FAQs
General Insurance
Lloyd’s associations are insurance companies where the manager who makes the decisions for the firm also has his/her own personal wealth at stake in the firm. Blue Cross/Blue Shield insurers are typically nonprofit (some may now be for-profit), community-oriented health insurance providers. Blue Cross/Blue Shield companies typically offer traditional indemnity health insurance. HMOs or Health Maintenance Organizations are companies that provide comprehensive health care coverage to their customers. HMOs, in their simplest form, provide prepaid health care coverage. Once you pay your premium you can use the services of the HMO at little or no further cost to you.
Independent agents have the freedom to shop your insurance for you with multiple insurance companies. The reason some companies have paid employee agents is obvious. The exclusive agent companies do not want their agents to be able to compare their policies with other insurance companies. Also since independent agents are not employees of the company, they have the freedom to offer more objective claims advice and more personal claims service. Many exclusive agent companies require their policyholders to call an 800 number rather than call their agent. Once this number is called, the potential claim goes on a claim record whether or not it is covered by the policy. The personal, customized service provided by independent agents has stood the test of time as the number of independent agencies has grown dramatically in the 21st century.
In order to make this kind of informed purchasing decision, a number of private organizations, called rating agencies, rate the financial stability of insurance companies. Major insurance rating agencies include the A.M. Best Company, Standard & Poor’s, Weiss Research, Duff and Phelps, and Moody’s. Each of these companies uses data obtained from various sources to rate the financial strength of insurance companies. It should be noted, however, that each organization has its own rating standards and therefore the financial grades from two different rating agencies may be different. The best advice usually given to insureds is to check the financial rating of the insurer from as many rating agencies as possible to determine the range of opinions of the financial health of the company.
All of this information will be used for two purposes. First, based upon the responses to these questions, the insurance company will decide whether the profile of the applicant is consistent with the type of risks the insurer is trying to attract. Some insurers specialize in offering insurance to only very safe drivers and therefore will only accept applications from people who fit the profile of a safe driver. Second, once the insurer has decided that your risk profile is consistent with the types of risks it accepts, the answers to the questions will be used to determine which rate to charge you. For example, the insurance company will decide whether you should be offered insurance at the high-risk driver rate or the low-risk driver rate.
Collectively, this entire process is known as the underwriting process. The primary function of the underwriting department in an insurance company is to decide whether or not to offer insurance to a person who has completed an application. If the answer is yes, then the underwriting department seeks to determine the “quality” of that risk so that the proper premium can be charged. That is, high-risk people should pay more than low-risk people.
Personal Insurance
Insurers frequently award lower rates to homeowners who guard against theft, accidents, and other losses. Companies may provide discounts on the premium for customers with multiple policies (home and auto). Here are some things you can do that generally qualify for lower premiums:
- Secure your home with dead bolts and window locks.
- Install a security system with outside signal and connection to local police.
- Install and maintain smoke detectors.
- Install a sprinkler system for fire.
- Install a fire alarm that automatically alerts the local fire department.
- Purchase your auto and home insurance from the same company.
Safety Equipment Discounts are available for safety equipment. If your boat is equipped with any of the following, check with your agent or broker to see if you qualify: GPS, Ship to Shore, VHF, Depth Sounder, Halon system, Fume detector, Alarm System Loran, and Boating Safety Courses. If you have taken the Coast Guard certification course, check with your current company as to the availability of a discount.
An auto insurance liability policy usually covers the following people:
- Named insured – the person or persons named in the policy, no matter what car they are driving.
- Spouse – even if the spouse of the named insured is not named on a policy, liability insurance almost always covers him or her, unless the couple does not live together.
- Other relative – anyone living in the household with the named insured related to the insured by blood, marriage or adoption, usually including a legal ward or foster child.
- Anyone driving the insured vehicle with permission – someone who steals the car is not covered.
Business Insurance
- bilities) to determine what you have to lose and thus need to protect. Remember, however, that liability losses resulting in judgments or out-of-court settlements generally have no respect for wealth or lack of it.
- Similar to setting liability limits based on your balance sheet, use your income statement for the same purpose. However, the same concern regarding losses vs. wealth still applies.
- Consider liability limits you can afford or with which you feel comfortable. Unfortunately, this practical approach does not provide “a quiet night’s sleep” for most business owners, especially if you realize that the next verdict could easily exceed your limits several times over.
- Review all business contracts you have signed, including premises and/or equipment leases, etc. for their specific liability limit requirements – most contracts will have them! This may determine at least the minimum liability limits you should carry just to comply with the contract provisions.
- Consider what level of liability protection is being carried by other area businesses and competitors similar to yours. While we cannot disclose confidential client information, our agency is a good source of general information of this nature because of the number and cross-section of businesses we insure.
All of this causes one to ask what a business owner can do to determine proper liability limits if the techniques previously listed are filled with uncertainty. There is no one acceptable and simple method. It requires an examination of the legal climate, or perhaps various legal climates, the type of exposures presented, and all of the previously suggested parameters.
Life / Health Insurance
Before buying life insurance, you should assemble personal financial information and review your family’s needs. There are a number of factors to consider when determining how much protection you should have. These include:
- Any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes;
- Funds for a readjustment period, to finance a move or to provide time for family members to find a job; and
- Ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.
Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb is to buy life insurance that is equal to five to seven times your annual gross income.
Emergencies
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Property
- Report the loss to your insurance agent as soon as possible, providing date of loss and description.
- Take photos or videotape of the damage.
- Keep records of your expenses for emergency or temporary repairs. Separate the damaged items from the undamaged items. The insurance company adjuster will want to inspect the damaged items, so don’t dispose of them without the adjuster’s consent.
- Make a detailed list of all damaged or lost property, including when and where they were purchased. If possible, provide the original receipts for each item.
- Obtain estimates for repairs and/or replacement of the damaged or missing items. Should the loss involve theft or vandalism, contact your police department immediately.
Auto / Car
- When possible, report the accident to the presiding police department and forward a copy of the report to your agent.
- Contact your agent, providing date of accident and details surrounding the incident. Obtain a written estimate for damages from the body shop of your choice.
- You will be contacted by your insurance company to make arrangements for an inspection of your vehicle. No repairs should be made without the insurance company’s authorization.
General Liability
- Contact your agent, providing date, time, description of incident, names and addresses of all injured parties and/or owners of property damage. Also provide names and addresses of any witnesses.
- Should you be served with suit papers or any other legal document, forward them immediately to your agent.
Workers’ Compensation
- Provide for immediate medical services as required by workers’ compensation law.
- Contact you agent for claim reporting procedures. You will need to provide the date, address and Social Security number of the employee, nature of the injury, etc.
- Upon notification of the claim, the insurance company will contact you with further instructions.
- Note: If the claim involves a death, be sure to file OSHA reports within eight hours.
Exchange name, address, and insurance information with the driver of the other car. Record the following information: date, time, and place of accident; the name and address of the owner of the other car, if different from driver’s Social Security number and driver’s license number; names and addresses of passengers and witnesses, license number of the other car and the cars of witnesses. Report the accident to the nearest police station and file any necessary reports. Cooperate fully with the police, but do not make any admissions about your liability. Don’t sign any statements for anyone other than an authorized representative of your insurance company. Promptly report the claim to your agent. Note: If you plan to travel by car in Canada or Mexico, check with your agent for insurance requirements.