Category Archives: Insurance

Are you covered the car

Mobile apps have made it possible to turn your personal vehicle into a source of revenue. More drivers are relying on ride sharing apps such as UberX and car-sharing programs such as RelayRides to make a little extra cash on the side, either by chauffeuring passengers or renting by out their cars.

But when it comes to insuring a car that you’re using for moonlighting purposes, things can get tricky.

Car sharing and ride sharing have created havoc in the private auto insurance market, with some insurers and state regulators scratching their heads over who foots the bill if someone gets into an accident.

“There’s a big public policy debate on how to insure this,” Michael Barry, vice president of media relations for the nonprofit Insurance Information Institute in New York.

While both relatively new concepts in the auto insurance world, car sharing and ride sharing are two different things, and insurance experts say it’s important for consumers to understand the difference between the two.

Car sharing is the sharing of private passenger vehicles, similar to a car rental service. FlightCar, GetAround and RelayRides are a few examples.

Ride sharing connects riders with drivers who use their own cars to transport them and is analogous to a taxi service. A few of these programs are Lyft, Sidecar and UberX.

Generally, neither ride sharing nor car sharing is considered by traditional personal auto insurance rating plans. Most personal auto ratings reflect driver characteristics such as driving record and vehicle type – not whether those drivers are selling rides or renting out their cars.

Ride sharing: When does coverage kick in?

Between the two sharing services, ride sharing has sparked the most debate as far as personal auto insurance goes.

“The concern was and still is that a private passenger policy was never intended to cover someone who is engaging in a commercial enterprise,” Barry says.

The question at the center of the debate: At what point does the coverage kick in? It could be anywhere between the time when the ride-share app is first turned on – and a driver sends the signal to Uber or Lyft that he or she is available to offer rides – and when the app is turned off and the person reverts to driving passengers privately.

“The private passenger market says you’re now engaging in a commercial enterprise. You might not have someone in the car, but you’re engaging in a commercial enterprise and driving around with a passenger policy that says you can’t do that,” Barry says.

One of the more high-profile instances of the ride-share insurance gap involved a fatal accident in 2014, when 6-year-old girl who was killed by an Uber driver in San Francisco. The family’s attorney said Uber denied insurance protection that would have covered the family and the driver, and the family ultimately filed suit against both Uber and the driver.

Uber maintained that the driver was not providing services on the company’s UberX system because he did not have a passenger with him.

Is your policy hurricane proof

No one expects to have their car float away in 12 feet of floodwater and end up perched atop a tree, or pinned under a house.

But there were a lot of those kinds of insurance claims filed by Gulf Coast residents a decade ago in the wake of Hurricane Katrina.

When all was said and done, the storm resulted in $2.2 billion in auto losses, which accounted for 5.3% of the insured losses from the storm, according to an Insurance Information Institute study.

Mega storms like Katrina and Superstorm Sandy exposed the fact that many consumers are unprepared to deal with the kind of widespread damage that hurricanes and other catastrophic weather events can leave in their path.

Here are seven ways to hurricane-proof your auto policy:

1. Don’t skimp on comp.

If a majestic old oak tree falls on your car or floodwaters carry your vehicle to your neighbor’s rooftop, the only way to cover the damages is through comprehensive coverage. Collision covers you only if you hit another car or object, and liability pays for damages to another person resulting from an accident that you cause. Comprehensive coverage is what takes care of everything else – from wind and hail to riots and fires.

“If you were carrying liability-only coverage and your car got damaged or destroyed, you’re going to wish that you had full coverage under your auto policy, Amy Bach, executive director of United Policyholders, a nonprofit consumers group.

Consumers need to ask themselves whether they can afford to repair or replace their damaged car without insurance. If the answer to that is no, then they should consider buying collision and comprehensive coverage, says Lynne McChristian, Florida spokeswoman for the Insurance Information Institute. “The big advice is don’t risk a lot of your money to save a little bit,” she says.

The good news is that unlike homeowners policies, motorists don’t need to obtain any storm-specific coverage to protect their vehicles. With homeowners insurance, you have to obtain a separate policy if you want flood coverage. That’s not the case for auto.
But recognize that homeowners insurance will not cover damage to your car – even if the house itself crushes it.

2. Study up on storm coverage.

Even though you don’t need to add any kind of wind or flood coverage for your car, it’s a good idea to ask your insurer if you have the right coverage in place to protect against all of those things, Bach says.

“If they confirmed you’re adequately covered, put those notes in a safe place. If they recommend an adjustment to your coverage, then follow through,” Bach says.

If you don’t have an agent and get your insurance online, you need to do some legwork before you get a policy, especially if you’re in an at-risk area, Bruce Betzer, a New Orleans area personal injury attorney in the New Orleans area who also handles insurance claims.
“Know what you have, what kind of vehicle you have, and understand what it’s worth. Go to NADA and enter in your features. Think about where you are in life, too, Betzer says. “Do you have assets? Are you living paycheck to paycheck? If you don’t have anything to lose, get the minimal policy limits,” Betzer says.

You might also want to consider adding rental coverage to your policy. After a car is damaged, insurance companies might spend months investigating what happened. If you don’t have rental coverage on your policy, you will most likely have to go without a car. “The catch is that they don’t always pay back what you pay out,” Betzer says.

3. Be willing to pay more.

If you live in a hurricane-prone area, protecting your vehicle comes at a cost – and it’s usually a higher one. In Louisiana, rates rose steadily in the years after Hurricane Katrina. The average annual premium was $1,275 in 2012, according to the most recent figuresavailable from the National Association of Insurance Commissioners. That’s up 9% percent from $1,174 in 2003.

How to switching auto insurance companies

With so many auto insurance companies promising to save you money, it would be surprising if you weren’t tempted to look into switching auto insurance companies.

And you should, because there’s very real potential for a significant cut in your insurance premiums.

But when can you cancel your auto insurance? The good news is that you don’t necessarily have to figure out when your current policy expires and then wait for that to happen before moving to a new insurance company.

Here’s what you need to know when switching auto insurance companies.

Switching auto insurance companies? Know your policy

You can always switch insurers without a penalty if you do so when your current policy expires. If you go this route, don’t wait until the expiration date when switching auto insurance companies because you have to ensure that you maintain continuous coverage both to comply with state insurance requirements and because insurers might charge more if you have a gap in your coverage.

ALSO: 6 Tips for Keeping Your Teen Driver Safe

So shop for a new policy and then set the start date of that coverage to coincide with the expiration of the old policy. Policy documents should show the expiration date of your current policy, and the company or insurance agent can always tell you if you ask. Don’t forget to tell your current insurer not to renew your policy.

Know if there’s a penalty for canceling early

When switching auto insurance compenies, your current company will refund a prorated portion of premiums you’ve paid, although it may charge a penalty for canceling ealy. You could read your policy to find out if there’s such a penalty for switching auto insurance companies and how much it is, or just ask your company or agent.

Many insurers do not have a penalty, and, if your current carrier does, the charge may be less than the savings you’ll get from switching.

Just like when switching at the expiration of your current policy, you’ll want to make sure your new coverage kicks in at the same time as your old policy is canceled. A gap in your coverage will violate state insurance requirements and could boost your rates.

Shop around for the best auto insurance deal

Don’t just go with the company that has the most persuasive ads or that saved your friend or relative a bunch of money when switching auto insurance companies.

Each insurer weighs factors that affect auto insurance premiums differently, and there are a lot of factors, such as where you live, driving record, gender, credit history, age, whether you’re married and own your home, what kind of vehicle you drive, what you use your car for, how much you drive and how much coverage you want.

So the company that provides the lowest rates for one driver or in one place might be nowhere near the best deal for another or elsewhere.

How to switching auto insurance companies

A 29-year-old driver in Maine made headlines in August after crashing his car into a tree while attempting to take a selfie with his friends, injuring several of them.

The car was full of passengers, all in their 20s and 30s. Two of the seven passengers’ injuries were serious, and police issued a distracted driving summons to the driver.

The accident is the latest story to draw attention to a disturbing trend on the roadways: Not only are people texting while driving, but they’re also taking their eyes off the road long enough to pose for and snap selfies.

Statistics support the growth of this trend. As of late September, there were 22,067 Instagram posts under #drivingselfie. That’s nearly six times as many as there was when CNN reported on the hashtag two years earlier.

In an AT&T survey from May, close to 1 in 5 respondents (17%) admitted to taking selfies or other photos while driving. And 7 in 10 people confessed to engaging in smartphone activities behind the wheel.

“It’s a sad fact that drivers want to be doing anything but driving,” says Kara Macek, spokeswoman for the Governors Highway Safety Administration, a nonprofit that represents the state highway offices that implement programs to address behavioral highway safety issues. “There’s no way you can operate a vehicle and take a selfie at the same time. It’s impossible to do.”

How to drive from the Internet

It used to be that taking driver’s ed meant packing into a classroom full of restless teenagers and watching hours upon hours of safety films.

But these days, more driver’s education students are turning to their computers and smartphones and opting to complete their coursework from home.

An increasing number of driver’s education programs are making at least part of their coursework available online. Some are even offering courses through a mobile app.

This driver’s ed evolution has raised questions as to whether online classes are as effective as the classroom for preparing teens to get behind the wheel.

Safety experts and driver’s education providers say there are pros and cons to taking these classes online.

“It’s a double-edged sword,” says Patrick May, vice president of sales and marketing for iDriveSmart, a driver’s education program based in Rockville, Md., taught entirely by active and retired police officers. “It helps with scheduling more than anything else, and it’s an efficient way of delivering information. The potential negative is it’s not the same experience as sitting in a classroom with a live, engaged instructor having an interactive conversation.”

Austin-based startup Aceable is offering a full driver’s ed course on a mobile app. Blake Garrett, founder and CEO of Aceable, believes in the value of online classes, but with some caveats.

“Online can be equally, if not more effective than in person,” he says.

But in surveying some of the other online courses on the market, Garrett says he’s seen many programs that haven’t been revamped in awhile.

“It’s basically like a PowerPoint that has been moved online. It’s not interactive and doesn’t play into cognitive learning. So I think there are a lot of ways to improve to make it a more engaging experience,” he says.

Convenience factor

Online classes offer a lot of conveniences to students and their families. For one, online driver’s ed providers have the ability to offer lower price points than classroom courses. That can be important for families who are about to take on college tuition bills. “That lets companies like us put money into improving the programs overall,” May says.

Finding a way to fit in driver’s ed classes can be difficult for busy families. May points out that states require 15 to 30 hours of instruction to complete a driver’s education program. “That’s a large time commitment to try to set aside when kids are in school and playing sports,” he says.