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)

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).

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)

Insurance Q&A: “An insurance policy with bodily injury coverage covers?”

Every year we plunk down our hard earned money to buy car insurance. In my experience, most of us aren’t completely aware of what we’re buying, rather just taking someone’s (or something’s: see the GEICO Lizard) word we’re covered.

Your auto insurance policy is broken down into a few basic types of coverage by limits. For example, you may see 100/300/100 listed on your policy. (Learn more about these liability limits.)

First is liability coverage. “Liability only” auto insurance is mandatory in many states. This ensures you have a state minimum amount of insurance in the event you injure someone or damage his or her property.

Included in liability coverage is bodily injury, or “BI” coverage. An insurance policy with bodily injury coverage covers more than you might think. In addition to bodily harm, BI covers sickness, disease and even death resulting from an accident you are found to be liable for.

This may occur if there are complications from necessary surgeries as a result of the accident, or any necessary care the injured party may require as a result of the bodily injury. Sickness and disease are mentioned to make sure to encompass damages that might result after the initial accident occurs.

Finally, expenses related to death are covered as well. These include funeral and burial expenses incurred by others. If you cause an accident and someone else is injured in any manner, your insurance is responsible for getting him or her back to health.

Also included in liability coverage is property damage. You may cause an accident in which no one is injured, but property damage has occurred. Perhaps you back into an unoccupied vehicle in a grocery store parking lot. Your liability property damage coverage would pay for the damages.

Physical damage is another basic type of coverage on your auto insurance policy. This is not to be confused with property damage discussed above. Physical damage is coverage for damage to your own vehicle. It is possible to purchase car insurance without this coverage.

You may be able to purchase personal injury protection (PIP), medical payments coverage or uninsured and underinsured motorist coverage, depending on which state you reside in.

Spoiler alert: California is not a no fault state for auto insurance.  I repeat, not a no fault state.

The state still operates under the tort system, where individuals have the right to sue one another for compensation for bodily injury and loss resulting from an auto accident.

It has been this way for many years in most states. However, now a handful of states have enacted “no fault” laws in order to free up the court systems and save time/money for insurance companies and consumers in general.

These states are FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA and UT.

Under no fault laws, an injured driver doesn’t have to prove another driver is “at fault” for an accident in order to receive bodily injury compensation for resulting bills.

The injured person’s own insurance company simply pays the claim. This is referred to as personal injury protection, or PIP.

However, the compensated driver does not retain the right to sue for additional damages after they have been indemnified, or paid back, for their claim.

Some states allow the victim to also file a lawsuit if a certain dollar threshold or injury severity, or “descriptive” threshold are met as a result of the accident.

Monetary threshold states currently include HI, KS, KY, MA, MN, ND and UT. The monetary threshold may be as low as $2,500.

Additionally, serious injuries also allow for lawsuits to be filed in no fault states. The injury threshold states are FL, MI, NJ and NY.

Note that property damage is not covered under “no fault” laws. In order to seek compensation for damaged property, you must deal with the insurance company of the person who caused the damage.

“Add-on” coverage is available in some states as well. This coverage allows you to purchase personal injury protection, but remains a tort system for recovery, meaning you can still sue and be sued freely. Currently, AR, DE, MD, and Washington D.C. are add-on states.

There are three unique states that allow their drivers to choose to purchase personal injury protection and waive the right to sue, or decline PIP, and stick with the good old-fashioned tort system and continue to sue each other like crazy.

Check out the complete list of no fault insurance states.

Insurance Q&A: “Should I buy collision insurance on an older car?”

Well, the choice may not be up to you. If you don’t own your car outright, whether it’s new or old, you’re usually required by contract of the loan agreement to carry full physical damage coverage, which includes collision and comprehensive coverage until the loan is paid off. Period.

The lien holder, or any other loss payee, will want to ensure the car loan is eventually paid off in full, which becomes difficult if the car is totaled and can’t be driven anymore. Owners tend to stop making payments in such events…

In addition, gap coverage may be necessary if you owe more money on the car than it’s worth. Insurance companies aren’t in the business of insuring cars for what you owe on them, but rather for what they’re worth (actual cash value), or the cost to replace them in some instances.

However, if you own your car outright, collision coverage is entirely optional. You’ll need to ask yourself if the car is worth insuring, an answer likely based on your personal financial situation and risk appetite.

The older a car is, the less it’s generally worth (minus vintage classics). The less it’s worth, the less it costs to insure for physical damage. This alone helps the average driver maintain physical damage coverage on any vehicle, old or new.

If the car is old, but you like the shape it’s in and couldn’t afford to repair it if it’s damaged, you may want to opt for physical damage coverage.

Remember, if you don’t have collision coverage and you are at fault in an accident that renders your car inoperable, you could well be stuck taking the bus.

On the other hand, if you can afford to repair or purchase a new car in the event yours is damaged, you may want to forego the coverage and save the extra money. Especially if you’re not attached to the vehicle.

If it’s strictly a matter of money, I recommend getting an online quote or quotes from an insurance agent to determine if you’re getting the right coverage at the right price.

There are a number of companies, such as A.M. Best and Standard & Poor’s, who rate insurance providers on various financial strength aspects in order to help consumers make more informed decisions (insurance company ratings).

If you’re in the market for insurance, you should look for an organization that’s been around a while, with a proven ability to repay claims assuming you’re involved in an accident.

After all, it’s a lot more likely an insurer will pay your claim if they’re still in business…

Each state also has a department of insurance that monitors the financial status of insurance companies and regulates their practices.

That said, here are the the top insurance companies in the United States, according to TopRatedInsuranceCompanies.com:

1. Allstate Insurance Company
2. State Farm Insurance Company
3. Prudential Insurance Company
4. Travelers Insurance Company
5. Fidelity Insurance Company
6. MetLife Insurance Company
7. Farmers Insurance Company
8. AIG Insurance Company
9. MassMutual Insurance Company
10. The Hartford Insurance Company

The insurance companies listed above may offer a combination of property, casualty, life, and/or health insurance coverage, along with an array of financial products as well.

Insurance companies, much like other large corporations, don’t always specialize in just one thing. However, they do tend to stick to insurance and financial services.

There are thousands of insurance companies out there to choose from; some focus on only one type of insurance or one specific region of the United States.

It’s not necessary to purchase an insurance policy from one of the companies listed above to ensure you receive adequate coverage.

If you have questions about your coverage or rates, shop online or contact your independent agent.