Tips for car insurance in 2016

There are lots of ways to use mobile technology that involve thinking outside the box -- such as using or driving for Uber, renting a car by the hour, or renting out your car to others. In this case, the "box" happens to be your personal car insurance.

If you're involved in any of these creative uses of automobiles, discover the limitations and exclusions you will face and my suggestions for protecting yourself.

 

2 coverage gaps with TNCs

Transportation network companies, or TNCs, recruit drivers who use their own car for a fee. Drivers for companies such as Uber and Lyft pick up passengers and deliver them on demand, all arranged through the TNC's mobile app.

Unfortunately, personal car insurance almost universally excludes all coverage, including when the car is carrying a passenger and when the driver is looking for passengers. This exclusion applies to liability, uninsured/underinsured motorists and collision coverage.

If you're a driver for a TNC, such as Uber, be aware you are not insured by your personal auto insurance or your umbrella policy, from the time you log in as an available driver until the moment you log out. So if your $30,000 Toyota gets crushed in a car accident, the cost to repair is yours to bear alone.

The reason? Your personal and umbrella policies exclude coverage when using your vehicle to haul people for a fee. A few car insurance companies are starting to develop endorsements for personal auto policies that, for an additional premium, will waive this exclusion. However, until these endorsements are also available on umbrella policies, I recommend you avoid the risk.

TNCs usually insure themselves and drivers for $1 million in liability coverage but only when actually hauling a passenger. When trolling for rides, there is no coverage at all. Some states such as Minnesota have passed a law requiring TNCs to insure the driver during the trolling period, but the required insurance limits are minimal.

2 coverage gaps with rental cars

If you have a personal auto insurance policy, your liability, medical and uninsured/underinsured motorists coverage will transfer to a rental car in the U.S. or Canada. If you have an umbrella policy, liability coverage also will usually transfer to a rental abroad.

What about your liability for damage to the rental car itself?

If you have collision and comprehensive coverage on at least 1 of your vehicles on your personal car insurance, that will transfer and cover the rental car as well, but not necessarily for every expense you're liable for in the rental contract.

For example, collision coverage will not cover your responsibility for diminished value claims. If you are driving a $30,000 rental car and cause $5,000 worth of damage, your collision coverage will pay for that, subject to your deductible. But it won't cover the resale value of the car that has dropped.

Diminished value claims happen when the market value of a car that has been in previous accidents is far less than it would have been if it were accident-free. The rental company offers a solution called collision damage waiver, or CDW, that covers all your renter obligations, but that too has a few coverage gaps.

For example, there's no coverage if you had a single drink. There's no coverage if you drive carelessly. There's no coverage if you drive on an unpaved road. There's no coverage if an unlisted driver causes the accident.

If you want coverage for diminished value claims or if you don't have a car with collision coverage that would transfer to a rental, buy the CDW coverage from the rental company. Just be aware that there are some exclusions in that coverage.

Since the collision coverage on your car won't apply outside the U.S. and Canada, be sure to buy the collision damage waiver when renting cars abroad. And if you don't have an umbrella policy that covers car rentals abroad, buy the optional liability coverage as well.

2 coverage gaps with car sharing

This goes under the category "What will they think of next?"

Your car is not on the road 24 hours per day. You would like to rent it out for part of the time that it's sitting idle.

The problem is that you have no idea what kind of driver you're renting to, and neither does your insurance company. And if the insurance company finds out what you're doing, it will cancel the policy immediately.

There are 2 problem areas. First, if the renter causes an at-fault accident, you will be named in the lawsuit as the car owner.

Second, if your renter is also injured, he or she can bring a claim against you for your liability as the owner of the car who didn't have perfect tires, perfect brakes, etc. If your liability coverage won't apply, neither will your collision coverage. Car-sharing is a bad idea; there's way too much risk. Avoid this.

1 coverage gap with non-owned autos available for regular use

Your use of these autos simply is not covered by your personal car insurance. The key word is "available." This exclusion applies even if the car isn't used that much.

Here's a classic example. You have a newly licensed 16-year-old son, Joe. Grandpa Bill, who's giving up his driving privileges, has a 1998 Buick sedan that he is willing to let Joe use for a while. He will keep the car insured at the same liability limits he's always had -- $50,000 per person and $100,000 per accident for injuries.

Six months later, Joe causes a serious accident with injuries. Because the injuries have an economic value that far exceeds $50,000 per person, Joe's dad files a claim with his auto insurance company with which he has $500,000 of additional coverage per person.

Unfortunately, because Grandpa Bill's Buick was available for the family's regular use, Joe and his family can get no coverage from the family auto policy. If you're in a situation like this, rather than amending the family policy and Grandpa's policy, protect Grandpa and the family by transferring the title to the family as soon as the car becomes available for regular use.

That way, when Joe has his accident, Grandpa Bill is no longer the owner and no longer has any liability exposure. This injury claim will be covered in full up to $500,000 per person because the car is now listed as an owned automobile on the family policy.

There you have it. A plethora of potential insurance gaps arising from creative new Web-based automobile products, accessed through mobile technology, combined with some old standbys as well as suggestions for dealing with each.

2 coverage gaps with company cars

Suppose you're a sales representative for a major company, and one of the benefits is a company-provided car that you have for business and personal use. It's fully insured by the company's car insurance.

You've got it made in the shade, right? Not necessarily so.

Though your company is covered by the company's business auto insurance, there are 2 risks that aren't.

First, there's usually no coverage for injuries you cause to co-workers riding with you. It's a serious limitation!

Second, there's no drive-other-cars coverage when you borrow or rent other vehicles for personal use. Your employer can solve the drive-other-cars coverage problem by adding the broad form drive-other-cars coverage endorsement to the company auto insurance, naming you and any other licensed family members.

However, if you have at least 1 insured vehicle on a personal auto insurance policy, drive-other-cars coverage is automatically included. Problem solved. If you don't have a personal auto policy of your own and if your employer is unwilling to add a broad form, drive-other-cars coverage endorsement to the business auto policy, you must buy a "named, non-owner auto policy."

As for the exclusion of the company's car insurance for injured co-workers riding with you, if you have a personally owned automobile and a personal auto policy, you can add the extended, non-owned automobile coverage endorsement.

If you don't have a personal auto policy in your name, protect yourself by purchasing a named non-owner auto policy.

1 coverage gap for Zipcars

Most rental cars are rented for a day or more. This section refers to the type of car that is rented by the hour.

Cars are stashed around the city. You go online, see what is available and where, and then you book it. Zipcar provides primary liability coverage of $300,000. Whatever you carry for personal auto coverage would be in excess of that.

Zipcar also carries primary collision and comprehensive coverage, subject to reasonable deductibles.

Zipcars are a great option for people who love the city and don't want the expense, hassle or pollution of a full-time vehicle. But, if you want more than $300,000 in liability coverage and don't own at least 1 vehicle, and therefore don't have a personal auto policy, you will need to buy a named non-owner personal auto policy.

Persevere in be paying

Getting health-care claims paid can be an arduous process, made worse by the penny-pinching of insurers, the complexity of policies, and inefficiencies in the health-care system, says Joseph Ditré. His advice: "Don't give up. And get help." 


Ditré's nonprofit Consumers for Affordable Healthcare, in Augusta, Me., is one of the organizations funded as "consumer assistance programs" by the 2010 federal health-care reform.

 Although not available in the 17 states that didn't apply for funding, the programs work with consumers one on one, helping them resolve difficult health-care claims.

Cash-Value Products

There are generally two kinds of life insurance: term coverage that pays out for a specified time period, and permanent coverage that builds up a cash value, much like an investment. Although some may get tax advantages from permanent life policies, consumer advocates say term coverage makes better financial sense for most people.

 "If you're not being told by a tax accountant to consider some cash-value product, you probably don't need it," CFA's Hunter says. "There are much better and lower-cost ways to invest" than through your life insurance policy, says adviser Knox.

Wait To Rebuild

When disaster strikes and a house is damaged, homeowners have two contradictory priorities: Prevent further damage, and preserve the evidence.

They might need to put up tarps or make minor repairs, but they shouldn't make any permanent repairs or clean up debris until after their insurer's claims adjuster makes a visit.

"It's important for the adjuster to see the damage in its worst state," says Altieri, the public insurance adjuster. Otherwise, homeowners might not be fully compensated for their loss.

Beware Computerized Payouts

Many automobile insurance companies use special software to determine payouts in bodily injury claims, and the Consumer Federation of America's Hunter warns that these computer systems often shave 20 percent off the claims.

The CFA says customers should ask if their auto claim offer was evaluated by computer and, if so, ask for the range of offers generated. "Don't accept any offer that is less than the high end of the range," the CFA advised in a Dec. 2010 consumer alert.

Stick up for Yourself on Insurance´s World

When making a big claim with an insurance company, Rutgers's Feinman says it's important to remember: "It's a business relationship.

"Despite marketing campaigns to the contrary,"they're not your neighbor, and they're not your friend." Sometimes professional help is necessary in negotiating with an insurer.

A public insurance adjuster can help with a time-consuming claim process, as when a house is damaged. If you're facing a fight with an insurer over a big claim, a lawyer may be necessary, says Hunter of the Consumer Federation.

Don't File Small Claims

Insurance policies with high deductibles not only save money on premiums; they prevent policyholders from being penalized for submitting many small claims.

"The more claims you file, the more you're going to pay for insurance," says United Policyholders' Bach. Too many claims can prompt insurance companies to refuse to renew your policy or to raise your rates.

Other insurers will also know about the frequency of your claims, because insurers use shared databases, she says.

Contracting a Responsive Insurer

"Companies are taking longer to pay claims and paying fewer claims," says Rutgers's Feinman. Getting information on how quickly a company will pay claims is hard, because state insurance commissioners collect but don't disclose such data, says Daniel Schwarcz, a University of Minnesota law professor.

States do post data on complaints. Also valuable, says Feinman, can be customer satisfaction surveys by J.D. Power and Consumer Reports. J.D. Power gave its highest customer award in car insurance to Auto-Owners Insurance Group and the top homeowners' insurance honor to Amica Mutual.

A 2010 Consumer Reports car insurance survey gave high marks to Amica, Auto-Owners, USAA, and NJM Insurance Group.
Source:

Check Insurer Strength

Many forms of insurance, especially life insurance and annuities, represent a relationship between an insurer and a customer that can last decades.

It's important to make sure a company is likely to survive that long. You can check on the financial strength of insurers through rating agencies such as Moody's, Standard & Poor's and A.M. Best.

Headley, the insurance agent, recommends picking only companies with the top three or four ratings from each agency. Companies receiving A.M. Best's top financial strength rating of A++ include USAA, State Farm, Northwestern Mutual, New York Life, Chubb Group, and Berkshire Hathaway.

Disability Insurance Tips

Disability insurance replaces income lost if you can't work, and it's a necessity for most people, University of Texas's Kitt says.

Workers are far more likely to become disabled than they are to die early. Many companies already provide short-term disability policies that usually cover two-thirds of employees' salaries.

If you're forced to buy your own individual policy, it will probably cost more than a group policy, but you won't lose it if you leave your company, and the benefits won't be taxed.

Disabled workers' insurance payments will generally be reduced if they receive other income, such as pension payouts or Social Security disability payments.

Avoid Narrow Coverage

Most experts warn against buying any insurance policy with extremely narrow coverage. Cancer insurance, for example, makes no sense when other policies can cover a broader array of health ailments.

Industry experts generally recommend a life insurance benefit of five to 10 times annual income, depending on how many debts and dependents you have.

With enough basic life coverage, you can avoid unnecessary life insurance gimmicks, Rutgers's Feinman says. For example, there is no need for extra life coverage folded into travel insurance products or for credit life insurance that pays off debts when you die.

Find Discounts

When Bill Wilson's son was in high school and college, his above-average grades lowered Wilson's auto insurance premiums.

Generally, a B average or better qualifies for a discount, he says. Homeowner premiums can be lowered by something as simple as putting a fire extinguisher in the garage or something as expensive as a new roof.

Life insurance can be four times more expensive for smokers than for nonsmokers, so it's important to get your policy redone if you quit, says Byron Udell, founder of AccuQuote, an online life insurance broker.

Liability Coverage

Another important addition to homeowner policies is umbrella liability coverage. Without it, you could be bankrupted by a lawsuit, whether from someone injured on your property or from someone slandered by your Internet blog.

Such coverage is rare but important for renters who live in large buildings, says Wilson of the Independent Insurance Agents & Brokers of America.

A fire started in one apartment can easily spread to other units, potentially putting a renter on the hook for a big bill for damages. Each $1 million in liability coverage generally costs $100 to $200 per year in premiums, Headley says.

Tips on Add Law Coverage

If your older house is destroyed by a fire or disaster, you can't just blow the dust off the original construction plans and build again. In most of the U.S., building codes have become much more stringent, requiring upgrades of everything from electrical systems to the thickness of walls when you rebuild.

To pay for these extra costs, public insurance adjuster Raymond Altieri Jr. of Altieri Transco American Claims advises all owners of older homes to get so-called ordinance and law coverage added to their homeowners policy. A typical policy boosts premiums 3 percent to 7 percent.

Insurance for Golden Years

Long-term care insurance has become more expensive. Customers who bought policies in the past should hold onto them, University of Texas' Kitt says. Although premiums may rise, those policies are likely more generous and less expensive than current products.

Buy between ages 40 and 55, and "the premium is much more manageable," says Terry Headley, an insurance agent and president of the National Association of Insurance & Financial Advisors.

Adviser Knox acknowledges that buying while premiums are high is a tough decision. "There's a lot of uncertainty around the premiums and how much they'll rise," she says. Balance that against the uncertainty you'll face with no long-term care coverage.

Too Little Coverage Insurance - Big Mistake

A dangerous way to lower premiums is to get too little coverage. Homeowners who can afford it would be smart to insure enough to cover the contents of a house–including artwork or other expensive items–and the full cost to rebuild a home on the site.

 This construction can be much more than the market value of a house, says public insurance adjuster Jack Kunz, president of Alex N. Sill. 

Also, many young families fail to get enough life insurance, says financial adviser Brenda Knox. Insurance agents sometimes won't present a policy with full coverage for fear that the high premiums will scare off customers.

Tips on Insurance Buying

Insurance protects consumers--while also maddening them. Shopping for the right policy can quite confusing and "consumers are really at a disadvantage," says J. Robert Hunter, director of insurance at the Consumer Federation of America. Getting paid for claims is sometimes no easier: "It has become a war of attrition," says Joseph Ditré, executive director of Consumers for Affordable Health Care.



Bloomberg.com consulted consumer advocates, academics, financial advisers, insurance agents, and adjusters for advice on how to avoid overpaying, underinsuring, or missing out on claims you deserve to have paid. Click ahead for tips and tricks of the trade.

Use Buying Guides

Agents are paid by insurers to sell their products and often sell only certain companies' policies. Some insurers offering lower prices, such as Geico and USAA, sell directly to the public. Before meeting an agent, read buying guides on state insurance regulators' websites, such as California's Insurance Dept. site to learn what insurance should cost and cover. Ask agents what they make on a sale, says Karrol Kitt, a professor at the University of Texas at Austin, and drill down on what policies cover. Ask them to verify answers with written proof. "Sometimes agents aren't as knowledgeable as they should be," Kitt says.

Be Wary Of Cheap Policies

Insurance isn't a "commodity like salt or sugar," says Bill Wilson of the Independent Insurance Agents & Brokers of America. "There can be a dramatic difference in coverage from one policy to another." One homeowners policy might cover all water damage, for example, while another might pay only if you notice it right away, excluding the effects of a pipe that has caused mold growth over a long stretch. In health care, coverage and price differences can be especially dramatic. "The cheapest is rarely the best," Ditré says.

Raise Your Deductible

"Raising your deductible is the best way to keep your premiums down," says Amy Bach, executive director of United Policyholders, a policyholder advocacy group. Even if you can afford the expensive premiums of a low-deductible policy, it should ultimately cost less to choose a high-deductible policy and create a bank account to insure your own small losses. Insurance should be for "catastrophic losses," says Rutgers University law professor Jay Feinman. For anything less, "it often makes sense to absorb those yourself."

Get Disaster Coverage

With disasters in the news, the importance of insuring a home against Mother Nature's bag of tricks is all too clear. Fire insurance won't necessarily pay out if the fire was caused by an earthquake--unless you have earthquake insurance. And coverage for hurricane wind damage might not protect you from the flood caused by the hurricane. (In Louisiana, only 29 percent of households are covered for floods, according to its insurance commissioner.) Flood insurance is available through the federal National Flood Insurance Program for an average of about $600 per year. On coastal areas and beachfront, coverage can be far more costly.

5 Tips for Car insurance

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Start the Countdown

How much you pay for auto insurance depends o­n several factors, including your age and marital status, where you live, and what you drive. You can't do anything about your age, and few people will move just to lower their insurance premium. You can, however, choose a vehicle that costs less to insure.
In this article, we'll give you all of the helpful tips you need when getting car insurance.



1.- Know Your Coverage Types
What is your car insurance actually insuring? Although you're buying a single insurance policy covering a specific vehicle, a number of components make up the final cost:

• Bodily injury liability: Covers injury and death claims against you, and legal costs, if your car injures or kills someone.
• Property damage liability: Covers claims for property that your car damages in an accident. Because liability coverage protects the other party, it is required in all but three states.
• Medical payments: Pays for injuries to yourself and to occupants of your car. This is optional in some states. In "no-fault" states, personal injury protection replaces medical payments as part of the basic coverage.
• Uninsured motorist protection: Covers injuries caused to you or the occupants of your car by uninsured or hit-and-run drivers. "Under-insured" coverage also is available, to cover claims you may make against a driver who has inadequate insurance. In some states, as many as 30 percent of drivers are uninsured.
• Collision coverage: Covers damage to your car up to its book value. Collision coverage carries a deductible, which is the amount per claim you have to pay before the insurance takes effect. The lower the deductible, the higher the premium. While it is legally optional, a lending institution or leasing company usually requires collision coverage.
• Comprehensive (physical damage): Covers damage to your car from theft, vandalism, fire, wind, flood, and other non-accident causes. Comprehensive also carries a deductible.

2.- Your Vehicle Affects Your Premium
Y­ou might want a sports car or a fancy SUV, but your insurance company may charge you more to protect you while driving it.
Insurance premiums are based partly on the price of the vehicle, which affects the replacement cost if it is stolen or "totaled" in an accident. How expensive the vehicle is to repair -- including parts and labor -- can also affect the cost. In addition, surcharges may apply to vehicles that are frequently stolen or involved in accidents.
Industry-wide information on injury claims, collision repair costs, and theft rates by vehicle model is available from the Highway Loss Data Institute (HLDI). You can write them at 1005 North Glebe Road, Arlington, VA 22201. HLDI is affiliated with the Insurance Institute for Highway Safety (IIHS).
According to HLDI, the lowest injury claims are from large vehicles -- cars, pickup trucks, and sport-utility vehicles. Small 2- and 4-door cars have the highest injury claims. Small cars also are among the highest in collision costs, along with sports cars.
If you have your heart set on a sporty vehicle, you'll probably pay dearly. Insuring a high-performance car can easily cost two or three times the insurance amount for an ordinary model.
Sport-utility vehicles, the hottest market segment, often have higher insurance rates than mid- and full-size cars, but some SUV models are relatively cheap to insure. SUVs are "hot" for other reasons: They are among the most frequently stolen vehicles, and they are more expensive than most cars. Cadillac's Escalade is currently the most popular model sought by thieves, but it's followed by the Nissan Maxima sedan. SUVs also can cost more to fix after an accident if the 4-wheel-drive system is damaged.
However, insurance companies set rates based on their own experience. If Company A has more collision and theft claims for a particular vehicle than Company B, then A will charge more for the same coverage. It all boils down to a company's actual experience with a particular vehicle or category of drivers. That is why it pays to shop around for insurance.

3.- Who You Are Affects Your Premium
Factors that you can least control may have the greatest impact on your insurance costs. Your age, gender, and driving record are key factors that affect your insurance premium.
Single males under the age of 25 pay the highest rates. Statistics show they are involved in the most accidents, so insurance companies charge young men higher premiums than women of the same age. Married men, who statistically have fewer accidents, pay less than single men. A handful of states do not allow rates based on sex or age, but that prohibition has tended to result in higher rates for women, not lower rates for men.
If you are convicted of moving traffic violations or of causing an accident, your premiums will likely go up, no matter what your age. Drivers with clean records -- no tickets, no accidents -- pay the lowest rates.
Where you live also plays a big role in how much you pay. Urban areas, with their greater population densities and heavier traffic, get higher rates than rural areas. According to the Insurance Information Institute, the average insurance expenditure in mainly urban New Jersey -- traditionally the most expensive state -- in 2002 was more than double that of North Dakota, a rural state with the lowest average premiums. High costs in states such as Florida, Massachusetts and New York are attributed to growth in fraud and theft.
In most states, too, insurers set rates by zip codes. If you live in a major city like Chicago or Los Angeles, you will probably pay more than if you lived in a nearby suburb.

4.-  Decide How Much Coverage You Need
While it is dangerous to be underinsured, having too much insurance can be an expensive mistake as well. Without insurance, your property is put at risk in an accident that is your fault. The minimum amount of insurance required in your state is seldom enough.
State law may require as little liability coverage as $15,000 per person, $30,000 per accident, and $5000 property damage. About half of the states require $25,000 per person and $50,000 per accident. Half of them require $10,000 in property damage coverage. If you can afford it, buy more than the minimum. After all, $10,000 for property damage may not be enough if you hit a $100,000 Mercedes-Benz.
The more assets and income you have, the more insurance you need. Most insurers recommend liability coverage of at least $100,000 per person, $300,000 per accident, and $50,000 property damage if you have assets to protect, such as a house. Some insurers also recommend a $1 million "personal liability umbrella" policy issued in conjunction with homeowner's coverage. State Farm reports that such coverage averages $270 a year, but the amount varies significantly depending on location and other factors. An "umbrella" policy could protect a family from financial ruin in a major lawsuit.
Like buying a car, there is no single best solution when it comes to buying insurance. Rates vary widely. Surveys suggest that you could pay anywhere from $500 to $2000 annually for the same coverage from different companies. Shop for insurance by consulting two or three of the largest insurers, such as State Farm and Allstate. Then, contact one or two independent agents who can quote premiums from more than one company. In addition, there are direct-marketing companies, such as GEICO and Progressive, which do business over the phone rather than through agents and offer some of the lowest rates. Ask for an itemized list of coverages and costs.
"We're price-competitive," said spokesperson Dick Luedke of State Farm, whose rates dropped somewhat during 2004. But with so many factors involved in setting rates, it's wise to check several prospects.
In 2004, the average price of auto insurance nationwide was $871, according to the Insurance Information Institute. They expected that the cost of auto insurance would rise by 3.5 percent in 2004, which would be the smallest increase in four years.
Don't forget the Internet. Many companies now offer online quotes, and insurance shopping on the Web allows you to compare rates from multiple providers in the comfort of your own home.

5.- You Can Reduce Your Premiums
The biggest difference you can make is to buy a vehicle that qualifies for a discount or at least doesn't carry a surcharge. Ask your insurance agent about the cost of insuring vehicles you are interested in before you make your purchase decision. Here are several other ways that you can save money on your car insurance:

• Most companies give a break to those who drive less than 7500 miles a year. If you take public transportation instead of driving to work, your premium will go down. Out of the question? Try carpooling.
• Make sure you get all the discounts you are entitled to. You might qualify if your vehicle has an alarm, for example. Discounts used to be given for such safety features as airbags, but they're fading away as those items become more commonplace. Discounts might also be available if you insure your vehicles and your home with the same company. People who pass a defensive-driving course or don't smoke or drink often get discounts.
• Review the status of all the drivers in your family with your agent. Most discounts apply only to one portion of the policy, so don't expect dramatic savings.
• Increase your deductible for collision and comprehensive. Switching from a $100 deductible to $1000 can reduce the collision portion of your premium by 30 percent, said Luedke. You'll still be covered for catastrophes, but you foot the bill for fender-benders. Also, think twice about filing small claims with your insurance: Why risk a premium increase?
• Shop around. Instead of just renewing, study the fine print of your policy to see if its terms -- or your situation -- have changed. Another company might have better rates, but you won't know unless you shop. Most insurers give rates over the phone and many via online computer services, making it easy to compare premiums.
• Drop collision coverage on older cars. Claims are limited to "book" value, so you're not likely to get much anyway if you car is more than seven years old. A good rule of thumb is to drop collision when the annual premium reaches 10 percent of your car's value.
• Be a good driver. Avoid accidents and traffic violations and you will be rewarded with good-driver discounts. Bad driving is expensive. The "safer you can be" on the road, Luedke said, "the lower your premiums."
• Drop coverage for such extras as towing costs or the expense of renting a car while yours is in the shop. The savings are probably small, but your new-car warranty's roadside assistance provision may provide them at no cost.
• Have your teenager share the family car instead of owning his or her own. Be sure to tell your agent if your son or daughter makes the honor roll or moves away to college. Both qualify for discounts with most companies.
• If your group health insurance provides generous coverage, consider dropping the medical-payments portion of your policy.
• Keep your credit rating healthy. A growing number of insurers are considering a person's credit score when setting rates.

General Insurance for your Needs

General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determined to be life insurance. It is called property and casualty insurance in the U.S. and Canada and Non-Life Insurance in Continental Europe.



In the UK, insurance is broadly divided into three areas: personal lines, commercial lines and London market.
The London market insures large commercial risks such as supermarkets, football players and other very specific risks. It consists of a number of insurers, reinsurers, P&I Clubs, brokers and other companies that are typically physically located in the City of London. TheLloyd's of London is a big participant in this market. The London Market also participates in personal lines and commercial lines, domestic and foreign, through reinsurance.
Commercial lines products are usually designed for relatively small legal entities. These would include workers' compensation (employers liability), public liability, product liability, commercial fleet and other general insurance products sold in a relatively standard fashion to many organisations. There are many companies that supply comprehensive commercial insurance packages for a wide range of different industries, including shops, restaurants and hotels.
Personal lines products are designed to be sold in large quantities. This would include autos (private car), homeowners (household), pet insurance, creditor insurance and others.

Home Insurance and Concepts

What is 'Homeowners Insurance'
Homeowners insurance is a form of property insurance designed to protect an individual's home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.



In the U.S. there are seven forms of homeowners insurance that have become standardized in the industry; they range in name from HO-1 through HO-8 and offer various levels of protection depending on the needs of the homeowner.

Also known as "homeowner's/homeowners' insurance."

BREAKING DOWN 'Homeowners Insurance'
While homeowners insurance covers most scenarios where loss could occur, some events are typically excluded from policies, namely: earthquakes, floods or other "acts of God" and acts of war.



For people who live in certain parts of the country, adding an extra policy for earthquake insurance or flood insurance can be a good idea to offer further home protection and peace of mind. Some homeowners insurance is designed for renters, typically HO-4 or "renters insurance", and only covers possessions within the home and isolated events not covered in the property insurance held by the owner.

Company Insurance Fundaments and Concepts

The cost of insurance (ie. premiums) is determined by the claims experience of the company. This is why young drivers, who have a high claims rate, may pay higher car insurance premiums than drivers over 25 years of age. This is also why female drivers, who are considered a lower risk, may get cheaper car insurance than males.



If claim numbers and the cost of claims increases, then so may insurance premiums.
For risks that involve a high severity of loss and a low frequency of loss, then risk transference (ie. insurance) is probably the most appropriate protection technique. Insurance is appropriate if the loss will cause you or your loved ones a significant financial loss or inconvenience. Do keep in mind that in some instances, you are required to purchase insurance (i.e. if operating a motor vehicle). For risks that are of low loss severity but high loss frequency, the most suitable method is either retention or reduction because the cost to transfer (or insure) the risk might be costly. In other words, some damages are so inexpensive that it's worth taking the risk of having to pay for them yourself, rather than forking extra money over to the insurance company each month.
The Risk Management ProcessAfter you have determined that you would like to insure against a loss, the next step is to seek out insurance coverage. Here you have many options available to you but it's always best to shop around. You can go directly to the insurer through an agent, who can bind the policy. The process of binding a policy is simply a written acknowledgement identifying the main components of your insurance contract. It is intended to provide temporary insurance protection to the consumer pending a formal policy being issued by the insurance company. It should be noted that agents work exclusively for the insurance company. There are two types of agents:
Captive Agents: Captive agents represent a single insurance company and are required to only do business with that one company.
Independent Agent: Independent agents represent multiple companies and work on behalf of the client (not the insurance company) to find the most appropriate policy.

UnderwritingUnderwriting is the process of evaluating the risk to be insured. This is done by the insurer when determining how likely it is that the loss will occur, how much the loss could be and then using this information to determine how much you should pay to insure against the risk. The underwriting process will enable the insurer to determine what applicants meet their approval standards. For example, an insurance company might only accept applicants that they estimate will have actual loss experiences that are comparable to the expected loss experience factored into the company's premium fees. Depending on the type of insurance product you are buying, the underwriting process may examine your health records, driving history, insurable interest etc.

The concept of "insurable interest" stems from the idea that insurance is meant to protect and compensate for losses for an individual or individuals who may be adversely affected by a specific loss. Insurance is not meant to be a profit center for the policy's beneficiary. People are considered to have an insurable interest on their lives, the life of their spouses (possibly domestic partners) and dependents. Business partners may also have an insurable interest on each other and businesses can have an insurable interest in the lives of their employees, especially any key employees.

Insurance ContractThe insurance contract is a legal document that spells out the coverage, features, conditions and limitations of an insurance policy. It is critical that you read the contract and ask questions if you don't understand the coverage. You don't want to pay for the insurance and then find out that what you thought was covered isn't included.

Car Insurance Fundaments and Concepts

Insuring an automobile is more than just a good way to protect an investment.  It's also a good way to protect people too.  In most states, owners are legally required to carry insurance to protect passengers, people that might be injured by the car, and damages it might cause to property.




In this article, we're going to discuss why consumers need automobile insurance, as well as the categories of protection offered to individuals.  We'll also talk about some of the factors companies will use to determine policy premiums.
Nobody sits behind the steering wheel and intentionally rams into another car, deer, or telephone pole (criminal exceptions noted).  The vast majority of individuals have accidents, and they can even happen when pulling out of a driveway.
In many countries throughout the world, it is mandatory, or compulsory, to purchase insurance before driving on public roads.  In the United States, there are penalties for not having a valid policy including fines, revocation or suspension of a driver's license or the vehicle's registration, and even possible imprisonment in some states.
In general, car insurance provides coverage for the policyholder, the vehicle, and third parties; this includes passengers, individuals involved in the accident, as well as other owners of the vehicle such as a bank or lender.  Each of these insured parties is protected by one or more categories of coverage.
Four Categories of Coverage

It's no accident that insurance companies separate a policy into subcategories of coverage that fit very nicely with the owner's needs.  This provides the opportunity for the policyholder to tailor their coverage to their individual situation.  Generally, the four subcategories of car insurance include:
Collision / Comprehensive Insurance
Medical Expenses
Liability Insurance
Uninsured / Underinsured Vehicle Operators
Each of these is discussed in more detail in the sections below.
Collision / Comprehensive Insurance

Collision insurance covers the damage to a vehicle when it's involved in an accident; up to the book value of the car.  Collision coverage is usually subject to a deductible; which is a cost-sharing agreement with the insurance company.  The book value will be paid to the insured if the cost of repair exceeds the book value of the car.
Under certain conditions, the insured may wish to sign a collision damage waiver (CDW).  When this happens, the owner would not be insured for collision damage.  This type of waiver is sometimes selected when a car's book value is less than the policy's deductible.
Comprehensive insurance covers damages to the car caused by an unknown party or an "act of God."  This type of damage is sometimes referred to as "other than collision."  Examples include fire, theft, vandalism, weather (such as hail), or impacts with animals such as deer.  These types of damage are known as comprehensive losses.
Medical Expenses

In most states, the insured is required to obtain a policy that includes payments for medical expenses.  This applies to medical treatment for the driver as well as passengers involved in an accident.
Liability Insurance

Property damage or injury the driver might cause to others is covered under liability insurance.  This coverage is normally provided at a fixed dollar amount.  For instance, the policy might provide $100,000 in coverage.  Liability payments usually occur when the insured is found to be negligent in some way.  For example, if the driver of the vehicle damages a utility pole, their liability coverage would pay for the expense of repairing or replacing the pole.
Liability coverage is usually sold as a combined single policy limit or a split limit.
Combined Single Limit Policy

A combined single limit policy simply combines all types of liability coverage provided by the policy.  Examples include bodily injury and property damage.  All payments made during a single event are combined, and limited, by a single limit policy.
Split Limit Policies

A split limit policy allows the policyholder to purchase separate coverage for both property damage and bodily injury.  For example, even during a single event, the maximum, or limit, for both bodily injury and property are not combined, but subject to the total maximum limit.
Uninsured / Underinsured

Unfortunately, even though it may be required by law, not everyone has car insurance. UM/UIM insurance helps the driver or passengers pay for damages or injuries that occur when the other party involved in the accident is an uninsured / underinsured motorist.
Special Types of Auto Insurance

The above items are the primary subcategories of car insurance; but companies may also offer additional policy features such as:
Loss of Use:  payments made to car rental companies if a vehicle is damaged and the owner needs to rent a car until the repair is completed.
Loan or Lease Payoff:  sometimes referred to as GAP Insurance, this feature provides protection that pays the gap between a car's market value and the outstanding balance on the car loan if it's totaled.
Towing Insurance:  a roadside assistance program that provides coverage for problems such as flat tires, dead batteries, or cars that run out of gasoline.
Insurance Premiums
Most companies determine the policy's cost, or premium, using a formula.  If the driver is inexperienced, then they're going to pay more.  Insurance companies don't have the time to follow each potential policyholder to see if they are a "wild child" or a "cautious kid."  The following is a short list of factors that determine the cost of insurance.
Age of Driver

Younger drivers, such as teenagers, are considered less experienced and would pay higher premiums.  However, these same teenagers are sometimes offered discounts if they take driver education classes or get good grades in school.  In general, premiums begin to decline when drivers reach age 25.
At the other end of the age spectrum, older drivers are often offered senior or retirement discounts.
Driving Records

Past performance is sometimes used as an indicator of future performance.  The location where the car is stored, either at home or a place of employment, can also affect costs: urban rates are usually higher.  Since men tend to drive more miles each year than women, they also have a higher chance of being involved in an accident.  This means gender can sometimes be a factor when determining premiums.
Type of Vehicle Driven / Level of Coverage

The cost of insurance also takes into consideration both the expenses associated with replacing a vehicle and the type of vehicle driven (sports car versus minivan).  Policy premiums would also reflect the level of deductibles chosen, or the level and / or breadth of coverage selected (more coverage simply costs more).
Distance Driven Each Year

Some insurance companies take into account the distance driven or how the car is used during the year.  For example, pleasure use only versus commuting to work.  These companies may ask drivers to estimate the number of miles the car will be driven each year, or require the policyholder to submit odometer readings at renewal.
Credit Scores

More recently, some insurance companies have been using credit scores to adjust premium levels.  Justification for using insurance credit scores is simply this: data indicates that consumers with lower credit scores are more likely to file claims and collect money on their policies.
Lowering Costs
In the following paragraphs, we describe several tactics individuals can use to help control costs.  The first tactic will probably save the most money, but also subjects the policyholder to the greatest risk of loss: eliminating collision or comprehensive coverage.
Collision Waivers

Since collision and comprehensive cover the cost to repair damages to the car, policyholders don't need to have this insurance.  We need to be careful with blanket statements like this because if there is a loan on the car, or it's being leased, it is very likely the company leasing the car or lending the money will require this coverage.  If the car is damaged and there isn't coverage for collision or comprehensive insurance, then the owner will need to pay for all repairs to the car or buy a new one.
Raising Deductibles

It's also possible to increase deductibles to lower costs.  By raising a deductible, the policyholder is paying a larger share of the car's repair cost.
Another way to lower cost is to see if the company that provides the owner's homeowners policy or life insurance offers "umbrella" policies too.  By consolidating these needs through one company or broker, the policyholder may qualify for discounts.
Taking Advantage of Discounts

Finally, it's worth the telephone call to simply ask the carrier what discounts they provide.  Many companies offer savings to students with good grades or individuals that have taken an approved defensive driving course.  Some of the safety features of the car:  anti-theft systems, air bags, and anti-lock brakes are designed to protect the vehicle and its occupants.  They should also lower the cost to insure the vehicle against these same types of losses.