Comprehensive coverage is physical damage coverage to the insured’s covered auto. To understand Comprehensive coverage you must first understand Collision. Collision is defined as a loss due to impact of the insured auto with another object or vehicle and includes the upset of the insured vehicle. Comprehensive is often referred to as Other Than Collision because it would pay almost every other type of direct, accidental loss to the vehicle other than collision (as long as it is not excluded by the policy).
Some examples of losses that would be considered Comprehensive losses are:
- Hail, water, or flood
- Contact with a bird or animal
- Glass breakage
Comprehensive coverage is not included on a standard auto policy. You must pay an extra premium for it. If you have a comprehensive loss then you will be subject to a deductible before insurance will kick in. It is highly advised that you include this coverage on newer vehicles. The older the vehicle gets, the less the coverage may benefit you.
There is a lot of confusion in the consumer world on whether or not they have to pay a deductible in the event of a glass breakage claim. Glass breakage falls under comprehensive coverage. Comprehensive coverage generally comes with a deductible (what the insured will pay before insurance kicks in).
Whether or not you must pay a deductible on glass claims largely depends on the state in which you are insured or the insurance carrier you are working with. In the state of Kentucky there is no deductible for glass breakage claims regardless of the insurance carrier. However, the damaged vehicle must carry comprehensive coverage at the time of loss.
Other states may be subject to deductibles for glass breakage; however, some insurance carriers do offer full glass coverage (no deductible) as an additional coverage on their policies. Consult with your agent if you have additional questions regarding how your policy reads.
Many people feel that insurance is a “necessary evil” because their premiums continue to go up every year. They turn in small claims but have to pay a deductible. Once they pay the deductible the insurance portion is minimal. So why bother?
Rule # 4- Sometimes a small loss is worth taking.
This rule appears to be counter intuitive. A loss, no matter what the size, is unpleasant. It seems that common sense would say that no loss, no matter how small, is acceptable, if instead it could be paid by an insurance company. But you have to understand that insurance is designed to protect against catastrophes. It is not designed to be a maintenance policy. You are better off paying small frequent losses out of your pocket. If you increase your deductible, you can help yourself in a couple of ways. First, it will decrease your premiums. Secondly, by turning in less small claims, your cost of insurance will be reduced over the long run. The summation of this rule is that insurance is most effective when it is used to protect against large unexpected losses.
The purchase of insurance is to protect you from catastrophic loss but you also want to protect you and your family in the most economical manner possible.
Rule # 3- Don’t Risk A Lot For A Little
Sometimes, when you do your risk evaluation, the potential loss is big, but the cost of insuring against it is cost prohibitive. Take Long Term Care insurance; the potential cost of nursing care is very large, but if you have health problems and are over 75 years old, then the cost of insurance is probably too expensive. But, there are many circumstances where there is potential for a very large loss, but the cost to cover it is minimal. An Umbrella policy, for instance, provides catastrophic liability protection. A $1,000,000 policy might cost a couple hundred dollars a year. (You can get a much higher limit of Umbrella coverage if needed.) In essence, the third rule states that there should be a reasonable relationship between the risk of the loss that is transferred to the insurance company and the cost involved in transferring the risk.
The purchase of insurance does not reduce the chance that you will incur a loss, but it does reduce the financial risk associated with the loss. You simply cannot go out and spend a budgeted amount for insurance in a very haphazard and nonchalant manner, and expect to be fully protected.
Rule # 2- Consider The Odds
Obviously, when thinking about what risk you want to guard against, you will consider how likely the loss is to occur. But, just because the odds are relatively small, don’t forget rule number one. Considering the odds doesn’t mean you automatically purchase the insurance. Take Long Term Care insurance for instance- even though the odds are greater than 50% that you will need nursing care, if your assets are below a certain level, it would not be a wise purchase. Flood insurance is one type of insurance that many people avoid, even though the potential for loss is huge. If you live on high ground, you may decide not to purchase flood insurance because the risk of a flash flood is so small. So in considering whether to transfer the risk to an insurance company or retain the risk personally, consider both the odds of a loss occurring, and the odds of how bad that potential loss will be.
For many people, the purchase of insurance is a “necessary evil”. It is something they know they need, but they don’t really want to think about it and they really don’t want to spend “too much” money on it. This leads to the all too common problem of spending more than enough for insurance and still not getting proper coverage. Insurance and Risk Management is not rocket science, but there are a few basic rules to follow in order to get the most “bang for your buck” on insurance purchases.
Rule One- Don’t risk more than you can afford to lose.
This is the first and most important rule. The primary purpose of insurance is to protect you from catastrophic loss. If you are looking to reduce your insurance premiums, don’t do it by reducing or eliminating coverage on an exposure that could financially bankrupt your family if it were to occur. Following this rule would dictate purchasing enough liability protection to cover your assets in the event of a lawsuit and having enough life insurance to take care of your family in the event of the breadwinners untimely passing. Disability and Long Term Care insurance are two other types of insurance that could help you deal with a very severe hardship. However, Disability and Long Term Care, along with Life insurance are forms not everybody will need. Before purchasing these lines of insurance, check with your trusted agent, as to whether, in your particular financial situation, you need a certain type of insurance. Beware of any agent that always touts a particular type of insurance without first questioning you about your own financial situation.
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.
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.
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!
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.