO NOT let another driver talk you out of calling the police.
- Carry a disposable camera in your glove compartment or make use of a cell phones camera feature and take pictures of the damage to the vehicles and of all drivers and passengers in the cars.
Fighting Homeowners Insurance Fraud
It is far more difficult to involve an innocent party in homeowner fraud. However, a homeowner can help himself and help deter fraudulent claims by properly maintaining their home, and by removing or repairing items that could create tripping hazards to outside parties. Also, if someone is injured in your home, be certain that you get full information and be sure that an injured person gets any needed treatment. Carefully document any incident, including all impressions about likely injury. It may also be prudent to show healthy skepticism over any information on medical bills or claims.
Report suspicious actions such as a friend who asks you to store valuable property and you then find that they reported to his insurer that the property was stolen.
Think of insurance fraud as money out of your pocket-because it is. According to the US Chamber of Commerce, fraud adds 25% to property and casualty insurance rates.
If you are involved in an accident and you are suspicious that fraud may be involved, report it to the authorities and your insurer. Another helpful source for fraud information is the National Insurance Crime Bureau at 1-800-TEL-NICB (at the time of this writing, their Website was located at www.nicb.org).
Umbrella insurance only works properly when the primary (underlying) coverages are maintained. In fact, the obligation to make sure proper support remains in place is part of the umbrella insurance contract. It is found in the policy’s “Maintenance of Underlying Coverage” provision.
The provision typically refers to the policy’s schedule or declarations where all of the applicable underlying coverage is listed. The underlying (also called primary) coverage typically consists of:
- Personal automobile
- Homeowner’s
- Recreational Vehicle
- Miscellaneous Personal Liability
Besides listing the various policies, an umbrella policy requires that a specific limit of insurance be assigned to each underlying policy. The maintenance provision then acts as a contractual obligation. Via the provision, each listed coverage and each assigned insurance limit must be kept in force throughout the length of time that the umbrella coverage exists.
Of course, there are consequences when the insured person fails to comply with the provision, either by dropping or changing (lowering) listed coverage. Whenever a change in coverage occurs, the insured is also obligated to inform the umbrella insurer; though that only warns the insurer, but does not affect the consequences. In either case, the umbrella responds to a loss in the same manner as if the listed coverage still existed. Therefore, the insured bears the total financial obligation for a loss until the loss amount reaches beyond the level where the original coverage was supposed to apply. If it doesn’t affect the consequences, you may wonder why the insurer requests notification. For two good reasons: one, they can ask you to remedy the situation or face terminating your umbrella coverage; two, they will be warned to review any loss situations you report so they can monitor the situation and, perhaps, take steps to protect their interest.
If you have taken the step to buy extra coverage to protect yourself and your assets, be sure to comply with all that is required of you. If you have questions, discuss your situation with a professional insurance agent.
When the topic of exotic, ideal locations for vacations comes up; island paradises and tropical locales are always popular. The water, the beaches, the warm winds are very attractive conditions. However, they are also the originating locales for tropical storms and hurricanes.
The dark side of the tropics is that all of the water and warm temperatures make up the key ingredients for cooking up massive storms. The low pressure areas allow the build-up of violent wind movement that is fuel by warmth and water. The hurricane season is a long parade of storms that form, build in power and size and then move toward land, and property……and people.
Often the major worry is “what is the storm’s category?” A storm’s potential life cycle goes may go from Normal Conditions – Tropical Depression – Tropical Storm – Hurricane (Category 1 up to Category 5).
Naturally it makes sense to be highly concerned about the size of storm surges (water and waves pushed by storms) and wind speeds; but less powerful storms do not automatically mean that there is less danger! Even when a storm does not maintain hurricane status, it can cause tremendous problems as it travels hundreds, even thousands of miles!
A slow-moving tropical storm or low category hurricane may not cause as many problems with wind damage; but may create wide-spread, substantial damage by inundating large areas with torrential rains. Massive amounts of water, smashing through areas where they shouldn’t be, is capable of washing away cars, trucks, boats, homes, businesses, bridges, roads and even lives.
In the aftermath, the incredible challenge is to rebuild and, without proper protection – such as flood insurance – the challenge may become impossible. The wish may be that you never have to deal with flooding caused by huge storms….the hope is that, if you do, you CAN deal with it. Flood insurance can be the key to your recovery!
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Besides proving that you’re a responsible driver, having auto insurance also means that you’re complying with your state’s requirements for driving on its roadways. However, even if you have auto insurance, there are still instances, called exclusions, when your policy won’t provide coverage. Why should exclusions exist in an insurance contract? There are several different reasons for exclusions:
- help contain the expense of providing insurance;
- prevent coverage under one type of policy that should be covered; and
- prohibit coverage for losses that are against public policy.
Let’s look at these reasons more closely.
Help contain the expense of providing insurance – If your auto policy had to cover every imaginable loss, it would also have an unimaginable premium. Auto insurance is affordable only if insurance companies can exert some control over the losses their policies can be expected to cover. Therefore, automobile policies generally contain exclusions against accidents which involve:
- injuries caused directly or indirectly by a nuclear weapon, reaction radiation or contamination; or by war, civil war, insurrection, rebellion or revolution.
- injuries involving any vehicle inside a facility designed for racing while preparing for, or competing in, a race.
The first instance involves losses that are beyond any insurance company’s ability to control and to pay for. The second instance involves losses that are strictly under an individual’s control (so it isn’t accidental). Insurance companies certainly want to avoid situations where their customers choose to put themselves and their cars in an excessively dangerous position.
Prevent coverage under one policy when it should be covered elsewhere – Most automobile policies won’t provide coverage for a loss or injury which:
- happens while in a vehicle that has fewer than four wheels
- occurs while the vehicle is transporting persons or property for profit
- happens while the vehicle is being used as a residence
- occurs while on the job, and workers compensation coverage is either available or required for the bodily injury
- takes place while an insured making use of a vehicle he owns or has regular access but the vehicle is not listed on the automobile policy.
- involves a vehicle that’s being used in an insured’s “business.”
These limitations are fair. Their purpose is to make sure that coverage that you buy for your own car, van, SUV, hybrid or truck listed on your policy does not also handle situations that should be addressed by either another person’s auto policy, a worker’s compensation, a business policy, by a specialty policy (such as racing events coverage) or other types of policies.
Prohibit coverage for losses that are against public policy – Some examples of this reason are when coverage is denied for losses:
- occurring when the injured person is occupying a vehicle knowing that she or he does not have the vehicle owner’s permission
- that were fraudulently staged by the vehicle’s owner in order to collect insurance for “phantom” injuries.
- That were deliberately caused by the vehicle operator
Insurance would be impossible to afford if it were expected to pay for injuries to car thieves, to people who fake accidents and injuries or to persons who intended to injure another person or damage property.
So remember, without reasonable exclusions, you or I would not be able to enjoy the protection and security that is offered by automobile insurance. If you have questions about exactly what is excluded by your policy, talk to your insurance agent.
The economy has made financing cars more difficult and lease arrangements are scarce, car loan and existing leases may last as long as four to six years. Whether your vehicle is a coupe, sedan, van, sports utility vehicle, or truck, your vehicle’s value will depreciate very quickly. A rapid loss of actual value accompanied by a longer loan obligation spells trouble.
It isn’t unusual for the amount of the unpaid loan and lease balance becomes much larger than the vehicle’s value. This disparity exists over much of the loan or lease period. Making matters worse is that this gap is usually only discovered after a total loss. After the insurer pays its obligation, you may have to pay the bank or leasing company thousands of dollars out of your own pocket. The situation is an unfortunate side effect of the need to extend financing to accommodate extremely expensive vehicles. However; there are a couple of solutions to the dilemma.
The Auto Loan/Lease Coverage Endorsement
This optional coverage is available from a variety of insurance companies. The form provides coverage for the following:
- Leased vehicles – Reimburses you for the difference between the amount due under the terms of the lease and the actual cash value of the auto in the event of the auto’s total loss.
- Owned vehicles – Pays any outstanding indebtedness incurred by you for that financed new vehicle in the event that there is total loss or damage to the vehicle and the amount due under the finance agreement is greater than the actual cash value of the automobile.
On smaller, partial losses, an insurer will normally pay to have the damages repaired or parts replaced, and the lease or loan gap coverage option is not a factor.
Exclusions
Generally this optional coverage excludes items such as overdue lease payments, penalties (for excessive use, abnormal wear and tear, or high mileage), security deposits, costs of warranties or various types of credit insurance, or carryover balances from a previous lease.
Auto Replacement Cost Coverage
For an additional premium, a new car owner may buy coverage to settle major losses based on the vehicle’s replacement cost rather than its depreciated value. There are some limitations such as:
- the coverage is usually only available for new or nearly new (six months or less) cars
- there may be a maximum dollar amount that applies to a total loss
- the coverage may only be available for the first few years of the car’s useful life
If you have a newer vehicle and are concerned that you could suffer a large out-of-pocket expense if your car is totaled, you should talk to a qualified insurance professional to answer your questions. You may find that the extra protection is worth the extra cost.
You may be frustrated with car insurance premiums and factors that cause increases, such as:
- Your insurance company’s overall loss experience (due to more claims)
- The increased value of newer model cars, particularly SUVs
- Increases in judgment amounts awarded in auto lawsuits
- Increased business processing and administrative expenses
- Auto loans lasting longer, meaning increased auto repair costs for older cars
There are ways to address rising costs. First, gather your insurance records and any other car-related information. Next, determine if circumstances have changed since you last dealt with your coverage. Once this information is handy, call your agent and discuss relevant items such as:
- If your home and auto insurance are with the same company, is a discount available?
- Does my coverage take full advantage of the discounts offered by my company?
- I have more than one car; am I getting a credit?
- Does it make sense to change my deductibles?
- Do my cars really need physical damage coverage insurance? (An important consideration for older vehicles)
- Do lifestyle choices such as drinking or smoking affect my premium?
- My son or daughter is on the honor roll, does this affect my premium?
- Did you know that my car has special security features?
- Did you know that my son took Driver’s Education?
- Does the company have accurate information on how often and how far I drive?
- Am I with a standard carrier or do I qualify for any preferred program?
- Is my vehicle charged an additional premium because of its type or performance?
- Do I qualify for a loss-free history or policy longevity discount/
Giving your agent accurate information helps you get the best available premium. Provide your agent with complete details about your driving history. It’s important to clear about who drives your cars and how they’re used. Finally, use your agent as a resource for handling errors about your account or which may be shown in your driver records.
Did you know that when the weekend comes, from 6 p.m. on Friday until 6 a.m. on Monday, that 1 in 5 of the drivers that you are on the road with are legally intoxicated?
Oh, it gets ‘better’. Did you know that on holidays – official ones like Christmas and Easter and unofficial ones too like Super Bowl Sunday – that number of impaired drivers drops to 1 in 4?
Beer, booze, legal prescriptions, dope, meth, crack…whatever. Toss in good old sleep deprivation from partying, hangovers, cell phones, texting…again, whatever…and you have the ongoing recipe for disaster. And, did you know that on any given day of the week, month, year, 1 in 7 drivers you encounter anywhere, anytime does NOT have any automobile liability insurance. But Wait!
The Law says they have to have insurance. True but the reality is people often let it expire, can’t pay for it, don’t renew it, get used to not having it, don’t care. The message is simple. Make sure you have BOTH Underinsured and Uninsured Coverage. Call your agent. Buy as much as you can. It isn’t expensive. It is well worth it
Article by: The Lowcountry Lawyer at The Clore Law Group – November 2011