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Term Life Insurance Laddering Approach

2011-09-25T05:42:00.001-07:00

In a blog post in April 2009, I wrote about Layering Term Life Insurance to provide different levels of coverage over a period of time. Layering or laddering several different term lengths can help address different time horizons associated with different needs for life insurance.
As an example, a 35 year married man with two young children (ages 7 and 13), earning $75,000 annually, has 20 years left on his mortgage (currently $250,000). He and his wife expect both children to attend college. Here’s how a laddering plan would work for this client:

Purchase a 30 year term policy with a $2,250,000 death benefit (Income x 30 years).
Purchase a 20 year term policy with a $250,000 death benefit to pay off the mortgage (as the mortgage amortizes as he pays it down, extra benefit can go toward supplementing college funds).
Purchase a 15 year term policy with a death benefit of $150,000 for the younger child’s college expenses.
Purchase a 10 year term policy with a death benefit of $150,000 for the older child’s college expenses.

Essentially, he would have a $2,800,000 death benefit for the first 10 years, then the benefit would drop as each shorter term policy expired (as the need for each policy was eliminated), leaving him with $2,250,000 of benefit for the final 10 years.
I have done this laddering for several clients over the years, using separate policies. However Legal & General America, through their Banner and William Penn companies has developed riders you can add to a base policy, rather than doing it though separate policies. In the above example, one would purchase a 30 year base policy of $2,250,000, then add the following riders: $250,000 for 20 years, $150,000 for 15 years and $150,000 for 10 years. As each rider expires, the cost of the rider would disappear as well.
While serving the same purpose as purchasing separate policies, this method could prove to be less costly, as there wouldn’t be separate policy fees that are built into each separate policy’s premiums. I expect to see other companies following Legal & General’s lead and come up with their versions of these riders.
As our term life insurance quote engine isn’t capable of quoting with these riders, feel free to contact us at 866-691-0100 ext. 105 if you would like to get quotes with these riders.

Applying for Life Insurance – Do Medical Exams Scare You?

2011-09-25T05:41:00.002-07:00

I wish I had a dollar for every prospective life insurance client I spoke with who was nervous about getting their blood drawn. I have even had a few people decide against purchasing life insurance because they couldn’t confront “the needle.” Medical exams, including blood tests, are part and parcel of the life insurance application. It provides valuable data to the underwriter as to what type of risk you present to the life insurance company. Along with a review of your application and medical records, the underwriter will determine your health class and premiums you pay for the policy.
For those of you who are a bit more than squeamish about getting poked in the arm with a needle, here are some tips for relaxing during your blood draw I found at labtestsonline.org:

Breathe: Take three slow breaths, counting to three for each one and breath through your nose. Breathe out through your mouth, counting to six. Breathe deeply to your abdomen and not to your chest – you will get deeper breaths.
Relax your muscles: Focus on individual muscles and “tell” them to relax.

Focus: Find an object or point (spot on the wall?) to focus on.

Count slowly (and silently) to ten: Breathing while you do this is highly recommended.

Talk to someone in the room: This will take your attention away from the “event.” Sometimes, it helps just to acknowledge your anxiety about the blood draw.

You should also realize that the person giving the exam is trained and is more than used to dealing with our fears and anxieties. They have “seen it all,” so you shouldn’t be embarrassed about your behavior. They will usually do what they can to get you to relax. When all else feels, just grit your teeth and go through what you need to go through because, by applying for life insurance, you are doing a selfless thing for your family. The fact that you have to endure the needle makes it that much more selfless. Pat yourself on the back – you deserve it.

If you have been putting off applying for life insurance, you can start by getting your life insurance quotes now. Just follow the directions above and you should get through the process relatively unscathed.

Life Insurance Awareness Month – with an Assist from Lamar Odom

2011-09-25T05:41:00.000-07:00

As a fan of the Los Angeles Lakers (sorry Celtics fans), I have seen some great players over the years – Jerry West, Wilt Chamberlain, Magic and Kareem, Shaq and Kobe, to name-drop a few. When he plays his heart out, I can utter the name Lamar Odom in the same breath with the others. Up until recently, I considered Lamar to be one of the greatest underachievers in the history of the game. He elevated his game this past year and won the prestigious Sixth Man Award, one he richly deserved.
However, in September of this year, Lamar Odom will be making an assist that will elevate him to an even higher level for me. He will be the spokesperson for Life Insurance Awareness Month, sponsored by the Life and Health Insurance Foundation for Education (LIFE). I believe by putting his celebrity to better use than in the TV reality show Kloe & Lamar, Mr. Odom will be promoting the concept of protecting your family with life insurance to a huge sports-watching public.

Lamar has a great story about the value of life insurance to tell – his mother passed away from colon cancer when he was twelve years old. Because she had life insurance, he was able to continue attending his private Catholic high school, where his mother had enrolled him so he didn’t have to go to the public school in his rough neighborhood. As a single parent, she knew the value of a good education and, in spite of her modest income, she purchased a life insurance policy to ensure that Lamar would be able to continue his education in the event of her death – which, unfortunately happened much too soon.
When Lamar graduated high school as one of the best basketball players in the country, he probably could have immediately entered the NBA, but to honor his mother (and because he valued his education), he enrolled in college. Had his mother not purchased her life insurance policy, Lamar might not have been able to attend college.

The Greatest Assist in his Life

Lamar has had some great assists on-court throughout his career from players like Kobe Bryant, Pau Gasol and Derek Fisher, but the greatest assist he has ever received was the one his mother gave him when she purchased her life insurance policy. That’s why Lamar has agreed to be the spokesperson for Life Insurance Awareness Month. ”Too many Americans haven’t done the kind of planning that my mom did,” says Lamar. ”They don’t have life insurance because they don’t think they’ll ever need it. I’m sure my mom didn’t think that she’d die at age 35, but that didn’t stop her from doing the responsible thing.”
When Lamar’s mother died, he had no idea how important his mother’s unselfish act was, but he fully realizes it today. ”Purchasing life insurance was one of the first things I did when I entered the NBA,” he says. ”As a husband and father of two beautiful children, I want to make sure the people I love will be provided for.”
If you don’t have life insurance, take an assist from Lamar Odom and score – protect your family’s future with a life insurance policy. To get a free life insurance quote, click the Start Your Instant Quote button now.

Life Insurance for Stay at Home Moms

2011-09-25T05:40:00.000-07:00

“Are you working?” I asked the young mother of two whose husband was purchasing a life insurance policy for himself. She answered, “no, I’m a stay at home Mom.” The husband told me they had thought of purchasing a policy for her, but since life insurance is “income replacement,” they would wait until she went back to work before they would consider a policy for her.
I bluntly asked him, “if your wife were to pass away, what would it cost to replace her “services?” After looking at me with a “I can’t believe you asked that question look”, they started looking at how much it would cost to get a full-time child-care provider, a housekeeper (who cooks), a driver to drive the children to school (when they started) and doctor appointments, etc., etc. I told them the replacement cost of the average contribution a wife makes at home is worth about $45,000 a year (based on a recent survey done by Penn Mutual Insurance Company).
Was that amount worth protecting for them? After looking at that number, they decided to purchase a 20 year term life insurance policy with a death benefit of $500,000. As she was young (27) and healthy, that policy would only cost them about $19 a month. Where else can you purchase peace of mind for less than $20 a month?
Stay at home moms – if you would like to see life insurance quotes for you, click the Start Your Instant Quote button now.

Benjamin Franklin

2011-09-25T05:39:00.000-07:00

I thought long and hard on President’s day of a relevant topic to post, but I could not think of an adequate tie-in. However, all those thoughts of men in white wigs reminded me that, although never president, one of the founding fathers of the U.S. is also responsible for starting the modern-day insurance system in the U.S.
In 1751, according to PBS.org, Benjamin Franklin and his Union Fire Company met with other Philadelphia fire-fighting companies to discuss the formation of a fire insurance company. Out of those discussions, the Philadelphia Contributionship was formed, which was the first successful fire insurance company in the colonies. About seventy Philadelphians initially subscribed to the contributionship.
In May 1752, the board of directors, of which Franklin was a member, decided to form an insurance company. Members agreed to make equal payments to the contributionship, which would be used to pay for losses any member would sustain through fire to his property.
Mr. Franklin also proposed other forms of insurance, including life insurance and annuities, according to PBS.org. In his Silence Dogood letters, he recommended insurance for widows and orphans, much like a current-day pension. Late in life, he also proposed crop insurance, based on the same type of organization as the Philadelphia Contributionship.

Primary and Contingent Beneficiaries

2011-09-24T06:14:00.001-07:00

One question that comes up fairly regularly in filling out a life insurance application is who should my beneficiaries be and what’s the difference between a primary and contingent (or secondary) beneficiary?
A beneficiary is a person or entity entitled to receive the death benefits paid under a life insurance policy. A beneficiary can be primary or contingent (or secondary).
If the primary beneficiary is alive when the insured dies, then the primary beneficiary receives the death benefit. If the policyholder has named a contingent beneficiary, the contingent beneficiary will receive the death benefit only if the primary beneficiary is not alive when the insured dies. One can name several primary and contingent beneficiaries and assign a percentage of the benefit to each.
If no valid primary or contingent beneficiary is living or exists when the insured dies, the benefits will be paid as follows:

If the insured is also the policy owner, the benefits will be paid to the insured’s estate.

If the insured is not the policy owner, the benefits will be paid to the policy owner or, if the policy owner is not alive or does not exist, the benefits will be paid to the policy owner’s estate.

The policy owner maintains the right to choose or change the beneficiary unless the policy owner makes an irrevocable beneficiary designation, such as in an irrevocable life insurance trust.

Factors to Consider When Purchasing a Life Insurance Policy

2011-09-24T06:13:00.002-07:00

Insurance Company Financial Strength

Whether you are purchasing term insurance, return of premium life insurance, whole life, universal life or survivorship life insurance, one of the most important issues to consider is the financial strength of the insurance company that’s providing the insurance. After all, you want to make sure the company will still be in business when your beneficiaries need to receive the insurance benefit. To check the financial health of an insurance company, you should turn to one or more of the companies that make a business of analyzing companies in the insurance industry. The best known rating services include Standard and Poor’s, A.M. Best, Moody’s and Fitch. Learn about life insurance company financial ratings, here.
Each of these services grades the insurance companies on financial strength, using letter grades to indicate how secure they consider the company.The actual grades vary by rating company. S&P uses AAA as its highest, for example, and Best uses A++.
Insurance Company Rating Categories indicates the rating service’s opinion of an insurance company’s ability to meet its obligations to policyholders,based on that company’s reported financial performance over several years.
Along with financial health, you want to choose a company that is responsive to its policyholders. That’s why it is a good idea to check with your state’s insurance regulating body to make sure there are no serious complaints against any of the companies you are considering.

Availability of Riders

Another factor that can influence which policy to choose is the availability of riders (rider = extra benefit added to a policy) that you want to purchase. One rider that is important is waiver of premium where if you’re disabled, premium payments are made by the insurance company.
Perhaps you would want a convertible policy, which allows you to switch from term insurance to whole life with no questions asked, another way to guarantee that you can purchase insurance even if your health declines.

Cash Value for Permanent Policies

When deciding among permanent life policies, you should be interested not only in the death benefit, but in the potential growth of the cash value that these kinds of policies offer. Because these policies are more complex than term policies,you may have to dig a little deeper to make your comparison. We can help you with those kinds of policies. Contact Us re: whole life.
For whole life policies, your LifeInsure.com representative will get you a number of competitive illustrations showing how the cash value might grow, based on interest and dividend assumptions.
Contact Us Call LifeInsure.com toll free at 866-691-0100 or Email at any time

LIFE presents The Seven Wonders of Life Insurance

2011-09-24T06:13:00.000-07:00

As part of this years Life Insurance Awareness Month, LIFE (The Life and Health Insurance Foundation for Education, a non-profit organization dedicated to educating the public about life, health, disability and long term care insurance) has produced a great piece about the importance of life insurance and the way it provides security for families. Visit www.lifehappens.org if you would like to see the original article, The Seven Wonders of Life Insurance, and some great supporting videos. In the meantime, here are the key points made in the article:
Many people purchase life insurance to pay for funeral and other final expenses. With proper planning, life insurance can provide much more for your family. Here is what life insurance can do for you:

Life insurance can buy time.
It affords your family and loved ones the time they need to grieve. Without life insurance, they might need to scramble to come up with the funds to pay for final expenses.

Life insurance provides a fresh start.
It allows your family to pay off debt (including the mortgage) so they can start with a clean slate.

Proceeds from a life insurance policy can generate income
Your family might choose to invest the death benefit in a conservative investment and live off the interest for years to come, leaving the principal intact.

Life Insurance can offer flexibility.
Your surviving spouse can take time off of work, if needed and/or perhaps switch to a new job that offers a more flexible work schedule, leaving more time to care for the family.

The funds from a life insurance policy can create opportunities.
They can provide funding to start a business or pay for schooling to train for a new career.

Life insurance can fund the future.
It offers a way to fund long-range goals like a college education for the children or to fund a retirement plan for a more-comfortable retirement.

Life insurance can leave a legacy.
It gives parents a chance to leave future generations with the legacy of long-term financial security.

Celebrate Life Insurance Awareness month by reviewing your life insurance policy to make sure you have enough coverage and, if not, get term life insurance quotes or universal life insurance quotes by clicking Start Your Instant Quote above and supplement your current coverage. If you don’t currently own a life insurance policy, now is a great time to start.

Life Insurance Rates Database – Open to The Public

2011-09-24T06:12:00.001-07:00

Not too long ago a consumer interested in life insurance would have to call on a bunch of agents to get quotes and compare prices (or have agents come see them). Twenty plus years ago an agent would look up the cost for someone in a rate book or rate manual and give a quote often for their company. You could trust that the person in front of you had a fair price or to compare you’d call on another one or two.
The next evolution which changed life insurance quoting was the personal computer, since an agent could check software on their computer and give you a printout, but it was still usually from one or two companies for which the agent had software. A consumer could then collect printouts from a few different companies. The Internet changed everything. One can learn about life insurance and get instant life insurance quotes from all the most competitive companies and can do it online, instantly and anonymously.
This is a perfect example of Internet shopping. Shopping for life insurance has evolved from having a life insurance advisor visit one’s home or office with a rate book, to seeing an agent or several agents with printouts from a computer, to present, where one now has the ability to view an entire life insurance rates database on one’s own computer screen through specialized life insurance sites, like LifeInsure.com. These sites allow one to see the prices anonymously and instantly.
This evolution in life insurance quoting has another unintended, but positive, consequence benefiting of the American consumer. Because of the full disclosure now available in life insurance quoting and the complete transparency, life insurance companies must compete. The best rates are shown instantly for all to see! Thus we have seen rates for term life insurance continue to get lower year after year. With life insurance on the Internet, that industry has not only seen an evolution but a revolution of full disclosure with the consumer winning.

Life Insurance Trends – What the Statistics Say

2011-09-24T06:11:00.001-07:00

Life Insurance Awareness Month, the time of year that the insurance industry reaches out to educate the American public about life insurance. LIMRA, an association that provides consulting, research and other services to insurance and financial services companies worldwide, publishes their Facts of Life, a statistical analysis of the life insurance industry. Out of all the life insurance statistics they provide, I find the ethnic studies to be the most interesting. This is from their 2011 study:

More than 80 percent of African Americans believe the main reason to buy life insurance is because you love your family:

In comparison to other ethic groups, African Americans are more concerned about not putting a burden on others with their funeral expenses and leaving an inheritance for their family. They are more likely to own life insurance for these reasons than other ethnic groups.

African Americans have a better understanding than other ethnic groups about how life insurance works, including how it protects the family and why families should own it.

When buying life insurance, African Americans, compared to other ethnic groups, place more importance on being certain they understand exactly what they are purchasing and less importance on getting a fixed price that cannot increase.

Seventy percent of Hispanics think they need life insurance:

Hispanics are less likely to feel insurance agents are knowledgeable and consequently are less likely to buy from an insurance agent than other ethnic groups.

Hispanics are more likely to cite paying for a college education as a reason to own life insurance.

Hispanics are more likely to prefer to buy life insurance direct from a company via the Internet than any other ethnic group.

These statements are from several of LIMRA’s life insurance consumer studies and are not based on my experience. While I find statistics like these to be fascinating, I believe that any time you group the experience of any ethnic group, you are liable to make broad generalities.
As people come to our Website and get life insurance quotes anonymously, we have no idea of the ethnic make-up of each visitor. When our visitors apply for a policy, all of our contact is via telephone or email, so we still don’t learn the ethnicity of our visitors.
LIMRA’s mission is to help their members improve their marketing and distribution effectiveness. I imagine the life insurance companies can use the data from these surveys to learn how to market to different groups. However, because of the relative anonymity of the world of online life insurance brokers, this is data that will never be used by us…and I like it like that.

LIFE presents The Seven Wonders of Life Insurance

2011-09-24T06:10:00.001-07:00

Life insurance can buy time.
It affords your family and loved ones the time they need to grieve. Without life insurance, they might need to scramble to come up with the funds to pay for final expenses.

Life insurance provides a fresh start.
It allows your family to pay off debt (including the mortgage) so they can start with a clean slate.

Proceeds from a life insurance policy can generate income
Your family might choose to invest the death benefit in a conservative investment and live off the interest for years to come, leaving the principal intact.

Life Insurance can offer flexibility.
Your surviving spouse can take time off of work, if needed and/or perhaps switch to a new job that offers a more flexible work schedule, leaving more time to care for the family.

The funds from a life insurance policy can create opportunities.
They can provide funding to start a business or pay for schooling to train for a new career.

Life insurance can fund the future.
It offers a way to fund long-range goals like a college education for the children or to fund a retirement plan for a more-comfortable retirement.

Life insurance can leave a legacy.
It gives parents a chance to leave future generations with the legacy of long-term financial security.

Business Insurance for a Lodging Establishment

2011-09-23T17:45:00.003-07:00

Commercial Auto Insurance

If the business will use a vehicle, then that vehicle must be covered by commercial auto insurance. Personal auto policies generally do not cover losses caused when a passenger vehicle is used for commercial purposes. This will be necessary insurance if vehicles are used in the business.
Other Insurance
Lodging businesses are only profitable while operating with guests. If there is a substantial disruption of your business, such as a fire, remember property insurance will only replace the property - not the lost income. The lodging business owner should consider business interruption insurance. Lodging businesses are increasingly computer dependent, consider specific network risk coverage.
Finally, it cannot be stressed enough that certain natural disasters, such as floods and earthquakes require separate endorsements or separate policies and are not covered by most property policies. So it may be that the old line, "location, location, location," as the most important factor in the value of a property applies to its insurance as well.

Before You Purchase Commercial Auto Business Insurance

2011-09-23T17:45:00.001-07:00

Commercial auto insurance is one of the most important aspects of your business insurance program. If your business uses a vehicle, or many vehicles, you need commercial auto insurance and you will want to ask your business insurance professional some important questions. You will also want to provide your business insurance professional with a complete picture of your vehicle use.
Consider the following points and ask the following questions.

How Many Vehicles and Drivers Will the Business Insure?

Commercial auto insurers often separate coverage types based on the number of vehicles and drivers to be insured. Fleet insurance is an option for businesses that will have a number of vehicles and drivers. The number of vehicles differs with each insurer and may depend on the class of vehicle. But, fleet insurance may be a less expensive alternative than individual, per vehicle policies.

What is the Policy Definition of Commercial Use?

Your personal auto policy will exclude coverage for commercial uses of your vehicle. A commercial policy will establish a definition of commercial use as well. It is important that you read the definition and discuss this with your insurance professional. If there is any question, it is better to obtain a commercial auto policy so that, in case of an accident, there is no chance of being uninsured.

How Can You Lower Premium Costs?

Commercial auto business insurance premiums can be lowered by:

Business Location - the location of the vehicles determines premiums for theft.
Driver Records - hire only qualified drivers with safe driving records.
Choice of Vehicle - sales people may want sports cars, but five-star safety rated, domestic, mid-sized sedans have the lowest premiums.
Deductibles - can your business afford part of the risk and maintain a high deductible? If so, your premiums will be lower.
Safety and Anti-Theft Devices - alarms, GPS tracking, air bags, seat belts, and other such devices can significantly lower premiums.

Insure U for Small Business Tips on Lowering Premiums

Special Commercial Coverages and Considerations.

Certain businesses must adhere to federal and state regulatory standards in the operations of their vehicles. For example, if your business will be hauling cargo interstate, there are specific Department of Transportation requirements for insurance that must be met. You will need to make sure you and your insurance professional have a thorough understanding of those requirements. Also, if you will be delivering or hauling for others or using other's equipment such as leased trailers or rental equipment, you will need hired or non-owned vehicle coverage.

Who is the Insured?

Make sure you know the insured. Sound simple? Maybe. But, all to often businesses set up a leasing company to lease equipment to the main company and the leasing company is the titled owner of the vehicles. A common mistake is to identify the main company and not the leasing company as the titled owner on the policy. Or, the dba of the company and not the full name of the company is listed. You want the full name of the company as an insured, the titled owner, any affiliates, and dba, and all employees as insureds on your commercial auto policy.

An Overview of Casualty Coverage

2011-09-23T17:44:00.000-07:00

Casualty insurance is typically combined with property insurance and often referred to as “property and casualty” insurance. However, there is a difference in the type of coverage. This is especially true after the events on September 11, 2001 and the hurricanes in 2004-2005.
Property insurance insures the location of the business while casualty insurance insures the business.
For example, if your business is on the seventh floor of a building and a natural disaster, such as a flood, occurs that wipes out the first floor, but causes no damage to the seventh floor, then any loss would not be covered by your property insurance because there is no direct loss to the location of the business. However, if you have business continuation or business interruption insurance you may have coverage for the indirect loss to your business.
Many of these products are developing in today’s world. Insurers are making it necessary to carry additional casualty insurance to cover certain types of losses. These types of coverage include:

Terrorism Coverage – Acts of terrorism or war are not covered by traditional insurance policies – or, so claims the insurers. The attacks on September 11, 2001, resulted in claims exceeding $30 billion. Insurers now specifically exclude terrorism and require the purchase of a terrorism policy.
Flood Insurance – Floods are generally not covered by typical property insurance policies and a separate flood insurance policy is necessary to protect against that risk.
Political Risk or Government Liability – If you do business overseas or have substantial government contracts, then you may want to look into this type of coverage. It protects against a sudden loss due to a sudden political change in a country or withdrawal of a contract without recourse.
Other Types – There are other types of casualty insurance that seem to be developed in response to the latest news: Cyber-Liability, Identity Theft, Cyber-Fraud, Employee Theft, etcetera.

Some of these casualty policies may be critical for the safe operation of your business. More often though, standard casualty coverage offered with a business owners’ policy will be enough casualty coverage and these types of policies are ‘flavors of the month.’
Casualty insurance also includes certain types of bonds or other limited insurance that have been long standing products and may be very necessary to your business.

Employee Theft and Dishonesty – This coverage protects your business from loss or damage caused by employee theft. If your employees have access to company funds or handle cash transactions you may want to consider this coverage for the employees.
Surety Bonds – This form of casualty coverage referred to as a bond insures someone you will contract with that you will complete the contract. If you are in construction or plan on bidding for government jobs, then you will be required to obtain a surety bond to insure your work.
Casualty insurance is a different type of insurance than property insurance. We will review different forms of casualty insurance and how these can work within your business plan.

Introduction to Property Insurance

2011-09-23T17:43:00.000-07:00

Property insurance insures your business against loss or damage to the location of the business and to its contents. It will also insure against loss or damage to contents under your control. Finally, if your business rents or leases a location or travels to other physical locations, then your business will be required by the property owner to carry property insurance by the terms of the lease or contract.
The more kinds of loss the policy covers, the higher the premium. Property insurance comes in two forms:

Broad Form – This type of policy identifies a number of different types of disasters and covers against loss from all identified causes in the policy.
Single or Specific Peril – This type of policy insures against loss only from the identified peril. This is typically a separate fire policy. However, other single perils can be insured against, for example, terrorism.

For most small businesses, a broad form property insurance policy is included in a packaged policy known as the “business owners’ policy” and will be the best coverage for the premium dollar. Some businesses, however, either because of specific risks or unusually high risk, may not be eligible for such a package. In that case, several specific peril policies may need to priced and examined.
Property insurance policies can be modified:

Endorsements – Endorsements add increased coverage or identify other business locations that are covered. This can include a customer’s location, for example, if your business is working at their location. Endorsements are a big benefit for your business and can be added, typically by a phone call, to a policy relatively easily if you have a good insurance professional.
Exclusions – Exclusions take away coverage. Your insurance professional or insurer will tell you that property policies are “always” written with the “such-and-such” exclusion. Exclusions are the business insurance purchaser’s worst enemy. The most recent example is after the hurricanes in 2004-2005. Many insurers claimed that the exclusion in their policies for “wind” damage excluded much of the damage from coverage. Regardless of what an insurer tells you: exclusions take away coverage.
Schedules – Schedules are lists of covered locations and property. These must be updated regularly and at any time a location or major covered equipment changes or is purchased. Good insurance professionals will contact you on a regular basis to discuss updating scheduled locations and equipment. If a location or piece of equipment is not a “scheduled” location or content, there is a possibility that a claim could be denied on that basis.

Property insurance can pay damages or loss based on one of two ways:

Actual Cash Value (or, ACV) – Actual cash value means that your loss or damage is valued at the value of the property loss. Sounds fair. But, if a $100,000 car lift in your garage has been depreciated over a five-year period it may be found to have an ACV of $20,000 at the time of loss. You can’t purchase a new lift for $20,000.
Replacement Value – Replacement value means that you are reimbursed the actual amount necessary to replace the equipment when it is lost. In the example above, if the new lift costs $120,000 to replace, then you get a new lift for $120,000.

Replacement value coverage typically carries higher premiums.
All of the above elements must be considered when reviewing and comparing property insurance for your business. A comparison made only on the premiums ignores critical aspects of the policy.

Understanding Insurance

2011-09-23T17:39:00.001-07:00

Many people find insurance policies to be unbearably complex documents, and not without reason. These contracts often appear to be piles of forms with impenetrable legal jargon and terms of art, with no clear order among them. This is true of all sorts of insurance policies, whether they are the homeowners, health or auto policies of individuals, or the Comprehensive (or Commercial) General Liability (“CGL”), Directors & Officers Liability, Commercial Property, Workers’ Compensation/Employer’s Liability, or Professional Liability policies purchased by businesses.

There is a method to the jumbled madness, however, and with the five easy steps below, the meaning of the pricey contract you bought will come into focus. While there is no substitute for the professional advice of attorneys and insurance professionals in this area, a little direct familiarity with your insurance policy will help you receive more benefit from that advice and from the policy itself.

Step 1: Swiss Cheese. Yes, I said Swiss Cheese. That’s the physical model you should have in mind when reading any insurance policy, no matter the type of coverage. Make sure it’s a slice, and not a block or a wedge. The cheese is your coverage; the empty spaces around it and within it are noncoverage. Don’t worry, this will make more sense in a moment.

Step 2: The Rectangular Border. The outer edges of the cheese slice represent the greater universe of coverage available to you, and the text of the policy corresponding to those edges is the “insuring agreement” or “coverage grant” (the phrases are used interchangeably). Usually you can find the insuring agreement at the beginning of the longest individual form within your policy. The insuring agreement is the insurer’s first and main promise to you, the promise to “pay,” to “indemnify,” or to “defend and indemnify,” and everything else in the policy is derivative or qualifying of it. If the policy were knighthood status, the insuring agreement would be the king or queen’s ceremonial sword tapping your shoulder as you receive your new title. Before then, you were just a commoner, that is, an uninsured.

There may be more than one insuring agreement in your policy. Homeowners policies, for example, typically contain both property and liability coverages. Where that is true, you should examine the coverages separately, as if they are independent policies, even though the two (or more) coverages in the policy may share certain endorsements or other forms.

Insureds too often get carried away with the overall size of their cheese slice, or the word “pay,” and want to jump immediately to the conclusion that they’re covered unless an exclusion says otherwise (yes, the exclusions are the holes in the cheese, but stop getting ahead of me). Unfortunately, the insuring agreement itself is limited in scope and the limitations present a number of frequently litigated coverage issues.

In CGL policies, for instance, there is plenty of room to fight over (1) whether a particular event constitutes an “occurrence” (typically defined as an “accident”), (2) whether the results of the event constitute “bodily injury” or “property damage,” and, if they do, (3) when, relative to the policy period, the bodily injury or property damage took place. While policies generally define the relevant terms, the definitions themselves leave room for debate, and even courts aided by the definitions often disagree over the policy’s meaning.

Similarly, in property policies, insurers and insureds often spar over what should be deemed “covered property” or a “covered cause of loss,” or when property damage occurred.

The crucial point is that the outer edges of the cheese slice are meaningful, even if there are lots of disagreements on the precise location of those edges. Do not jump immediately to the exclusions, discussed below, when trying to figure out if you’re covered for something. If the claim or loss with which you are dealing with falls outside the edges of the slice, you are not covered, end of story.

Step 3: The Holes. The holes in the cheese slice represent the exclusions. Once you have decided that your loss or claim falls within the insuring agreement, your next analytical step is to see whether it falls farther, straight through a hole to the hungry mouse waiting below you, who had kind of been hoping for the cheese.

The main coverage form of your policy – the same form in which you found the insuring agreement – will generally contain most of the exclusions, but additional exclusions, or amendments to exclusions, are likely to be in endorsements.

Exclusions come in a lot of flavors, but there are some common ones you can expect in just about any policy. The most common exclusion, usually the first or second one listed, is for expected or intended harm. This makes intuitive sense, as most people understand that an insurance policy is designed to cover risk, not a fait accompli. In liability policies, this exclusion overlaps conceptually with the idea of an “occurrence.”

Pollution exclusions are very popular among insurers since Congress and state governments began imposing strict liability on polluters a few decades ago. These exclusions are also very unpopular with insureds, so there has been much litigation over them and subsequent re-wording by insurers. The wording matters, a lot. Check it in consultation with your attorney or insurance professional against the law applicable to the policy.

Property coverage policies have exclusions both for certain causes of loss and certain types of property. What is damaged and how it was damaged must be examined against the policy language. In some cases, you will wish you had not elected out of the meteorology elective you almost took in college, as the distinctions among flood water, rain water, wind and wind-driven rain become paramount.

Liability policies are laden with exclusions designed to make clear that the insurer is not a guarantor of the insured’s product or work, though the insurer will cover secondary losses from the product or work. These exclusions, often called “business risk” exclusions, overlap conceptually with the notion of “property damage,” as the latter assumes that the property at issue was undamaged at some relevant time and became damaged during the policy period.

Step 4: The Glass Dome on Top. You didn’t expect the cheese to sit out in the open air to rot, did you? No, there is a protective glass dome on top of it, and the dome corresponds to the policy’s conditions. The conditions are there to make sure that the cheese is not accessed for frivolous or unjustified reasons. You have to fulfill the conditions to open the protective glass and get to the cheese.

Some of those conditions relate to the timing of notice of the claim or loss, and others relate to cooperation or the submittal of a proof of loss. There are conditions concerning timely premium payments and the fulfillment of other coverage prerequisites. A good insurance agent or a lawyer will guide you through these requirements.

Step 5: The Accoutrement. The coverage grant, exclusions and conditions addressed above form the main part of any policy, but they do not operate in a vacuum. As mentioned, definitions help to guide the insured in understanding of the various terms used. Endorsements may add to, subtract from or modify the contract. Within the exclusions (the holes), may be exceptions to the exclusions (islands of coverage within the empty space). The declarations page, schedule of underlying insurance (if any), schedule of forms, limits of insurance, list of named insureds, and other forms appended to the policy must all be considered.

In the event of a serious coverage issue with your insurer, it’s time to call in the assistance of your insurance agent, an attorney or another qualified insurance professional. My hope is that this article will help you benefit from that assistance more fully and allow you to receive the full benefit of the coverage for which you bargained.

Before You Choose an Insurance Company

2011-09-23T17:38:00.000-07:00

Choosing an insurance company to provide your business insurance is an important part of your business insurance plan. Once you have chosen an insurance professional, you will need to choose among different policies and programs offered by different insurers.
Here are some things to consider in choosing an insurance company for your business insurance.

Price, Stability, and Service

Price, stability and service are three important considerations in choosing an insurance company.

Price: The cost of coverage can vary greatly from one insurer to the next without any difference in coverage. Have your insurance professional secure quotes from at least three insurers.
Stability: Insurance companies do fail and the results can be disastrous. Companies are rated for their stability by various rating services such as A.M. Best or Standard & Poor . Consider companies with a Best's Rating of B+ or better.
Service: You will want an insurance company with an excellent reputation for customer service.

Registered in Your State

You will want an insurance company with a physical location in your state. You will also want a company that is registered to sell insurance in your state.
Sometimes smaller insurers will sell policies through another company registered in the state. For your business, stay with a company registered and physically present in your state. You can search on your state insurance department website to determine if an insurer is registered in your state.

Listing of State Insurance Departments

Choice of Counsel Provsion

Some insurance companies have a choice of counsel provision in their policy that allows the insured to pick their own attorney to defend them in case of a lawsuit. This can be a valuable option and is typically only available for higher premium packages.
Regardless, find out how an attorney is retained to defend you in case of a lawsuit. Some lower value insurers make use of house counsel attorneys that are actually employees of the insurance company. You want the ability to choose your own counsel or be promised that skilled representation from an independent lawfirm will be provided to you.

Pick a Market Leader

The insurance business is one of fluctuating highs and lows in each market. Some insurers will enter markets for a short period of time to determine profitability and leave the market (and their insureds) if it appears unprofitable.
Stay away from market floaters or companies offering a "deal' because they are new to the market. Instead, find the leaders in the market that have stayed in the market for at least ten years. They will not be the cheapest premium. But, such companies typically offer extra services that make up for the extra cost.

Do I need to buy a separate life insurance policy for my child?

2011-09-22T05:36:00.002-07:00

If you want life insurance coverage for your child, you may be able to add a child death benefit rider (usually limited to $5,000 or $10,000) to an existing policy on your own life. Otherwise, you'll probably need to buy a separate policy on your child's life.But is it a good idea to insure your child's life? In some cases, yes. Term policies for children typically carry small premiums. In addition, your employer's group policy may include inexpensive term coverage for your dependents. Either one of these options can provide you with some peace of mind at a relatively low cost. In most cases, however, it's better to wait until your child reaches adulthood to start thinking about life insurance.Why? Because the main purpose of life insurance is to replace lost income when a person dies. Unless your child is a movie star or a model, he or she is likely earning little or no income. His or her death would certainly be a tragedy, but it would probably not cause your family any financial hardship. You would have to pay for your child's funeral expenses, but buying a life insurance policy just to cover those costs may not make sense. Instead, consider saving or investing the money you would spend on insurance premiums. That way, the money will be available in case a tragedy strikes, but it can be used for other purposes as well.Perhaps you have other reasons for wanting to buy a separate insurance policy on your child's life. You might be worried that you won't be able to insure your child down the road if he or she develops a medical condition (especially if certain diseases run in your family). However, few medical conditions make a person uninsurable. Only about four percent of all life insurance applications are rejected. And don't think that life insurance will be too expensive once your child grows up. Insurance policies for healthy young adults don't cost much more than policies for children.

Can I name someone other than a relative as the beneficiary of my life insurance policy?

2011-09-22T05:36:00.000-07:00

You can name any legally competent person as a beneficiary of your life insurance policy, including your spouse, children, other relative or friend. You can also name an entity as a beneficiary, such as a charity, church or trust.

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It's a good idea to designate a contingent beneficiary as well as a primary beneficiary. If your primary beneficiary cannot be located or dies before you do, the life insurance proceeds go to your contingent beneficiary. Be very specific when naming a beneficiary; include full name and Social Security number to avoid any confusion.
Other important factors
Here are a few additional notes about designating a beneficiary:

Trusts. A trust is a legal document that transfers money from you to another person or institution who will manage the proceeds for the benefit of a third person. Make sure to have the appropriate legal paperwork in place when you designate the trust as beneficiary.
Power of attorney. If you give someone power of attorney, indicate whether or not that person can make changes to your designated beneficiary.
Community property states. Remember that in community property states, your spouse is entitled to half of everything. Such states include Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington and Wisconsin.

It's a good idea to review your beneficiary designation regularly to make sure it still reflects your wishes. Major life events such as births, deaths or marriages are good times to confirm you have the appropriate person or entity designated as the beneficiary of your life insurance policy.

Can I donate my life insurance policy to my favorite charity?

2011-09-22T05:35:00.001-07:00

Yes, you can donate your life insurance policy to charity. In fact, insurance can be a good way to leverage affordable premium payments into a substantial future donation. There are several different ways you can give your life insurance policy (or the death benefits from it), to charity. Each method has different advantages and disadvantages to both you and the charity.One way to help your favorite charity is to simply name the charity as a beneficiary on your policy. When you die, the charity will receive the death benefits. A disadvantage of this approach is that you will not get to take the charitable income tax deduction for the premium payments that you make. With this method, there are no gift tax implications. The proceeds of the policy will be includable in your taxable estate, but you will receive an offsetting estate tax charitable deduction.Another way to help your favorite charity is to donate an existing life insurance policy to the charity. You will be able to claim an income tax deduction for either the tax basis or the fair market value of the policy (whichever is less) for the year of the donation. You can then make deductible cash gifts to the charity, which the charity can use to make the premium payments. The proceeds of the policy may be includable in your taxable estate, but you will receive an offsetting estate tax charitable deduction.A third way to donate a life insurance policy to charity is to donate money to the charity and have the charity buy the life insurance policy. You make income and gift-tax-deductible donations to the charity, and the charity makes the premium payments. The proceeds of the policy will not be included in your estate for estate tax purposes.Note: Some states' laws do not consider a charity to have an insurable interest in a donor and will not allow a charity to purchase a life insurance policy on a donor.There are a number of different strategies from which to choose, as well as a number of tax rules and differing state laws that may influence your decision. If you are considering a substantial gift of life insurance to a charity, ask your attorney or tax advisor to help you decide on the best approach.

Can I do anything to lower the cost of life insurance?

2011-09-22T05:34:00.001-07:00

The price you pay for life insurance depends on your age, your health, and your lifestyle. So if you are older, you have health problems, and you are a smoker, you will always pay more for life insurance than someone who is younger, healthier, and a nonsmoker. That being said, there are ways to lower your life insurance premiums, even if you fall into a higher-risk category. Following are some simple suggestions for life insurance and term life insurance.1. Round upOften, you'll actually pay less for a little more life insurance as you approach multiples of $250,000 in coverage. For example, $240,000 of life insurance coverage might cost $275 per year, while $250,000 in coverage might cost only $260 per year. Find out the rate per $1,000 of coverage, which often drops once you pass a certain level of coverage. This figure will help you determine how to get the most life insurance for the least money.2. Find a "friendly" life insurance companySome life insurance companies do offer competitive rates for conditions such as diabetes, heart disease, and cancer. These companies employ underwriters who are trained in analyzing people on a case-by-case basis, rather than lumping everyone with a particular condition into one group.3. Consider quittingEveryone knows that you'll save money on your insurance premiums if you quit smoking, start exercising, and lose weight. But you might be surprised to find out just how much you can save. Many insurance companies charge smokers doublethe nonsmoker rate for insurance. (Don't even think about lying, though. If you end up dying of a smoking-related illness, your insurance company can opt not to pay your death benefit.) Similar discounts can apply if you lose enough weight to fall into a preferred category.4. Forget the ridersWhile riders may add value to your life insurance policy in certain situations, many are simply an unnecessary expense. Paying extra money to cover an event that's almost guaranteed not to happen just doesn't make sense when you're trying to cut costs. Additionally, many riders simply provide duplicate coverage once your overall insurance needs are met.5. Find out about hidden feesYou may not realize it, but your life insurance could end up costing you more if you choose to make "convenient monthly payments" rather than paying the entire premium up front. Before you choose a payment plan, compare the single payment price to the total cost of the monthly payments. Do the math, and decide whether the convenience is worthwhile.6. Shop aroundWhen it comes to insurance, it pays to shop around because premiums can vary widely. And thanks to the Internet, it's now easier than ever. Save time by going to a website where you can compare multiple insurance companies at once.

Ain't love grand? Unmarried couples get car insurance discounts

2011-09-22T05:31:00.001-07:00

A growing number of states are adopting laws that give couples in domestic partnerships and civil unions many of the same rights as married couples.

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Now car insurance companies are responding to these laws by offering new discounts to unmarried heterosexual, gay and lesbian couples who enter into legally recognized relationships.
Civil unions and domestic partnerships are similar; some states – such as California, Washington and Oregon – use the term domestic partnership, while other states generally prefer the term civil union. The legal relationships are an alternative to marriage in states that don’t issue marriage licenses to same-sex couples.
All companies must follow state laws for how to treat domestic partnerships or civil unions. But some insurance companies are courting the market more than others by getting the word out about discounts.
Esurance recently announced that it is offering new savings to couples who enter into civil unions in Illinois in light of the state's recent passage of the Religious Freedom Protection and Civil Union Act. The law gives couples in civil unions many of the rights already afforded to married people.
Insurance companies give discounts to married couples because claims histories show people who are married tend to be at lower risk for filing claims than single people.
The auto insurance discount could be 10 percent or more, but varies depending on a variety of other factors, such as driving record, accident history and vehicle make and model, Esurance says.

Growing list of states

In addition to Illinois, Esurance also offers car insurance savings for domestic partners in California, Oregon and Washington -- states where couples in registered domestic partnerships also have many of the same rights as married couples. The company also is looking at expanding the discount to other states, Eric Madia, the company's director of product and actuarial management, says. Esurance offers direct-to-consumer car insurance in 30 states.
Esurance was among the first insurers to offer discounts on car insurance for domestic partners who are on the same policy, Madia says. It began offering the discount in June 2004 in California, several months before the California Insurance Equality Act went into effect in January 2005. The law prohibits insurance companies from issuing policies that treat registered domestic partners and married spouses differently.
New Esurance customers can get the discount by telling the company about their domestic partnership or civil union when asked about their marital status, , Madia says. Current customers who qualify can log in to their Esurance accounts or call the company to change their marital status to civil union or domestic partnership to get a better rate.
The company may ask for a copy of the completed certificate of civil union or domestic partnership for proof.

Courting couples in civil unions

Esurance is among several car insurance companies making an effort to reach out to gay and lesbian customers.
The travel and alcohol beverage industries began reaching out to the communities two decades ago and some companies have developed incredible customer loyalty, says David Paisley, research director of Community Marketing Inc., a San Francisco-based marketing company that's helped companies connect with gay and lesbian communities since 1992. Gay and lesbian customers make up at least 10 percent of the consumer market, according to Community Marketing.
"Insurance companies are becoming more active," Paisley says. Allstate, Prudential and MetLife have all done consumer outreach, he says, and his firm is now doing research for a couple of insurance companies.
It takes more than advertising to court customers.
"All the research shows that the first thing any company in any industry needs to do is get their own house in order," Paisley says. "If you start advertising to the LGBT [lesbian, gay, bisexual and transgender] communities and don't have the right personnel policies in place, it can actually become a negative."
Seeing the hypocrisy, Paisley says, disgruntled employees may "out" employers whose cultures are unfriendly to gay and lesbian employees.

Mexico Auto Insurance

2011-09-21T10:09:00.001-07:00

Did you know?

•The Mexican Government does not recognize U.S. insurance policies.
•You'll be required to provide proof of Mexican auto insurance in case of an accident.

Many tourists make the mistake of assuming that their U.S. auto, RV, motorcycle or watercraft policy provides them with Mexico auto insurance. Without Mexico auto insurance, your vehicle could be impounded or you could be jailed.

The government of Mexico strictly regulates the importation of vehicles into the country. If you plan to driver further than the Border Zone or the Sonora Free Trade Zone (including the Baja California Peninsula), you will be expected to obtain a vehicle importation permit in addition to having Mexico Auto Insurance.

Our recommended Mexico auto insurance provider, International Insurance Group offers a wide variety of Mexico auto insurance coverage's for liability, damage, theft, travel assistance, towing, medical payments and more. The Deluxe and Platinum Packages offer the most comprehensive tourist auto, RV and motorcycle coverage available in Mexico.

Choose the Mexico auto insurance you need, for as long as you need it:

•Daily Policies
•6 or 12 Month Policies

For the exact length of your trip
For longer stays or when you are frequently in and out of Mexico at unpredictable intervals

Get Started

Why take the chance or wait in line at the border? Obtaining Mexico auto insurance is easy, affordable, and safe. You can complete your application online and have your policy in less than five minutes.

Mexico auto insurance coverage is only available to California residents through AIS. By clicking this button, you verify that you are a resident of California and will be directed to our recommended provider's website.

California Personal Watercraft Insurance

2011-09-21T10:08:00.001-07:00

AIS has been offering Californians' personal watercraft insurance coverage for many years. AIS shops multiple watercraft insurance carriers to find you the best combination of price and coverage.

With access to many reliable and high quality California personal watercraft insurance carriers, AIS can find great rates and coverage for any type of personal watercraft. We provide coverage for watercraft including, Jetskis, Waverunners, and other brands.

After you complete our online California personal watercraft insurance quote request, you will receive a phone call from an AIS representative! The representative will walk you through the quote process and present the best rates available for you.

Please click here to request a free California personal watercraft insurance quote!

California Boat Insurance

2011-09-21T10:07:00.003-07:00

For more than 10 years, AIS has been offering its clients California boat insurance. AIS works with multiple boat owners insurance carriers that offer coverages for many types of boats including sailboats and yachts.

About California Boat Insurance

Available boat owners coverages can help protect more than just your boat. Most policies include liability coverage which includes protection for your passengers and liability for water sports activities. Damage to furniture, the hull, sails, and machinery are generally covered by boat owners insurance.

Uninsured Boaters Coverage

Protect yourself against damage caused by an uninsured boater. This coverage will protect your fishing equipment and your personal property on your boat. Uninsured boaters bodily injury coverage pays for medical treatment, wage loss, and other damages sustained as a result of a boating accident where the liable boater does not have California boat insurance.

About Total Loss Replacement

Replaces your boat with the latest model (new for old), or if not available, a comparable model. Once the coverage is purchased, it can remain in place through the 10th model year.

After you complete our online California boat insurance quote request, you will receive a phone call from an AIS representative! The representative will walk you through the quote process and present the best rates available for you.

Please click here to request free California boat insurance quote!

California Classic Car Insurance

2011-09-21T10:07:00.001-07:00

Did you know?

It is essential to have California classic car insurance for your show car. Many classic car enthusiasts make the mistake of assuming their standard auto insurance covers their classic car. This is not the case. Make sure you have the essentials, extras and discounts that are available by placing your insurance with a specialized program with claims specialists who will know how to properly handle your claim. You get this with California classic car insurance from AIS.

AIS has partnered with American Modern Insurance Group to offer you California classic car insurance including liability and physical damage coverage for a wide variety of classic vehicles.

AIS can provide you with great California classic car insurance rates and coverage for the following types of classic cars:

•Antiques: 25 model years and older
•Classics: 20-24 model years
•Collectibles: 15-19 model years
•Exotic cars: Newer than 15 years, considered to be appreciating in value
•Street rods: Made before 1949, mechanically and/or cosmetically altered
•Customs: Made since 1949, mechanically or cosmetically altered
•Kit cars: Built from purchased packages, and assembled by an experienced professional, manufacturer, or dealer

Get Started

Obtaining California classic car insurance coverage for your classic car is fast and simple. You can request a quote online in less than 10 minutes. You'll quickly be on your way to insuring your classic car.

California classic car insurance is only available to California residents through AIS. By clicking this button, you verify that you are a resident of California and will be directed to our recommended provider's website.

California Motorcycle Insurance

2011-09-21T10:06:00.001-07:00

AIS offers over twenty years experience in finding clients great rates on California motorcycle insurance coverage. AIS shops multiple California motorcycle insurance companies to find the best combination of price and coverage for you and your motorcycle.

Types of Motorcycles Covered

Most California motorcycle insurance policies cover cruisers, street sport, touring, high performance bikes, and scooters. If you are a motorcycle enthusiast, and have needs that are unique to your motorcycle, ask an AIS representative for details on a policy that is right for you.

Uninsured / Underinsured Motorist Coverage

Protects the driver and passenger of a motorcycle damaged by an at fault driver that is uninsured or underinsured. Underinsured motorist coverage provides additional coverage on top of the injured parties' liability coverage in the event the injuries cost exceeds their limit of coverage and the limit for the underinsured motorist coverage is higher than their bodily injury liability limit.

Custom Parts and Equipment

Custom motorcycle equipment, parts, and after-market parts are generally not covered by a standard California motorcycle insurance policy. If your motorcycle has been customized, you will require additional coverage. Some carriers allow an insured to purchase additional coverage for these items.

After you complete our online California motorcycle insurance quote process, you will receive an AIS instant quote on the coverage you requested! This quote will include not one, but many California motorcycle insurance carriers' rates. If you wish to speak to a representative about any questions you have, or wish to purchase your policy, click "Please Contact Me" at the end of the quote process.

Please click here to request a free California motorcycle insurance quote!

California Auto Insurance Pick Your Price

2011-09-21T10:05:00.001-07:00

AIS, the California Auto Insurance Specialists, shops dozens of California auto insurance carriers to find you the best combination of price and coverage. To shop California auto insurance carriers' rates online, start your AIS Instant Quote by clicking "Start Quote" below.

PICK YOUR PRICE ^SM

Right coverage. Right price.

Pick Your Price ^SM custom California auto insurance quotes. AIS representatives help you determine which auto insurance carrier and coverage is right for you. Our licensed and knowledgeable representatives will help you every step of the way. If you have a perfect price in mind, our Pick Your Price service allows our representatives to tailor coverage to you.

We also offer additional coverages for your vehicle including, rental car reimbursement, gap coverage, mechanical breakdown and towing.

More Information about California Auto Insurance Coverage

The standard California auto insurance policy is made up of the following coverages:

•Bodily injury liability
•Property damage liability
•Medical payments
•Uninsured motorists coverage
•Comprehensive physical damage coverage
•Collision coverage

AIS Service

AISinsurance.com has robust service offerings, including, change of California auto insurance coverage online. We also offer customer service by phone, or at any of our 23 locations across the state of California.

After you complete our simple four step online quote process, you will receive an AIS Instant Quote on the coverage you requested! This quote will include not one, but many California Auto insurance carriers' rates. These rates will all reflect the same coverage level that you selected during the AIS Instant Quote process.

If you wish to speak to a representative about any questions you have, or wish to purchase your policy, click "Please Contact Me" at the end of the quote process.

Please click here to complete a free California auto insurance quote

10 new health insurance freebies

2011-09-20T07:58:00.001-07:00

If you have health insurance and have been putting off a colonoscopy, mammogram or other test, you now have one less excuse.

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Health insurance reform requires that new group or individual health plans created or purchased since March 23, 2010, cover 100 percent of the costs of preventive care. That means you don't have to pay a deductible, coinsurance or copay for a variety of tests and treatments.
Keep in mind, though you still might have to pay a copay for an office visit if the preventive care is billed separately. Also, the law requires health plans to provide this fully-covered care only through in-network clinicians.
Here are 10 new health insurance "freebies." All of the following testing recommendations come from guidelines established by the U.S. Preventative Services Task Force.

1. Diabetes, blood pressure and cholesterol tests

High blood pressure and high cholesterol levels increase the risk for heart disease. Health insurance reform now covers tests for these conditions.
Blood pressure screening is recommended for all adults. Screening for Type 2 diabetes is recommended for adults with high blood pressure.
Cholesterol screening is recommended for:

Men 20 to 34and women 20 and older who are at risk for heart disease
All men 35 and older

2. Breast, cervical and colon cancer screenings

The American Cancer Society estimates health reform preventive provisions could double cancer screening rates among the newly insured, thereby saving tens of thousands of lives a year.
"Evidence shows that we could prevent as many as two-thirds of cancer deaths in this country with a proper focus on prevention," says John Seffrin, CEO of the American Cancer Society Cancer Action Network.
Under health insurance reform, fully covered screenings include:

Mammograms to screen for breast cancer every one to two years for women over 40
Regular pap smears to screen for cervical cancer for sexually active women
Colonoscopies to screen for colon cancer for adults over 50

3. Health education counseling

Want to quit smoking but don't know how? Need advice on how to cut down on alcohol? Health counseling is fully covered to help you achieve these goals and others, such as how to improve eating habits and treat depression.
Counseling is eligible for coverage if it comes from your primary care doctor or a specialist or program referred by your doctor. Talk to your physician and check with your insurance plan to see what is covered.
"For decades our health care system has waited to treat people until they get sick, but the Affordable Care Act shifts the emphasis to disease prevention and management as well as improved wellness and quality of life," Seffrin says.

4. Routine vaccines

You don't have to pay anything out of pocket to get your kids immunized, except perhaps a copay for an office visit if the immunizations are billed separately. Fully covered vaccines include hepatitis A and B; tetanus, diphtheria and pertussis; measles, mumps and rubella; varicella (chickenpox); and other standard recommended shots. Routine vaccines for adults are also covered.

5. Flu shots

Each year, somewhere between 5 percent and 20 percent of the U.S. population gets the seasonal flu, according to the Centers for Disease Control. Most people recover, but flu can be lethal.
New plans now must fully cover the cost of flu shots. The CDC recommended vaccination for everyone 6 months and older during the most recent flu season.

6. Counseling and screening for healthy pregnancies

The U.S. infant mortality rate is about seven deaths for every 1,000 live births, disturbingly high for an industrialized nation, according to the U.S. Department of Health and Human Services. About 8.2 percent of babies have a low birth weight, an increase of 17 percent since 1990.
Under health insurance reform, fully covered services during pregnancy include:

Screening for conditions that can hurt women or their babies, including iron deficiency, hepatitis B, a pregnancy-related immune condition called Rh incompatibility and a bacterial infection called bacteriuria
Counseling from a doctor to help pregnant women quit smoking and avoid alcohol
Breast-feeding counseling and education to help nursing mothers.

7. Well-baby and well-child visits

Children in the United States receive recommended health care less than half of the time, according to a 2007 study from the RAND Corporation, Seattle Children's Hospital Research Institute and the University of Washington School of Medicine.
Under health insurance reform, fully covered services include:

Screenings and health counseling to prevent and treat obesity among children, depression among adolescents, and dental cavities and anemia.
Routine vaccinations and boosters
Well-child visits to the doctor from birth to age 21

8. HIV and sexually transmitted disease screening

A new system to track HIV infection estimates that 56,300 U.S. residents were newly infected with the disease in 2006, the latest year such statistics are available, according to the CDC.
Screening for HIV and sexually transmitted diseases and behavioral counseling to prevent infection are now fully covered:

9. Osteoporosis screening

Osteoporosis occurs when bones become more porous and lose mass, making them susceptible to fractures and breaks with even simple activities, such as picking up a child, bumping into furniture or sneezing.
Health reform calls for routine screening for osteoporosis, which is recommended for all women 65 and older and for women 60 to 65 who are at increased risk for the condition.

10. Obesity screening and weight loss counseling

Two-thirds of Americans qualify as overweight or obese, according to the National Institutes of Health. Even more startling, 17 percent of women and 11 percent of men are severely obese.
Obesity increases risk of Type 2 diabetes, heart disease and a host of other health problems.
Screening for obesity and intensive health counseling and education now is fully covered to promote sustained weight loss for obese adults and obese children 6 and older. Your primary-care doctor may offer the health counseling or refer you to a specialist, such as a dietitian. Always check with your health plan before you schedule services to make sure they qualify for free coverage.

All You Need to Know About Health Insurance

2011-09-20T07:56:00.001-07:00

With medical expenses soaring higher every year, health insurance is an expensive necessity. Knowing more about health insurance can help you get the coverage you need while keeping your expenses down.

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What types of health insurance are available?

Health insurance plans generally fall into one of two categories: indemnity plans (also known as reimbursement plans) and managed care plans such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service (POS) plans. (Learn more about HMO, PPO, and POS plans.)

An indemnity plan allows you to choose your own doctors and pays for your medical expenses - totally, in part, or up to a specified amount per day for a specified number of days.
Managed care plans generally provide broader coverage, but they all involve an arrangement between the insurer and a selected network of health-care providers (doctors, hospitals, etc.). This arrangement provides a strong incentive for you to stay in-network, usually by covering less for services received outside the network.

No matter which type of health insurance you buy, you'll need to make sure it offers the right kinds of coverage.

What should be covered?

A good health insurance policy contains several types of coverage.

Hospital expense coverage pays your room, board, and incidental services costs if you're hospitalized
Surgical expense coverage covers surgeons' fees and related costs associated with surgery
Physicians' expense coverage pays for visits to a doctor's office or for a doctor's hospital visits
Lab coverage pays for laboratory services like X-Rays and other diagnostic lab tests

What might be covered?

When comparing health insurance plans, check to see if they provide additional benefits that you may need, including:

Prescription drugs
Preventive care
Mental health benefits
Maternity care
Vision care
Dental care
Chiropractic coverage

What will it cost?

In addition to the monthly premium expense, you may have other out-of-pocket costs. These costs can really add up, especially if you have children or other family members who visit the doctor frequently. Check to see if the health insurance plan you're considering requires you to pay any or all of the following:

Co-payment: The flat fee you'll have to pay each time you visit a health insurance provider (can vary by provider type).
Deductible: The amount you'll have to pay toward your medical expenses (usually annually) before the insurance company begins to pay claims (generally required by indemnity plans).
Coinsurance: The percentage of your medical costs you'll have to pay after you reach any deductibles that apply.

Where can I get health insurance?

You may get health insurance through a group plan at work or through another group affiliation (a school, a club, etc.) or by purchasing an individual plan on your own. By purchasing an individual plan, you may be able to customize the health plan.
A good way to compare rates, plans, and options for your individual needs is to shop online. Comparing online health insurance quotes helps to ensure you get your best rate.

How do I decide which plan is best?

The best health insurance plan for you is the one that gives you the greatest flexibility and the most benefits for the lowest cost. Unfortunately, there's no such thing as a standard health insurance plan. As you would when making any major purchase, you'll need to shop around and get several quotes before choosing a plan. Here are a few points to consider:

What co-pays, deductibles, and coinsurance requirements apply?
How much freedom do you have to choose your own health-care providers?
Does the plan cover the health services that you need?
Does the plan cover the health-care providers you're currently using?
Does the plan offer family, as well as individual, coverage?
Does the plan cover pre-existing conditions? If so, is there a waiting period?
Does the insurance company have a good reputation in the industry and a positive rating from a major ratings organization and your state's department of insurance?

No dental insurance? Here are 3 options

2011-09-20T07:55:00.001-07:00

Can't get dental insurance coverage through your employer? If not, you may be tempted to skip dental cleanings and other treatments. But good basic care lowers your risk of suffering a major, expensive problem in the future.

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There are three ways to approach dental care if you don't have employer-based coverage – purchase your own private insurance, opt instead for a discount plan or simply pay for services out of pocket as you need them.
Each approach has its own risks and rewards.

Private dental insurance plans

In some cases, you may be able to purchase group dental insurance and private insurance plans on your own even if you can't get coverage through your employer.
Group dental insurance typically costs less than individual insurance. In some states, organizations such as AARP and businesses like Costco offer dental plans at group rates to members, says Elizabeth Risberg, a spokesperson for Delta Dental.
If you don't qualify for group coverage, consider buying individual dental insurance. Individual plans advertise costs of around $200 to $300 annually, which is higher than many group plans charge, says Amy Bach, executive director of United Policyholders, an insurance consumer advocacy organization in San Francisco.
Risberg says there are ways to lower those costs. Plans with higher deductibles often offer lower premiums. Other plans offer greater affordability in exchange for your agreeing to choose services from a more restricted network of dentists.
Dental insurance plans may have restrictions on certain services, such as orthodontic work, Bach says. Many dental plans also have a maximum benefit of around $1,000 to $2,000 per year.
Plans also may restrict coverage of pre-existing conditions or refuse to cover preventative care options such as dental sealants or fluoride treatments. But many other preventative services are likely to be covered through insurance.
"With dental insurance, procedures such as cleanings and x-rays are encouraged, so they're usually covered for no or low cost," Risberg says. "And a lot of the time, the deductible doesn't apply for those preventive services."
Ask providers what they will and will not cover before purchasing a plan.

Discount dental plans

Discount dental plans are an alternative to dental insurance. These plans require participants to pay a fee to access a network of dentists who offer services at reduced prices.
The fee, which typically is paid once a year, is likely to be less than the cost of private dental insurance, says Bach. In fact, many plans advertise annual costs of about $100 a year for individuals, less than half the annual premium of many insurance plans, she says.
With discount dental plans, you typically pay less than full price for preventive services, such as cleanings and x-rays, as well as other procedures, including root canals and orthodontia, says Bach.
Unlike dental insurance, you'll probably have to pay at least some money out of pocket for cleanings and other preventative services. On the other hand, discount plans may offer reduced rates for services that aren't covered at all under standard insurance, such as cosmetic dentistry. So if you're planning to have aesthetic work done in the near future, a discount plan could be cost effective, Bach says.
However, if you're not familiar with your dentist under a discount plan, remain on guard.
"You may think you're getting a deal with a discount plan, but if the participating dentist prescribes a bunch of services you don't actually need, you could end up paying more," Bach says.

Pay-as-you-go dental care

You may be tempted to skip insurance coverage or a discount plan and simply pay for services as they are needed. After all, as Bach points out, skipping dental coverage is unlikely to put you at the same degree of financial risk as skipping health insurance.
However, Risberg reminds you that a dental crisis could still leave you facing big, unexpected bills if you don't have insurance.
"You don't always know what type of dental situation you're going to have," she says. "You might have an emergency, or crack a tooth and need a crown. That's not ever something that you can plan for."
Before going coverage-free, Bach suggests adding up the costs of routine services you and your family would likely need in a year, such as cleanings and x-rays, and comparing them to the out-of-pocket costs of dental services in your area.
"If you're a single adult and you're in good dental health, it may be unlikely that private insurance is worth it, after you do the math," says Bach.
If you forgo coverage and a problem arises, use your lack of insurance to try to negotiate lower fees with your dentist, she says.
"Find a dentist whom you trust, tell him or her that you don't have insurance, and then see if you can work out an agreement for a lower rate on services," she says.

Is a broken windshield covered under my auto policy deductible?

2011-09-20T07:53:00.002-07:00

Broken windshields and other glass are typically covered under the comprehensive coverage of an auto insurance policy. Comprehensive generally provides coverage for physical damage to your vehicle not caused by a collision with an object or another vehicle, but by a variety of other specific situations, such as fires, floods, or hitting a deer. So, if your windshield is broken but you don't have comprehensive coverage, the cost of replacing it will not be covered by your auto insurance. If you do have comprehensive, the cost probably will be covered, but to what extent depends on the details of your particular policy. Most drivers purchase comprehensive coverage with a deductible, in which case you would have to contribute a certain amount out of your own funds toward the cost of replacing your windshield. For example, if you have a $250 deductible, you'll end up footing half the cost when your $500 windshield breaks.

What coverage should I buy? And how much?

2011-09-20T07:53:00.000-07:00

Each state has mandatory coverages (such as bodily injury and property damage liability coverage or personal injury protection coverage) as well as optional coverages (such as comprehensive, collision, and medical payments coverage).

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When deciding how much bodily injury liability coverage to buy, it's important to understand that this coverage protects your personal assets - your savings, your property and even your future earnings - if you cause an accident and are held legally liable for injuries to other people. This coverage will also pay for legal defense costs if you are sued. Similarly, property damage liability coverage pays for damage to property, such as another car, a mailbox or a streetlight, that results from the accident you caused. Legal defense costs are also covered if you are sued.
One way to think about how much to buy is to think about what you'd lose if you had to pay for an accident - without insurance:
No house, no dependents and not much in the bank? The state minimum limits of liability might be enough, unless you're in a state with really low minimums, like Louisiana ($10,000 per person/$20,000 per accident), Ohio ($12,500 per person/$25,000 per accident), or Arizona, California, New Jersey or Pennsylvania ($15,000 per person/$30,000 per accident). We believe these limits are too low. We recommend buying at least $25,000 per person/$50,000 per accident coverage. Also, remember that even if you don't have assets currently, you could put your future assets and earnings at risk if you don't have enough insurance.
Starter house, a family and modest savings? You'll want to buy at least $50,000 per person/$100,000 per accident liability coverage. It may not cost much to increase to even higher limits ($100,000 per person/$300,000 per accident), which will protect you as your assets grow.
Bigger house, teen drivers, investments or other properties? Buy the highest limits available from your carrier, usually $250,000 per person/$500,000 per accident or $500,000 CSL (Combined Single Limit). And, if you have significant personal assets, consider buying an umbrella policy to protect you if an accident exceeds the limits on your auto policy.
A trip to the emergency room and a short hospital stay may cost thousands of dollars - potentially tens of thousands. So, when you're buying car insurance, you're buying peace of mind - for the event you hope never happens.
When you start a quote, it helps to look at your current policy - but don't worry, we'll provide online help to guide your choices if you don't know what limits or deductibles you have today. And, once you get a quote, you can change your selections to see how the price will change with different limits or deductibles. You can also call one of our knowledgeable and friendly licensed agents, who will be happy to speak with you about your options.

Uncle Sam slashes PCIP health plan premiums

2011-09-19T08:50:00.001-07:00

If you have a pre-existing health condition, your insurance costs now may be less expensive, courtesy of Uncle Sam.

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On July 1, premiums for federally administered pre-existing condition insurance plans (PCIPs) were reduced by between 2 percent and 40 percent in 17 states (plus the District of Columbia) where the program is administered by the federal government.
Created under 2010's Affordable Care Act, PCIPs provide federally administered insurance coverage to people who previously have been denied insurance because of a pre-existing condition.
The federal government is in charge of PCIPs in 23 states and the District of Columbia. The remaining states manage their own PCIP programs while using federal funds provided by the Affordable Care Act.

States where PCIP rates have decreased
Alabama	Minnesota
Arizona	Mississippi
Delaware	Nebraska
District of Columbia	Nevada
Florida	South Carolina
Georgia	Tennessee
Indiana	Texas
Kentucky	Virginia
Louisiana	West Virginia

The premium decreases are designed to bring the PCIP health insurance rates in line with rates in individual markets.
Rates remained unchanged in six of the 23 states – Hawaii, Idaho, Massachusetts, North Dakota, Vermont and Wyoming – where premiums were deemed already in line with standard health plan costs.
The latest changes are part of several tweaks made to the health insurance policies since they were introduced, says Richard Popper, director of insurance programs at the Center for Consumer Information and Insurance Oversight (CCIIO).
"The feedback we were getting from the states where we operate the program and from our state partners was that we needed to get our premiums in line with more affordable insurance products," says Popper. "We also needed to make it easier to apply for the coverage."
PCIP insurance provides comprehensive health coverage, including:

Primary and specialty care
Hospital care
Prescription drugs
Home health and hospice care
Skilled nursing care
Preventive health and maternity care

As of the end of April, 21,454 people had enrolled in the PCIP plans run by either the federal government or individual states, according to the Department of Health and Human Services (HHS).

Easier to prove eligibility for health insurance

In addition to lowering premium costs, the July 1 change included a provision that makes it easier to prove eligibility for federally administered PCIP programs.
Previously, you had to wait until receiving a denial of coverage letter from an insurance company before you could get PCIP coverage. Now, you will be allowed to simply submit a letter from a doctor, a physician assistant or a nurse practitioner dated within the previous 12 months, stating that you have or have had a medical condition, disability or illness.
"The benefit of this change is that it saves people weeks if not months of time before they can get insurance coverage," says Popper, who adds that the new provision "cuts down the wait time to a day or two after the doctor's letter."
Forget about trying to pull a fast on the government and trying to claim a previous denial of coverage that never occurred. The application form states that anyone who makes material misstatements or omissions can have their policy canceled "as though it were never effective" and will be subject to "any other action available by law."
To apply for a PCIP, you still must meet the other criteria established by the federal government:

You must be an American citizen or residing legally in the U.S.
You must have been without health insurance coverage for six months or longer.

Applying for PCIP insurance

If you lack health insurance because of a pre-existing condition or have been offered insurance that excludes treatment for your condition, visit the government's Pre-existing Condition Insurance Plan website to find out about eligibility, plan benefits, rates and how to apply for PCIP coverage. Or, call 1-866-717-5826.
In some states, you may also be eligible for a PCIP plan if you have been offered insurance at twice the cost of PCIP because of your health condition, Popper says. However, keep in mind that you cannot have purchased this more expensive health insurance – to qualify for PCIP, you must be uninsured for six months or longer.
"Once approved, the coverage begins on the first day of the following month without any waiting period," says Popper

Can I temporarily suspend my auto insurance coverage?

2011-09-19T08:47:00.000-07:00

All states except New Hampshire require you to carry a minimum amount auto insurance on registered vehicles. So, if you plan to keep driving, you'll need to maintain your coverage.

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But what if you plan to stop driving your car just for a period of time? Then, you have two things to consider:

Whether you can suspend your auto insurance
Whether you should

Whether you can suspend it depends on state regulations, the insurance company's stance and the lender's requirements if you have a loan on the car.
Because all states (except New Hampshire) require you to carry insurance on registered vehicles, suspending coverage means you might also have to suspend or cancel the registration, then reinstate it later. Some states have a procedure for doing this, but it might be more hassle than it's worth.
Meanwhile, your insurance company may or may not allow you to suspend your car insurance coverage. Finally, check the loan documents if you took out a loan to buy the car. Sometimes lenders require you to carry insurance on the vehicle and don't allow coverage suspensions.

Car insurance consequences

Also, consider the consequences of suspending your coverage. Although the car will be safe from traffic accidents because you won't be driving it, it could still be at risk for damage from other causes, such as a hailstorm, flood or vandalism. Or, it could get stolen, especially if it's parked outside an unoccupied house for months. Comprehensive insurance coverage protects you in case of theft or damage from events others than traffic wrecks.
Because of these risks, it's probably a bad idea to suspend the entire policy. If you're keen on suspending it, see if you can suspend portions of the policy and maintain comprehensive insurance.
What if your insurance company doesn't let you suspend coverage? Don't even think about not paying the premium and letting the insurer cancel it. With a cancelled insurance policy due to nonpayment on your record, insurers will consider you a big risk. You'll pay higher premiums as a result once you're ready to purchase another car insurance policy – even if you go through a different company.

How can I insure my teen without breaking the bank?

2011-09-19T08:46:00.001-07:00

Insuring teenagers is expensive because younger drivers are more likely to get into car accidents than older drivers with more experience. National Highway Traffic Safety Administration (NHTSA) statistics show that the leading cause of death among 15- to 20-year olds is vehicle collisions.
Consequently, insuring your teen driver comes with a high price tag – a premium increase of 44 percent if you have one car; 58 percent for two cars; and if you have a third vehicle, premiums can increase by 62 percent, according to the Insurance.com article "Adding A Teen To My Car Insurance Policy Costs How Much?"
Having a separate auto insurance policy for your teen is an option but generally a more expensive one. The average car insurance policy for a teen driver can run $2,267, which is probably significantly more than the increase you might see on your existing policy.

4 strategies to reduce teen car insurance rates

For parents, teenagers behind the wheel of a car can be a scary thought, not only from a safety aspect but financially as well. Here are four strategies that can minimize your auto insurance premiums while insuring your teen driver has the proper insurance coverage.

Enroll your teen in a driving safety school. Choose a program with a good reputation; your insurance company may have suggestions. Spend time with your teen drivers while they practice driving. Remember, it's ultimately your responsibility to evaluate how well your teen is doing and when he or she is ready for the road. As a bonus, your insurance company may offer a discount at course completion.
If you're buying a car, buy the right one. There isn't one right car, but ideally you want a combination of safety and reasonable premiums. SUVs and luxury cars can be very expensive to insure and aren't necessarily safer in an accident. Also, new cars are generally more expensive to insure, so a used vehicle may be more cost-effective. Before committing to a vehicle, research online car insurance quotes and look for vehicles with excellent safety ratings.
Look into student discounts. Find out if your insurance company offers discounts for student drivers who maintain at least a 3.0 grade point average or who participate in community service activities.
Comparison shop for insurance. It's more convenient than ever to compare auto insurance quotes online. Look for all available student discounts to get the best deal you can when you insure your teen driver.

Once licensed, don't forget to add your teenager to your policy. Intentional misrepresentation could result in cancellation of your policy or refusal by your auto insurance company to pay a claim. Some companies may pay the claim and then back-charge you for the premiums, but don't take it for granted that they will.

I forgot to pay my auto insurance premium last month. Will my policy be canceled?

2011-09-19T08:45:00.001-07:00

Each state has its own rules governing the cancellation of automobile insurance policies. You should check your personal auto policy for information about when, how, and for what reasons coverage can be terminated.

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If you fail to pay your premium on time, your insurance company has the right - after providing you with the legally required notice - to cancel the policy. Some companies may send an overdue notice, asking you to pay the past-due premium plus a late fee. Other companies may send a cancellation notice, stating that if payment is received prior to the effective cancellation date, your coverage will be considered "reinstated" and will remain in-force.
If you are sent a notice of cancellation, it will inform you of the date and time the cancellation will take effect.
It may also be possible for you to reinstate coverage after the effective cancellation date by paying the overdue premium and perhaps an additional sum. However, it is likely that you will not be covered for any accidents between the effective date of cancellation and the date of reinstatement.
Most companies accept online payment and payment by phone - so, if you've missed a payment, call your company or check online as soon as you remember. Make sure to ask about your options, because some companies will not accept partial payment - meaning that you must pay for both the month you were late and the current month. Otherwise, your payment could be returned to you instead of keeping your policy in-force.

Glossary of auto insurance terms

2011-09-19T08:43:00.000-07:00

A

Actual Cash Value: Fair market value of an item at the time it was damaged, stolen or destroyed. After a loss, your company will review the condition of your car's body, interior, tires, and additional equipment. Based on the pre-accident condition of the car, a claim adjuster locates similar models for sale in your area, and uses those prices to determine the Actual Cash Value.
Actuary: A specialist in the mathematics of risk, especially as it relates to insurance calculations such as life expectancy, prediction of accident frequency, and loss reserving.
Adjuster: Individual employed by an insurance company to settle claims brought by policyholders or claimants. The adjuster evaluates each claim and then makes payment based on the coverage available in its policy contract.
Appraisal: A professional, formal, written estimation of the value of property. Damage appraisals may be completed by an insurance adjuster or vehicle repair specialist.
Assigned Risk Plan: State-managed auto insurance plan for individuals who cannot obtain conventional liability coverage because of their poor driving records. These drivers are placed in a residual market with insurance companies assigned to write policies for them at higher prices. Assigned risk plans also exist for health insurance.
Attach: To seize property or assets, or to obtain a legal writ granting the right to seize the property or assets. This usually occurs when an individual has outstanding debt, is financially unable to pay the debt in cash, and has assets of sufficient value to cover the amount of the debt.

B

Bodily Injury Liability Coverage: Part of an auto insurance policy that covers you, up to the policy limits, for car accidents that result in bodily injuries to other drivers or pedestrians for which you are legally at fault. Covered losses generally include medical expenses, pain and suffering, and lost income. Legal defense costs are covered if you are sued as a result of the accident.

C

Carrier: Insurance company that actually underwrites and issues the insurance policy. The term refers to the fact that the company carries (or assumes) certain risks for the policyholder.
Casualty: Liability or loss resulting from an accident.
Claim: Request by an insured for the insurance company to cover an incurred loss. A claim may be filed online, by phone or in writing.
Claimant: One who submits a claim for an incurred loss.
Collateral: Asset pledged to a lender until a loan is repaid. If the borrower defaults, the lender has the legal right to seize the collateral and sell it to pay off the loan. Comprehensive and Collision coverages are required by lenders when a car is the collateral for a loan.
Collision Coverage: Collision coverage pays for damage to your car caused by an impact with another vehicle or object or a rollover. Collision coverage includes a deductible, such $250 or $500. You are responsible for paying the deductible when you get the damage repaired. For example, if the damage was $1,500 and you have a $250 deductible, your company pays $1,250 toward the repair costs.
Combined Single Limit: Combined single limit (CSL) auto insurance policies have a single amount for liability payment limits for both property damage and bodily injury. This is in contrast to a split limit policy that has separate limits for bodily injury per person, bodily injury per accident, and property damage per accident.
Community Property: Marital property as defined by state law under which spouses own equal interests in property acquired during a marriage. This does not include property brought to the marriage or acquired by gift or inheritance.
Comprehensive Coverage: Comprehensive coverage pays for damage caused by hazards other than collision, such as fire, theft, explosion, windstorm, hail, water or contact with an animal. Like Collision coverage, Comp coverage includes a deductible, such as $250 or $500. You pay the deductible when you get the car repaired or replaced. For example, if the cost to replace your stolen car is $10,000 and you have a $500 deductible, your company will pay you $9,500.
Comprehensive Loss Underwriting Exchange (CLUE): Claims history database created by ChoicePoint. Insurance companies can access your claims information when underwriting or rating a policy. Includes information such as date of loss, type of loss and amounts paid, and vehicle description.
Consumer Price Index (CPI): Measure of change in consumer prices, published monthly by the U.S. Bureau of Labor Statistics in the Department of Labor. This index is widely used as a cost-of-living benchmark to adjust Social Security payments and other payment schedules. The cost of insurance is part of the CPI.
Coverage Forms: Attachments to an insurance policy to complete the coverage provided by the policy. Also know as endorsement forms.

D

Declarations Page: The section of an insurance contract containing such information as the name, description, and location of insured property; the name and address of the policholders; the period for which the policy is in force; premiums payable; and the amount of coverage. Also know as a "dec page" or "dec sheet."
Declination: An insurer's refusal to insure an individual after careful evaluation of the application for insurance and any other relevant factors. Many states have specific rules that prohbit declination for poor credit or other factors that may be infairly discriminatory.
Deductible: The amount that must be paid out of pocket by the insured for covered losses before the insurance company pays a claim. Comprehensive and Collision coverages generally have a deductible of $250 or $500. Choosing a higher deductible will save money, but it’s a trade-off between saving money on your annual premium and having to pay the deductible if you have a loss.
Deposit Premium: The premium deposit paid by a prospective policyholder when an application is made for an insurance policy. It is usually equal to at least the first month's estimated premium and is applied toward the total policy premium when billed.
Depreciation: In auto insurance, depreciation is used to determine the actual cash value of a vehicle, in the event it is determined to be a total loss. Factors such as miles driven, model year and overall condition will be used to determine the current value of the car.
Dollar Threshold: In certain states with no-fault auto insurance, the dollar threshold prevents individuals from suing to recover for pain and suffering unless their medical expenses exceed a specified dollar amount, called the threshold.
Driver Education Credit: Discount on auto insurance premiums for which young drivers become eligible upon completion of a driver education course. Available in certain states.

E

Endorsement: A written agreement attached to an insurance policy to add or subtract coverage. Once attached, the endorsement takes precedence over the original terms of the policy.
Exclusions: Items that are specifically denied coverage under the terms of an insurance policy. For example, most auto insurance policies exclude coverage for normal wear and tear, drag racing and intentional acts.
Extended Coverage: An endorsement added to an insurance policy, or a clause included in the policy, to provide additional coverage for risks other than those covered under the basic policy provisions.

F

Fair Market Value: The price at which property would change hands between a willing buyer and a willing seller, where both parties have reasonable knowledge of the relevant facts and neither party is under any compulsion to buy or sell.
Financial Responsibility Law: A law that requires the owner of a vehicle to show proof of financial ability to pay for auto-related losses. In most states, proof of insurance takes the form of a minimum amount of automobile liability insurance, but some states permit self-insurance or a financial responsibility bond.
Free Look Period: An insurer may cancel an auto insurance policy for any reason during the Free Look Period, which is usually the first 30 days of the policy. The exact number of days varies by state.

G

Grace Period: Some auto insurance policies have a grace period that allows customers to make a payment after the due date. But, many companies will not accept a payment after the date shown on a cancellation notice. Online payments and EFT can prevent policy lapses.

I

Indemnity: The principle upon which all auto insurance contracts are based. According to this principle, the objective of insurance is to restore the insured to the same financial position after a loss that he or she was in prior to the loss.
Independent Agent: An insurance professional who represents different insurance companies, is not an employee of any one of those companes, and earns commissions from policies sold.

L

Lapse: The expiration of a right or privilege when one party does not live up to its obligations during the time allowed. A lapse in auto insurance coverage may result in paying higher premiums for a new policy, because insurers have determined that drivers who maintain continuous coverage are less likely to make an insurance claim that those who let a policy lapse.
Liability insurance: Coverage for sums that an insured becomes legally obligated to pay because of bodily injuries or property damage, or financial losses caused to other people.

M

Medical Payments Coverage: Part of a standard auto insurance policy that provides coverage of medical expenses and funeral bills incurred by you and your passengers in the event of an accident, regardless of who is at fault.
Motor Vehicle Report (MVR): Record of moving violations and license status. Not every traffic incident actually appears on your MVR. Some states only record 75 percent of incidents on an average MVR.

N

No-Fault Insurance: Auto insurance laws in some states require companies to cover losses, regardless of who caused the accident. Personal Injury Protection is the basic coverage that pays for your own medical, hospital and funeral expenses, as well as those of your passengers and any pedestrians. Lost wages and other accident-related expenses may also be covered.

P

Payee: An insured individual or a beneficiary who receives a loss payment from an insurer. On an auto insurance policy, a Loss Payee is the institution that financed the loan or lease of the vehicle. In the event of a total loss, the insurance company makes payment to the Loss Payee first.
Personal Injury Protection: Personal injury protection (PIP) is a coverage in which your own insurance company pays you for medical, hospital and funeral expenses resulting from a car accident, regardless of who's at fault. It can sometimes also cover your passengers and/or other types of expenses.
Policy Period: Time period during which an insurance policy is in force. Auto insurance policy periods begin and end at 12:01 am in the local time zone.
Premium: The payment required for an insurance policy to remain in force. Auto insurance premiums are quoted for either 6 month or annual policy periods.
Property Damage Liability Coverage: Part of a standard auto insurance policy that covers you, up to the policy limit, for losses that result when you damage or destroy someone else's personal property. This is required coverage in most states.
Proximate Cause: In property/casualty insurance, the cause of a loss whereby that cause, the loss itself, and all intervening events form an unbroken chain.

R

Replacement Cost: The cost of replacing or repairing lost or damaged property without allowing for depreciation in value or considering the market value. Some auto insurance companies offer Guaranteed Replacement Cost coverage on new cars, if the loss occurs within the first 12 months of ownership or 12,000 miles driven.
Residual Value: The expected value of an asset at the end of a specified period, such as the value of a car at the end of the lease.

S

Split Limit: Split limit policies have three separate amounts for liability payment limits: one for bodily injury per person, one for bodily injury per accident, and one for property damage per accident, usually in that order. Often expressed in the form $100/$300/$100, with the amounts referring to thousands of dollars.
Subrogation: The process by which you assign your insurance company the legal right to recover the amount of the loss from another party who is legally liable. For example, if a third party damages your car, but has no insurance, your own insurance will pay you for the loss, if you have Collision coverage, and the company will then attempt to collect that money from the uninsured driver.
Surcharge: An increase in your auto insurance premium due to an at-fault accident or a moving violation.

U

Uninsured and Underinsured Motorist Coverage: Part of a standard auto insurance policy that provides coverage for injuries you and others suffer when you're involved in an accident with an uninsured driver, or a driver without adequate insurance. UM/UIM is not a required coverage in every state, but it is highly recommended.

Why do certain vehicles cost more to insure than others?

2011-09-18T09:26:00.003-07:00

Insurance companies consider the likelihood that a particular vehicle will be stolen, vandalized, or involved in an accident. They also track the costliness of repairs. Insurance companies obtain their information by consulting various claim statistics. The Highway Loss Data Institute, for example, indexes the amount of money insurance companies have paid out (on average) for collision, injury, and theft claims for various types of motor vehicles. Therefore, the vehicle that is most attractive to thieves across the country will probably be more expensive to insure than the one that is stolen least often.

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In addition to these industry wide statistics, insurance companies consider their own experience with claim payouts. For instance, if one company has paid numerous claims regarding a particular vehicle, it may charge higher insurance rates for that type of vehicle than another company would. For that reason, it's wise to obtain quotes from several insurance companies before insuring your vehicle.

Can an auto insurance company cancel a policy after just one claim?

2011-09-18T09:26:00.001-07:00

First, understand the difference between cancellation and nonrenewal. An insurer can't cancel a policy that's been in effect for more than 60 days unless you don't pay the premium or you've lied on the application or committed fraud, according to the Insurance Information Institute.

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However, the insurer can decide not to renew the auto insurance policy once the term expires. Some states require insurers to give a certain amount of notice and explain the reason behind the nonrenewal decision. In other states, insurers can simply walk away from the deal.
If you think you've been treated unfairly, call the insurance company's customer service department, and if you're still unsatisfied, contact your state's insurance department and ask it to look into the matter.

Increasing the car insurance premium

It's unlikely an insurer will choose not to renew a policy because of just one claim, but it may increase the premium. The increase is called a surcharge and it can remain in effect for a few years.
The amount of surcharge companies attach to premiums varies. This is why it's important to ask about companies' surcharge policies when comparing auto insurance rates. Although one company might advertise the lowest rates initially, it might not offer the best deal once a surcharge is factored in if you get in an accident. Some companies offer "accident forgiveness" so you don't get a premium hike for the first accident you cause.
Although a single claim may not prompt nonrenewal, a series of claims and traffic tickets could push an insurer to drop you at renewal time. Clean up bad driving habits to keep safe, maintain a good relationship with your insurer and keep car insurance rates low

How does marriage affect car insurance premiums?

2011-09-18T09:25:00.000-07:00

In many cases, your rate will decrease after marriage. By combining car insurance policies with the same insurer after you're married, you likely would qualify for a multiple vehicle discount. If you purchase home or renters insurance from the same insurance company that provides coverage for your cars, you might also qualify for a multi-line discount.

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In addition, some insurance companies rate married people as lower risk than single people – which would also impact the premium in your favor.
However, rates could increase if your new spouse has a poor driving record. You'll need to get insurance quotes to see whether the discounts associated with marriage outweigh your spouse's poor driving record.

Other factors impacting car insurance rates

Gender, age and credit rating also impact the cost of insuring a spouse. Insurers generally view men as higher risks than women, when all else is equal, and they view younger drivers as higher risks than older drivers. So if your new spouse is a 20-year-old guy, and you're a 20-year-old-woman, he'll likely be viewed as riskier than you.
How's your beloved's credit rating? Insurance companies also consider an applicant's credit history when setting the premium. Insurers say data shows that customers with poor credit ratings are more likely to file claims than customers with sterling credit ratings.
Even if your spouse has never filed an insurance claim, he or she will pay higher premiums after making bad credit mistakes.
The type of cars you drive will also influence premiums. Some models are much more expensive to insure than others. If you plan to purchase a car together, check with your insurance agent or get quotes to compare insurance costs of the models you're considering.
You may determine that maintaining separate auto insurance policies is more cost effective than combining polices. Your policy may require that you let the insurer know that someone else lives in your household. Ask your insurance agent about a named driver exclusion to allow you to keep your policies separate if you determine that's the cheapest route to go.
Finally, encourage your new spouse to drive safely. Even minor infractions can increase car insurance premiums.

How do "points" affect car insurance rates, and when do insurance companies check driving records?

2011-09-18T09:24:00.001-07:00

In most states, the motor vehicles department has a "point" system, which is used to track accidents and violations that affect your driving record. Insurance companies will order a copy of your driving history once you have purchased a policy, in order to confirm the information that you provided on the application. Your company may also check your driving record when your policy is scheduled for renewal.

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Each insurance company has its own method of evaluating applicants, so the points on your driving record may or may not have a direct impact on the rates you pay for auto insurance. And, you should know that only "moving violations" will affect your insurance rates. Parking tickets and other non-moving violations are not used by insurance companies.
If a review of your driving record uncovers negative information, there's a chance your insurance rates will increase. Insurers typically use their own "point" system to determine the amount of the increase (if any).

Ain't love grand? Unmarried couples get car insurance discounts

2011-09-18T09:22:00.000-07:00

A growing number of states are adopting laws that give couples in domestic partnerships and civil unions many of the same rights as married couples.

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Growing list of states

Courting couples in civil unions

Strange reasons states may snatch your driver's license

2011-09-17T03:32:00.000-07:00

Everybody knows you can lose your driver's license for racking up too many speeding tickets, getting a DUI or driving without car insurance. But in some states, you can also have your driving privileges suspended for:

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Being a deadbeat dad
Skipping school
Ignoring your parking tickets
Littering

While those behaviors – and countless others – have little or nothing to do with how you drive, governments have passed such measures to get motorists to comply with state and federal laws.
"Some of [the reasons] are just crazy," says Sheila Prior, regional director of member support for the American Association of Motor Vehicle Administrators (AAMVA), which represents state officials who administer and enforce motor vehicle laws.
Depending on which state you live in, you can get your license yanked for everything from stealing fuel (in 14 states) to advocating the overthrow of the government (in New York and Pennsylvania), according to a 2009 study published by the National Highway Traffic Safety Administration (NHTSA).
If you reside in Montana, you'd better pay your student loan; in Nevada, don't get caught spraying graffiti. Both could cost you your driver's license.

Growing trend

The strategy of pulling driver's licenses to punish non-driving offenses gained traction after states such as Illinois, Maine and Vermont used the tactic to push deadbeat parents into making child support payments in the 1990s.
As child support collections rose in the wake of such punishments, states jumped on the bandwagon and applied the concept more broadly, Prior says.
The NHTSA study looked at almost 80,000 drivers whose licenses had been pulled and found that between 2002 and 2005, the percentage of licenses suspended due to non-driving reasons jumped from 27 percent to 36 percent.
The latest trend is to deny licenses if a student drops out or misses an excessive amount of school. Arkansas even requires students to maintain a C average if they want a permit or license.
In South Carolina, Rep. Tom Young introduced a bill to prohibit anyone under age 18 from having a driver's license if they aren't enrolled in, or haven't already completed, high school. On his website, Young says the measure isn't a "silver bullet," but would help combat the state's dropout rate. While the bill squeaked through the state House, the Senate has yet to vote on the measure.

Critics call approach 'self-defeating'

The logic of suspending driver's licenses for non-moving violations is lost on some.
"There's really only one legitimate purpose for a driver's license – to certify you can operate a vehicle safely and responsibly," says Gary Biller, executive director of the National Motorists Association.
Suspending a driver's license for something like failing to pay child support makes it more difficult for the person to get to work and generate the income necessary to make payments, Biller says.
"It seems to me it's self-defeating," he says.
Margy Waller, executive director of the think tank The Mobility Agenda, says laws linking child support payments to driver's licenses have an unfair impact on those in low-wage jobs or who are unemployed and can't catch up on support payments.
"A driver's license is almost necessary in this society, with very few exceptions," she says.
Waller says jurisdictions need to "weigh benefits and costs" of pulling a driver's license for a non-driving violation.
Prior says AAMVA already is working on suggesting alternative methods for getting drivers to comply with laws. She expects the proposals to be completed in late 2012 or 2013.
Changing such laws would take the burden off departments of motor vehicles, she says. DMVs receive information from schools or other agencies that a motorist's license must be suspended, then notify the motorist that his or her license has been suspended until the driver complies with the law.

Suspended license and car insurance rates

Having your license suspended also can impact your auto insurance rates. Once your license is suspended, your insurer is likely to cancel your car insurance policy. Later on, when you shop for insurance after your license is reinstated, the cancellation on your record likely will disqualify for you from the best rates.
If your license is suspended for any reason, you'll have to prove you have proper auto insurance before you can get your license back. Lynne McChristian, Florida spokeswoman for the Insurance Information Institute, says it's likely you'll need an SR-22 form, which proves that you have the necessary car insurance coverage. If you don't maintain the SR-22 for the specified period of time, your license can be suspended again.
To ease the burden all the way around, Prior says the AAMVA would like jurisdictions to revise their laws, which are costly to enforce and "have nothing to do with highway safety."

As economy sinks, pay-as-you-go car insurance soars

2011-09-17T03:31:00.001-07:00

As job growth stalls and household budgets shrink, more drivers are warming up to cost-cutting "pay-as-you-go" car insurance programs.

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Pay-as-you-go car insurance plans peg your car insurance rate to the number of miles you drive. Drivers also receive discounts for avoiding violations and accidents, and for limiting time on the road during peak hours and late-night hours.
If you meet all pay-as-you-go requirements, it's possible to save up to 30 percent on car insurance rates.
A majority of drivers who took a joint MSN-Insurance.com online poll said they would at least consider driving less if it meant they could save money on car insurance. The poll results were as follows:
Would you be willing to drive less to cut your insurance rate?

Yes – 24 percent
It depends on how much money I could save – 35 percent
No – 21 percent
I can't drive less than I already do – 20 percent

The poll was conducted Sept. 1-6 and is not scientific.

Car insurance companies respond to demand

Two of the nation's biggest insurers are now responding to this growing demand for pay-as-you-go coverage.
A few weeks ago, State Farm – the country's largest insurer – announced plans to introduce a new telematics-based effort dubbed In-Drive to drivers in Illinois. Additional states are slated to receive In-Drive in 2012.
Allstate – the nation's third-largest insurer – also recently expanded its Drive Wise pay-as-you-go program to Ohio and Arizona after an earlier rollout in Illinois.
It's no coincidence that pay-as-you-go insurance is on the upswing at a time when the economy is in a downward spiral, according to Robert Passmore, spokesperson for the Property Casualty Insurers Association of America (PCI).
"A lot of companies are offering it, and a lot of people are driving less and looking for ways to save money," he says.

More control, lower car insurance costs

If you join a telematics-based program, you'll typically be asked to install a device into your car's diagnostic port (located below the steering column) that records information such as:

How many miles you drive
How often you brake hard
How smoothly you navigate turns

Initially, privacy advocates raised concerns about these devices and their ability to snoop on drivers. But the success of programs such as Progressive's Snapshot and a GMAC Insurance program based on OnStar technology apparently has convinced more insurers that pay-as-you-go insurance is the wave of the future.
"It's really about rewarding those better, safer drivers, and the technology is now in place to do that," says Dan Kraft, Allstate director of new products and service development accountability.
Lori Conarton, a spokesperson for the Insurance Institute of Michigan, says pay-as-you-go programs make sense at a time when people are looking for cheap car insurance in an increasingly frugal America.
"The whole idea of paying only for the coverage you actually use is attractive to consumers," says Conarton..
She also says drivers today like the idea of having their insurance costs "tied more directly to their individual behavior" instead of watching passively as their rates are determined by an insurer's risk profile.

The future of pay-as-you-go car insurance

Although pay-as-you-go insurance is just now catching on, advocates have been pushing it for years as a way to both save customers money and to achieve other social benefits, such as reducing traffic fatalities and cutting back on pollutants that contribute to global warming.
A 2008 study by the Brookings Institution noted that, "Just as an all-you-can-eat restaurant encourages more eating, all-you-can-drive insurance pricing encourages more driving. That means more accidents, congestion, carbon emissions, local pollution, and dependence on oil."
While it appears the world is catching up with those sentiments, it's unlikely that pay-as-you-go insurance will become the dominant form of pricing in the industry.
Kraft points out that such programs are not the best option for all policyholders. If you drive frequently or have a spotty driving record, pay-as-you-go probably doesn't make sense.
"It's not going to be a program that we're going to end up seeing 60 [percent] or 70 [percent] or 80 percent of our customers opt into," he says.
Still, Kraft believes drivers who choose pay-as-you-go automobile insurance coverage to save a buck during hard times will stick with the program long after the economy heals itself. And Passmore still sees room for the trend to grow.
"If people like it and perceive it as a value and save money, why not?" Passmore asks.

New rankings spotlight cities with the best drivers

2011-09-17T03:29:00.001-07:00

Looking for safe streets and responsible drivers? Go west, young man! (Or woman.)

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For the second year in a row, drivers in Fort Collins, Colo., earned honors as the city with the safest drivers, according to Allstate. The insurer uses its car insurance collision claims data in the 200 largest U.S. cities to determine the rankings.
The average driver in Fort Collins is involved in an auto collision every 14 years, compared to the national average of 10 years, Allstate says. That's a good reason for all of the city's drivers to celebrate, says Kate Hollcraft, an Allstate spokesperson.
"The area you live in can impact your rates," she says. "If you're in an area with less accidents, it's going to result in lower rates – not necessarily right away, but over time."
Four of the top five safest cities on Allstate's list are located west of the Mississippi River. The country's best drivers are located in:

Fort Collins, Colo.
Boise, Idaho
Lincoln, Neb.
Chandler, Ariz.
Huntsville, Ala.
Knoxville, Tenn.
Springfield, Mo.
Reno, Nev.
Eugene, Ore.
Chattanooga, Tenn.

Allstate also ranked the cities with the safest drivers and populations of at least 1 million. Again, western U.S. cities dominate the list, with Phoenix taking the top slot for the seventh straight year. Other high-ranking big cities include:

Phoenix
San Diego
San Antonio
Houston
Chicago

Formula for success

Hollcraft says it's difficult to pinpoint why cities in the West rank so high on the list. Many cities in the South and Midwest also get good marks, she says.
Rural areas with lower traffic volumes naturally tend to see fewer accidents, she says:
"Certainly, the West is a little more spread out."
Rita Davis, a spokesperson for the Fort Collins Police Department, says her city's place at the top of the rankings is "most likely the result of a variety of factors," including good citizen driving habits, well-designed and maintained roadways, and a "strong emphasis on traffic enforcement of laws."
Cities like Fort Collins that are blessed with such advantages tend to appear near the top of Allstate's list year after year, Hollcraft says.
The report is intended to get communities thinking about practices that can lead to safer roads.
"The report is not used to determine auto rates," Hollcraft says. "We hope the report gets a discussion happening."

What a crock! 10 lies people believe about auto insurance

2011-09-17T03:28:00.001-07:00

When searching for cheap car insurance, it pays to know the facts. Don’t rely on your neighbor or co-worker for insurance information. Here are the truths every driver should know.

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1. "No-fault insurance means it's not my fault!"

No-fault car insurance varies by state, but usually requires your car insurance company to pay medical expenses and lost wages for injuries due to a car accident, regardless of who is at fault.
"After an accident, no-fault insurance lets all parties get payment for their immediate medical needs while their insurance companies are deciding amongst themselves which company is going to pay for the accident," says Michael Petrarca, an assistant vice president at Amica Mutual Insurance Co. in Lincoln, R.I.
If you caused the wreck, it doesn't mean you're off the hook. The insurance companies will decide who's to blame, and that party would be responsible for repairs and other damages, he says.

2. "The color of my car affects my insurance rate."

Auto insurance companies set rates based on the safety features of a vehicle and how much it costs to repair or replace the vehicle (among other factors about the driver). But the color of the car doesn't factor into the premium, says Petrarca.
"Some makes and models generate more claims than others, and they're rated accordingly, but the color of a vehicle means nothing," he says.

3. "My friend borrowed my car, so he's responsible for damages."

If you give someone permission to drive your car and that person crashes, it will be your insurance – not your friend's policy – that covers the damages, says Rebecca Doran, a senior corporate underwriter with Amica.
"For a personal auto policy, the insurance is generally going to follow the car, and not the driver. So if I lend a vehicle to my brother, and he gets in an accident, it would go through my insurance company," she says.
However, if your auto insurance coverage is maxed out, your friend's policy can be tapped for the remainder of damages, Doran says.

4. "My auto insurance company can cancel my policy at any time."

State regulations prohibit insurance companies from dropping you in the middle of your policy term unless the insurer has adequate grounds to do so, says Petrarca. Such grounds may include non-payment or fraud.
However, if you're paying your premiums on time and have a valid driver's license, you have little to worry about, he says.
"While there are reasons companies can cancel insurance policies, they can't necessarily do it at any time," he says.

5. "A more expensive car costs more to insure."

Car insurance companies look at the “loss history” of your vehicle – meaning how many claims they’ve paid on that model—along with how much it might cost to repair or replace your car, not its sales price, when determining how much to charge you for collision and comprehensive coverage.
In fact, some mid-priced vehicles may have higher insurance premiums if they have a high loss history and cost more to repair than expensive ones.
"A $30,000 sports car could have costlier claims than a $50,000 SUV, so the sports car could cost more to insure," says Sal Orso, an assistant vice president of casualty underwriting for Chartis Insurance's private client group in New York.

6. "I got a ticket, so my car insurance rates will skyrocket."

A ticket doesn't automatically mean an increase in rates, Doran says. In fact, if the ticket was minor and you have an otherwise clean record, your premium may not increase, she says.
"It depends on the situation, and how many infractions you've had in the recent past. Ask your insurance company if you're unsure," says Doran.

7. "I don't need comprehensive insurance for theft, because thieves don't steal old cars."

In reality, many criminals are attracted to older, trustworthy, popular vehicles, such as a Honda Accord or Toyota Camry, says Doran. Because of the popularity of these cars, there's a large demand for their parts. When thieves steal the cars, they can strip the parts and sell them, she says.
"On the other hand, if you steal a $70,000 Mercedes, there wouldn't be as much of a demand for the parts," Doran says.

8. "The laptop in my car is covered by my auto insurance policy."

Personal property, such as a laptop or cell phone, isn't covered under an auto insurance policy, says Petrarca. Those items might be covered by home insurance, but a claim would be subject to your deductible.

9. "I recently paid my insurance premium, so I won't need a new policy for my new car."

Whenever you buy a new car, your insurance company will have to issue a new policy, regardless of when you paid for the previous policy, says Dick Luedke, a spokesperson for State Farm Insurance in Bloomington, Ill.

10. "My personal auto insurance covers both my personal and business use of my car."

If you're hauling supplies or otherwise performing business duties in your vehicle, you have to insure your auto for business

As economy sinks, pay-as-you-go car insurance soars

2011-09-17T03:26:00.001-07:00

As job growth stalls and household budgets shrink, more drivers are warming up to cost-cutting "pay-as-you-go" car insurance programs.

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Yes – 24 percent
It depends on how much money I could save – 35 percent
No – 21 percent
I can't drive less than I already do – 20 percent

The poll was conducted Sept. 1-6 and is not scientific.

Car insurance companies respond to demand

More control, lower car insurance costs

If you join a telematics-based program, you'll typically be asked to install a device into your car's diagnostic port (located below the steering column) that records information such as:

How many miles you drive
How often you brake hard
How smoothly you navigate turns

The future of pay-as-you-go car insurance

Does a Medigap policy cover dental care?

2011-09-16T20:26:00.002-07:00

A Medigap policy helps pay your share of the costs (such as coinsurance, copays and deductibles) for Medicare-covered services. Medigap policies are sometimes referred to as Medicare Supplemental Insurance. Some Medigap policies also cover services that Original Medicare – Part A and Part B – don't cover.

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But Medigap policies don't cover dental care. They also generally don't cover long-term care, vision care, hearing aids, glasses and private-duty nursing.
Private insurers sell Medigap policies, and the policies are standardized. There are 10 different types of Medigap policies, but not all of them are sold in every state. To buy a Medigap policy, you must have both:

Medicare Part A, which covers hospitalization
Medicare Part B, which covers medical services

Another option is to purchase a Medicare Advantage health plan, which operates like a preferred provider organization or health maintenance organization. This type of plan covers services covered under Medicare Part A and Part B, usually includes prescription drug benefits, and may also provide other coverage, such as vision, dental and hearing coverage.
You can't have a Medicare Advantage plan and Medigap. You must choose between:

Medicare Advantage
Original Medicare, plus a Medigap policy

Medicare Advantage option

Private insurance companies approved by Medicare sell Medicare Advantage plans. The plans vary, so it's important to compare those offered in your area to find one that provides the coverage you want at a cost that fits your budget.
Out-of-pocket costs vary among different Medicare Advantage plans. As you compare plans, check how much the yearly deductible is, how much you pay for each visit or service, how often you can get coverage for services you need, the plan's network of providers and the limit for annual out-of-pocket costs.
The Medicare website features a wealth of information about Medigap and Medicare Advantage and a tool to find and compare insurance plans.

Do I need to buy special insurance if I live abroad for several months?

2011-09-16T20:26:00.000-07:00

You should consider purchasing health insurance designed for expatriates. Standard American health insurance plans aren't designed to cover you for extended periods outside the country, and usually the networks of providers are based in local areas. A hospital network in Denver isn't going to be much use to you in London.

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Are you 65 or older? Don't count on Medicare when you're abroad. The federal health insurance plan does not cover health expenses outside the country.
If your stay will be limited, you might get the coverage you need through travel insurance. But travel insurance, which typically has a six-month limit on benefits, is not sufficient for an extended stay.

Expatriate health insurance

Expatriate insurance companies specialize in covering Americans living all over the world. The plans do not restrict you to a certain network of medical providers, the way many domestic health insurance plans do, and they include a variety of features from which to choose, including maternity coverage and specialty treatments, such as acupuncture.
If you'll be living in a remote area, look for a plan that provides evacuation coverage to pay for getting you to the nearest hospital in a medical emergency. Otherwise you could be stranded or pay out of pocket for transportation. Hiring a private plane in the far reaches of the world can cost tens of thousands of dollars.
Expatriate insurance rates depend on your age, health condition, benefits in the plan and where you'll be living. You'll pay more if you live in a war zone than in a safer city.
It's best to purchase the policy here before you leave. Read the details before you buy to make sure you understand what the policy does and doesn't cover. Once you have a policy in place and you're ready to take off, the Centers for Disease Control and Prevention advises to take with you the insurance policy identity card and a claim form.
For more, see Living abroad and your health insurance needs.

What is long-term care insurance?

2011-09-16T20:25:00.001-07:00

Long-term care insurance pays for services that aren't covered by Medicare or traditional health insurance but are important when you can't fully take care of yourself. These include help with activities of daily living, such as dressing, getting to the bathroom, bathing and eating.

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Policies vary widely in cost and coverage levels. The premium is based on the type and amount of services you want covered, your age and health condition when you buy the policy and optional benefits, such as inflation protection.
Long-term care insurance policies include limits on coverage. There might be a cap on how much the policy will pay out over your lifetime and how much it will pay per day or per month for care. Some policies also limit the number of years they pay for long-term care. Typical time periods are two, three, four and five years.

How long-term care insurance has changed

Policies issued a generation ago typically paid for nursing home care. Today, most policies are comprehensive and cover a wide range of services in a variety of settings, including nursing homes, assisted living communities, adult day care centers, Alzheimer's special care centers and your own home.
You can also choose from a variety of riders - or, add-on benefits - such as inflation protection, which allows the value of coverage to increase with inflation. The cost of an inflation protection rider is built into the premium from the beginning.
Many policies also pay for services and equipment to help you live at home, such as electronic monitoring systems, wheelchair ramps, transportation to medical appointments, and training for a friend or relative to provide care.
Some policies even provide payment to family members or friends who care for you, according to the National Clearinghouse for Long-Term Care Information. Another common benefit pays for the service of a care coordinator, who meets with you and then arranges for and monitors care.
Another way to plan for long-term care expenses is through a policy that combines life insurance with long-term care insurance. The popularity of these policies has taken off in recent years, with sales growing 62 percent in 2010, according to LIMRA, a global life insurance research and consulting firm. The policies provide long-term care benefits and pay out a death benefit to life insurance beneficiaries if not all of the long-term care coverage is used.
For more, see Long-term care: Choices and options.

Motorcycle, Commercial Vehicle, Pet & Other Online Insurance

2011-09-16T20:21:00.001-07:00

Whatever your insurance need might be, insurance.com is proud to help. When you choose one of the companies we work with below, you can rest assured you'll go to a top-rated company that specializes in the type of insurance you need. There you'll receive a competitive quote and expert advice.

Motorcycle Insurance

Looking for a great price on motorcycle insurance? We offer three great ways you can get a competitve quote:

Get a quote online from GEICO.
Call Safeco at 1-866-215-1308.
Ask your insurance.com agent for a quote from Progressive, after you compare auto insurance rates.

Commercial Auto & Truck Insurance

Insurance.com works with many of the best companies in the industry to help you meet your insurance needs. That's why we trust that Progressive and InsureZone can help you find the policy that meets all your business needs.

Call Progressive today at 1-800-418-4645 to get a quote for a Commercial Auto/Truck Policy.
Visit InsureZone to compare multiple Commercial Auto Quotes in a quick, simple online interview.

Pet Insurance

Pet insurance can help cover the costs of keeping your pet healthy and happy on a daily basis. Also, pet health insurance will help cover the costs of veterinary care or medication. By clicking through the link below to PetInsurance.com, you're assured help with the pet insurance questions you have the the pet insurance quotes you desire.
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Auto Warranties

Repairs to your automobile are inconvenient and costly. An extended car warranty can protect you from unexpected repair bills. Additionally, auto warranties can save you several hundred to thousands of dollars over the life of your vehicle. Request an extended warranty for your new or pre-owned car, truck or SUV, today by visiting our partner Warranty Direct.
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Canadian Insurance

Do you live in Canada? Get online car insurance, home insurance, life insurance, travel insurance, and commercial property and general liability insurance quotes from many of Canada’s top insurance companies by visiting our partner Kanetix.
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Boat and Personal Watercraft Insurance

Do you have a boat or PWC that needs protection? Call Safeco Insurance at 1-866-215-1308 for quotes, or ask your insurance.com agent for a boat insurance quote from Progressive, after you compare auto insurance rates.

Classic or Antique Car, Hot Rod or RV

Do you own an RV, custom car or other vehicle of great value or rarity? You need specialty auto coverage.
Call 1-866-215-1308 to speak with our partners at Safeco Insurance and get an insurance quote for these vehicles today.

6 types of insurance you may not need

2011-09-16T20:18:00.001-07:00

Insurance can give you peace of mind, but sometimes you can have too much of a good thing. While it's important to protect your financial well-being, some insurance products are likely to do little more than waste your cash.
Here are six types of insurance you probably can live without.

Pages in this slideshow:

How missed insurance payments put home at risk

2011-09-15T05:22:00.001-07:00

If you have a reverse mortgage, don't forget to pay your taxes and home insurance or you could face serious consequences, including the threat of foreclosure.

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You may assume that a reverse mortgage keeps your lender from foreclosing on your property. After all, reverse mortgages do not require monthly payments and are repaid only when the home is sold or after you die.
However, a reverse mortgage – also known as a home equity conversion mortgage (HECM) – does not release you from the obligation to pay your property taxes and home insurance premiums. Failure to meet such obligations can put your home at risk.
And it can be easy to forget to make these payments. Unlike a traditional mortgage, a reverse mortgage does not offer the option of an escrow account from which taxes and insurance are paid automatically, says Steve Irwin, executive vice president of the National Reverse Mortgage Lenders Association (NRMLA).
If you have a reverse mortgage, you still can opt for a "set-aside" account from which your lender pays these obligations. However, less than 2 percent of all reverse mortgage borrowers do so, Irwin says.
People with reverse mortgages typically don't use the set-aside option because doing so reduces the amount of money available to them to pay for other expenses, Irwin says.
"And it can be difficult to determine how much to set aside since no one knows exactly how long the reverse mortgage will be in place," he says.

Proof of home insurance

If you opt for a reverse mortgage, you must provide proof of homeowners insurance – such as a copy of the declarations page – during the settlement process, says Russell Rothstein, reverse mortgage division manager for Graystone Mortgage in Rockville, Md. You'll also be required to provide proof of continued insurance coverage each year thereafter.
If you fail to provide proof of insurance, the loan servicer will issue "force-placed insurance" that covers the cost to rebuild the property, but not the contents, finishes or fixtures inside the home, Rothstein says. Such coverage typically costs three times as much as regular home insurance, he says.
"Force-placed insurance will be paid from the reverse mortgage line of credit if there are proceeds still available," says Rothstein. "If the loan is a lump-sum, fixed-rate reverse mortgage, then the lender will pay the insurance premiums on the force-placed insurance and continue to contact the borrower for reimbursement."
If you fail to reimburse the lender, your home could be at risk of foreclosure. Irwin says that if the lender, rather than the homeowner, is paying the taxes and insurance, the loan is technically in default.
The Federal Housing Administration (FHA) division of the Department of Housing and Urban Development (HUD) guarantees the majority of reverse mortgage loans. Under HUD rules, the lender must go to HUD to request a default.
"Historically, HUD has been reluctant to call the loan on elderly borrowers, so typically these loans are given a 'pending' status rather than a yes or no answer on whether the lender can foreclose on the borrower, says Irwin.
A pending status means that the homeowners can stay in their home but face uncertainty as to when or whether HUD may begin foreclosure proceedings.
HUD guidelines say that before foreclosing, lenders must offer loss-mitigation options to homeowners such as:

A repayment plan
Allowing the homeowner to contact a HUD-approved housing counseling agency for free assistance
Refinancing to a new reverse mortgage if there is enough equity available to pay off the current reverse mortgage as well as the late payments

Lenders have to allow at least 24 months to work out a repayment plan with you before any foreclosure steps can be taken. If none of the loss-mitigation efforts works, HUD may decide to allow lenders to move the status from pending to actual foreclosure.
Or, HUD may allow the homeowners to stay until they die or sell the house, with the loan servicer continuing to pay the insurance bill and hoping to be reimbursed through proceeds from the home sale.

Avoiding reverse mortgage delinquency

Rothstein says that Reverse Mortgage Insight magazine reports that approximately 5 percent of all reverse mortgage borrowers currently are delinquent on property taxes, home insurance or both.
What should you do if you're concerned that you may begin missing tax or insurance payments?
"Borrowers who are running out of money should contact their loan servicer immediately to see if they can work out an arrangement to pay their insurance and tax bills," says Rothstein.
He says most reverse mortgage borrowers still have some equity in their homes. For those who are in financial trouble and have few options, "this may be the point when they need to consider selling the property if no other arrangement is possible."
Irwin says help is available if you're struggling financially. NRMLA and the National Council on Aging (NCOA) offer counseling for seniors with reverse mortgages and can help identify local programs that offer tax and home insurance payment assistance.
"Eventually there will be a database of resources on a national level to support reverse mortgage borrowers," says Irwin. "Right now, the best option for seniors is to contact their loan servicer or a HUD counselor to find out about local options for assistance."

The $5,000 gap in your hurricane coverage

2011-09-15T05:21:00.002-07:00

While potentially catastrophic Hurricane Irene bears down on the U.S. East Coast, nervous homeowners watch and wait, hoping they won't be in the storm's path.

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If you are among those in the line of fire, a good home insurance plan that includes windstorm coverage should help you sleep better at night. But you could be in for a rude shock if you don't understand how windstorm deductibles differ from other aspects of your home insurance.
While standard home insurance policies often have a deductible of $500 or $1,000, windstorm out-of-pocket costs often are based on a percentage of a home's replacement value – typically, from 1 percent to 5 percent, according to the Insurance Information Institute.
So, if your home is insured for $100,000 and Irene or another tropical tempest smashes into it, a 5 percent windstorm deductible would leave you on the hook for $5,000.
And the situation could be even worse if you live in a condo or home right on the beach.
"The closer a home is to the coastline, the more likely it is that the property's owner will be paying a higher percentage deductible," says Michael Barry, a spokesperson for the Insurance Information Institute.
Many insurers charge deductibles higher than 5 percent on homes that have an increased risk of coming face-to-face with a hurricane's full fury.
Eighteen states and the District of Columbia allow insurers to use separate windstorm deductibles. They are:

Alabama
Connecticut
Delaware
Florida
Georgia
Hawaii
Louisiana
Maine
Maryland
Massachusetts
Mississippi
New Jersey
New York
North Carolina
Rhode Island
South Carolina
Texas
Virginia

How much will you owe?

Home insurance companies shifted to percentage-based windstorm deductibles after suffering a spate of losses tied to devastating storms such as 1989's Hurricane Hugo in South Carolina and 1992's Hurricane Andrew in Florida.
After those costly storms, home insurance companies struggled to secure reinsurance coverage, which is basically an insurance company's own insurance. By shifting to a percentage deductible, home insurers were able to reduce their risk of overall loss, making them better able to secure reinsurance coverage.
If you have windstorm coverage, you can find your percentage deductible by checking the declarations page of your home insurance policy.
It's also important to know when your windstorm deductible applies, and when it doesn't. Barry says each insurer has its own "trigger" that determines when a windstorm deductible kicks in. Triggers may be determined by the nature of the storm (such as whether the event is officially declared a "tropical storm" or a "hurricane") or the storm's intensity.
"Hurricane deductibles often go into effect when the National Weather Service declares a Category 2 storm," Barry says, though he adds that this varies from company to company.
Although deductibles are becoming costlier, Barry says proactive steps such as installing hurricane shutters can help you "drive down the cost of [your] insurance premiums."

How umbrella policies can benefit you

2011-09-15T05:21:00.000-07:00

You may hear the words "umbrella policy" and scoff, thinking "why would I need that?" But anymore, we live in a highly litigious world, and not a day goes by where there is not a story in the newspapers about a new lawsuit being filed-both for serious and for frivolous reasons. If you want to protect yourself in the event you are served with legal papers, Insurance.com suggests you look into getting a personal liability umbrella policy.

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Umbrella policies give extra cushion to both your homeowners and car insurance policies. David Roush, CEO of Insurance.com says, "It's a good idea to have an umbrella policy if you want to cover assets that may be at risk." He goes on to say that "if you are involved in a lawsuit and your liability coverage isn't enough to cover the claim, having an umbrella policy will help protect your home, your car, and anything else that someone may go after in trying to collect."
Who needs an umbrella policy?
Like when it comes to considering purchasing any type of insurance, be sure to evaluate what assets you want covered and what the likelihood of you getting sued is. It may be more cost-effective to raise your liability limits with your homeowners insurance, rather than buying an umbrella policy. Also, by raising your deductible, you may ultimately pay less for your premium than you had originally been paying. No matter, with the commonality of million-dollar settlement verdicts, an umbrella policy may be the best way to go.
For example, if you own a swimming pool, hot tub, trampoline, swing set, or even pets, it would be a good idea to consider getting an umbrella policy. If you don't regularly have people over, and your pooch couldn't hurt a fly, it may not be that important. However, if you generally have guests over and your dog tends to snap or bite people, then purchasing an umbrella policy might be a wise idea.
What does a personal liability umbrella policy protect?
When you buy a personal liability umbrella policy, you are buying a broader insurance coverage range with higher liability limits. Primary policies generally cover bodily injury and property damage, but with personal liability umbrella policy coverage, you can include personal injury, property damage or bodily injury-which may be caused by you, your pets, or your dependents. Along with a personal injury protection, you may be covered in the unfortunate event of:

False arrest
False imprisonment
Defamation
Invasion of privacy
Malicious prosecution
Eviction
Wrongful entry

Some umbrella policies go as far as giving you coverage if you're charged liability while actively participating on the board of a charitable, religious or civic organization. It's important to realize that even if the lawsuit is frivolous or silly, you will still need to pay the expenses for defending yourself.
When umbrella policies go to work
After your liability insurance in your homeowners or car insurances has run out, umbrella polices will kick in. They cover the amount above what your homeowners or car insurance policies capped out, up to the limit you selected. Many companies will only issue you an umbrella policy if you have both your car and homeowners insurance with them. Also, they may require your liability limits be at least a certain amount. The reason that most umbrella policies are so inexpensive is that the policy is just added protection. If you are sued, the bulk of the cost is taken from your homeowners or car insurance, then the rest falls on the umbrella.
Umbrella policy exceptions
Umbrella policies vary from state to state, so depending on where you live, your umbrella coverage may not cover you for everything and anything you may be sued for. For example, many policies won't pay for punitive damages-which are generally used to punish people for their conduct. Intentional acts are another that may not be covered by an umbrella policy, as well as if a claim comes from a business endeavor.
There are always exclusions and loop-holes when it comes to umbrella policies, so be sure to talk with your insurance agent and fully understand what your coverage entails, so you don't get any funny surprises down the road. If you are interested in getting a homeowners insurance or car insurance quote, visit Insurance.com. Here you will be able to evaluate multiple rates from best-in-class homeowners and car insurance providers - helping you find the best homeowners and car insurance coverage for you and your family.

New homeowner insurance basics

2011-09-15T05:20:00.000-07:00

You've been searching for the perfect house for months. Finally, you find the one. After your offer is accepted and a small mountain of paperwork is signed, it's yours. What are you going to do next?

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If you're smart, before you pack a single box, you will make sure your home insurance has you covered for whatever life might have in store. While your mortgage lender likely requires you to carry some level of home insurance, don't assume that amount will protect you from financial disaster.
Donald Griffin, vice president of personal lines for the Property Casualty Insurers Association of America (PCIAA), offers these tips.
Tip No. 1: Insure for your home's replacement cost
Here's one of the most common mistakes homeowners make: Confusing a house's market value with its replacement cost. Your home insurance coverage should cover the cost of rebuilding your house if it is destroyed. "The best indication [for coverage] is the cost to build a new home," Griffin advises. "With an existing home, look at the replacement cost rather than the market value." This is often less than what you paid for your home; if you're insuring your house for its market value, you may be overinsuring it.
On the other hand, if you bought a foreclosed home, the price you paid may not accurately reflect construction costs to rebuild it.
To determine the replacement cost, most home insurance companies use software that allows them to enter your home's features and calculate the cost of replacement. In addition, most policies include coverage for up to 125 percent of the replacement cost.
While it may be tempting to use this buffer as a reason to purchase less coverage, the reduced cost may not be worth the risk you take in having inadequate coverage. Griffin says it can be less expensive to rebuild a home than to do extensive remodeling, and many home insurance claims are for only partial damage to a home.
Tip No. 2: Don't skimp on liability insurance
There's the old joke that trial lawyers have never seen a lawsuit they didn't like. That may be an overstatement, but the threat of legal action is a real concern for everyone - especially if you have assets like a house, savings and investments. If you're sued for an incident covered under your home insurance (like a slip-and-fall injury on your front steps), liability insurance covers not only the settlement but also your legal fees (up to your liability limit).
According to Griffin, many liability insurance policies will cover you even if an incident happens away from your home. He also recommends buying an excess liability or an umbrella policy that offers coverage of $1 million beyond what is already included in your home insurance and car insurance policies. These policies are relatively inexpensive, often costing $200 to $300 per year.
"You don't want to lose your home because you failed to buy an insurance policy," says Griffin.
Tip No. 3: Protect your personal property
When you receive a home insurance quote, be sure to review the coverage amount for your personal property. Most policies include coverage equal to 50 to 75 percent of the replacement value of your house.
In addition, you may need a separate endorsement, or rider, for some valuables. For example, coin collections, stamp collections, jewelry, furs, fine art, cameras and other expensive belongings may be subject to limited coverage under the personal property provisions of your plan. When requesting a home insurance quote, ask whether these items need to be listed under a separate endorsement to ensure they are properly covered.
Tip No. 4: Don't overlook coverage for additional living expenses
If your house is destroyed or otherwise unlivable while repairs are being made, you'll be glad you can tap into your "additional living expenses" (ALE) coverage. This type of coverage won't pay your mortgage, but it will cover the cost of an apartment or hotel. If you are displaced from your house, you can make a claim for this coverage by submitting paperwork documenting your living expenses.
The ALE standard for most homeowner insurance policies is a benefit worth 20 percent of your home's replacement value. When you get a home insurance quote, find out if the policy specifies any limitations or exclusions on ALE.
Tip No. 5: Examine what's not covered
Finally, read the exclusions section of your home insurance policy. Understanding what's not going to be covered is just as important as knowing what is - before you ever have to make a claim.
In the end, Griffin reminds new homeowners that it is important to choose a financially stable insurance company. Financial strength ratings are available from A.M. Best, for example.
"Remember," he says, "you are buying a promise from that insurance company that they will be around when you need to make a claim."
And what about customer satisfaction? J.D. Power and Associates releases annual customer satisfaction rankings of home insurance companies. And state insurance departments generally post their annual "consumer complaint" reports on their Web sites

Fund your child's retirement now with life insurance

2011-09-15T05:19:00.000-07:00

The thought of buying life insurance for a child may seem grim. But some financial experts say buying a policy for a child or grandchild and allowing the money to build up over decades can provide a financial cushion when the child's retirement eventually rolls around.

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"It's kind of a gruesome idea to buy insurance on a child. It's almost like bad luck," says Rich Arzaga, principal at Cornerstone Wealth Management and a professor at University of California, Berkeley. "If you get past this emotional bias, you leave them a legacy they would not have."
Jean Towell, a spokeswoman with Northwestern Mutual Life Insurance Co., says buying life insurance for a child provides "a long-term asset that gains value over time."
The policy ultimately could be worth hundreds of thousands of dollars – or more – depending on factors such as the type of life insurance policy you buy, how well the insurer's investments perform and how long the child hangs on to it.
Children typically don't have to undergo the underwriting process, although a few simple medical questions may be asked. Purchasing a policy when the child is young generally means that as long as the policy never lapses, the child will always be able to get life insurance – even if he or she switches the type of policy when older – without having to go through medical underwriting, Towell says.

Life insurance options for a child

Greg Blake, executive director of life insurance products at USAA, says there are three main types of life insurance to choose from when insuring a child:

Whole life insurance (also known as permanent life insurance)
Term life insurance
A rider on a parent's policy

A permanent life insurance policy continues on indefinitely. The other two types of life insurance policies can be converted to permanent insurance once a child reaches adulthood, but the life insurance rates will be higher at the time of conversion because premiums increase with age, Blake says.
Life insurance companies generally offer children's policies in small sums, such as $10,000 or $25,000, and topping out at about $100,000. However, the amount often can be increased when a child reaches certain ages in adulthood, Blake says.
Andy Hutchison, Mutual of Omaha's vice president for product development, says buying life insurance for a youngster is becoming increasingly popular among baby-boomer grandparents because it gets their grandchildren "started in life, from a financial standpoint."
If a parent or grandparent buys a policy for a child, someone – such as the child or the person who purchases the policy – needs to continue to pay the premiums once the child reaches adulthood in order to keep the policy in force, says Ray Caucci, vice president of product management at Penn Mutual.
Along with providing a death benefit to survivors when the insured dies, the life insurance policy has a cash value. A child who keeps the policy into adulthood can take cash out of it to fund a college education, a new small business or a wedding, Caucci says.
The owner can borrow against the policy and may – or may not – choose to pay the money back. Borrowing against the policy and not paying the loan back will decrease the policy's cash value and death benefit.

Supplementing a child's retirement

If your children hold on to their life insurance policies, the policies will continue to grow on a tax-deferred basis. A child can decide later whether to cash it in or borrow against it to help supplement retirement income.
Hutchison says one possibility is to convert the insurance policy into an annuity at retirement age so it can generate a set amount of income each month. Monthly income from the annuity would be based on the value of life insurance policy and the owner's age.
When buying life insurance in order to eventually supplement a child's retirement, it's important to choose a company likely to still be around 60 or 70 years from now, Blake says. Before you buy, "evaluate the financial strength of the life insurance company" by checking the company's rating from an agency such as A.M. Best, Blake says.

Will a health condition kill your life insurance options?

2011-09-15T05:18:00.001-07:00

If you have a pre-existing medical condition, you might assume it's virtually impossible to get life insurance. But in many cases, you can still find coverage, even if you've been treated for heart disease or some types of cancer.

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"It's a mistake people make, thinking they can't get life insurance. They may not be able to get it at the ultra-preferred rate, but only 10 percent of applicants get ultra-preferred rates," says Jack Dewald, past chairman of the LIFE Foundation, a nonprofit designed to help consumers with life and health insurance issues.
Your ability to obtain insurance depends on your medical condition, and how well it's controlled.

Control your condition – and life insurance options

Some health problems are likely to preclude you from getting any type of life insurance coverage. They include certain cancers that have metastasized and indicate a short life expectancy, cocaine use and severe alcoholism, says Ray Dinstel, senior vice president for life and long-term care insurance underwriting at Genworth Financial.
"The impairment is so drastic" in such cases that the likelihood of survival is "immensely shortened," he says.
Other conditions that life insurance companies may put under the microscope include:

Diabetes
Heart disease
High blood pressure
High cholesterol

But simply being diagnosed with these conditions – or having been treated for them – doesn't mean getting life insurance is out of the question, especially if the condition is well-controlled.
People shouldn't "disqualify themselves automatically," says Dr. Robert Pokorski, chief medical strategist in the underwriting department of The Hartford.
As of 2007, the United States had 11.7 million cancer survivors, according to a recent Journal of the American Medical Association article.
"Many of those people are very insurable," Pokorski says.
For example, depending on the insurer, a woman whose breast cancer was caught at an early stage might be eligible for life insurance six months after completing treatment, he says. A man with prostate cancer might have a 12-month wait.
Those with other types of cancer might have to wait longer for coverage, or they might pay more, Pokorski says, depending on the type of cancer and its stage when diagnosed.

Other ailments and life insurance

Patience and flexibility also are virtues if you have heart disease or another heart ailment. Someone who recently suffered a heart attack might have to wait for approval because insurers don't know "if they'll take care of themselves or not," Dinstel says.
However, if you've had a heart attack – or other serious health problems – you'll have a much greater chance of getting insurance down the road if you quit smoking, lose weight and start exercising, you'll have a far greater chance of getting insurance down the road, Dewald says.
Meanwhile, Dinstel says conditions such as diabetes, sleep apnea and depression that are well-controlled are "not a terrible risk," and people can get life insurance at reasonable rates.
At Genworth, there's been a move to look at applicants holistically. If you're diabetic but not overweight and you don't have other related medical conditions, you can get better rates, Dinstel says.
"It's really important to look at the whole picture," he says.
If the condition is not controlled, "you start to have problems with insurance," Dinstel says.
A diabetic who doesn't eat right and is overweight may struggle to find coverage, he says.
"It really is up to the applicant in many ways," Dinstel says.

Shop around for insurance

It's important to shop around if you have a health condition that makes getting life insurance a challenge. Insurers have all developed their own underwriting guidelines, and some are able to offer better rates for applicants with certain medical conditions.
Guaranteed life insurance is another option if you're looking for coverage with no health questions asked and no physicals required. But the amount of coverage offered is usually quite limited, the premium will be very high, and if you die within the first year or two, your loved ones will likely receive only the premiums you've paid and any interest earned, Dewald says.
"That could be a measure of last resort," says Dewald, who is now president of Agency Services Inc., a life and health insurance agency in Memphis, Tenn.
Instead, he urges consumers to get life insurance when they're young and in good health.
"You can't insure a house once it's on a fire, so don't wait till you're sick to buy your insurance," he says.

Future of Fund Management and Banking

2011-09-14T11:02:00.002-07:00

You need a flashplayer enabled browser to view this YouTube videoKey fund management themes to watch in 2010-2012:
Over the last decade I have lectured to thousands of fund managers from many different institutions, responsible for hundreds of billions of actively managed investments, mainly entrusted to them by pension funds. The global economic crisis highlighted a number of fundamental problems within the industry, that had been there for many years, and remain unresolved.

Improving performance:
Many actively managed funds struggle to outperform trackers – by the time all charges have been added. Either performance from investment decisions must improve, or charges must fall.

Restoring the Trust Gap with consumers:
A significant proportion of fund managers (often the majority) at events I have spoken at over the last few years lack confidence in their own actively managed investment funds. For example many tell me (straw polling during presentations) that they do not recommend their own products to friends and family, and do not commit their own wealth into their own funds unless they need to as part of the job.   If fund managers do not believe they are adding value, it becomes a serious ethical issue if those retail funds continue to be actively marketed. Life is too short to sell things you don’t believe in.
You need a flashplayer enabled browser to view this YouTube video
Interview following keynote to hundreds of Fund Managers at ICBI.

Consumer competition:
Expect growth of online and other boutique services allowing “smaller” retail investors to manage their own portfolio of investments in tax efficient ways, right up to full pension provision, with live reporting data. Charges for such services will often be very low.

High-net worth family offices will grow:
Expect an increasing percentage of high-net worth clients to delegate a large part of the management of their own investments to specialists within their own family offices, and to be involved on a daily or weekly basis.

Benchmarking into oblivion:
In the past, risk managers often took comfort from benchmarking their advice against the “industry norm” – but as we have seen, the results of such alignments can be disastrous. Risk management requires great courage at times, and willingness to be regarded as eccentric, going against the current consensus if necessary. This will only possible with greater sophistication in risk modelling, and greater skills in commicating to analysts the basis on which contrary positions are being taken.

Hedge fund recovery but take care:
Hedge fund inflows from pension funds are likely to increase, but complexity will always create extra risk.   Expect therefore much greater attention by pension funds to due diligence, and preference for hedge fund investments which can be easily understood. We can expect severe public and regulatory reactions against hedge funds (and institutions who invest heavily in them) if we see failures of several large funds over the next investment cycle.

Compliance is dead:
100% compliance cannot protect your brand nor build trust. History shows that perfect compliance may keep senior executives out of prison, but cannot defend their reputations when public mood changes in response to the latest financial scandal.   Things that may have been legal, now start to look unethical or immoral. New regulations often follow a well-publicised problem, and compliance follows regulation, so tends to be locked into past thinking. To win and maintain trust we have to go far beyond minimum requirements forced on the industry, to take a clear moral lead. We need to consider where future regulatory pressures may come from, and what tomorrow’s citizens will consider best practice.

More honesty is needed about life expectancy:
The primary relationship between fund management and pension provision will remain, but within it is a huge risk related to repeated under-estimates of life-expectancy. Both governments and corporations can have incentives to significantly understate future likely pension liabilities. We will explore how future medical advances are likely to place further severe pressure on existing assumptions, and the impact on pension fund viability. Radical improvements in life expectancy may be good news for the fund management industry, driving growth, but could bring pensions providers themselves into disrepute if it becomes clear that they have failed in their duty to forecast responsibly and provide safely.

Future Inflation or deflation? Economic Outlook Europe / US

2011-09-14T11:02:00.000-07:00

April 2010 Economic outlook - inflation or deflation. Inflationary pressures on many national economies following fiscal stimulus and growth of consumer demand. Government action to prevent deflation makes inflation more likely in short to medium term. Why deflationary forces so feared by governments and corporations. Future interest rates and GDP growth impact on manufacturing, industry. Business cycles and where they are likely to go next. Preparing for a boom followed by a downturn. How to make money out of business cycles. Economic forecasts and projections - Europe, UK, Africa, China, India, US, Asia. Managing uncertainty and risk. Banks and banking, investments and fund management, portfolio and wealth creation for pension funds. Institutional investors and bankers. Comment by Futurist keynote conference speaker Patrick Dixon.

Future of Banking - Safe Strategy for Banks

2011-09-14T11:01:00.001-07:00

Future of Banking - scroll down for presentations, videos, articles on the future of banking, retail banks, corporate banking, wholesale banking, investment banking etc.
"I have worked with many of the world's largest banks over the last 15 years. One of the greatest challenges facing every multinational bank is TRUST - or rather restoring trust. And one of the greatest risks is collective BLINDNESS. Failure to see banking needs through the eyes of customers; dangerous assumptions that past trends can predict future; failure to look beyond the typical banking view of global trends. BENCHMARKING is a lazy way to lead (and possibly destroy) a bank: "We follow industry best practice", "We take an average industry-wide position on this issue". As we have seen, it is possible to sleep-walk with the rest of an industry into great danger, comforted by the large number of other banking leaders who have adopted similar strategies. Banks need clear vision, moral strength, prudent and agile leadership, flexible strategy, and customer focus." Patrick Dixon, Chairman Global Change Ltd and author of Futurewise.
Topics covered on this website include: future of retail banking, corporate banking trends, investment banking and fund management, online banking, mobile banking, risk management in banking, wholesale banking. The future of local, national and global banks. Non-banking competitors including retail stores, insurers, technology companies and mobile phone companies. Future of banking regulation and compliance issues - why compliance is not enough to retain trust and protect brands, and so on.
These "Future of Banking" resources are by Patrick Dixon, Chairman of Global Change Ltd, whose banking clients include: 3i, ABN AMRO, ABSA bank, AIG, Allianz, AMA, Asset Management Advisors, Aviva, Bank of Ireland, Barclays Bank, Birla financial services group, BNP Paribas, Britania Building Society, Clariden Bank, Credit Suisse Group, Credit Suise First Boston, CUES, Deutsche Bank, Fortis, Friends First Bank, HSBC, International Mutual Funds Institute, Kazakstan Investment Forum. LLoyds TSB, Lombard, Macquarie Bank, Minsheng Bank, Morgan Stanley Investment Bank, Morley Fund, Munich Re, North Island Credit Union, PrivatBank (Ukraine), Prudential, RBS, RMB, SEB, Skandia, Sumitomo Bank, Swiss Re, Swiss Stock Exchange, UBS, Bank Vontobel, Winterthur Insurance and Zurich Financial Services.

Videos related to the Future of Banking

Why every successful bank needs more than one strategy - in a rapidly changing world. Managing the biggest risk of all which is Insitutional Blindness. Q and A session - Stan Am Rhein Leadership Summit.
Future of Banks and Phone Companies - convergence into mobile payment systems. Impact on future of banks and telecommunications. Keynote conference lecture for Aditya Birla (India).
Future of Private Banking - how High Net Worth individuals are changing. New demands from Family Office professional advisors. Why advice on Philanthropy will be an important service for many customers. Video comment following conference keynote lecture to high net worth families and their family office teams.
Trust - core issue for the future of banking. Conference keynote - Thailand.
Future of Fund Management - investment banking, pension funds, retail funds, actively managed v tracker funds - practical, marketing and ethical issues - impact on future of banking. Keynote conference lecture for Mercer client event.
Future of Banking Regulation - Why compliance is dead except as a strategy to keep directors out of prison. Why 100% compliance cannot protect your brand or career. What banking leaders have to do now to survive and succeed. Video comment.
Future of Wireless Transactions - seizing the opportunity for banks to dominate wireless payment systems. Smart phone payment systems - impact on future of banking. Video comment.
Future of Sovereign Wealth Fund Investment Strategies - expect China and other nations to change investment strategies - impact on banking, exchange rates, government bonds and global economic growth.
Microbanking - power to lift millions out of poverty - and into emerging middle class, using traditional banking. Impact on future of banking in India. Conference keynote.

Presentations on the Future of Banking

Reducing Risk in Financial Services - risk management and investment banking. Keynote for global risk management team of Investec.
Future of Banking - wider global issues and impact on IT-related issues. For global IT team of LLoyds TSB.
Future of Institutional and Investment Banking - RMB annual gobal leadership event
Future trends in Russia, Ukraine, Belarus and rest of region - Russian language presentation for PrivatBank
Future of the global insurance industry - for HSBC Insurance global leadership team
Future of Banking, Management, Marketing and Motivation: Two day leadership seminar for Barclays Bank / Absa Bank - senior leaders from across sub-Saharan Africa. Day 1: Issues facing banking and African business development. Socio-demographic, political, technology and other factors including sustainable business development. Scenario creation - and using scenarios to test strategic assumptions. Day 2: Building a Better Business: the Future of Marketing, management and motivation. Also includes managing yourself and how to increase team productivity by up to 50%.

Future of Euro – and breakup of the EU

2011-09-14T11:00:00.001-07:00

* Patrick Dixon advises senior teams in many of the Europe’s largest corporations on a wide range of global trends including macro-economic issues.

I am often asked about the future of the Euro and Eurozone nations. Will the Euro collapse? Will one or more nations leave the Eurozone? Will nations like Greece default on their national debt? Will EU nations like the UK who are outside the Eurozone be damaged in the possible chaos?

Since the late 1990s I have warned of the risks and challenges facing Euro nations, as they seek to manage their own economies with common exchange rates and interest rates, but without the proper financial disciplines that would be expected if Euroland were a single nation of separate States like America.

Things can muddle along when the global economy is stable, but in economic crises, agility is always vital, with speed of response, rapid big decisions, firm and courageous action. These things are essential to restore market confidence.

We have seen such clear leadership in nations like the US, Australia and the UK, but in the Eurozone we have seen dithering, bickering, posturing, point scoring, blaming, blocking, delays, denial, muddle, confusion, complacency and toxic paralysis. We have also seen protests, riots and significant further loss of government control.

So here is my answer about the future of Euroland – written for non-economists, in non-technical language. Simple facts which cannot be avoided, and will drive the future survival of Europe for the next two decades.

More Euroland crises are inevitable

Euro nations will be at risk of crisis after crisis, for reasons I set out below, until the Eurozone is radically restructured – as it must be. At the same time, they will also continue to benefit from the ability to buy and sell goods between them without exchange rate worries or costs – but it remains to be seen whether these benefits will be worth their risk. The answer will vary from nation to nation.

Those outside common currency areas will remain vulnerable to speculative attacks on their own individual currencies – as we saw in the UK on Black Wednesday, an event which threw the UK out of the entry process for the Euro. It is much harder for global market traders to push a regional currency like the Euro up or down in a major way against – say – the dollar.

Hard facts which must be faced

Here are some hard facts about life with the Euro that have to be faced: facts that will not change and will dominate the long term future of Europe. These facts lock all nations inside the Eurozone into an economic prison from which there can be no escape – unless they leave.

1) COMMON CURRENCY – blessing and curse:

When nations share a common currency, they lose two vital control systems to balance boom and bust, inflation and deflation, over-growth or recession / depression. The first is a national exchange rate, and the second is a national interest rate. There are no other tools which are as powerful.

Why do these matter so much? You may not notice when all is well, but in rapidly growing economic crisis, loss of both controls can be as dangerous as sailing a medium sized boat in a severe gale with a broken rudder, broken mast and no engine.

To use another analogy, nations are like market stalls. Think of a local trader who sells oranges in a local fruit market. Every day, and from hour to hour, he varies his price to make sure he makes as much money as he can from his stock, and is left with as little unsold produce as possible. The value of his stock rises and falls.

Imagine a government official coming along and telling him that from tomorrow, whatever the market conditions, all oranges must now be sold at a fixed price – set at an average of his normal prices over the last three years. It will have a terrible impact on his business.

On a good day he will run out of stock early, while on other days he will be left with mounds of rotting fruit. Sometimes he will be fortunate and be able to buy oranges from farmers at low prices and make a profit. On other days he will struggle to be able to buy any fruit at a price worth selling. He will soon be out of business.

Every nation is similarly buying and selling its products in a market where conditions are constantly changing. All these products have to be paid for in local currency – pounds sterling in the case of the UK.

The more people buy, the more pounds they buy. As they buy pounds, the value of the pound increases in the global market. If they do not want to buy, the value of the pound falls until they are tempted to buy once more.

So when you have floating exchange rates, the price of goods in every nation rises and falls for buyers in other nations – even when the price remains the same inside the nation where those goods are made. So prices can stay relatively stable for trade inside a country, while export and import prices are adjusting rapidly.

Automatic adjustment for inflation

Suppose there is high inflation in the UK – with wages increasing by 20% a year. So the price of UK goods for people buying in dollars is rising by the same amount.

An American will soon find that they can get two prices for an almost identical product: high price from the UK, low from everywhere else. So they stop buying from the UK. If this happens on a large scale, as a direct result, the value of the pound starts to fall.

As the pound falls, two things happen which are helpful to the UK economy: the American buyer soon starts buying from the UK again, and the British buyer finds it increasingly hard to afford foreign goods – buying from local businesses instead, which helps support British jobs and communities.

So we can see that a floating exchange rate provides a helpful, natural balance to inflationary pressures – constantly adjusting prices of exports of a country, as the situation changes, and helping a nation to recover in a crisis.

Now let us look at the example of two nations within the Euro with no exchange rate variations. They always know the price they are buying and selling at because they never have to worry about exchange rate fluctuations. Business deals are easier and less risky. But other risks become greater.

If the UK joins the Eurozone and then has high wage and price inflation, UK goods will price themselves out of the wider European market very quickly, but the price of all imported goods from other European nations remains the same. Unemployment will then rise in the UK in our example, because people cannot sell outside the UK. Many businesses will shrink or collapse.

In this Eurozone example, the only way that the UK can become competitive again is if people are willing to cut their wages right back to where they were before they started to rise faster than their neighbours’ – that could be a 20%, 30% or even 50% cut. As it happens, they will have no choice. Those that continue to charge too much for their labour will soon be out of work.

As wages fall and unemployment rises, more people cannot service their loans, house prices collapse, prices of other assets also fall, loans become larger than the assets they were used to buy, people default and walk away from over-mortgaged homes, property prices fall even more, banks start to collapse and the economy spirals into crisis. Deflation of – say – 10-20% a year, for several years, can destroy a nation far more effectively than inflation of a similar order.

As prices start to fall, people stop spending, worried about their future, or because they hope for bigger bargains tomorrow. Shops start to close. Meltdown can follow.

This is the story of Ireland in 2011: they have seen wage cuts right across public and private sector to try to restore competitive prices – made worse because Ireland is locked into the Euro. In a similar situation, the UK currency has fallen by 20%, so British residents have found imports more expensive, but those outside the UK have found British products and services are now at better prices. Manufacturing exports are rising.

If Greece had stayed with the Drachma….

If Greece had remained outside the Euro, in 2010 and 2011 we would have seen a sharp fall in the value of the Drachma. Tourists would have flocked back into the country, taking advantage of cheap holidays, and Greek people would have had to get used to buying less foreign goods for a while, buying more from each other instead. The economy would have stabilized at a new level.

2) INTEREST RATES – LOSS OF CONTROL

When prices rise by - say - 5% a year, the value of cash falls by the same amount. So after a year, £100 is worth only £95. No one in their right mind would want to save money in such a situation, unless they receive interest to compensate them for the difference.

When money is (almost) free of interest, people tend to borrow as much as available, and spend rapidly. As they do so, prices rise, we see a boom. When money is very expensive to borrow, people tend to pay back debt, spend very little, and prices fall. So governments have a powerful lever to regulate demand, by varying the interest rates they are prepared to pay on government borrowings.

Regulating a house price boom

If there is a housing boom, a national government can offer savings certificates with a high rate of interest, encouraging people to stop spending and to save with the government. Mortgage interest rates then rise, because banks have to keep their borrowing and lending products broadly in step with what government is doing (market forces), and then house prices start to level off or fall.

But in the Eurozone, imagine we have three nations with house price booms, and three others where house prices which are collapsing. What interest rate should the European Bank set? How do you make sure that three national economies are slowed down, and three nations speeded up?

This was the dilemma when Ireland joined the Euro. The Irish economy was already growing fast, encouraged by cheap labour and low corporation taxes which attracted many large corporations into the country. At that very moment, this “tiger economy” entered the Eurozone, where interest rates were much lower than Ireland really needed. The reason was that Germany and other nations were struggling to grow, so the Central Bank had to keep rates down.

Irish borrowers enjoyed a bonanza: a frenzy of low cost house loans followed, driving up house prices even higher.

Dublin became a huge building site, with massive new estates springing up across the city. And still interest rates stayed low.

When the inevitable collapse came, triggered by the global economic crisis, Irish house prices fell by an astonishing 50%.

If Ireland had been outside the Euro, you can be sure that interest rates would have been much higher during the housing boom, and then slashed to almost zero as in the US and the UK – but instead, Ireland has recently been hammered by far higher borrowing costs than they needed, imposed by European Central Bank.

The reason: Germany and France’s own economies are now recovering, and of course we have all the newer additions to the Euro to consider, with higher growth rates than Ireland.

So Ireland has to an extent been driven into mega-boom and then battered by a mega-bust as a direct result of being inside the Eurozone. To an extent we can see the same has happened in Greece – one of the factors which contributed to the crisis in 2011.

So then, we can see that the combined impact of European-average interest rates and exchange rate means that individual nations inside the Eurozone have lost their two most powerful tools in controlling their own economies.

Government debt – ticking economic bombs

There is another huge hazard: lack of control over government debt in Euroland. If a nation like the UK is outside the Eurozone, and spends too much money, borrowing a huge amount in the market, or printing millions of pound notes, then its own currency become less valuable. So it faces the result of overspending in a very direct way, which is isolated from impact on other nations.

If the UK overspends, or misbehaves in other ways, it will have to face more expensive imports, cushioned by cheaper exports. Inflation will also erode its own government debt, but the government may find in future that it has to offer higher interest rates to get that debt refinanced in future.

(Incidentally, the UK had a huge advantage in the recent crisis: much of its debt was tied up in long term contracts on fixed (low) rates which could not be renegotiated, unlike countries like Greece who were faced with fairly immediate needs to go to the market for refinancing. So the UK has been able to sit back, not worried too much about who is going to buy UK government debt in 2010 or 2011 or 2012, with breathing space to cut government spending, increase taxes, and restore market confidence in the nation as a whole. Inflation is welcome then, as it cuts the value of government debt, at a time when the markets are unable to insist on a better deal.)

But if Greece does the same thing with Euro, running up vast debts which it probably cannot repay, the result is damage to the value of the Euro currency as a whole, which affects every other nation using the Euro. Greece will also find they have to pay higher interest on their debt in the global market, and they have to finance significant debt every few weeks.

In summary, the Euro project only works in a sustainable way if you think about Euroland as a single nation, a single community, a single inflation rate, a single interest rate, a single exchange rate, a single economic policy, a single European budget for public services, a single mechanism for borrowing money and repaying public debt.

That is the situation in the United States – with considerable freedoms for State governments. But the big balancing factor in the US is mobility of the labour force. So as one State or another booms or declines, unemployment and wage costs rise and fall locally, and millions of Americans relocate, chasing better wages and job prospects.

In Europe, we have seen increasing mobility – especially in the case of workers from nations like Poland and Romania – which has balanced out some of the latest crisis. For example, when the UK boomed, Polish workers flooded in. When the UK hit recession, many of them returned to Poland – one reason why unemployment levels changed less than some expected.

But we are still a very immobile cluster of societies compared to the US – for cultural and language reasons. We are still very separate nations.

Expect major changes

The current situation in the Eurozone is unsustainable: we have very separate nations from the cultural and growth-rate point of view, locked into an economic prison whose walls are defined by common exchange rates and common interest rates – which are by definition less than ideal for almost all Euro nations.

Their individual governments have lost huge economic power to Euroland, yet retain almost all powers to run up as much public debt as they want, spending freely on public services and failing to balance this indulgence with adequate taxation.

There is a hard choice facing some nations soon: they have to decide either to manage their own affairs, set their own interest rates, allow their currencies to float, manage their own taxes and spending – or to go the whole way and accept that in Euroland we all live and die together, which means accepting further loss of sovereignty, loss of freedom to overspend, less freedom to decide tax rates and so on.

But there is a further problem: while diplomats, beaurocrats and politicians debate these things, the future of the most vulnerable nations will be dictated by the markets themselves.

If pension funds, investment funds, banks, corporations and wealthy individuals all begin to worry about the economic future of a particular nation, that government will find it has to bribe investors with huge interest rates to raise money to pay its debts, or to refinance them as each loan comes up for renewal and renegotiation.

How big will those bribes have to be? Can that nation afford to offer them, or will such bribes simply make future challenges even worse? That is the plight of Greece today, with Spain, Portugal, Ireland and others not far behind.

What happens if a nation decides one day not to honor its debts, stops paying interest, refuses to repay loans? Much of that debt is probably held by its own banks, so the first thing we can expect is panic as millions of people rush to get their money out of those banks and preferably out of the country altogether. Banks can become insolvent almost overnight.

Huge amounts of debt are held in other European banks, with risks of default insured all over the world in ways that are very hard to monitor. So a major default could create an uncontrolled wave of further economic crises, lasting several years, affecting many Euro nations and far beyond – all at a time when governments have little extra capacity to stimulate their economies.

The same could happen if a nation was to leave the Euro in an uncontrolled and sudden way. If Greece for example was to re-issue the Drachma, all their debts would be revalued in the new currency, and as the new currency floats, you can be sure a lot of people will sell very quickly, fearing that the currency will collapse and their holdings will soon be worthless. As they sell, their own worst predictions will become true, because the very act of selling the currency will force a further spiral down.

Will the Euro survive?

So what is the answer? You can be sure that the European Central Bank, IMF, European government leaders and heads of banks will work very hard to transform and stabilize the situation in small, clear, well-anticipated steps. The aim will be to reduce the debt burden of Greece by one means or another, and (likely I think) manage an orderly exit from the Euro. This will be a huge cost and risk for EU nations, but the alternative, regular crisis bailouts with likelihood of little return, is also hideously expensive and also risky.

Will the Euro currency survive? Almost certainly yes. Will it have as many members as today? Almost certainly no. Could we have a two tier Euro – effectively splitting the currency into two kinds of Euro for two different kinds of nations? Possibly, but each smaller group will continue to face most of the problems above from common exchange and interest rates.

Would it make sense for a strong nation like Germany to leave the Euro? Possibly. Germany is a dominant economy within the EU so interest rate policy has to be set with that in mind, and Germany, like France, is often as we have seen at a different stage in its boom and bust cycles than many smaller economies, with different requirements. Taking Germany out of the picture could make alignment easier.

The German people are not impressed by the failure of the Greek government to manage its budget, collect taxes, deal with corruption, and keep the country stable.

There will be a limit to which any democratically elected government in Germany can go in bailing out nations like Greece, without losing an election. So we could see an ultimatum, if the situation deteriorates far enough, in Greece and other nations: “Either they go, or we go”.

Future of Insurance and ReInsurance Industry

2011-09-14T10:59:00.000-07:00

ASIA INSURANCE REVIEW (edited): Interview on future of insurance and reinsurance: Dr Patrick Dixon, Chairman of Global Change and notable Futurist, expects the current risks to spawn opportunities for insurers and reinsurers to grow, but insurers must communicate the right message first.Elaborating, he stresses that the key is that companies and governments must cast their vision on the long-term risks that will prevail and how they can prepare, mitigate and combat their effects.

Growing risks for reinsurance industry

And what are these risks? Dr Dixon has a long list of them and finds it hard to pick the top four. “I wish you’d give me at least ten risks to talk about,” the 53-year-old quips.Nevertheless, his four selected risks for the insurance industry, in no particular order, are:

1. Contagious financial chaos: Our world is becoming more stitched together with more people jumping online, more people communicating at the speed of light, increasing volumes of international trade, all leading to escalating complexity. Dr Dixon adds: “We are now so interconnected and one of our greatest risks is managing weird combinations of risk that we hadn’t realised were possible. Complex financial instruments that people did not understand had caused the biggest shocks in the world recently and we will continue to see such complex monetary shocks. These are compelling reasons to reinsure such risks.”

2. Climate change: This is turning out to be impacting human beings much worse than originally forecast, especially in Asia, therefore insurers must be more active in climate change discussions, Dr Dixon says.

3. Growing contrast between the wealthiest and poorest in our societies: He expects this moral challenge to cause political instability, civil war and regional conflict on a scale that has not been seen before. The price of an apartment in Mumbai, compared to someone living under a plastic sheet in its shadow, is an example.

“You’ll see much of the same contrast in most of Asia, while gaps in the US, UK, Australia are also widening. History shows us that conflicts and disparities like these are unsustainable. Eventually people rise up,” he says, adding that such growing contrasts will materialise into regional instability and could spell violent seizures for asset prices and business interruptions.

4. Mutant viruses: We remain a very vulnerable specie to global pandemics. The Asian region is particularly sensitive as shown by outbreaks such as SARS, Bird and Swine Flu, which will continue to fuel the need for insurance.

Preparing for wildcards

Nevertheless, on top of future insurance risks, wildcards exist in every industry, he says, classifying these as “low probability events which cause massive destruction”. Recent examples are illustrated by BP’s oil spill, Iceland’s volcanic activity and the September 11 attacks. “Businesses everywhere underestimate the number of wildcards they have and their level of exposure to risks.”

This is why insurance is so important for businesses and helps to keep the wheels of the economy going, says the futurist. In BP’s case, having had advised them before, he deems the oil spill as not an unexpected risk as “it all boils down to an issue of the size of the company…the bigger it is, the more risks are attached.”

Changing image of insurers, it’s all about “trust” As for expanding and building a sustainable industry, he says: “You need to be clear what message you are communicating”, since insurers have had a “bad image” for over 30 years. Adding: “In this global world, the days of obsessing and talking about profits and bottom lines are over. If you continue to do that, you’ll destroy the industry. You need to convey trust.”

The truth or the key story behind insurance is that it is “a cooperative community of people who have chosen to carry each other’s risks through good and bad times and insurance companies exist to pay out in times of trouble.” If insurers can articulate this clearly and build trust within communities, Dr Dixon believes they can grow the market anywhere.

Communicate Right Message

In communicating the ‘right’ message, he advises insurers to change their language.

An insurance company CEO should discuss the good that it has done, such as: “Last year, I’m proud to tell you, we rebuilt the homes of 5,000 people in Singapore…We were there to support, sadly, 300 families who lost their parents in car crashes… We were there to support a family of three young children, whose father tragically died from cancer at the age of 35 [by] paying out a quarter of a million dollars to help them with immediate challenges over the next five years.”

The things insurers do for the community and its people are fantastic, he commends, and should be communicated by insurers. And declares that companies must fight tooth and nail to protect their image, saying: “Be proud and tell the story!”

Inside the mind of a Futurist In 2005 Dr Dixon was ranked as one of the 20 most influential business thinkers alive, according to the Thinkers 50 (a private survey printed in The Times (UK)), alongside Bill Gates, Jack Welch, and Richard Branson, just to name a few.

There is one key criterion for being a Futurist, elaborates Dr Patrick Dixon. “When you think about ‘tomorrow’ you are a Futurist. From a farmer, parent to a politician, we are all futurists if we think ahead.” However, for himself, he adds: “My daily mission is to: ‘Make sense of how the wider world is changing and what companies can do today to prepare ahead.’”

Quick Facts

To get into the mind of this leading futurist, here are some quick facts on Dr Dixon:

• Role model: Nelson Mandela
• Received his calling? As a physician, he was looking after cancer patients at the St Joseph’s Hospice, London. “When these patients found out they only have a few weeks or months left, they came alive, in an amazing way,” he said, which triggered him to quit as a doctor, start an AIDS Foundation and get into this futuristic work.
• Personal Campaign: He and his wife founded the ACET International Alliance, a network of independent national AIDS care and prevention programs, active in 23 countries including the UK, Ireland, Uganda, Zimbabwe, Thailand, India, Ukraine and Russia. He is currently its Chairman.
• What drives him: Wanting to make a difference and help create a better world.
• Most proud of: His wife and four children.

October 2010

Articles and Videos on Future of Insurance

Future of Banking, Insurance and other Financial Services
Future of online insurance
Why small business insurance often fails to protect
Should genetic screening be allowed for life and health insurance?
Gene tests for insurance - ethical and legal issues - video
Many other videos by Patrick Dixon on insurance industry trends
Future of insurance and wealth management
Reducing risk in financial services / insurance industry
List of insurance industry clients - insurance industry corporate events

Insurance Conference Keynote Presentations - slides

Future of Insurance Industry - wider global trends - for clients of Swiss Re in Asia. Conference keynote presentation.
Future Trends - for insurance industry audience with interest in sustainability. For Kilne Group.
Future of insurance and wealth management in South East Asia - internal event for senior leadership of leading global insurer.

Reducing Risk in Financial Services - risk management and investment banking. Keynote for global risk management team of Investec.

Sustainable business - leadership issues - global warming, climate change, wider environmental issues, risk management, personal and family sustainability.

Future of the global insurance industry - for HSBC Insurance global leadership team

Insuring a Rapidly Changing World - major trends relevant to life insurance and health cover underwriting - for clients of Munich Re

Global Trends and their impact on the insurance industry - Munich Re event for clients from Asia. How the insurance industry will be affected by wild cards (low probability, high impact events), why demographic forecasts for ageing and pensions liabilities are incorrect, the development of insurance industry in emerging markets, single issue activism and a rethink about business ethics.

The Future of Insurance, Pensions, Fund Management, Health and Life - Internal event for senior team members of Allianz looking at opportunities and challenges from such trends as new technology, demographic shifts, emerging markets and lifestyle choices. What will happen to life expectancy and the latest on ageing.

HSBC Chairman's Leadership Summit September 2005 - Opening keynote at event for HSBC senior leadership on issues likely to impact the bank, for some of the senior HSBC global leadership team.

Global Trends in Banking and Financial Services - executive training programme for senior teams at Credit Suisse, covering a broad range of issues that are likely to affect the bank and personal / corporate clients.

Managing risk in an uncertain world - Risk management client event for Zurich Financial Services in Lucerne Switzerland. How to manage risk more effectively, with clear vision of future potential liabilities and "wild cards". Many of the greatest risks are the hardest to measure - for example loss of brand value, reputation, sales and share value following high profile scandal. Risk management is becoming more complex and new strategies are needed, including better early warning systems.

The Future of Commercial Insurance Brokers - and related issues. Client event for Zurich Financial Services for their largest commercial insurance brokers in the UK, covering important insurance-related trends and risk management.

How to make sure your cash lasts as long as you do

2011-09-13T07:51:00.001-07:00

Concerned about running out of money after you retire? You're not alone. A Gallup poll released this summer found that 66 percent of Americans are very or moderately worried about having enough money for retirement.

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One of the obvious challenges of planning for retirement is that you typically don't know how long you're going to live, says Bennett Kleinberg, vice president and senior actuary at MetLife Insurance.
"If you spend too much in retirement, you risk running out of money," he says. "And if you spend too little, you could have maximized your lifestyle more."
Longevity insurance, also known as a deferred-income annuity, helps solve this dilemma. When you buy this type of policy, it allows you to structure your investments to cover a specified amount of time after you retire, says Kleinberg.
Once you pass that period of time, payments from your longevity policy kick in, providing additional income as long as you're alive, she says.

Ease of planning

The typical person who benefits from longevity insurance buys a policy upon retirement at age 65 but doesn't start receiving the benefit until around age 85, says Lynn Ballou, a managing partner at Ballou Plum Wealth Advisors in Lafayette, Calif.
That age isn't set in stone – many companies will let you choose the time you start receiving income, even if you're in your 70s, she says. But the general rule is that the longer you defer payment, the more income you'll bring in when you start receiving the benefit.
Although longevity insurance is a type of annuity, it offers a higher income stream compared with other annuity products, says Kleinberg. The payout is larger because you're deferring income, allowing the amount you invest to grow over many years.
Your money grows exponentially because it compounds at a certain interest rate, says Ballou. The rate of return depends on the insurance company that sells the product and the current market rates at the time you bought the insurance, she says.
Your company can tell you what your income would be when you make withdrawals, so you can plan ahead, she says.
"People who are very risk-averse may feel more comfortable with longevity insurance," says Ballou, who's also a Certified Financial Planner and ambassador for the CFP Board of Standards. "It's an election that's made to protect oneself from volatility in the rest of their portfolio."
Based on summer 2011 rates, if you're 65 and buy longevity insurance for $25,000 (with no death benefit), you can expect to receive an income of about $18,000 per year starting at age 85, says Kleinberg. If you buy $100,000 at age 65, your annual income at age 85 would be about $72,300.
By contrast, if you buy an immediate annuity for $25,000 at age 65, you can start receiving money right away – but the annual income would only be about $1,770 (with 10 years of guaranteed income), says Kleinberg.
According to the CDC, life expectancy in the U.S. is 78.2 years. So, insurance companies don't expect everyone who buys longevity insurance to receive a payout, Ballou says. However, if you do live for a long time, longevity insurance minimizes the risk that you'll run out of retirement savings, she says.
Longevity insurance is available in a range of options. With a traditional longevity policy, you don't receive any income during the deferral period and there is no death benefit for your heirs.
However, other versions of longevity insurance pay out less income, but give you more options. For example, some policies provide a death benefit for heirs, just as with life insurance. Some companies also offer an option where you can make payments toward your longevity policy instead of buying it with a lump sum of your savings, Kleinberg says.

Interest rates affect payout

Although longevity insurance has been around for years, it's not as popular or widely known as other types of retirement products, says Ballou.
Since current interest rates are at near-historic lows, your money won't compound as quickly as it would if interest rates were higher, and that could mean relatively lower payouts in the end, she says.
"In this day and age, with interest rates as low as they are, most people aren't rushing out to put all their money into this type of product," she says.
Instead, some people are taking a wait-and-see approach. They believe that if interest rates go up, they may get a better deal on a policy later, Ballou says.
If you do purchase longevity insurance, experts agree that you shouldn't spend your entire savings to buy a policy.
She suggests researching any insurance company before writing them a check, just as you would do with any other financial partner. To be safe, select an insurance provider that has a high score from an independent rating agency, such as A.M. Best, Ballou says.
Kleinberg suggests that a typical 65-year-old should put 10 percent to 15 percent of savings toward buying longevity insurance, while also diversifying retirement savings.
"You can take an unknown horizon and turn it into a known one of 20 years," he says.
However, your own circumstances may vary, so consider consulting with a financial planner or other adviser when planning your retirement.

Waiver of premium life insurance riders provide disability safety net

2011-09-13T07:49:00.001-07:00

What happens to your life insurance policy if you become injured or sick and can't pay your premiums? Chances are it will lapse – unless you have a waiver of premium rider.

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A waiver of premium rider covers your life insurance premiums when you are disabled. This type of rider is especially attractive if you work in an occupation that puts you at greater risk of disability.
According to the American Council of Life Insurers, 87 percent of all individual life insurance policies in force in 2010 included a waiver of premium rider.
With this type of rider, coverage does not kick in immediately after you are injured or become ill.
"Once you are covered under a waiver of premium rider, the typical policy requires a waiting period of six months after you become disabled," says Paul Wetmore, assistant vice president of Life Product Management at MetLife. "You must keep paying your life insurance premiums during that time, but you will be reimbursed for those premiums after the waiting period."
If you have a recurring disability, you won't have to undergo the six-month waiting period each time. "If you have a waiver of premium rider, there is no limit to the number of times you can use the rider," says Wetmore.
However, if you have a new disability unrelated to the earlier problem, you again will have to wait six months, he says.
Most waiver of premium riders are available on life insurance policies issued to policyholders between the ages of 18 and 60, although each insurance company has different requirements, according to Wetmore.
Terry Headley, president of the National Association of Insurance and Financial Advisors (NAIFA), says that waiver of premium riders generally terminate at age 65.
"The idea is to protect earned income, so if someone is retired, there is no earned income to protect," says Headley.
The cost of a waiver of premium rider depends on the size of the insurance policy, the type of policy, your age and your risk rating.
For example, Wetmore says on a term life insurance policy – which has lower premiums than a whole life policy – the waiver of premium rider might cost 10 percent to 15 percent of the total annual premium.
On a whole life insurance policy, the waiver of premium rider might cost 3 percent to 5 percent of the total annual premium.

Challenges for high-risk professions

If you work in a high-risk profession, it may be a little more challenging and costly to find an insurance company that will sell you a life insurance waiver of premium rider.
Headley says insurance companies use occupational ratings to underwrite waiver of premium riders. Some insurance companies use their own ratings system while others use a schedule developed by a state insurance commissioner.
If you are in an occupation with a "no" rating, it may be more difficult to get a waiver of premium rider on your life insurance policy. Firefighters, police officers and pilots are among the "high risk" occupations that typically fall into this category.
But others on this list might surprise you. They include many professions viewed as relatively risky to insurers because of the greater likelihood that illness or injury may keep you from working. Examples include:

Air traffic controllers
Bartenders
Bus and truck drivers
Chiropractors
Convenience store clerks
Couriers
Emergency Medical Technicians (EMTs)
Flight attendants
Furniture movers
Housekeepers
Manicurists
Nurses
Parking lot attendants
Postal workers
Trash collectors
Waiters

Headley says back pain and back injuries are responsible for many cases of disability leave, so a lot of occupations on the list involve lifting heavy items – or in the case of nurses, moving patients.
Other factors also may affect your ability to get a waiver of premium rider. If you are in poor health or enjoy a risky activity such as scuba diving or skydiving, you may not be approved for a waiver or may have to pay a higher premium for the rider. Your age also may play a role in whether you're approved.

Term life insurance vs. permanent life insurance: Is cash value the best value?

2011-09-13T07:47:00.001-07:00

If you're looking for life insurance, aside from considering how much you need, you'll find the need to understand and possibly choose between the two basic types: term life insurance and cash value life insurance.

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The main difference between the two is that term life insurance covers you relatively inexpensively for a set period, whereas cash value life insurance covers you at a much higher cost for the remainder of your life. Cash value life insurance costs considerably more than term life insurance, depending on age and health, but adds a cash value component of debatable merit.

How do term and cash value life insurance work?

Term life insurance generally offers the most amount of coverage for the least amount of money, and is the appropriate choice for most people. The most common reason to buy life insurance is to replace a person's income in case of early death, and term life insurance is the cheapest and best way to do that. Term life insurance is also an especially good choice for people and families who are just starting out, because it's relatively cheap and provides a lot of protection when replacing income is most important.
Cash value life insurance, also called permanent or whole life insurance, offers protection for your entire life (as long as you pay your premiums) and more flexibility than term life insurance. However, it usually comes at a much higher price. For example, the premium for a cash value policy can easily be 10 or more times higher than a term policy with the same level of coverage. The feature that makes permanent life insurance different is its ability to gain cash value. A portion of the money you pay into your premium goes into a cash value portion that grows over time, and becomes available for your use after a certain period.

How does cash value work?

The portion of your payment that goes toward the policy's cash value is very large in the beginning, but decreases slowly as time goes on. That's because permanent life insurance payments are made up of two parts: the regular insurance premium, which is comparable to the premium amount for the same coverage in a term life policy, and the cash value, or "overpayment" amount. The overpayment money is invested by the insurance company and later used to pay for the higher costs of insurance as you get older. In this way, the company is able to keep your premiums the same instead of increasing them over time. At a certain time, this cash value amount becomes available for your use.
A very common way people use their cash value is by taking out a loan against their policy. This loan draws from the cash value amount and uses the face value (or death benefit) of the policy as collateral, and is usually not subject to credit checks. You don't have to pay it back, but the initial amount, plus interest, will be taken out of your death benefit if you die, resulting in a lower payout. Another consideration is that the loan amount may be taxable if it is worth more than what you have paid in premiums.
Although many insurance agents recommend cash value policies because of the ability to use the cash value portion, their tax-advantaged status, and their retirement and savings features, most people can gain these same advantages with other forms of retirement and savings without the drawbacks and high prices of cash value insurance. Also, remember that there are usually penalties, or "surrender charges" for canceling a cash value policy in its early years.
The cash value component of a policy can work differently and be used for different things depending on the type of permanent life insurance you choose. There are four main variations: whole (or ordinary) life, universal (or adjustable) life, variable life, and variable universal life.

Whole life insurance is a predictable policy that provides a guaranteed benefit, a guaranteed earnings rate on your cash value, and a level premium. You may also earn dividends based on how well the company performs. Whole life is the most basic kind of permanent life insurance.
Universal life insurance is a flexible option that lets you vary your premium payments. After the first premium, you can usually make payments at any time. If you have extra money, you can pay more. If you can't afford to make a payment, you can skip it or pay less. The cash value portion usually operates in a similar manner as with whole life insurance. A problem with universal life is that if you don't make enough payments, or the company does not perform as expected, your policy could lapse. Newer types of universal life policies include guarantees that this will not happen, so be sure that you explore this option. Universal life can be one of the cheapest forms of permanent life insurance.
Variable life insurance allows you to invest your policy premiums. The problem with this is that if the investments perform poorly, the death benefit and cash value will decrease. On the other hand, if the investments perform well, the death benefit and cash value can greatly exceed those of a normal policy. Variable life is one of the most risky forms of permanent insurance, although its rewards can be great as well.
Variable universal life insurance, as its name implies, is a combination of variable and universal life insurance. It allows you to vary your payments, invest your policy premiums, and vary your coverage amount. Variable universal life insurance is the most flexible type of permanent life insurance, and can be either risky or predictable, depending on how you use it.

Making the choice

Most financial planning experts recommend term life insurance in almost all circumstances. You could potentially benefit from a cash value life insurance policy, but it's very likely that you'll overpay for what you get in return. You can receive almost all the retirement and investment benefits of permanent life insurance through traditional means, such as a 401(k) account, IRAs, bonds, etc. Even if you can afford the premiums for cash value insurance, you're probably better off buying the same amount of term life insurance and investing the difference.
If you're still unsure, remember that many term life insurance policies offer a conversion feature. This option will allow you to change the term life policy to a permanent life policy, either during a set period or at any point in the term. Some policies even allow you to credit some of the term premiums you've already paid toward your permanent life insurance policy.
If you're ready to make your decision, remember that term life insurance is a relatively cheap way to get protection for a set period, and is almost always the better choice.

Motor scooters: Do you need insurance?

2011-09-13T07:43:00.000-07:00

Motor scooters are fun to ride, get up to 100 miles per gallon, squeeze into tiny parking slots and are, well, just so darn cute. All of these factors are driving up sales, especially among women.

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But don't let the adorable factor make you think you're riding a toy.
"You're a motorcyclist, and you need to act like a motorcyclist," says Tim Buche, president and CEO of the Motorcycle Industry Council and Motorcycle Safety Foundation.
That means you need to take a riding course, wear the proper gear, get a motorcycle license and buy insurance to cover both your liability and any damage that occurs to the scooter.
"While scooter riders are only legally required to carry liability coverage, we would advise them to pursue full coverage," says Ricky Taranda, line manager for Allstate's emerging business.

Scooter sales zoom higher

Sales of motor scooters zoomed up almost 50 percent in the first quarter of 2011, compared to the same period last year, according to the Motorcycle Industry Council's Retail Sales Report.
Data from Allstate Insurance suggests women may be leading the trend. Almost three times more women than men requested quotes from Allstate for scooter insurance last year.
Buche says high gas prices fuel scooter sales, or at least allow people to rationalize buying what they always wanted. The tough economy put a damper on sales last year and in 2009, so the recent sales spike could indicate buyers feel more confident about their finances.
The line between scooters and more powerful motorcycles has blurred. Some scooters are equipped with relatively powerful 800cc engines. Generally, scooters have a step-through design and automatic transmission that distinguishes them from motorcycles. These features make scooters easier to ride and less intimidating for beginners.
But it's best to think of scooters as a type of motorcycle, Buche says. Too often novices think of scooters as motorized bicycles and ride them close to the curb, which confuses drivers and creates hazards.

Insurance and other scooter basics

Buche recommends buying a scooter that's powerful enough to keep up with traffic. Some scooters have small engines that go no more than 35 or 40 mph and are inappropriate for major thoroughfares.
Check your state's requirements – generally, states require you to register your scooter and get a motorcycle license. And don't forget about safety. Take a motorcycle riding and safety lesson and wear the proper gear for riding, including a helmet, Buche says.
Finally, don't forget about insurance.
Depending on the scooter's engine size and state insurance requirements, you may be legally required to purchase liability coverage, Liability insurance covers others' damage and injuries if you cause an accident, but doesn't provide any protection for your own property.
Taranda says most scooter policies written for Allstate are full coverage policies, which include liability, collision and comprehensive insurance. Collision insurance covers the scooter if it's damaged in a traffic accident, and comprehensive covers theft or damage from causes other than a traffic accident, such as a natural disaster.
Because scooters are less expensive than cars and motorcycles, relatively cheap insurance is available.

7 things you must do within 30 minutes of a car accident

2011-09-13T07:42:00.000-07:00

In the immediate aftermath of a car accident, auto insurance is probably not the first thing on your mind. Even a minor fender-bender can leave you shaken up and unsure what to do.

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"You're not thinking clearly. It's just so sudden," says Mary Bonelli, senior vice president of public information for the Ohio Insurance Institute.

That's why you need an accident checklist. They're handy to print out and keep in your glove compartment. With a checklist, you'll know how to collect the type of information that can smooth out the car insurance claims process.

Here are seven things you should do within the first half-hour after your car tangles with another.

1. Call 911

The first thing to do is grab your cell phone and dial 911 to have local law enforcement officers dispatched, as well as emergency services if someone is injured.
Even if it's just a fender-bender, "it's always good to have authorities on the scene to document and report what happened," says Anthony Noviello, assistant vice president in the claims division for Amica, based in Lincoln, R.I.

However, there are times when law enforcement won't respond. In bad winter weather, the police may respond only to accidents involving injuries, Bonelli says.
Police also may refuse to respond if an accident occurs on private property, like a mall parking lot, says Brandon Sutkowi, vice president at Meadowbrook Insurance Agency in Saginaw, Mich.

If police are there, get the police report number, along with the officer's name and badge number.

2. Take photos of the vehicles and accident scene

Once you've called the authorities, it's time to start collecting key information related to the accident.
"The information that your insurer will need to investigate your claim is normally available at the accident scene," says William Brower, assistant vice president for claims for Boston-based Liberty Mutual Insurance. "However, it can be very timeconsuming to collect this information, if the details aren't captured at the accident scene."
If you have a camera – such as one attached to your cell phone – and the accident scene is not dangerous, Noviello recommends taking photos before the vehicles are moved to the side of the road.

If the cars haven't been moved, the photos will document the point of impact between the vehicles. Photos should be forwarded to your car insurance company for claims purposes, he says.

3. Exchange personal and auto insurance information

Even if the police arrive, it's important to exchange personal and car insurance information with the other driver.

Don't take the other driver's word about his or her car insurance provider. Instead, ask to see a copy of their insurance card, Bonelli says.
"There are situations where people make up information," such as when they are uninsured, Bonelli says.
Also ask to see their driver's license, and write down the information directly from that.
Brower says if you've got a camera handy, snap a close-up photo of the insurance information and driver's license. Meanwhile, Noviello says if the driver is not the owner of the vehicle, get the owner's information as well.

4. Gather information about the other vehicle

Write down information about the other vehicle, such as its make, model, color and license plate number.

That's particularly crucial if it's a hit-and-run accident, Bonelli says. In that case, try to memorize the license plate number, or snap a picture with your cell phone.
The more information you can provide to authorities, the better.

5. Collect information from witnesses

Get the names, address and phone numbers of any witnesses to the accident. Those could be passing motorists or pedestrians, or even passengers in the other vehicle.

Collecting such information can be especially helpful if you're involved in a hit-and-run accident. Witnesses may have caught the license plate number of the fleeing vehicle, Bonelli says.

6. Admit facts, not fault

Noviello cautions against discussing who is at fault in the accident. However, you should tell police the facts.
If you spilled coffee on your lap before rear-ending the car in front of you, let the police know.
"You always want to tell the truth on what happened," Noviello says. Those facts are then used to determine fault and liability.

Bonelli agrees that you should not comment about the accident unless answering questions from police. Otherwise, "you don't know how it could be misinterpreted."

7. Contact your car insurance company or agent

Depending on your insurer, you should contact either your car insurance company or your insurance agent. Amica, for example, sells its auto insurance directly to consumers, while others use agents to do so.

If you purchased your insurance policy through an agent and the accident happens after business hours, call the 1-800 number on your insurance card, Sutkowi says. Your insurer will want the “who, what, where and when” of the accident, as well as the number of the police report.

Noviello recommends calling your insurer "as soon as practical after an accident," because the sooner you call, the sooner the company can start processing the claim.

My son enters college this fall. Are there insurance issues I need to consider?

2011-09-12T11:29:00.000-07:00

As long as your son lives on campus, your renters or home insurance covers the stuff he takes to college as part of the coverage for off-premises belongings. Still, it's a good idea to do an inventory of his possessions because the policy's coverage limit might be too low to cover pricey items, such as a laptop, flat-screen TV, iPod or sports equipment. Talk to your insurance agent about whether you need to purchase a personal property floater or endorsement to provide full coverage for everything.
If your son lives off campus, he'll need a separate renters insurance policy to cover his belongings.

College and car insurance

Let the insurance company know if your son takes a family car to college. Insurers base premiums partly on where cars are garaged, and failing to report the change could jeopardize coverage. Also make sure the insurer still allows your son to be listed on your policy; most car insurance companies let parents list children 18 and older on their policies as long as the kids are full-time college students.
If your son owns the title to the car, he should have his own car insurance policy and should inform the insurer about taking the vehicle to college.
Finally, your son can remain on your health insurance policy as a dependent up to age 26, but you might want to purchase a health plan through his college or university if he's leaving town and will be out of your plan's health network.

I'm purchasing an expensive mountain bike. Will it be covered under my homeowners insurance policy?

2011-09-12T11:28:00.000-07:00

Like most of your personal property, your mountain bike should be covered under the named perils section of your homeowners insurance policy for both on- and off-premises damage. In other words, if your bike is lost while you are on vacation or stolen from your home, it will most likely be covered under your homeowners policy.One thing to keep in mind is that if something happens to your bike and you need to replace it, your policy deductible may exceed the actual value of your bike (e.g., your policy has a $500 deductible and your bike is valued at $400). Therefore, it might not always make sense to file a claim for your bike with your insurance carrier. You can always try lowering your deductible amount, but this usually increases the cost of your homeowners insurance coverage.If you do file a claim for your bike, it's important to note that most homeowners insurance policies offer actual cash value coverage, which would reimburse you for the replacement value of your bike minus depreciation. This means that you could end up being reimbursed for less than what it would actually cost to replace your bike. To make sure that your bike is adequately covered, find out if your insurance carrier offers replacement cost coverage, which would reimburse you for the actual cost of your bike without taking depreciation into account.If your homeowners policy does not provide adequate coverage for your mountain bike, consider purchasing a floater. A floater covers more perils, provides replacement cost coverage, and has no deductible. However, an insurance company will probably require you to have your bike appraised when you purchase a floater.

How to compare car insurance quotes

2011-09-12T11:26:00.001-07:00

It's easy to get stuck in a rut with your auto insurance, especially if you have few complaints about your current insurance company. But failing to do a car insurance comparison at least once a year can cost you a lot of money – potentially hundreds of dollars.
Why should you compare auto insurance? Here are some key reasons:

Rates may vary for the same coverage

Each time you compare car insurance quotes, you receive a range of price levels for identical coverage. Why do rates vary from one company to another for the same coverage?
When determining your rate, an insurer looks at factors such as your age, driving record and claims history. The insurer also notes the type of car you drive and other factors, such as where you live, whether or not you keep your car in a garage, and the insurer's own claims history.
Each car insurance company has its own formula for determining how such factors affect rates. So, your rate may vary from company to company, even for the exact same type of coverage. This is a key reason why it's so important to compare car insurance rates.

Car insurance companies change their rates

Car insurance companies stay competitive by changing their rates. If one company begins offering "accident forgiveness" or "pay-as-you-drive" insurance, you can bet that its competitors will soon find ways to lower their own rates so they remain attractive to drivers looking for cheap car insurance.
By shopping around, you may find an insurer's rate is lower today than it was the last time you decided to compare car insurance.

Your car insurance needs may change

As your life circumstances change, so do your auto insurance needs. A single, 22-year-old driver usually requires a different level of coverage than a 40-year-old married parent. This is another reason it's foolish not to compare care insurance rates.
Events that may trigger the need to undertake a new auto insurance quotes comparison include:

Getting married
Having children
Passing certain milestone birthdays
Purchasing a new car
Buying a home

Auto insurance comparisons can help you find the best coverage for your changed circumstances at the cheapest rates.

It's easy to compare car insurance rates online

In the past, auto insurance comparison involved making several phone calls or visiting several insurance agents in their offices. Today, it's easy to compare auto insurance rates is to use an online tool, 24 hours a day.
When you compare insurance quotes online, you get an instant answer about your auto insurance options. You can also purchase your policy online, putting instant insurance coverage at your fingertips.
For example, by plugging your ZIP code into Insurance.com's rate "Quote and Compare" box, you can quickly compare insurance rates from some of the best auto insurance companies.
Before you compare auto insurance quotes, read through some of the following articles. They offer tips to help you find cheap car insurance that also keeps you covered when it counts.

Find cheap auto insurance in 8 easy steps

2011-09-12T11:25:00.000-07:00

Everybody wants cheap car insurance, but how do you actually find it? Fortunately, there are several things you can do to lower your insurance costs.

Before you start searching for a bargain-basement policy, remember that sometimes focusing solely on the lowest insurance rates is a mistake. Cutting costs does not make sense if you're also shortchanging quality.
However, with a little research, you should be able to find cheaper auto insurance without sacrificing important coverage amounts. Here are ways to improve your odds of lowering your insurance rates:

1. Comparison shop

Sometimes, you'll get the best deal with your current car insurance company. But in many other cases, the road to the cheapest car insurance policy will take you elsewhere.
Comparison shopping can help you uncover cheap car insurance companies and auto insurance discounts. How often should you search for lower premiums? Experts generally suggest looking around at least once a year. Insurance.com offers a rate-search tool that can help you find the best insurance rate.

2. Bundle your policies

Your insurance company may offer more affordable car insurance rates if you purchase both your home insurance and auto insurance policies from the same provider.
It's not unusual to save 10 percent or more off your premium when you receive a multiline discount.

3. Raise your deductible

Simply raising your deductible from $200 to $500 can lower your car insurance premium by about 20 percent, according to the Insurance Information Institute.
Remember, though, that a higher deductible means more money out of your pocket in the event of a claim. Cheap insurance can become expensive fast if you have to pay your deductible with a high-interest credit card.

4. Ask about discounts for which you qualify

Is your daughter a straight-A student? You may qualify for cheaper car insurance. Park your car in a garage? Your insurer may give you a price break because the car is less vulnerable to theft and weather damage.
Talk to your agent about all auto insurance discounts that are available and find out if you qualify for any of them.

5. Buy the right type of car

If you're shopping for new wheels, your choice of automobile can play a big role in getting lower insurance rates. Cars that cost less to repair or replace generally receive lower premiums.
You'll also get better rates if your car has certain safety features. Insurance companies often give discounts for features such as anti-lock brakes, side air bags and automatic safety belts. Anti-theft devices also may help in your quest for cheap vehicle insurance.
There are also a few things you should avoid doing that will reduce your car insurance rates. They include:

1. Avoid tickets and accidents

A poor driving history can easily disqualify you from getting the cheapest car insurance. Insurers will check your record to see if you present a high level of risk. Speeding tickets, accidents, drunk driving citations – all can drive your insurance rates higher.
Drive sensibly and cautiously and you'll be on the way to cheap car insurance in no time.

2. Don't carry unnecessary insurance coverage

If you have an old beater, reduce your car insurance costs by dropping comprehensive and collision coverage. When should you make this move toward cheaper auto insurance? Many experts say it's time to drop these coverages when the actual cash value you’d receive for your vehicle doesn’t justify the insurance expense.
Also, don't pay extra for personal injury protection or medical payment insurance if your family already has a good health insurance plan.

3. Don't ignore your car insurance agent

Experts generally recommend you sit down with your agent annually to discuss any changes in your life that might impact your auto rates. For example, your insurer may offer cheaper car insurance if you've dropped your daily commute in favor of working from home.
Has your teen recently flown the nest and landed car-free at a university or college? If so, let your agent know that the teen does not drive your car for the majority of the year. Being proactive can help you nab these and other auto insurance discounts.