The Truth About Insurance.com

Insurance Q&A: “Does homeowner’s insurance cover my dog?”

First off, it’s important to note the difference between coverage for a dog and liability coverage for the acts of a dog.

Homeowner’s insurance policies will not cover injury or sickness for a family pet. You would have to obtain pet insurance if you want to cover Fido’s own health.

As far as liability coverage for bodily injury or property damage your household pet causes to others, you may be covered.

Of course, this will depend on the specifics of your policy, the company who insures you, and depending on where you live, the type of dog you own.

Your insurer or independent agent should ask if you own a dog when providing a homeowner’s policy quote.

It is in your best interest to be honest and upfront, as any misrepresentations on your insurance application may result in a voided policy or denial of coverage in the event of a claim.

Note that the majority of insurers will cover most dog breeds.

However, some insurers will deny an application if a specific dog breed is present in the home, depending on state laws or their own underwriting guidelines.

You can probably guess which breeds are most commonly excluded: pit bulls, bulldogs, German Shepherds and various other protective/guard dog breeds.

If you already have an insurance policy and are considering obtaining a dog that might fit the “vicious” breed category, it’s best to inform your insurer ahead of time.

You will certainly want to make them aware, as the resulting premium may be too high for your budget and cause you to rethink the purchase, or worse case, result in a claim being denied if something were to happen.

I get asked this question a lot as an insurance professional. The answer is yes, assuming you have purchased the right type of coverage on your personal auto policy.

But you might be surprised to find out exactly what is covered and what isn’t.

First things first – you must have purchased a full coverage policy, including comprehensive coverage, also know as “other than collision,” to file such a claim.

If you did, you may be wondering what’s covered?

Any damage to your vehicle as a result of the break-in would be covered. This includes a broken window or lock, and any dents or dings suffered while the action took place.

Additionally, any equipment permanently attached to your vehicle or installed by the factory is covered. This would include the factory stereo or the airbag.

Airbags are a hot item for would-be car thieves, as they are sold to auto body shops for big bucks. Auto body shops reinstall them into cars where they have been deployed as a result of a collision.

Now on to the bad news…what isn’t covered. Many people assume any and all personal items left in the car are insured.

This is NOT accurate, as coverage for these items is often excluded. Your sunglasses, radar detector, and wallet/purse stuffed under the seat are not covered by your car insurance policy.

That is, unless you have a homeowner’s policy or a renters policy in place to cover your personal items. And even then, the deductible for theft will likely be higher than what your claim would be, so you’re probably better off replacing those items out of your own pocket.

Do note that it’s possible to list additional equipment on some policies to include the cost of aftermarket items you may want covered in the event of a theft or even an accident.

Your insurance company may request pictures and receipts in order to certify the value. You will have to pay additional premium to get these items covered, but it may be well worth it for those with expensive aftermarket add-ons.

(photo: dumbonyc)

Below is a list of the top auto insurance companies in California, based on written premium. Keep in mind that these companies aren’t necessarily the top rated, just the most frequently used.

As you can see, State Farm was the top auto insurance provider in California in 2008 (the most recent data available), according to the California Department of Insurance.

The company grabbed 12.9% market share with $2.54 billion in written premium, followed by The Automobile Club, which raked in 8.9% market share with $1.76 billion in written premium.

The California State Automobile Association grabbed the third spot with 6.8% market share and $1.34 billion in written premium, followed closely by Mercury, with 6.6% market share and $1.3 billion in written premium.

Rounding out the top five was Allstate, with 6.4% market share and $1.26 billion in written premium.

A number of other notables are in the top 25, including Farmers, 21st Century, Progressive, Geico, and Esurance.

Perhaps rather surprisingly, Geico held only a 1.8% share of private passenger insurance in California in 2008, despite their strong advertising push; Esurance held less than 1% market share.

FYI, this report looks at total insurance written for both private passenger liability insurance and physical damage coverage.

Also note that many insurance companies have subsidiaries and are listed multiple times.

Insurance providers often write through multiple “companies” with the same name, which is referred to as the “holding company.” The reasons can be many.

For example, it is darn near impossible for an insurer to raise rates in California, so “another company” may be formed to introduce a new, more expensive product line.

Or a company may sell both direct to the public and through independent agents. That’s what Mercury, Allstate, and others are doing here.

Also, a company may serve two markets, such as a non-standard, non-credit auto program, and a more standard in nature credit scored program.

One product cannot have both credit and non-credit lines, so each would need to be written under a different company.

As I mentioned before, this isn’t necessarily a gauge of quality, but more about market share, and the names an independent agent may throw your way.

U.S. Transportation Secretary Ray LaHood this week unveiled sample legislation that can be used as a starting point for states looking to craft laws to prohibit texting while driving.

There is an ongoing concern about texting while driving because it combines three types of distraction: visual – taking your eyes off the road, manual – taking your hand(s) off the wheel, and cognitive – taking your mind off the road.

“Texting while driving, like talking on cell phones while driving, is an extremely dangerous and life-threatening practice,” said Secretary LaHood, in a press release.

“This language, which we created with a variety of safety organizations, is another powerful tool in our arsenal to help the states combat this serious threat.”

Currently, 19 states and the District of Columbia have a ban on texting while driving.

Additionally, federal employees are not allowed to text while driving government-owned vehicles or government-owned equipment.

And just last month, LaHood announced federal guidance to prohibit texting by drivers of commercial vehicles, including large trucks and buses.

Truck and bus drivers who text while driving may be subject to civil or criminal penalties of up to $2,750.

Of course, a recent study found that texting was not the biggest distraction while driving; it turned out to be road rage and screaming children.

However, another study found texting drivers were six times more likely to get into an accident, which could lead to even higher insurance rates for teens, who seem to be the biggest texters out there.

(photo: d3sanfrancisco)

Think you don’t need uninsured motorist coverage? Think again.

A study released by the Insurance Research Council revealed approximately one in six drivers in the United States may be driving without insurance this year.

The group said the estimated percentage of uninsured drivers fell from 14.9 percent in 2003 to 13.8 percent in 2007, but is expected to reach an all-time high thanks to the economic downturn, which is causing more than its fair share of unintended consequences.

Apparently a one percentage point increase in the unemployment rate is associated with a more than three-quarters of a percentage point increase in the uninsured motorist rate.

So based on current unemployment rate projections, the percentage of uninsured motorists is expected to rise to a staggering 16.1 percent in 2010.  That said, the need for uninsured motorist coverage is clearly growing.

In 2007, New Mexico had the highest percentage of uninsured drivers (29 percent), followed by Mississippi (28 percent), Alabama (26 percent), Oklahoma (24 percent), and Florida (23 percent).

The five states with the lowest estimated percentage of uninsured drivers were Massachusetts (1 percent), Maine (4 percent), North Dakota (5 percent), New York (5 percent), and Vermont (6 percent).

If you happen to be one of the many uninsured drivers out there, consider picking up at least minimum liability insurance.

The IRC study examined data collected from nine insurers, who represent roughly half of the private passenger auto insurance market in the United States.

Depending on what state you live in, your credit history may be used to determine your homeowner’s, auto, and/or business insurance rates.

While hotly contested, the practice is highly favored by insurance companies and will likely be around for some time to come, if not indefinitely.

It is believed that roughly four out of every five credit reports contain errors, so the odds are clearly not in your favor.

And these errors could mean you’re paying a higher insurance premium than you deserve.

Regularly checking your credit report and C.L.U.E. report for errors will help ensure you are not being unjustly overcharged for your insurance coverage.

Insurance companies use an “insurance score,” which is calculated similarly, but uses a slightly different formula than a typical credit score.  It’s one of the many factors that may be used in determining your insurance rate.

My experience as an insurance professional has revealed to me that there are a number of insurance agents unaware that the companies they represent are using the practice.

Providing your Social Security number in order to receive an insurance quote is a big tip your credit history will be reviewed for the purpose of determining how much to charge.

However, insurance scoring is not mandatory to calculate rates and regularly depends on what type of insurance company you have/intend to get your policy with.

Typically, standard companies, which only accept “preferred risks”, make credit scoring a requirement in order to receive a rate.

If you don’t have a credit history, or have very little credit history, you will simply be assigned a “no-hit” or “thin hit” score, which means you’ll be stuck with a “less than desirable” rate.

Non-standard insurance companies, which provide insurance for drivers who have a greater chance of filing claims based on their MVR, usually have the option of purchasing a policy that does not use credit score as a rating factor.

As a result, these drivers are more likely to pay more for insurance than a standard company would charge.

We’ve all experienced that sinking feeling when renting a car and trying to decide whether to get the insurance or not.

It seems like a no-win situation; you either pay for the additional rental car insurance, or decline it and leave in fear you may be involved in an accident and go broke paying for the damages (which is the exact feeling they try to instill in us).

One of the options you’ll be offered is the “Collision Damage Waiver,” or “CDW,” also known as the “Loss Damage Waiver,” or “LDW.”

Both of these options do not constitute insurance of any kind. Rather, they are sold as a promise from the rental car company to not hold you responsible for physical damage caused by you to their vehicle while in your care or custody.

Depending on your existing personal auto insurance policy, and what state you reside in, you may be able to reject this offer without a care in the world…with one stipulation.

In some states, like Texas for example, your auto policy’s property damage liability coverage will protect you in the event you damage a rental car.

The way the policy is interpreted, your liability for damage to others’ property, in this case the rental car, is covered up to your policy limits.

Basically, it means damage to the rental car is not treated any differently than damage you cause to someone else’s car while driving your own vehicle.

The one stipulation here is that your auto policy has high enough property damage limits to cover the cost of your rental car.

For example, if your policy limits cover $25,000 in property damage liability, and you wreck a $40,000 rental car, you will be on the hook for the remaining $15,000 if the car is completely destroyed.

I highly recommend contacting your insurer or independent agent to determine your individual coverage and the laws in your state before renting a car and making any assumptions.

It’s important to be informed in order to avoid being taken advantage of, or ending up with a huge bill at the end of a vacation for damaging the rental car.

At the end of the day, the rental car company is counting on your lack of knowledge and hoping you will sign on the dotted line and cough up the money.

Tip: Some credit card issuers provide Collision Damage Waiver coverage on rental cars for damage due to collision or theft.

Insurance Q&A: “When did auto insurance become mandatory?”

The answer depends on whether we’re talking about liability insurance or physical damage insurance.

Every state has some form of mandatory minimum liability auto insurance in place to ensure drivers on our public roadways are capable of indemnifying, or paying back, one another in the event they’re found liable for an accident.

Liability limits are set by individual state departments of insurance and must be adhered to by any insurance company choosing to offer policies in that particular state.

In other words, the insurance company has to offer at least that amount to every driver in the state.

Long story short, the first mandatory liability insurance law went into effect in 1927 in the state of Massachusetts, though it’s important to recognize that insurance, in some form or another, has been around for thousands of years.

Insurance for physical damage, on the other hand, usually depends on whether or not you own the item in question outright.

If you own your car, home, boat, or whatever else free and clear, meaning there’s no lien holder on it, you’re not required to have physical damage coverage.

For example, if you’ve got a loan on a car or house, the financial institution you owe money will likely force you to carry insurance for potential damages as part of the contract.

Think of it this way. If you borrowed $20,000 to buy a car and it was totaled in a wreck, what motivation would you have to pay back the balance if an insurance company didn’t replace it?

To sum it up, liability is mandatory for automobiles because of state laws, and physical damage is usually only made mandatory by lenders for items you still owe money on (or items you do not want to have to repurchase with your own money if they’re damaged/destroyed).

Amica Mutual was rated the top auto insurance provider in the United States for the 10th consecutive year, according to a customer satisfaction survey from J.D. Power.

The company scored 851 points out of a possible 1,000, and was followed closely by State Farm (831), Shelter (828), Auto-Owners (825), and Erie Insurance (823).

Notables like the Automobile Club of Southern California (813) and Geico (806) scored above the industry average of 801, but other big names like Farmers (797), Progressive (796), and Allstate (794) did not.

AIG was the worst auto insurance company in terms of customer satisfaction, scoring just 719, with its closet competitor being GMAC (751).

Overall, auto insurance customer satisfaction reached a five-year high in 2009, largely because auto insurance premiums have decreased.

In 2009, 42 percent of customers said their auto insurance premiums decreased without the need to switch to another insurer, nearly twice the rate seen in 2008.

Direct insurers are also winning out over traditionally more favorable independent agents, as better technology and greater hours of operation (interactive websites) have given them the edge.

One key behavior that tends to lower dissatisfaction is engaging customers when speaking about rate increases and discussing ways to mitigate any price changes (how to lower your auto insurance rate).

All that said, take a look at the “top auto insurance companies in the United States,” and also the worst…and remember to do your own research and rate comparison to ensure you’re getting the best deal.

The teenage years are hard enough on a parent without having to worry about things like auto insurance.

But one of the greatest concerns for all parents is the idea of their teen behind the wheel of an automobile, along with the astronomical price of auto insurance.

That leaves many wondering, “Am I required to have auto insurance on a teenager?”

The short answer is no, you are not required to have auto insurance on a teenager.

Specifically, you are not required to pay for auto insurance for your teen to drive a vehicle if they are not actually going to drive! Of course, there are some details to discuss.

Most insurance policies require all members of a household above the age of 15 to be listed on the auto insurance policy, leaving you with two options.

Option 1:

Exclude your teenager from the auto insurance policy. This means your teen is listed on the policy as someone who lives in the home and will not drive the vehicle(s) covered under the policy.

But don’t take the exclusion lightly. Your insurance company will deny a claim if your excluded teen “borrows” the car and gets into an accident. You could be out a car and in court getting sued personally for the damages. Be sure to have that discussion with any excluded teen drivers.

Option 2:

Bite the bullet and list your teen as an eligible driver of the vehicle(s). Expect your insurance rates to increase when insuring a teen driver (How much is car insurance for a 16 year old?)…and for the car to be low on gas next time you get into it.

It’s never easy to watch your teen drive off in the car for the first or even hundredth time, but it may help calm your nerves knowing you’re covered if they cause an accident.

Shop online or visit your insurance agent to determine if you have the right coverage at the right price for your teen driver.

(photo: ice.bluess)