Auto Liability Basics

Auto insurance liability limits come in a few different forms as well as in many different levels. The two main forms of auto insurance liability are “Split Limits” and “Combined Single Limit”. One main thing to first understand about auto insurance liability limits is that these limits are what’s used by the insurance company to pay out on your behalf the damages that you cause to someone’s body and or property. Auto insurance liability limits are not used to pay money toward your injuries or property damage. Those coverages are auto insurance medical payments coverage, comprehensive coverage, collision coverage and uninsured/underinsured motorist coverage. We will not be addressing those items in this blog post.

Split Limits have three different ceilings or maxes that the insurance policy will pay out. Those three different maxes are “bodily injury per person”, “bodily injury per accident” and “property damage”. Often you will see insurance policies with split limits of $250,000 bodily injury per person and $500,000 bodily injury per accident and $100,000 in property damage. What this means is that if you cause an auto accident the most that one individual will get for their bodily injuries is $250,000 from your insurance policy. If there are multiple people in the other party’s vehicle then the most the policy will pay out is $500,000 in bodily injury to all involved. Accidents that you cause will usually result in property damage to others and $100,000 is the max that the above example limits will pay for someone else vehicle or property.

 

Combined Single Limit still covers bodily injury and property damage but there is only one lumped together limit for the policy. For example if you have a $500,000 combined single limit policy than the most the other party will receive for their bodily injuries (no matter how many people are in the vehicle) and property damage that you cause is $500,000. There is not a per person limit sublimit nor a property damage sublimit.

There are many different levels of auto insurance liability limits you can have. Each state has a minimum which means you at least have to have the amount they require in order to legally operate a vehicle. This limit is usually very low and in order to best protect your assets and help restore people that you cause injury and damage to we recommend much higher limits of insurance. Obviously the higher the limits of insurance you purchase the more money the insurance policy will cost but extra money you spend could be the difference in protecting your assets after a large claim or have the possibility of losing some of your assets.

Snow Emergencies Overview

With all the snow and ice today I though it would be good to have a refresher on what snow level emergencies meant. 

Find emergency classification details and Ohio law pertaining to snow emergencies online at: http://www.weathersafety.ohio.gov/SnowEmergencyClassifications.aspxSnow emergency levels and enforcement

LEVEL 1: Roadways are hazardous with blowing and drifting snow. Roads may also be icy. Drive cautiously.
LEVEL 2: Roadways are hazardous with blowing and drifting snow. Only those who feel it is necessary to drive should be out on the roads. Contact your employer to see if you should report to work.
LEVEL 3: Roadways are closed to non-emergency personnel. No one should be driving during these conditions unless it’s absolutely necessary to travel or a personal emergency exists. Employees should contact their employer to see if they should report to work. During a Level 3 emergency, drivers may be subject to arrest and/or fines.

When a Level 2 or 3 is issued, motorists are advised to seek public transportation. In a Level 3 emergency, conditions are not safe and driving is limited to emergency personnel and personal emergencies. One purpose for issuing a Level 3 snow emergency is to enable snow removal equipment to adequately clear roadways without the obstacle of motorists. Citations could be issued for reckless or unnecessary driving during a Level 3 emergency.

Small Businesses Need Liability Insurance

Today many small businesses are popping up.  The reasons for this vary.  Many want to be their own boss, some people are creating their own job since they are unable to find one or many corporate companies are encouraging their employees to become 1099 consultants to help save on benefits.  Either way, people are setting up on their own and it is to these people that I write this blog article.  

Start up costs are a difficult things to manage when you are just beginning your business.  Many demands are placed on your budget but one thing I would encourage you to put top on that list is liability insurance.  All business, big or small, should have liability insurance to both protect the business itself and its customers.  Here are four reasons I would strongly recommend liability insurance even for theone person shop.

1) Contracts:  Contracts are king these days.  Customers require contracts to do business with you.  In many contracts you will see insurance requirements so it is best to have that in place at all times to be able to meet those requirements, especially if you are bidding for a job.  Many start up business work out of their home but for those that lease space elsewhere you will find insurance requirements in your lease contract that need to be met.

2) Slip and Falls:  As I write this article Ohio is dealing with cold weather, snow and ice.  Already claims are coming in where people have slipped and injured themselves outside of businesses.  Whether you are negligent or not in these situations there is still a cost to defend yourself when someone comes to your door on crutches handing you their medical bill from the fall they took on your premises.  

3) Product Liability:  Retailers who sell products have the exposure of something going wrong with their products and causing injury.  Especially if your product is used in cooking or toys for children, this risk is always there and could be very costly.

4) Property Damage to Others: Contractors face this risk the most.  If you are mowing a customer's yard and cause rocks to damage near by cars or houses you will be liable to pay for the damages.  If you are a contractor working on a customers building and end up damage a portion of the building you are not working on, that damage will be your responsibility.  

These are just four examples of where businesses risk having claims.  Each of these would be covered by a general liability policy setup for your business.  Be sure to consult with an independent agent that can help pinpoint the type of coverages that best suit your business and stay protected from unexpected expenses.

Extended Dwelling Coverage on a Homeowner

Many moons ago all insurance companies used to have guaranteed replacement cost endorsement you could put on your homeowner policy. This endorsement would guarantee that the insurance company would rebuild your house exactly as it was prior to the claim even if your limit of insurance on the house was lower than the cost to rebuild. Today many insurance companies limit that endorsement to only homes that are considered high value (homes valued at $500,000 or more). The endorsements also require that the insurance companies send out professional reconstruction appraisers to figure out as best they can what it would cost to rebuild your home.

For those homeowner clients who have a house valued at less than $500,000 the endorsement that needs to be added to the homeowner policy is Extended Dwelling Coverage. What this endorsement does is give a percentage of the homeowner limit as extra coverage in case of a total loss on the home. For example, if you have 25% Extended Dwelling Coverage and your house is insured for $200,000 then you would actually have $250,000 if your home suffered a total loss ($200,000 X 1.25 = $250,000).

We feel this coverage is important for two reasons. One reason is we do not send out professional reconstruction appraisers to every house. Instead, insurance companies use in house software that helps determine reconstruction cost on your house using things like square footage, construction type, location, year built, etc. to come up with a value. These programs are usually very accurate but nothing replaces the accuracy of an in home visit with measuring tape and details of the type of amenities in the house. The Extended Dwelling Coverage endorsement helps make sure that if for some reason the calculations on the house are a little off, there is still enough insurance there to replace the house to its original state.

The second reason we encourage this endorsement is for catastrophe situations. Let’s say a tornado wipes out not only your house but two other neighborhoods worth of homes. Every builder and building supplier in town will be in demand. Economics 101 will tell you that if demand goes up and supply is the same, then prices are going to rise. That home that only cost $200,000 to rebuild just got a lot more expensive but if you have the Extended Dwelling Coverage on your homeowner you would be in a much better situation.

One thing to note about this endorsement, you can’t use it to underinsure your home. In our example above, you can’t insure the house for only $160,000 and add the 25% Extended Dwelling Coverage (which would put your total insurance at $200,000). That is not the intent of the coverage. The insure companies will use their software to figure out a good estimate of the cost to rebuild your house and you would have to have it insured for that amount in order to add the coverage.

Rental Car Coverage

The Holiday Season brings on a lot of travel.  People are either taking advantage of time off to go on vacation or they are traveling to see loved ones in other areas of the country.  Either way they often rent a vehicle during the Holiday Season so we thought it would be a good idea to post our thoughts on whether to buy or not buy rental car insurance.  

The first question we get from customers asking about rental cars is "does my insurance cover a rental car that I rent?"  Our answer is always a "gray" answer because it just depends on the coverage they selected on their personal insurance policy, what state they will be traveling in and what rental car company they are using.  Because of this "gray" response we always recommend at least take out Collision Damage Waiver from rental car companies.  Here are four reasons why this is always a safe option:

1.  Chance of claims is higher when traveling:  In our opinion the chance of a claim when you are driving around an unfamiliar city are much higher then when you are around your hometown.  You are not often sure of where you are going so you may spend more time looking at road signsor GPS devices instead of focusing on other vehicles.  

 

2. Claims paid out by your own policy can cause your rates to increase:  As mentioned in item 1, the chance of a claim is higher when in unfamiliar areas and if you were to have a claim and did not buy the Collision Damage Waiver than the payment of the claim would come from your personal auto policy.  This could cause your rates to increase.  If, however, you had purchased the Collision Damage Waiver from the rental car company the damages to the rental car would be paid by the rental car company and not your personal auto policy.  This would help preserve your claims history.

3.  Your auto insurance deductible would apply:  If you have a claim and need to go under your own insurance, often your auto policy deductible would apply.  If, however you take out the Collision Damage Waiver there would be no deductible.

 

4.  Dealing with out of state accidents is difficult:  If you were to cause an accident while on vacation you would have to work with the rental car company on getting their car fixed by your insurance company (again, assuming you didn't purchase the Collision Damage Waiver).  You also run the risk of them automatically charging the damages to your credit card which some rental car contracts let them do.  If you did have the Collision Damage Waiver, however, you would just simply turn the car over to the rental car company and they would then deal with all the repairs and not bother you with getting payment for the damages.

It is because of these four points that in Fey Insurance Service's opinion it is always good to purchase the Collision Damage Waiver from the rental car companies.  If anything it gives you peace of mind during your Holiday travels.

Named Peril vs. Open Peril Homeowner Policies

Many today feel all homeowner policies are the same, that they are a commodity of sorts. In our professional opinion this is not the case. One glaring difference between homeowner policies is whether they are “Named Peril” or “Open Peril” homeowner policies.

Named Peril insurance policies specifically list the risks they will cover your home for. The policy contract will cover such happenings as wind, lightning, fire, smoke, theft, etc. If something happens to your home that doesn’t fall into the insurance policies definitions of the name peril terms than there is no coverage.

Open Peril insurance policies state that all risks are covered except for a list of exclusions that are outlined in the policy contract. This type of contract gives broader coverage than a Named Peril because the incident that happened to your home or personal contents doesn’t have to fit into a certain definition of coverage. As long as the incident isn’t excluded it is covered.

A homeowner policy that is using a “Named Peril” contract will always be cheaper than an “Open Peril” contract. It is important to know this so that you don’t fall victim to purchasing solely on price. You may be excited to see a savings from one policy to the next but that savings could be at a much higher cost and exposure to you. Unfortunately you may not know this until you actually have a claim and are staring at a bill that would have been covered under an Open Peril policy but is not covered now under your Named Peril policy.

This is just one example of what may be different between homeowner policies. Other things like deductibles, specialty items coverage, fallen tree coverage, water backing up sewers and drains, and earthquake coverage are a few others to consider.

Douglas M. Fey

Fey Insurance Services morns the loss of Douglas M Fey who served those in our agency as an owner, brother and uncle.  We will greatly miss him and his warm spirit around the office.  Below is his obituary.

FEY, Douglas Michael age 64, went home to be with the Lord on Friday, September 27, 2013. He was born on December 30, 1948 in Cincinnati, OH, the son of Ralph N. Fey and Ruth Yvonne Curpen "Bonnie" Fey. He attended school in Oxford graduating from Talawanda High School and later attending Miami University in Oxford where he was awarded a Bachelors of Science Degree in Business Administration in 1971. While at Miami he was a member of Beta Theta Pi Fraternity where he served as Chapter Treasurer. Following graduation he entered the U. S. Army serving in the Finance Branch in the United States and for 18 months in South Korea. Upon completion of his military service he returned to Oxford to begin working in the family insurance business with his father, older brother, his sister-in-law and later his nephew. Doug was Vice President of Fey Insurance Services. He loved to fly and held a commercial instructor's rating, and at one time he owned a vintage 1946 Piper Cub which he hangered at his family's farm. In addition, he was at various times a member of the Oxford Presbyterian Church, the Oxford Kiwanis Club, the Oxford Rotary Club and the Oxford Country Club. On October 17, 1993, Doug married his beloved Paulette, and they moved to Lebanon, OH where he lived the rest of his life. Doug and Paulette loved to travel and spend time with their children and grandchildren. He leaves his brother, Thomas Curpen Fey (Cathy) of Oxford, Ohio, Paulette's daughters Amber Mitchell (Jon) of New Carlisle, Ohio, Kim Martin (Zach) of Loveland, Ohio and Laura Hockett of Lebanon, and thirteen grandchildren including Samantha Mitchell, Milo Mitchell, Ulyana Mitchell, Ilia Mitchell, Anastasia Mitchell, Slava Mitchell, Olga Mitchell, China Martin, Nova Martin, Cherokee Martin, Zion Martin, Ivy Hockett, a niece, Elizabeth Fey Mundy (Al) of Cincinnati, Ohio and nephew, Brian Douglas Fey (Kate) of Cincinnati, Ohio and their children. He was preceded in death by his parents. Visitation will be held on Wednesday October 2nd from 10:00-12noon at Oswald-Hoskins Funeral Home with a service immediately following. Interment will take place in Lebanon Cemetery. Arrangements were made by Oswald-Hoskins Funeral Home. Online condolences may be sent to the family by visiting www.hoskinsfh.com