Accident With a Borrowed
Car: Whose policy pays?
If you lend your car to a friend and your friend has an accident, it might be
your insurance that's on the hook. It all depends on the insurance company
that issued your policy. One company’s policy may state:"the insurance
follows the car"; while another company’s policy says the driver’s
insurance is the primary coverage even though you own the vehicle involved.
Let’s take a look at the two different scenarios:
If the insurance follows the car and you lend your car
to a friend, your coverage is considered the primary coverage.
If your friend has an accident, it’s your insurance that
will pay the claim. If the accident is serious enough to use
up all of your policy’s coverage, then your friend’s
coverage, which is considered secondary, might also be used.
If the insurance follows the driver, coverage is provided
the other way around. If you lend your car to a friend and they
have an accident, it’s their policy that is considered
primary coverage, meaning their insurance company will pay the
claim. In this case, your policy would be secondary and wouldn’t
pay for anything unless your friend’s policy limits were
All these rules go out the window in many cases if the person borrowing
the car happens to be a relative who resides in the same household
as the owner. You should read your policy carefully to
see what type of coverage applies to you.
Remember these two things: First, always exercise caution when it comes
to lending your car. Second, if you're ever in doubt about
whether you or another driver is covered in any given situation, please
Rental Cars: Should
you purchase rental agency coverage?
If you have collision and comprehensive ("other than collision") coverages
on your own car, you are most likely covered if you're traveling in the
United States, its territories and possessions or Canada (for example,
travel in Mexico, the Bahamas or Europe would not be covered). Most
policies (except business policies) cover any rental car that you drive
at no additional premium. Business cars frequently require an extra
premium to afford the same coverage. Give us a call before you leave
for your "fun in the sun and/or snow" to confirm your coverage.
Cellular Phone Coverage
Since many of us now have cellular telephones, we thought it might be worthwhile
to highlight a few points regarding how insurance applies to this technology:
If a cellular phone is stolen from your car (or along with your
car if it is stolen), is the phone covered by your auto insurance?
No, it is not unless the phone is permanently installed and powered by
the car's electrical system.
Is your portable cell phone covered by your homeowners or renters
Sometimes it is, but coverage is subject to the policy provisions and deductible
in your homeowners or renters policy.
Can you buy broader coverage for your portable cell phone?
Yes, most companies offer a special, broader coverage for portable cell
phones that can be added to a homeowners or renters policy. Call
us for details.
What if you lease a portable cell phone?
If you lease a phone, check with the company you lease the phone from to
see what (if any) coverage they may provide. You may then want to check
with us to compare coverages and cost.
Lease Loan Gap Coverage
If you are thinking about leasing or buying a car, you might consider adding
Lease Loan Gap (LLG) Coverage to your auto policy. LLG Coverage is
an extension of your auto's physical damage coverage.
Ordinarily, your comprehensive and collision coverages provide you with
up to the actual cash value (the vehicle's cost minus depreciation) in
the event of a total loss. When you sign a lease or loan agreement,
you may be obligating yourself for an amount higher than the vehicle's
actual cash value.
At a cost of approximately 5% of your current comprehensive and collision
premiums, LLG Coverage protects you from out-of-pocket expense when such
a "gap" occurs. Although there are some limitations, LLG Coverage
will pay up to your lease or loan amount if your car is stolen or if the
cost of repairs is greater than its salvage value. Contact our office and
we'd be happy to discuss this coverage further.
Note: Some car manufacturers may provide gap coverage as part of the lease
agreement --- check your particular contract for details.
New Car Selection: Safety Counts
The Insurance Institute for Highway Safety has published a shopping guide
for those wanting to buy a new car based upon safety features. While
the guide does provide specific car lists (from station wagons to sports
cars) it also reveals some overall safety basics to keep in mind.
Vehicle size - Quite simply, bigger means safer. According
to the shopping guide, "People in small vehicles are injured
more often and more severely than those in large vehicles." In
relation to their number on the road, small vehicles account for
more than twice as many occupant deaths as large vehicles. Small
sport utility vehicles have the highest death rates of all, in part
because of their greater involvement in fatal rollover crashes. "While
utility vehicles and passenger vans might go head-to-head in a popularity
contest, passenger vans have good on-the-road crash experience ---
similar to that of station wagons."
Air bags - Serving as a buffer between vehicle interiors and
occupants' heads and faces, air bags provide automatic protection
in frontal crashes. The Institute advises that although "the
speed and force of air bag inflation may occasionally cause minor
injuries such as abrasions, this slight risk is far outweighed by
the benefits." This type of injury can be reduced by selecting a
seat position that is not too close to the steering wheel.
Safety belts - Remember, the more comfortable the safety belt,
the more likely you are to always use it. Even though
shoulder belts allow some forward movement, automatic crash tensioners
and/or belt webbing grabbers can reduce the chance of an occupant
hitting the steering wheel or dashboard in a serious frontal crash.
Antilock brakes - Especially designed to avoid skidding and
loss of control, antilock brakes automatically pump several times
a second. Drivers need to become familiar with the difference
in braking style as antilocks require heavy braking pressure to activate
this safety feature.
Head restraints - Required in the front seats of all new passenger
vehicles, head restraints prevent occupants' heads from snapping
back in a rear-end crash. Look for a fixed head restraint or
an adjustable restraint that is designed to protect tall and short
people even in the "down" position. Avoid a poorly-designed
adjustable restraint that would only protect the shortest occupants.
Built-in child seats - Several cars and vans offer built-in
child safety seats as options.
Ohio's Graduated Driver Licensing Law
A graduated driver licensing law became effective in Ohio on July 1, 1998. Designed
to provide new drivers under age 18 with additional experience and skills
when behind the wheel of a motor vehicle, this law:
Allows 15 1/2 year-olds to obtain temporary instruction permits which
are valid for one year.
Requires a parent, guardian or licensed driving instructor
to accompany the teen driver at all times.
Requires the temporary permit to be held for a minimum of
six months before a license may be obtained.
Requires permit holders to have 50 hours of driving experience,
including 10 at night, with a parent, guardian or licensed
Also changes driver education requirements effective January
1, 1999. New drivers must have 24 hours of classroom
and 8 hours of behind-the-wheel instruction.
The Ohio Insurance Institute supports this new graduated driver licensing
system. Similar systems in other states have reduced the number of
crashes involving teens. Call our office or stop by for your free copy
of The Driving Challenge - A Guide to Ohio's Graduated Driver Licensing
Law published by the Ohio Department of Public Safety. Or for
further information call the Department directly at 1-800-462-2269.
Uninsured Motorist Coverage: Do I Really Need It? You're driving your son to soccer practice when you are rear-ended
at a stop sign. Dealing with the initial trauma of the accident
and injuries and the subsequent disruption of a period of medical
recovery and the inconvenience of car repairs is bad enough. What
if the injuries are serious? And what if the at-fault driver
has no insurance? Where do you turn?
This is where your Uninsured Motorists (UM) Coverage comes into play.
What is UM Coverage? The Ohio Insurance Institute defines
it as coverage that "pays the policyholder and passengers in his/her
car for losses sustained by reason of bodily injury ... caused by the owner
or operator of an uninsured automobile or a hit and run driver."
What is the difference between Uninsured and Underinsured Motorists
Coverage? Underinsured Motorists Coverage covers you and
passengers in your car for "losses unpaid because sufficient bodily
injury liability limits are not available from the policy of an at-fault
driver." In other words, Uninsured Motorists covers you if
the wrongdoer has no insurance while Underinsured Motorists covers
you in the event that the wrongdoer has some coverage but not enough.
Many people wonder if UM is really necessary. After all, isn't liability
insurance mandatory? How can there be any uninsured drivers out there? The
problem is not everyone obeys the law. The Office of Public Safety
for the State of Ohio recently quoted to us in a telephone interview that
7% of the drivers convicted of moving violations in a recent six-month
period were found to have no insurance. There are upwards of 11 million
automobiles registered in the State of Ohio. If even 5% of them are
uninsured, that's a frighteningly high number!
Others question the necessity of UM in light of the fact they have very
comprehensive medical coverage. In the event of an accident with
an uninsured driver, they assume their own medical coverage will fully
protect them. Yes, medical insurance would likely cover most medical
expenses. But it will not generally compensate the injured person
for lost wages, disfigurement, pain and suffering, mental anguish, and
changes in quality of life. For a person permanently disabled following
an accident, even things such as modifications to make a home and a vehicle
more accessible can cost tens of thousands of dollars. UM can compensate
the victim in these broader areas.
There are ways insurance dollars can be saved, but paring down
or going without UM is one we strongly discourage. The largest
claim in our agency history is not a huge fire loss or a big liability
settlement. It is, you guessed it, a UM claim.
Uninsured Motorist Property Damage Coverage
It is estimated that one out of every 20 motorists is driving uninsured. Although
this figure represents only 5% of today's drivers, uninsured motorists
are responsible for approximately 13% of all auto accidents. If you become
involved in an accident with an at-fault driver of an uninsured motor vehicle
there are coverage options available to ensure that you are adequately
UMBI- Uninsured Motorists Bodily Injury Coverage provides
bodily injury coverage for you and for the occupants of your vehicle. Most
policies already provide this coverage.
UMPD- Uninsured Motorists Property Damage provides coverage
for your vehicle. Vehicles without collision coverage have no protection
for damage resulting from an accident with an uninsured driver. If
the optional UMPD coverage is added to your policy and you find yourself
tangled in an accident with the at-fault driver having no insurance,
you won't be left to pay for the damage to your car out of your own
Please contact us if you want to check into how your particular company's
UMPD coverages are structured and priced.
Does windstorm include tornado?
Since the policy specifically refers to windstorm as a covered cause of
loss, some residents have wondered what exactly windstorm includes. Tornadoes,
hurricanes, high winds, thunderstorms and blizzards are all included in
the definition of windstorm. Your homeowners policy also provides
'loss of use' benefits to cover additional living expenses while repairs
are being made to your home.
Please call us with any specific questions regarding your property coverage. We
are always happy to review your current coverage needs.
Volunteer Activities: Are you covered?
You are a volunteer soccer coach, a 4-H advisor, a chamber of commerce
committee member, on the church board, or you helped raise contributions
for the last United Way campaign. Perhaps you have volunteered hundreds
of hours this year without a thought of insurance coverage. If someone
is injured, who pays for any legal action brought against you in these
volunteer activities? If you serve as a board member and are sued
for breach of duty, imprudent investments, discrimination in hiring or
wrongful termination, are you covered? To answer these questions, there
are two places to check: your home insurance and the organization's insurance. Let's
look at them:
Your homeowners insurance policy gives you liability protection for bodily
injury and property damage to others in non-business activities, like a
child who is injured when you are the volunteer soccer coach or 4-H advisor. On
the other hand, no protection is provided if your volunteer activity is
related to a business (chamber volunteer, union, trade or professional
association representative, etc.) or if you receive any compensation. Any
legal action other than bodily injury and property damage is not covered
(an exception: some homeowners policies cover personal injury --- libel,
slander, false arrest, false imprisonment, etc.).
Also check for coverage under the organization's policy. Ask the organization
leadership for proof of insurance for general liability, directors and
officers liability, and employment practices liability. Also check
to see if volunteers are covered (named as additional insureds) under those
policies. Some other potential loss situations could include:
Failure to examine documents signed
Silence with respect to improper conduct of fellow officials
Improper rejection of bids
Failure to exercise diligence in management
Incurring unnecessary expenses
Communities are fortunate to have so many volunteers donating their
time in a host of different areas. This discussion is not meant
to discourage any present or prospective volunteers. Rather,
our intent is to help individuals be well-informed, comfortable and
adequately protected when it comes to volunteering.
Earthquake, Flood and Sewer Back-up
While not wanting to dampen your anticipation of this long-awaited season,
it is a good idea to review some optional coverages you may wish to add
to your current homeowners policy. Flood insurance as well as the
sewer back-up and earthquake endorsements are worth a brief examination.
Flood- Since flood damage is excluded under your homeowners
coverage, you should be aware that flood insurance is available from
the National Flood Insurance Program. Most Ohio communities
have qualified for the program that provides coverage for surface
flooding only. Structural and contents protection are offered. A
$500 deductible applies.
Sewer Back-Up- This endorsement provides protection for direct
loss caused by water that backs up through sewers, drains or sump
pump wells. Just as flood insurance excludes coverage for sewer
back-up, this endorsement excludes any coverage for damage due to
flooding. Coverage is subject to a deductible.
Earthquake- Coverage is available with the premium determined
by the structure of your home or building. Because it will
better withstand an earthquake, a frame structure is less to insure
than a masonry one. A substantial deductible (often a percentage
of the amount of insurance that applies to the destroyed or damaged
property) is in effect.
For clarification of your current policy or information regarding the above
coverages, please contact us. We welcome the opportunity to evaluate your
present needs and to discuss possible insurance improvements for you and
Your Home Business: Know Coverage
Test your knowledge of your homeowners insurance:
Are you covered?
While caring for a child for a fee, the child is
injured in your home. The parents expect you to cover the
You replace your friend's car brakes
for a "few bucks" and the car is damaged or your friend is hurt
in some way. He expects compensation.
A friend slips on an icy walk or trips on a toy while
picking up the craft item she paid you to make. She expects
you to cover medical bills.
You use your detached garage for
a small woodworking business and the garage is damaged in a windstorm. You
want your garage rebuilt.
You do word processing for a fee from your home. Your
computer is stolen. You want it replaced.
You are a self-employed sales representative
with an office in the home. While entertaining a client
in your home, the client is injured and expects compensation.
In each situation described, the answer is probably "not covered" --- unless
you have added specific coverage to your policy for this home business. Take
away the compensation, or business aspect, and each would probably be "covered".
Situations like those described can be covered in one of three ways:
Your employer may cover it if your business is conducted on
behalf of your employer.
A business insurance policy may be purchased to cover it.
Your home insurance policy can sometimes be broadened to
If you have any concerns about a business-type activity in your home,
call us. We'll be happy to discuss it with you.
Money Saving Tips
Controlling household expenses is something we all try to do. We
want to help you reduce your home insurance costs when possible. Here
are some points to consider:
Smoke alarms. Check your policy or contact us to see that
you are receiving a discount. If you don't have alarms, get
them. Not just for the discount, but for your family's safety.
Higher deductibles. The standard deductible today is $250. If
yours is lower, you are paying an added charge. If you choose
a $500 or higher deductible, more savings are available.
Delete unneeded coverage. Review your policy. There
may be jewelry listed that has since been sold, endorsements for
businesses in the home that are no longer in operation or other unnecessary
Central station alarms. Fire and burglary alarm systems that
automatically dial a central station can provide both good security
and a significant premium savings.
Combine home and auto insurance in one company. Companies
often offer a discount on the home and auto insurance or both when
carried by the same insurer.
In addition to these money-saving tips, some companies offer discounts
if you have fire extinguishers, deadbolt locks or a loss-free record. Check
with us to see if your plan offers any of these options.
Remember, under insuring is not a recommended way to save premium
as it can lead to serious problems settling a claim. Whether it's a question
about cost or coverage, we're always willing to review any insurance concerns
with you. Please call us.
Just how broad is your insurance coverage? Will it cover sunken tractors? This
true story has occurred several times: our client parks his riding mower
on a hill, dismounts, and the tractor slips out of gear and rolls into
the pond. Covered? Only if you have an HO15 endorsement on your policy.
You don't have a riding mower or a pond you say? The HO15 endorsement
broadens a homeowners policy so that it also covers other personal property
lost due to extraordinary situations. Consider these other covered
Lost jewelry or gemstones falling out of jewelry not specifically
insured (subject to a policy dollar limit).
Loss in value when a gemstone is scratched or cracked (subject
to a policy dollar limit).
Cameras or other personal items falling overboard from a boat
or a capsized canoe.
A hot iron falling on and scorching an area rug.
A deer crashing through a sliding glass door causing extensive
damage to household contents as it struggles to deal with the
unfamiliar surroundings of a family room.
Raccoon damage (rodents and vermin are not covered).
Lost hearing aids, eyeglasses, telescopes, cameras, etc.
Spillage of paint, India ink, nail polish, acid, bleach, and
other chemicals that damage household contents.
Most home insurance policies list 17 or 18 different perils of coverage
for household contents that do not include the above or numerous
other bizarre possibilities. The H015 will cover most of these
--- subject to your policy deductible.
Be a Fraud Buster!
Fraudulent insurance claims cost us all money. Toll-free numbers are available
for reporting information concerning fraudulent insurance claims. The
caller's identity is kept confidential and an individual may talk with
a trained investigator or leave information anonymously on a telephone
Funds spent on fraud detection are a good investment. According to
the National Insurance Crime Bureau,the property/casualty industry is recovering
$3.50 for every $1.00 it invests in detecting fraud.
If you want to report insurance fraud, please call our office. You can
also contact the National Insurance Crime Bureau at the number shown below.
Be a fraud buster. We can all help fight insurance fraud.
With costs approaching and frequently exceeding $30,000 annually, this
is an area of concern to all, especially those who have been successful
in accumulating significant assets.
Extensive planning is often done to conserve these assets and protect them
from high estate taxes. It is equally important to consider the effect
a long-term stay in a nursing home can have on an estate. Death taxes
and a long-term illness can exhaust accumulated assets. To avoid
having to "spend down" assets before government programs (Medicaid) will
pay for long-term care, a long-term plan may be purchased that will provide
the dollars necessary for care. As with most types of health insurance
plans, the premium increases as we age and the risk increases. The
following chart shows representative annual premiums for $100/day, 60-day
waiting period, 5% compound inflation benefit at various ages.
Issue age 50 - $ 552/year
Issue age 55 - $ 723/year
Issue age 60 - $ 993/year
Issue age 65 - $1437/year
Issue age 70 - $2097/year
Other optional benefits such as home health care are available for
an additional premium. As in any estate planning situation,
with long-term care the earlier one starts in planning the solution,
the lower the cost.
Individuals who have been successful in accumulating an estate should be
careful in planning for estate taxes and long term care costs. We
would be happy to talk with you about the need, the benefits and the costs
as they would apply to your situation. Please give us a call.
Liability Why have it? What is it? Who needs it?
Skyrocketing court settlements and medical costs can cause uneasy feelings
about the adequacy of insurance protection. Liability insurance pays
for injuries to others due to negligent acts by you or another covered
person on your policy. Although the liability insurance provided
under a home or auto insurance policy is adequate for most situations,
in a few instances large lawsuit settlements do approach or exceed the
limits of these policies.
An umbrella liability policy is designed to give you peace of mind from
this concern. It adds one million dollars (or multiples of $1 million)
of protection to the liability limits of your home and auto insurance policy.
* Should a judgment against you exceed the limits of that policy, the umbrella
picks up the unpaid portion up to the umbrella policy limit.
Persons most likely to purchase an umbrella policy are:
"Likely "targets" for a large lawsuit--professionals, business owners,
property owners, higher income individuals, etc.
Those who want greater peace of mind knowing that their life
savings will be protected from a financially devastating lawsuit.
Coverage cost varies, but it is generally $115 to $150 per year for a $1
million limit. If you would like more information on this topic,
please call us. We will be happy to discuss it with you.
*The umbrella can also increase the liability
limit for your boat, rental property, motor home, recreational vehicle,
motorcycle, vacation home and others.