Car Insurance and Which Car Teen Drivers Are Rated On

Posted by on May 10, 2017 in Blog | Comments Off on Car Insurance and Which Car Teen Drivers Are Rated On

Car Insurance and Which Car Teen Drivers Are Rated On

A client called me last week who was surprised at the increase of adding his youngest son with a brand-new driver’s license to the family car insurance policy. I’m reviewing his options, but thought this was a great example of how car insurance companies take different approaches concerning vehicle assignment when adding a teen driver. These differences can result in some very surprising rates, especially if the new driver will be sharing one of the family cars!

All Vehicles: The company my client is with does not assign any driver in the household to a specific vehicle on the policy as their primary vehicle. Instead, it opts to rate the policy with the teen driver, as well as all other drivers, to every car on the policy, whether they will drive them or not. The reasoning for this approach is the teen driver has access to each car in the household and is therefore rated on each vehicle. In this case, the teen with the new driver’s license is listed on his mom’s BMW and brother’s sports car resulting in a dramatic increase in the family’s rate.

Most Expensive Vehicle: Other car insurance companies will rate the teen as the primary driver on the most expensive vehicle in the household, even if they are not allowed to drive it. This too can have dramatic effects on the family premium since a newly minted driver is several times more likely to be involved in an accident the first two to three years of driving.

Vehicle Assignment: Still other car insurance companies allow each driver in the household to be assigned to a specific vehicle as their primary vehicle. In this instance, we can assign the teen, or other family members, to a specific vehicle as the primary one they’ll be driving. While all vehicles are still available for the teen to drive, rating them mostly on either dad’s, mom’s, or a sibling’s vehicle keeps the premium more realistic overall.

Own Vehicle: A variation on the vehicle assignment option, is when the new driver will have their own car and we’re able to assign them as the primary driver on that vehicle. Preferably, this will be a used vehicle with four doors, or a small pickup truck, or SUV which tend to carry more favorable car insurance rates than a two-door car or newer vehicle. The teen is still listed as a potential driver on the other vehicles, however, the car insurance company recognizes they will be the primary driver of a specific vehicle rather than dad’s or mom’s more expensive vehicle.

I’m working through my client’s options with our other carriers to determine which car insurance company will give him the very best rate! I’m grateful we have several options to work with! What’s been your experience? Share them with me, along with any questions or comments you may have on my Facebook, Google +, or LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Texas Townhouse Insurance

Posted by on May 8, 2017 in Blog | Comments Off on Texas Townhouse Insurance

Texas Townhouse Insurance

I wrote about condominiums and condo insurance last week and this week, I wanted to follow that up with an overview on townhouse insurance. The reason for addressing townhouses as a distinct home type is they have elements of a traditional single family home. They also share something in common with condominiums as they have a mandatory homeowner’s association and are usually found in highly planned communities.

Since a townhouse shares features with both single family homes and condos, there are usually two ways the townhouse insurance can be written. Which one’s the right one for your townhouse depends on who’s responsible for the home’s exterior walls, roof and foundation. This is usually clearly outlined on the association policy.

Once I’ve gathered information about the home from the owner or buyer, I call the person who administers the HOA policy to ask whether it covers the exterior and roof of the town houses in the community, or does it just provide liability coverage for the association. Whenever possible, I’ll request a copy of the certificate of insurance to verify what’s covered by the association policy.

If the association policy only provides general liability and related coverage for the association, I’ll quote a standard home insurance policy which provides coverage for the complete structure of the townhouse including exterior walls, roof, interior finish out and the owner’s personal property and liability. The only thing that differentiates this policy from a traditional single family is the “style” of home which is townhouse as opposed to ranch, Victorian, etc..

The location of the town house may provide a rating difference if located at the end of several homes. In other words, it’s an “exterior” versus an “interior” unit. The presence of a firewall between each home may also make a difference in the home’s insurance rate. Other items which may contribute to a lower rate is if it’s located in a gated community and is equipped with an interior sprinkler system.

If the association policy provides coverage for the townhouse’s exterior walls and roof, then a condo policy is called for. This policy type covers the finish out of the home, or sheetrock in, including the walls, flooring, cabinetry, plumbing fixtures, appliances, and personal property or contents of the homeowner.

Townhouses continue to grow their presence in north Texas, especially in the tear down and rebuild urban areas. I expect this trend to increase over the coming years as lot and home prices continue to rise in the Dallas / Fort Worth metroplex and people who prefer to live closer to work take advantage of mixed development communities. Besides, not everyone likes yard work!

Once I know the answer to what the association policy covers, I can then write the proper townhouse insurance policy. What questions, comments, or experiences do you have you’d like to share? Share them with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Do Texans Get Free Roadside Assistance and Towing!?

Posted by on May 3, 2017 in Blog | Comments Off on Do Texans Get Free Roadside Assistance and Towing!?

Do Texans Get Free Roadside Assistance and Towing!?

A couple of times a year I’m asked if it’s true Texans get free roadside assistance just for living in our glorious state. Usually the question comes from a client either because they saw it on Facebook or received an email which has been circulated (multiple times now). No, it’s not some fake news article and there really is an 800 number on the back of your Texas driver’s license stating it’s for Texas Roadside Assistance.

But like anything that sounds too good to be true, there are some things every Texan should know. So, before you cancel the roadside assistance coverage on your car insurance policy or your AAA membership, let’s address what is provided and what’s not.

Facts:

  • There is a number for Texans & it’s on the back of your driver’s license
  • The number is (800) 525-5555
  • This service was established in 1989
  • Please do not use it instead of 911, it’s not intended for that
  • The service is designed to help motorists with a legitimate need for assistance on Texas roads
  • The hotline is answered by Department of Public Safety personnel
  • Information is then passed on to the nearest police department, sheriff’s office, courtesy patrol or DPS office
  • It’s designed to respond to
    • People stranded with car problems
    • Hazardous road conditions
    • Debris on the road
    • Suspicious activity at a rest area
    • Obviously intoxicated or dangerous drivers

This is an excellent service however, there are a few things to be aware of before you use it.

  • Tow trucks are not dispatched at the expense of DPS or the Texas Highway Patrol.  If a tow truck is called, you will have to pay the bill
  • Our Texas Highway Patrol officers are not certified to repair your car nor do they carry a tool kit with them
  • For their safety and yours they do not perform repairs
  • They do not carry a gallon of gas with them to help you if you run out of gas
  • They do not perform locksmith service if you lock your keys in your car

The bottom line is if there’s a cost to be incurred, you will be responsible for paying the bill.  Me, I’m holding on to my roadside assistance plan! Have you used this service?  If so, share your experience with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Texas Condo Insurance

Posted by on May 1, 2017 in Blog | Comments Off on Texas Condo Insurance

Texas Condo Insurance

I had an interesting conversation last week with a Dallas area mortgage professional about condo insurance. He was working on his client’s loan and had several questions about coverage, which I thought would be useful in guiding a blog post for those who own, or are considering buying a condo.

Coverage: His first question was to confirm what a condo policy covers. There are two property areas most condo insurance addresses, the finish out of the condominium and the owner’s personal property.

The finish out amount should be enough to rebuild the condo if there were a total loss such as a fire. Since most condo association policies cover the physical structure, studs out and common areas, the condo owner’s policy covers the sheetrock in. This includes the sheetrock and what covers it (designs, specialty paint, paneling, etc.), electrical plugs, light fixtures, ceiling fans, cabinetry, floor coverings, and plumbing fixtures.

In addition to the condo’s finish out, the amount of personal property, or contents, coverage should be enough to replace everything the owner moves into their home. This includes furniture, electronics, clothing, dishes, appliances, etc.

There is one exception to this. I work with a couple of small associations whose policy covers the entire building including the condo finish out. In this case, the only property the owner needs to cover is their personal property as the association covers the entire physical structure.

Coverage Itemization: Some insurance companies show a single number for both the finish out, or replacement cost of the home, and the owner’s personal property. Other companies show these amounts separately. Whenever I work with a mortgage professional, I confirm how these are represented and when combined, how much is earmarked for the home and how much for the owner’s personal property.

Claims: The condo my friend was working on, had a claim against the association, so he wanted to know if this would impact his client’s rate. Whether it impacts the buyer’s rate is largely up to each insurance company, however, most of the ones I work with are only concerned about claims specific to the condo the owner is buying or owns. Those may or may not impact the rate as most companies only concern themselves with the buyer’s claims if this is a new purchase, or the owner’s prior claims if they are considering moving insurance to one of my carriers.

Optional Coverage: Lastly, the mortgage loan originator was curious about optional coverage the buyer was examining. Like most home insurance policies, condo insurance comes with a variety of optional coverage including personal liability, medical coverage for people who visit, water options, glass coverage, and much more. The one option I always recommend is loss assessment coverage which protects the owner against an association assessment for a major claim such as a fire or large hail claim. This option is very nice and protects the owner against having a major outlay of cash to satisfy an assessment.

I love good questions and a fun discussion about insurance. Our discussion helped the loan officer better understand the policy his buyer has chosen and that it meets their underwriting guidelines. What questions do you have? Share your questions, comments, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Teens, Car Insurance, and Two Questions

Posted by on Apr 26, 2017 in Blog | Comments Off on Teens, Car Insurance, and Two Questions

Teens, Car Insurance, and Two Questions

I’ve talked with two clients in the past week. Both are parents of teens who are about to start driving. One client has a teen son that’s about to get their learner’s permit while the other has a son who’s about to get their license. Both had two questions related to their car insurance.

The two questions I’m most frequently asked when it comes to teens who are about to get their permit or license is when they should add their teen driver to their car insurance policy and does it make a difference to the insurance rate if their child takes a parent led driver’s training course or an instructor in a driving school?

When to add a teen driver is dependent on the car insurance company and how they approach this. Companies usually falls into one of two approaches:

  • Some want the teen driver listed on the policy when they receive their learner’s permit.
  • Other companies wait to add the driver when they obtain their driver’s license.

In the first case, listing a teen driver with a permit does not impact the insurance rate, it simply is an acknowledgement there is another “driver” within the household. In this case, the teen with a learner’s permit is listed but not rated.  The rate changes only when the teen driver receives their driver’s license whether it’s when they turn 16 or at a later age.

For car insurance companies in the second group, since they do not require a permitted driver be listed, we only add them to the policy when they receive their driver’s license.  The rate is adjusted at that time to account for the new driver and the risk they represent.

In both cases, there is no set time between when a driver receives their permit or is awarded their driver’s license.  Teen drivers are only rated when they become licensed, not when they turn 16 or some other age.  That is up to the parent and the teen, not the insurance company.

Regarding my client’s second question, does the type of driver’s training class make a difference to their future rate?  The answer is, no. No insurance company I work with makes a distinction between a parent led or instructor led course.  In both cases, the student driver is awarded a certificate upon completion of the course and that’s worth a discount on the car insurance rate.  The only question is which class option is best for the emotional and relational health of both the parent and the teen!

Do you have a question or experience you’d like to share?  Share them with me on my Facebook, Google +, and LinkedIn pages!  I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Home Insurance and Federal Pacific Electric Panels

Posted by on Apr 24, 2017 in Blog | Comments Off on Home Insurance and Federal Pacific Electric Panels

Home Insurance and Federal Pacific Electric Panels

I reviewed Sheri’s and my home insurance in March. It had gone up again and we’d been with the same company for several years, so it was time. I was very pleased with the rates I found with a couple of my other carriers and decided to call the underwriter to discuss our home since it was built in the mid 1950’s. She told me it would require an interior inspection, in addition to the exterior inspection. I was curious what they’d review and the criteria they’d use to determine whether to write my home insurance or cancel it. What I found out caused me to go to the next option on my list!

The interior inspection would cover several items including whether the electrical, plumbing, and heating and air conditioning systems were up to code and if they’d been updated since the home was built. They would also see if the electrical panel had circuit breakers or fuses and if it is a Federal Pacific panel. We’d replaced the interior and exterior HVAC system in 2016, the water heater in 2009 or 2010 and both were up to code. The one strike against us is we have a Federal Pacific panel and that would cause us to be declined.

I’d been asked by a realtor several years ago about whether a home insurance company would write a policy on a home with a Federal Pacific electrical panel before. Based on my research at the time, the company I was with would and I was not aware of any insurance company that wouldn’t. I’ve not run into any home insurance company since then who will decline a home insurance policy due to the presence of a Federal Pacific electrical panel until a few weeks ago.

Federal Pacific electrical panels were widely installed in millions of homes nationwide from 1950 until 1990. Many people and safety experts believe they are the cause of to 2,000 to 3,000 home fires annually. These fires occur when a circuit becomes overloaded, overheats and fail to “trip” or switch into the off position. A properly working circuit breaker will trip into the off position in no more than two minutes when overloaded. The Federal Pacific circuit breakers weren’t tripping and were believed to cause home fires.

The Consumer Product Safety Commission closed its investigation on Federal Pacific panels in 1983, as they didn’t find a serious risk of danger to consumers based on data at the time. The company, Federal Pacific Electrical Company sold the company’s assets to Challenger Electric which have been subsequently resold several times since then with no one having any ties to the original FPE panel makers.

In most cases, this still isn’t an underwriting question most agents are asking. Most home insurance companies do not specifically exclude coverage for a home with a Federal Pacific electrical panel. I considered having our panel replaced, however the average cost is about $2,000 meaning it will be done either later this year or next year. What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Car Insurance, Rental Cars, and International Travel

Posted by on Apr 19, 2017 in Blog | Comments Off on Car Insurance, Rental Cars, and International Travel

Car Insurance, Rental Cars, and International Travel

A client called me last week to discuss a question about her car insurance. She’s taking a vacation with two friends in May and will head for Europe for a couple of weeks. They’ll travel through Italy, France, head up to Switzerland, and then back to Italy before returning home. They will rent a car for part of the trip and she wanted to know if her car insurance covers a rental car in Europe.

The answers range from absolutely not to absolutely yes.

  • Domestic Only: Most car insurance companies provide coverage anywhere in the United States and will extend coverage to rental cars. There are few who don’t so always confirm.
  • US & Canada: Many companies will cover your car and a rental car if traveling anywhere in the US and even in Canada.
  • US Territories: Some companies extend coverage to US territories such as Puerto Rico, Guam, the US Virgin Islands and American Somoa, however, confirm before you go.
  • Mexico: Car insurance if you’re driving across our southern border is limited at best. Many exclude coverage in Mexico while others provide limited coverage which means the first two to five miles. If you’re traveling to Mexico, Central America, or even further south, I recommend buying the local insurance.
  • Europe & Asia: A few carriers extend coverage when traveling to Europe or other western countries such as Japan, Australia, etc. Some may have restrictions by country or coverage while others don’t. MetLife extends coverage for both property damage and personal liability. Safeco requires a specific car insurance package to provide property damage coverage and an umbrella policy to cover personal liability.

Regardless of where you’re traveling, confirm with your agent what coverage is provided by your policy and what limitations you may have. Here are a couple of considerations:

  • Confirm you have enough property damage coverage in the liability and uninsured motorist limits to pay for a new car especially a high-end car.
  • You’ll need to carry both collision and comprehensive deductibles to fully protect you in an accident claim when renting a car. If you don’t carry comprehensive or collision coverage, add it to your policy for the duration of the trip or buy it from the car rental company.
  • If you don’t want an international claim to follow you home and impact your rates, buy the car insurance from the rental or travel company.
  • If you’re traveling to multiple countries, such as in Europe, confirm if the insurance applies to each country you’re visiting.

In the case of my client, I quoted the coverage she needs to be fully covered while driving a rental car in Europe. The cost is about is about $220 a year. She is then able to compare this with the cost of purchasing rental car insurance through Orbitz to see which provides the better value. Where are you traveling this summer? Share your travel plans, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Home Insurance and Roof Depreciation Schedules

Posted by on Apr 17, 2017 in Blog | Comments Off on Home Insurance and Roof Depreciation Schedules

Home Insurance and Roof Depreciation Schedules

I sat in a meeting with one of our carriers last week and heard an interesting statistic. On average, insurance companies who wrote Texas home policies in 2016 paid $1.30 out in storm related claims last year for every $1.00 of premium they received. That doesn’t include non-storm related claims such as fire, theft, water damage, etc. The issue facing all home insurance companies is how to remain profitable without raising rates astronomically. One method carriers are examining is roof depreciation schedules.

Most home insurance companies will write either a replacement cost policy or an actual cash value policy (see http://wiseinsurancegroup.com/home-insurance-replacement-cost-actual-cash-value/). If the roof needs to be replaced due to hail or wind damage, a replacement cost policy pays the amount it costs to replace the roof with a new one of the same quality less the wind / hail deductible. For example, a $200,000 home with a 1% wind / hail deductible ($2,000) and costs $10,000 to replace, will pay $8,000 to replace the roof with comparable grade shingles.

Actual cash value policies, on the other hand, pay the depreciated value of the roof less the wind / hail deductible. For instance, a 10 year old roof covered in 20 year shingles will be depreciated by at least 50% if it’s in excellent shape. If the cost is still $10,000 to replace the roof as in the above example, the total amount paid for the claim will be $3,000 ($10,000 less 50% depreciation less 1% deductible). The issue with actual cash value policies, aside from the lower claim amount paid, is there’s too much wiggle room when determining the depreciated value.

To reduce the amount of interpretation and provide a better client experience, a couple of companies have implemented or are considering implementing roof depreciation schedules. For instance, a brand-new composition shingle roof may depreciate at a published rate of 2% to 3% per year until it reaches a certain minimum amount, say 25%. Slate, tile, and metal roofs would have their own depreciation schedules. This enables the client to know if they don’t have a hail claim until 10 years from now, the claim amount paid will be some value between 70% and 90% depending on roof material.

Insurance companies believe providing a written depreciation schedule prior to writing a policy enables clients to know the risk up front and make the right decision for themselves. In some cases, home insurance companies may provide a discount for accepting a roof depreciation schedule and charge more for a replacement cost coverage on the roof. Other companies may adopt this approach as their primary offering on all home policies and not offer a replacement cost option at all.

Would you pick this type of coverage or elect to pay more for replacement cost coverage on your roof? Share your thoughts and questions on roof depreciation schedules with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

What Does Your Car Insurance Cover?

Posted by on Apr 12, 2017 in Blog | Comments Off on What Does Your Car Insurance Cover?

What Does Your Car Insurance Cover?

I am working with a prospective client on their car insurance. I realized he’d never had a good explanation on car insurance once we began to review the quote together. I suggested we start over so I could explain each coverage and answer his questions. Unfortunately, I’ve found most people have never received a good explanation on car insurance, what it covers, and options worth considering, so I thought I’d write about that in this post.

Liability Coverage: This coverage, also referred to as Bodily Injury Property Damage (or BIPD), pays when you hit another car, person, or object and are at fault. The bodily injury portion is designed to cover an injured person’s medical bills and the property damage is there to repair the other person’s vehicle or whatever you hit. This is the only coverage required on a Texas car insurance policy.

The limits may be expressed in one number or with three numbers. People with one number usually have combined single limit coverage ranging from $100,000 to $500,000. If your limits are expressed with three numbers, then you have split limits which can range from the Texas minimum of 30/60/25 all the way up to 500/500/100. Each number represents thousands with split limits.

Uninsured Motorists: Uninsured / under insured motorist may be referred to as UM / UIM BIPD is optional coverage to protect you if someone with no car insurance or not enough car insurance hits you and it’s their fault. It can be used to cover medical expenses for you and anyone riding in the car with you, as well as to repair your car if it’s damaged. Coverage can be written as either combined single or split limits.

Medical Coverage: There are two types of optional coverage available, medical and Personal Injury Protection or PIP. Both provide medical care ranging from $2,500 to $10,000 or more, and pay on a reimbursement basis. PIP, however, can also be used to cover lost wages or hiring someone to assist with activities you’re unable to do following a car insurance accident. It can also be used by a personal injury attorney in a lawsuit.

Deductibles: Any deductible, is the amount of money the policyholder must first pay before the car insurance policy pays. The two most recognizable deductibles are comprehensive and collision. Collision pays to repair your car after an accident and comprehensive covers hail damage, falling objects such as tree limbs, fire, flood, if it’s stolen, or you hit a deer or other animal.

For you to have either coverage you must have a deductible. If the deductible isn’t listed on your policy, then you do not have that coverage. For instance, a liability only policy will not have collision coverage. Conversely, if you still are leasing or paying a loan on your vehicle, then you’ll need to have collision coverage.

Roadside Assistance: This usually covers several services including towing, changing a flat tire, unlocking a car, or providing a gallon of gas if you’ve run out of fuel. It’s an inexpensive option and worth every penny when you least expect it.

Rental Reimbursement: It’s hard to get to work or anywhere else when your car’s in the shop after an accident. Having this coverage is invaluable and lasts up to 30 days. For anything larger than a sub-compact, you’ll need at least $35 a day in any metropolitan area.

Options: Life is full of options and car insurance companies are constantly coming out with new ones. Some of the more common ones include accident forgiveness, new car replacement, GAP coverage, OEM parts, and more allowing you to tailor your policy to your specific needs.

The prospective client was pleased with our discussion, and for the first time, he felt like an informed consumer. What surprised him most, is that for a few dollars more a month, he could be fully protected rather than carrying inadequate coverage. What questions do you have? Share your questions, comments, and questions with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

Home Insurance Claims and How They are Paid

Posted by on Apr 10, 2017 in Blog | Comments Off on Home Insurance Claims and How They are Paid

Home Insurance Claims and How They are Paid

A client called me Monday morning after receiving the estimate to replace his roof from the March hail storm which struck north Texas. Before calling, he’d emailed me a copy of the claim estimate to help guide our conversation. He had a couple of questions about the estimate and payment structure, however, his biggest concern centered on one issue. If his home insurance policy is a replacement cost policy, why does the repair estimate refer to the depreciated value of his roof.

The home insurance policies I write are all replacement cost policies which means the policy is written based on what would it cost to replace your home if it were destroyed, such as by a tornado or fire. The other type of home policy is an actual cash value, or ACV, policy which pays on a depreciated basis. Replacement cost policies pay claims based on what it costs to replace a roof damaged by hail rather than its depreciated cost which is usually much less than the cost of a new roof.

Home insurance claim estimates outline the cost for materials and labor to replace the roof and then a depreciated value will be used based on the age of the roof. The reason the depreciated cost is displayed on a claim estimate is due to how the claim will be paid. Most home insurance companies have gone to dividing the payment into at least two payments. The first or initial payment is made on the depreciated value of the roof in this case which is usually enough money to order shingles and other materials needed to complete repairs for the claim and get the job started. The insurance company will make the second payment for the remaining balance, less the wind / hail deductible once the job is completed.

There are two reasons insurance companies give for making two payments. One is to protect the policyholder from being taken advantage of by a scammer who takes the money and runs. The other to cut down on the incidence of insurance fraud by policyholders. There have been too many instances where a roofing check was cashed and used for a shopping spree, to pay off debt, or something else as opposed to what it was intended for – to replace the homeowners roof.

Both checks will be made payable to the homeowner and their mortgage company, if they still have one. This is a bit of a pain as it may entail sending the endorsed check to a loan servicing branch outside of north Texas and waiting for it to be returned before the homeowner can pay the roofer. The reason insurance companies do this is because mortgage companies are an additional insured, which means they have a financial, thereby insurable, interest in the claim. They want to see the roof replaced just as much as the insurance company does.

Once I explained this to my client, he understood and appreciated he will get the full amount due as the project is completed. He’s not thrilled about having to get the checks endorsed by his mortgage company, but he is confirming with them who can sign and where the can be signed. Do you have a comment, question, or experience you’d like to share? Please share them with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group