Is Rental Car Insurance Really Worth It?

Every summer as travel starts to increase we are met with the question, “Should I buy the rental companies insurance plan when I rent a car? Is it really worth it?” And every year we give our clients the same black and white answer… it depends.

The personal auto policy is designed to extend coverage to a rented vehicle at the broadest coverage the insured has on their current auto policy. Many people with older vehicles choose to only insure their vehicles for their liability since the value of the vehicle is diminished. If you do not have physical damage coverage on your vehicles then your personal auto policy would not extend physical damage to the rented vehicle either.  In that situation you would definitely want to purchase the rental companies insurance to have coverage for damage to the vehicle. But considering that your current auto policy includes liability, physical damage and medical coverage then would it still be worth it to purchase the rental insurance?

It depends because there is more to consider. If you are involved in an accident in the rented vehicle then the rental company could put a hold on your credit card until your insurance company provides payment. This could significantly inconvenience you while traveling. There might be coverages like loss of income that the rental car company would be entitled to collect that your auto policy doesn’t provide. As Insurance Professionals we take the responsibility of educating on risk and advising our clients on best practices. We tend to lean toward purchasing the rental companies insurance. Purchasing the rental insurance can also allow you to keep your own insurance free from claim activity if you do have a loss while driving a rented vehicle. It can also provide you with the chance to lower your deductible if your current auto policy has high deductibles.  If you are going to be renting a vehicle outside of the United States then we would highly recommend purchase rental insurance.

 

Who Should Be A Listed Driver On My Auto Policy?

Insurance eligibility and premiums are assessed based on risk. In order to have an accurate picture of your household’s risk the carriers need to know who has regular access to or use of your vehicles and would typically be considered a member of your household. Regular access/use does not mean a neighbor borrowing your car to get to work one day because theirs is in the shop. Or even a friend borrowing your car for one weekend to move.  Regular use applies to household members of driving age that have access to your keys and vehicles or those who reside with you 50% or more of the time. This can include but is not limited to drivers with a learner’s permit, drivers with a permanent license, and roommates. The requirements are carrier specific so you would need to ask your agent to see what your insurance carrier requires.

Some carriers we work with do not require a driver with a learner’s permit to be listed at all. Others want them to be listed but will not charge you for them. Roommates work in a similar fashion. Carriers will typically require them to be listed as drivers but some will give you the chance to list them as “insured elsewhere” so that you are not charged for them.

Withholding driver information or falsifying driver information is considered insurance fraud and could result in denial of a claim and cancellation of your policy. It is better to be up front about who is using your vehicles and how often than to avoid that discussion with your agent and have to pay a claim out of pocket or be placed in non-preferred and more expensive market after a cancellation has occurred. Pursue other avenues to save money like good student or driver training discounts.

 

Why should I Insure Recreational Vehicles?

Summer is in full swing. For Paducah, KY this means you will start seeing packed golf courses in the cities and kids whizzing around on 4-Wheelers in the county.

Many people do not see any value in insuring their recreational vehicles. They are not as expensive or powerful as vehicles and are typically used on or around the residence premises. Consumers believe that their homeowners policies will provide coverage; however, they do not realize the limitations of the homeowners policy in regard to recreational vehicles.

First, an unendorsed homeowners policy limits when coverage is provided. The homeowners policy is typically designed to provide coverage for things like lawn mowers, golf carts and 4-Wheelers, but only when they are used for servicing the residence premises, assisting the handicap, or on the golf course.

Secondly, an unendorsed homeowners policy limits where coverage is provided.  The homeowners policy does not extend property or liability coverage once you leave the residence premises listed on the homeowners declarations page, the one exception being a golf cart on the golf course. Use “on the course” refers to being on the course or paths and is not to be confused with public roads going to and from the golf course.

Finally, an unendorsed homeowners policy limits what coverage is provided. The homeowners policy provides coverage subject to the insured perils under a homeowners policy. A homeowners policy is insuring perils such as fire, wind/hail, or theft. Collision is not a covered peril under a homeowners policy.

We work with insurance carriers that write policies specifically built for Golf Carts and ATV’s. The premium is often minimal and the property deductible is lower than a homeowners deductible. If you would like to talk to an agent about your risk in this area then please give us a call!

 

Should I Let Others Drive or Borrow My Car?

You might have heard your insurance agent say, “Insurance follows the car not the driver”. If your vehicle is insured, then someone borrowing your car with your permission would also be covered under your insurance policy. With that information, you may want to pause before letting anyone drive your vehicle. When you are trying to decide on letting someone borrow your car you more than likely are considering their personal driving habits and how much you trust them. But do you consider the impact it could have on your insurance if the borrower were involved in an accident in your vehicle?

Because insurance follows the car, your policy would act first in the event of an accident even if the borrower has their own insurance. Their insurance would not kick in until your limits were completely exhausted. Your policy is also the one that would take the rate increase that often comes with claim activity.

We don’t want to discourage you from being a good neighbor or exercising common safety practices. We all have had a friend move and need to borrow a truck or have taken a long road trip where the driving needed to be broken up into shifts.  However, as insurance professionals we do need to make you aware that when you loan your car you are also loaning your insurance.

 

What Liability Limits Should I Carry On My Vehicles?

**Reminder as you read: The liability coverages discussed below are only taking into account bodily harm or property damage you cause to others. Coverage for your own medical injuries or your own vehicle would be found elsewhere in your policy if you have purchased them.

Each state government has set a minimum limit of liability insurance that a vehicle owner must carry in order to be considered legal. For insured’s in Paducah, KY the minimum liability limits set by the state of Kentucky are:

$25,000 Bodily Injury Per Person | $50,000 Bodily Injury Per Accident | $10,000 Property Damage Per Accident

We believe that some insurance is better than none; however, we do not feel that the limits required by Kentucky are enough to actually protect you in the event of an accident. As agents that have helped our clients through auto claims situations time after time we are convinced that an insured should carry NO LESS than the following limits of liability:

$50,000 Bodily Injury Per Person | $100,000 Bodily Injury Per Accident | $50,000 Property Damage Per Accident

When working with our clients or prospective clients we actually recommend they purchase one of the following two options:

1.) $100,000 Bodily Injury Per Person |$300,000 Bodily Injury Per Accident | $100,000 Property Damage  Per Accident

2.) $250,000 Bodily Injury Per Person | $500,000 Bodily Injury Per Accident | $250,000 Property Damage Per Accident

We understand that being able to pay premium is obviously a large factor in purchasing insurance. We also understand that some do not have assets great enough that require them to purchase a large amount of protection. But we do challenge you to consider the value your policy brings. The premium payment is really quite small compared to the protection provided when an auto accident occurs. Given the increase in distracted driving and the amount of time spent in your vehicle each week the odds are not in your favor to avoid an auto accident forever.

We also encourage our insureds to be realistic. Minor fender benders may be the most common types of accidents we see around Paducah, KY. Minimum limits may be enough in that type of scenario to cover expenses you are legally obligated to pay. But what if you hit someone on a motorcycle? What if you are responsible for a 3 car pile up? Vehicles are becoming more and more expensive as safety features and capabilities are added. Medical expenses are also increasing today. You purchase an insurance policy to protect you from catastrophic loss like one of the scenarios mentioned above. A benefit of insurance is also having it available for the minor fender bender; however, that type of scenario is not necessarily how insurance was intended to be used.

 

 

 

What Is Loss of Use or Additional Expenses?

Your homeowner’s insurance policy includes Coverage D- Loss of Use. Some insurance carriers call this Additional Expenses but the same coverage rules apply.  If you suffer a covered property loss that makes your residence uninhabitable then your policy will provide reimbursement for the expenses you incurred relating to maintaining your normal standard of living. Some examples we have seen of this were expenses for apartment/hotel rental, laundromat and food. The key word is uninhabitable. If you have covered damage to your kitchen but all your appliances are still in working order and your kitchen is still accessible then you would not be eligible for reimbursement of food expenses under loss of use coverage.

Let’s look at a different scenario. If you own a home that you rent to others then you might see Fair Rental Value in the place of Loss Of Use on the insured properties declarations page. Damage that makes the rental home you own uninhabitable may not directly affect you. Your home is still livable. Your appliances are still working.  You are still able to take care of your daily needs; however, you have lost the rent income from your rental home when the tenants had to find another place to live during repairs.

Another place you will find coverage for loss of use is on your auto policy. On the auto policy loss of use falls under the coverage named Transportation Expense. You might also see this coverage labeled Rental Reimbursement. The reason it is considered loss of use is because this coverage only comes into play when your vehicle is “out of use” due to a covered claim. You cannot collect rental reimbursement for a vehicle you rented to take a trip in simply because you didn’t want to put mileage on your vehicle. You can collect rental reimbursement when you had to rent a car while your vehicle was in the shop for 2 weeks after you were involved in a collision.

Contact your agent if you have more questions about loss of use coverage and when it applies!

 

What Deductible Should I Carry On My Autos?

We are asked all the time, “What deductible should I carry on my auto policy?” The standard auto deductibles we see at Bradshaw & Weil, Inc. in Paducah, KY are $500 or $1000. When choosing your deductible you want to consider the value of your vehicle and the impact of claims on your premium. Insurance is designed to protect you from catastrophic loss not as a maintenance policy. Turning in small claims all the time will inevitably impact your premium and hurt you in the long run. Higher deductibles not only save you a little bit of premium but they also discourage you from turning in small claims.

You also need to remember that insurance settlements for vehicles are typically done at an Actual Cash Value basis (unless your policy specifies Agreed Value or Replacement Cost loss settlement. These types of settlements for auto policies are not standard.) It is a good idea to check a third party source to determine if the value of your car is worth paying premium for comprehensive and collision coverage. If your vehicle is only worth $1,000 and you carry a $500 deductible then the most you could receive from insurance at a time of total loss would be $500. Would that be worth paying $200 or more every 6 months to include that coverage on your policy?

The Fiduciary Role of an Insurance Agent

At Bradshaw & Weil, we call ourselves Insurance Professionals because our service goes beyond just acquiring a license and selling policies. The process of obtaining an insurance policy is not necessarily a difficult one but it does require going through several steps. An Insurance Professional will guide you through each step of the process, letting you know what to expect, and helping you to understand how the process relates to your coverage.  As Insurance Professionals, we are held to a fiduciary standard and our companies’ Code of Ethics when dealing with our clients. This means more than just doing what is legal. It means doing what is right no matter the outcome.

A fiduciary is a person who stands in a special relationship of trust to another person. you hear this term a lot in the financial sector but did you know that Insurance Agents have fiduciary responsibility too? We have a fiduciary duty towards our clients, our insurer’s and the public.  Two of the ways in which we enact our fiduciary duty are:

  • selling coverage not price
  • educating on the process of inspection.

Some agents cut coverage in an attempt to price match or avoid disclosing possible inspection issues for fear it could lead to their client declining the policy and have a negative impact on the agencies bottom line. We understand that price is important to our clientele and that is exactly why we make the point to fully disclose coverage concerns or inspection red flags. If you can’t afford to pay your insurance premium, then you won’t be able to afford the payout of a large claim against you.  Education is of utmost importance when it comes to coverage. If you make an educated decision to cut your coverage or to self-insure then that is your right. But we feel that matching coverage to beat price is a disservice to you.

Inspection requirements work the same way. Insurance companies are inspecting your residence for things that increase hazards. Brush growing along the side of a home or trees hanging over the roof are going to increase the chance that your home has fire damage or damage from a tree falling etc. As with anything, the upkeep of these items can cost you money or your valuable time to fix. When your agent takes pictures or recommends you trim trees, it is not because the agent doesn’t like the way it look s or because the insurance carrier will not accept your home in the condition that it is but because your agent wants to be able to prepare you up front for any repairs or maintenance that might be required of you.

 

Disclaimer: We will not always be aware of every inspection requirement that could arise with your property. We will not force you to pay a premium for a coverage you do not want. It is your policy and your right. However, as an Insurance Professional it is our duty to make you aware of available coverage and educate you on how it can be a benefit to you. All licensed insurance agents regardless of employer are held to a fiduciary ethical standard. We cannot speak for practices of your agent or insurance company.

Is Auto Insurance Required?

Auto insurance is pretty cut and dry; however, there are still options available to you depending on your preference and on your state of residence. Liability insurance is required on your vehicles in all states. Liability coverage does not protect the insured’s vehicle or passengers but it does protect the policy holder from suffering a large financial loss when they are legally responsible for another parties bodily injury or property damage because of an auto accident.

The state of Kentucky only requires auto owners to carry liability limits of 25/50/10.  This means to be legal you need at least:

$25,000 Bodily Injury Liability per person | $50,000 Bodily Injury Liability per accident| $10,000 Property Damage Per Accident

Although these are the minimum limits, it doesn’t mean that they are sufficient to cover incurred expenses. Many auto accidents incur much more expense than these minimum limits. Therefore, we never recommend only acquiring the minimum limits. Remember the main goal of insurance is to protect against catastrophic loss.

In addition to liability insurance, many insureds also purchase comprehensive (or Other Than Collision) and collision coverages to cover physical damage to their own vehicle. Other desired insurance coverages include personal injury protection, uninsured/under insured motorist, towing and rental. We will provide more on these topics in a later blog post.

If you are a resident of Paducah or Western Kentucky, you can contact Bradshaw & Weil, Inc. for a full review of all these coverages and our personal recommendation of insurance options to fit your own situation.