Am I covered to rent a car?

Ever gone to rent a car and had the sales person adamantly suggest that you purchase the insurance from the rental car company? This usually feels like an unnecessary "up-sell" by the rental car company. However, there is a very good reason for their persistence and it isn't just to line their pockets. I'll try to describe some of the advantages and disadvantages of relying on your auto insurance contract and limitations that may be present.

First and foremost, you should read your contract. Do not rely on the fact that the well-meaning, anonymous person at the call center told you it was covered. What is written in the contract is what you have for coverage, regardless of what someone tells you over the phone.

I'm going to describe the coverages that are provided in a standard auto insurance contract. Again, there is nothing really standard about this and each company may have altered the wording significantly so please, read your specific policy and do not rely on this article. (You can also call or email us if you would like us to review your auto insurance contract for free.)

There are two aspects that should be handled separately: Liability coverage and physical damage coverage. They are handled differently under the contract and you should know the distinctions. First, with liability coverage - that part which keeps you from losing everything you own if you crash and hurt somebody - the definition and specific language usually promise to protect you from claims for bodily injury and property damage that arise out of "any auto accident." These words are very specific and in this case designed to be fairly broad with respect to your protection from liability judgments against you from other motorists.

There are some exclusions that may apply to your auto insurance coverage. Generally, the class of operations is limited to private passenger autos. This means that if you rent a motorhome, a moving truck over 10,000 lbs, a motorcycle, or any vehicle that isn't a private passenger auto, you may not have any coverage under your auto insurance policy. Also, if you are renting a vehicle for business purposes, your personal auto policy is likely going to exclude coverage.

Physical damage coverage is handled quite differently. Most contracts use the term "Your Covered Auto" to describe what type of vehicle gets the benefit of your insurance policy's physical damage coverage. The definition of "Your Covered Auto" usually is limited to the following four classes of vehicles: 1) Vehicles listed on the policy 2) a "Newly Acquired Auto" 3) any owned trailer 4) a temporary substitute vehicle.

The last class is an important distinction. On the standard car insurance contract, a temporary substitute vehicle must be Non-owned, temporary, and used because your primary vehicle is out of service due to a) breakdown b) repair c) servicing d) loss e) destruction.

To spell it out in plain English: if your primary vehicle is in the shop, destroyed, stolen, etc. and you are renting a vehicle temporarily, the damage to your rental car will be paid for by your primary auto policy. However, if you are on vacation and choosing to rent a vehicle just for pleasure, the physical damage to that rental car is likely NOT going to be covered. Again, some companies will offer endorsements and include this feature, but as a rule, that is the way the contracts are written.

Now that we are a little more clear on what is and isn't covered in the car insurance contract, there is a very specific advantage to purchasing the physical damage waiver from the rental car company - it saves you time and may not be reported to your company. If you buy their physical damage coverage and damage the rental car, you can turn in the keys and let the company deal with fixing it. In addition to saving you time and inconvenience, the rental car companies have in the past added additional charges, such as lost of rental income, restocking fees, etc. which can add up in addition to the cost of the damage to the vehicle. Additionally, if there is no injury involved you may very well avoid having the accident in a rental car show up on your driving record, which will save you an average of $600 on your future auto insurance premiums after an accident.

When renting a car, please be sure to check your policy - ask your agent or broker to point out specifically in the contract where the coverages apply and how they are treated. If they can't point that our or are unwilling to show you, find an agent or broker that will take the time to help you.

Are you being overcharged for your Teen Driver?

One of the most expensive auto insurance exposures is a teenage driver. If you have high school aged kids in the house, you may have already realized this fact. While there are many factors that go into determining the price you are charged for insurance, the age of those driving vehicles in the household is one of the most significant.

In the past, insurance companies divided drivers into 7-8 different age bands. There was one bracket for 16-19 year olds, 20-23, 24-25, and so on. In recent years and with the advent of increasing technological investments, insurance companies have been creating almost yearly deviations in rating profiles to accurately price drivers with each additional year of driving experience. The idea was to more accurately and gradually adjust rates as the drivers gained more experience. However, it is unclear whether these changes have in fact affected the prices that parents are actually paying to insure their teenaged drivers.

At Fowler & Associates, we are going to conduct the mother of all comprehensive rating surveys to determine empirically what families with teenaged drivers are being charged and which companies are offering the best prices and incentives for families with teen drivers. Now more than ever, families are looking for ways to save money on auto insurance and need every penny to pay for the necessities in life. Over the next few months, we will survey thousands of households to uncover what parents of teen drivers are actually paying for auto insurance in many neighborhoods throughout California, as well as which companies are the most economical in each geographic location. We will post our findings here for your review and comment.

If you would like to participate, you can send us your contact information by filling out the contact form at the right of this web page. Check back for information as we complete this study.

Saving Money on Home Insurance

There are ways to save money on home insurance. However, its not what you think. Home insurance has many more moving parts than auto insurance. Most people know how to look at the coverage amounts and can tell if they are roughly similar. Many consumers pick the cheapest priced policy and assume they are all the same as long as the coverages are equal - WRONG! Home insurance is not as interchangeable as auto insurance. You can't look at the limits and know with relative certainty what you are buying.

There is a reason why GEICO and Progressive do not sell homeowners insurance. (They broker it for other companies) The main reason is that it takes more skill to accurately assess home insurance needs than that required to quote auto insurance. Not only are there far more endorsement options, the contracts themselves have fairly significant variation and require in-depth knowledge in order to select among the most appropriate policies for a given risk.

While it is true that the coverage amount is important and should accurately reflect your rebuilding cost, the real devil is in the details, in this case, the detailed exclusions. Remember that 20-30 page policy you got in the mail with all that boring legal jargon? if you read the contract closely, you will notice a list of things your policy DOES NOT COVER. What's more, you will not find this list until AFTER you purchase your policy from the insurance company, assuming of course you take the time to carefully read and understand it. Even worse, the list of exclusions as they are known, can vary from 18 to 25 items or more items that your policy specifically does not cover.

Generally, a cheaper policy has more exclusions. This may come as a shock to you, but if a company is charging you less, it is probably because they found a way to pay out less in claims. This isn't necessarily a bad thing. Many of the exclusions in a contract are designed to eliminate coverage for items that degrade over time or are likely to happen in large frequencies in concentrated locales. An example: one contract excludes coverage for losses that occur over a period of weeks, months, or years. This exclusion is designed to except claims for maintenance items that should be addressed by the responsible homeowner. If your house is less than 20 years old, this exclusion might be a welcome compromise for a premium reduction. However, if your home is older, it would be unwise to buy a policy that eliminates these items which are more likely to occur.

Another example: freezing. Let's say you live in an area that routinely experiences freezing temperatures. Some policies will not cover your landscaping and pool pipes if they freeze during the winter. Again, if you live in a more temperate climate, this may not be a concern for you and you can easily exchange this exclusion for a lower premium.

Someone needs to make these important differences known to the public. It is about time someone compares contracts in an accessible way that the average consumer can understand and really use to accurately compare quotes. We are creating a simple guide that will easily contrast all of the major policies offered by the leading home insurance companies. Don't wait until after your home is damaged to find out that the $100 you saved on home insurance is now costing you $25,000 in uncovered repair bills.

We will be reviewing home insurance contracts from State Farm, Farmers, Allstate, Travelers, Liberty Mutual, Safeco, Mercury, AAA, USAA, and many more. Keep checking back to learn more about insurance than you ever thought possible.

Saving Money on Car Insurance

Most people are looking for ways to save money these days. Car insurance is a major expense for most households. If you have a teenage driver, you are probably paying some of the highest rates to insure your vehicles. While it is important to lower costs, it is also crucial to understand what you are purchasing.

Here is a dirty little secret that insurance companies don't want you to know - auto insurance is much easier and interchangeable than any other type of policy. That doesn't mean, however, that all policies or companies are equal, or that there are not significant differences between offerings.

Comparing multiple quotes

Most people know enough to examine the 5 major coverages on an auto policy and determine if the coverage dollar amounts are the same as their present policy. However, I have yet to have a customer ask me about policy language or specific provisions. I will highlight a few features of the actual policy contract that can make a big difference in how your coverage performs.

OEM Parts

One of the biggest differences in auto contracts is how the company handles claims situations involving your vehicle. Many policies define the insurance company's obligation to fix your car with "like kind and quality." What that means in English - the company will pay for the cheapest possible repairs. One major factor is whether or not your company will authorize the use of Original Equipment Manufactured parts (OEM for short). Now, to be fair, often the aftermarket parts are just as good and can be far cheaper than OEM parts. On occasion however, OEM parts may have certain limitations. For example, some aftermarket items may fit slightly different, be made with cheaper materials, or may have higher defect rates than OEM equipment. When comparing policies, find out if the new company offers an endorsement that will require the company to use OEM parts for your repairs. The decrease in the cost of the policy is generally due to provisions like this that most consumers aren't aware of until after they have a loss. If this is not important to you, then by all means take a cheaper policy.

Permissive Use

When you lend your vehicle to another driver, whether it's Uncle Joe who is visiting from out of town, or your neighbor whose car broke down and needs to get to work, you should be acutely aware of how your policy covers guest drivers. Many policies that offer lower rates do so in part because they restrict the payouts to protect guest drivers. Some policies may even exclude coverage altogether. This provision sometimes referred to as a "cut-back" endorsement, will limit coverage for the guest operator to the state minimums. That doesn't mean that you are less protected, but could leave Uncle Joe or your neighbor with a huge exposure that their policy may or may not be able to fill. At worst, it can make for a very unpleasant thanksgiving dinner.

Customizing equipment

Most policies have exclusions for customizing equipment. If you go to best buy and have your new Escalade outfitted with all the latest entertainment gadgets, you may be shocked to learn that none of the items will be replaced if it is stolen. Some companies offer an endorsement to cover these items. Remember to factor this in when you compare prices.

Personal property

This is another provision that drives customers crazy. For example, let's say you walk out to your car after work only to find your window broken and your stereo removed. In addition, your laptop, Garmin navigation system, and hundreds of CDs are also missing. Most auto insurance companies will not cover the cds, laptop, or non-permanently installed navigation system. Some companies include a small amount of coverage for these items. Most companies will only cover these items on a homeowners or renters policy - and will charge you a separate deductible which means you may not recover anything for these personal items in your vehicle that were stolen.

These are some of the major differences in policy provisions that can anger customers at the time of a loss. Some of these things may not be important to you, but you should at least be made aware of these limitations before you decide on a cheaper policy. Most often, if you are being quoted a cheaper price for exactly the same coverage, you are more than likely agreeing to some or all of these limitations. Take the time to ask specific questions about what matters to you and always get the answers to your important questions in writing. I have seen many cases where a customer tells me "my agent said it would be covered" to things I later point out are restricted in the actual contract. My office is in San Ramon, Ca and I'm always available to do a review or help with any questions you may have, free of charge!

Should you buy Earthquake Insurance?

In California, this question comes up frequently. With the recent earthquake in Japan and other areas of the world, it brings to light the devastation that can result from high magnitude earthquakes. The cost of purchasing earthquake is quite considerable and in most instances can cost more than the home insurance policy. Additionally, the standard policy offered from the California Earthquake Authority comes with a 10% deductible - as in 10% of the insured amount. The high deductibles relegate this coverage to purely catastrophic exposures.

However, earthquakes are a certainty and one of the only risk factors or perils that have the potential to completely obliterate your home and thus your equity. In my opinion, the homeowner should first consider the amount of equity that they own in the property and determine if they are comfortable with the risk potential. For example, if you own your house free and clear like 30% of American homeowners, your home probably represents a significant portion of your net worth. In that instance, you should seriously consider purchasing earthquake insurance. You can adjust the deductible as high as allowed and get quotes from private insurance companies (where available) to make the most effective purchase.

In the event that you do not have significant equity in the property and choose not to purchase earthquake insurance, there are a few protective measures you can take to reduce your potential loss and increase your personal safety. If your home was built on a raised foundation, you can pay a contractor to install retrofitting, which will help secure the structure to the foundation. This will reduce damage due to shifting and the potential for crumbling. Retrofitting, depending on the size of your home and the materials needed, can typically cost north of $3,000. This is a considerable expense, however it typically only needs to be done once.

Another precaution - you can install an earthquake safety valve on your gas meter. This device will shut off the supply of gas to your house in the event of earth movement. Since much of the damage from earthquake results from subsequent fires caused by ruptured gas lines, this little device can literally be a life saver. The cost of these devices is about $350 typically and should be performed by a licensed and insured contractor.

Whatever you decide, you should at least be aware of what your home insurance policy does and does not cover. It does NOT cover earthquakes. Many people do not realize that fact, so it is worth mentioning. If you have specific questions, or would like to further discuss, give us a call or post a comment below.

How does your insurance provider measure up?

When you are trying to lower your expenses , make sure to at least examine industry and customer reviews of the companies that you do business with. There are three sites that can help you make sure your insurance company is up to par.

www.jdpower.com

JD Power ranks insurance companies on customer satisfaction surveys. These rankings are a good place to start, but can be slightly misleading and tend to favor smaller, regional insurance companies that are not available in most markets.

www.insurance.ca.gov

If you check the consumer section of the department of insurance website, you will find the "Justified Complaint Study." This report ranks the insurance companies by the number of justified consumer complaints against the company. These reports for auto, home, and life insurance are also weighted by the market share of each company which gives in my opinion, a more accurate assessment of how the company actually treats its customers. For a complaint to be justifed, the department of insurance reviews the entire incident and concludes that the company acted improperly.

www.yelp.com

Lastly, Yelp is a good place to review what actual customers are saying about a particular agent or agency that you plan to work with. Yelp reviews are made by individuals and reflect individual agents and brokers. With such a finite focus, you can determine how well a particular individual at a certain company performs, which is much more diagnostic and predictive of your overall experience.

Progressive launches new Snapshot Discount

Progressive announced earlier this month its new "Snapshot"discount.  The only problem is that it doesn't work in California...yet!  it will probably go live in 2012, but for now, they have other discounts that can help save you money.  Please call us today to find out if you qualify.

Update on Friday, June 24, 2011 at 12:04PM by Justin Fowler

Snapshot is live in Oregon however, so all you Ducks and Beavers need to call us today!!

Youtube Channel

Insurance Podcasts from KDOW 1220 AM

Click on the links below to listen to the KDOW 1220 AM Business of the Week interview with Fowler & Assocaites owner Justin Fowler.  Topics include, healthcare reform and insurance for small businesses and individuals.

If you have insurance topics you would like us to cover, please send your requests to justin@fowlerinsure.com

	Interview Segment 1
	Interview Segment 2
	Vignette 1
	Vignette 2
	Vignette 3
	Vignette 4
	Vignette 5