He's Going Away to School

You nursed him through whooping cough, cheered at his soccer games, and cried when he graduated.  Now he is off to college even though you may not be ready.

There are so many details that need to be addressed, including insurance.  Is there coverage for his laptop and x-box?  Will he be covered if he drives his roommate’s uninsured car?  What if he burns the dorm down with a chemistry project?  Will your insurance cover him when he is away at school?

·         The Need

In addition to property coverage, the student away at school needs liability insurance to cover two basic exposures:

o   Non-owned auto

o   Personal activities

Although the student has no assets, he does have a promising future.  A judgment handed down today could hang over his head for the rest of his life

·         The Parent’s Policies

If the student gets sued for bodily injury or property damage, his parent’s insurance may apply.  The policies provide coverage as long as the student is considered a resident of the parent’s household at the time of loss.  What qualifies a person to be considered a resident of the household is not defined in the insurance policy; the insurance company will make that determination when there is a claim.  This issue has been the focus of numerous court cases; the findings of the court vary from one jurisdiction to another

·         Separate Policies

Those families who feel uncomfortable with this uncertainty, can purchase insurance in the student’s name.  A renter’s policy will provide both property coverage and liability for personal activities.  If the student has an auto policy in his own name, that policy will usually provide liability for driving non-owned autos.  Of course, the additional cost of these policies is always a consideration.

Your insurance agent will be able to advise how your insurance applies to the student away from home and the coverage options that are available.  Then you can make a decision on the steps to take to protect your student’s future.

Beware When You Rent a Car

A Michigan agent alerted me to a new problem with the rental car claim.  Budget Rental now has this clause in their rental agreement:  “If the car is damaged, you will pay our estimated repair cost, or if, in our sole discretion, we determine to sell the car in its damaged condition, you will pay the difference between the car’s retail fair market value before it was damaged and the sale proceeds”

In this case, the insured rented a Ford Freestar valued at $26,500 and brought it back damaged.  Budget sold the car at auction in its damaged condition for $11,700 and billed the renter for the difference.  The renter’s personal auto policy paid the amount it would have cost to repair the car plus loss of use for a total of $7873.  The renter was responsible for the difference:  $6926.

Does the renter have any recourse?  Not really.  He signed the contract with the rental car company; it establishes his financial obligation.  The wording of the insurance policy determines what the company will pay for the loss.  When the proceeds of the policy do not meet the obligation under the rental agreement, the renter is legally liable for the difference.  Actually, Budget has the contractual right to charge the $6926 to the renter’s credit card.  Had the renter purchased the Loss Damage Waiver (LDW) from Budget, it would have covered all of his legal obligations for the damaged vehicle.

Last week I was in Indiana and I heard a similar claim; this one was with a different rental car company.  The renter was being billed for over $3000 additional after the car had been sold in its damaged condition.

Uninsured/Underinsured Motorists Coverage

Today, many motorists drive without insurance or carry limits of liability that are grossly inadequate.  When one of these drivers causes an accident, the victims may not be compensated for their loss.  The insurance industry has developed two coverages designed to indemnify the innocent victims for the loss caused by an uninsured or underinsured driver.

The purpose of the coverages is to put the victim in the same position as if the motorist who is legally liable had bodily injury coverage sufficient to pay the damages.

Uninsured Motorist coverage provides compensation to insureds who have suffered bodily injury in an accident with an at-fault motorist does not have any bodily injury liability insurance.  The coverage also applies when the victim is injured by a hit and run vehicle or if the insurance company covering the at fault driver either denies coverage or become insolvent.  A second coverage, Underinsured Motorist coverage, is activated when the at fault driver has some coverage, but not enough to cover all the damages of the accident.

With an increasing number of uninsured and underinsured drivers on the road, the prudent person is buying limits for Uninsured and Underinsured Motorist coverage equal to the liability limits found on their auto insurance policy.  In addition, many people endorse excess limits of Uninsured and Underinsured Motorist coverage on to their Personal Umbrella Liability policy.

In a perfect world, everyone who owns or drives a car would insure it for substantial limits of liability.  In the real world, we cannot assume this is the case and today drivers need to enhance their own auto policy by adding Uninsured and Underinsured Motorist coverage.

How an Umbrella Works

Odds are you will never be sued for a million dollars.  But, what if you were?  What if your teenager caused an auto accident leaving a passenger in the other car permanently disabled?  And then what if the injured person sued you for $1 million and won.

How much liability coverage do you have under your auto policy?  Would it be enough?  If it is not enough, where would the money come from?  The fact is, you could lose everything you own and continue to pay for years to come.

The chances of this happening to you are not very great:  that is why insurance to cover the exposure is so affordable.  A Personal Umbrella liability policy can usually be obtained for less than $150 a year (Standard premium based on one home and one auto).  That same amount will only pay for the services of a good attorney for less than an hour.

A Personal Umbrella policy sits on top of other insurance that includes liability protection, such as your auto, homeowners and boat policies.  When coverage under these primary policies is not enough, the umbrella policy is triggered, spreading protection (hence the term “umbrella”).

Only you can decide how much liability coverage is right for your family.  In making that decision, you may want to know what an umbrella should cost in your particular situation.  Call your agent and get a quote.  Then you can make an informed decision.

Liability: Peace of Mind Coverage

The liability promise is the biggest commitment an insurance company can make.

“We will pay up to the limit of liability for the damages for which the insured is legally liable”

Liability coverage is designed to pay when an insured hurts someone or damages another’s property.  The “damages” referred to are those sums paid to the claimant, the person who has sustained damage.

·         A neighbor slips and falls on the ice on your sidewalk; you are liable for their damages

·         Your teenaged son loses control of your boat and collides with another; you are liable for the damages

·         Your over-active eight-year-old propels a loaded shopping cart down the aisle, hitting a little old lady and sending her flying; you are liable for the damages

In addition to paying the damages for a covered loss, your liability coverage pays for all the attorney fees and defense costs.  With most liability policies, the entire limit of liability shown on the front of the policy goes to pay damages; defense is paid in addition.  Today, the cost of defense is often more than the amount of the damages.

There are always expenses involved with a liability claim:  claims expenses, investigation expenses, and court expenses.  A liability policy will pay for these and the payment does not come out of your policy limit.

As with any insurance contract, there are exclusions in a liability policy.  Generally, liability policies do not cover intentional damage.  In addition, a homeowner’s policy does not cover any business-related claim.  An auto policy excludes coverage when carrying people or property for hire.  When buying an insurance policy that includes liability, you should always ask what is excluded.  But, despite the exclusions, the coverage provided by a liability policy is very broad.

There is liability coverage on an auto policy, a homeowner’s policy, and a recreational vehicle policy.  You can also purchase a Personal Umbrella liability policy which provides excess limits.  One of the most important insurance decisions an individual makes is the amount of liability coverage.

The liability promise is the biggest promise an insurance company can make.  It is true “peace of mind” coverage

How much is enough

With liability insurance, you are offered the opportunity to transfer a portion of the risk of being sued; only you can decide how much of that risk you should transfer.  The experts say there are four factors everyone should take into consideration when making the decision:

·         What do you have to lose?

What are you saving for?  Retirement?  College?  A dream vacation?  How would you feel about turning your savings over to a total stranger?  Would you be able to continue to save if you had to pay an uncovered judgment?

·         How likely is it to happen to you?

Some people are more likely to face a large lawsuit.  Do you have teen-aged drivers, recreational vehicles, a swimming pool or a dog?  Are you active in the community or visibly successful?  Do you coach little league or play bocce ball?  Some people have more exposures to loss than others

·         What will it cost?

Higher limits of liability are usually affordable; your agent will be able to tell you the cost of increasing the limits on your policy.  Then, call a good defense attorney and ask what he would charge to defend you if you were to be sued for more than your limits.

·         How do I feel about risk?

Cautious people transfer more risk to an insurance company; risk takers are comfortable taking their chances with lower limits.  Remember to consider the risk tolerance of your entire family.  How would the dynamics of your family change if you faced a liability claim that was only partially covered?  Would your family’s sense of security be threatened if you were sued for more than your limit?

Only you can decide how much liability is right for you.  Consider these factors, make a decision, and adjust your insurance to what you consider appropriate for your circumstance.  Remember, today you do not have to be a millionaire to be sued like one.

Firework Safety

When Things go BOOM in the Night - Fireworks Safety

For most of us, the Fourth of July is a time to enjoy the company of family and friends, having fun and creating memories - whether at home or up at the cabin.

But for some families, the holiday is a nightmare. Homes each year in Wisconsin are damaged by wayward fireworks. Thousands of people are injured in accidents.

At Mower Insurance, we want your holiday to be happy, but also safe. So here are some tips to help you protect yourself and your property on the Fourth.

Protecting yourself (and others)

·         To minimize the risk of injury, don’t use consumer fireworks. Attend a public display conducted by professionals in Chippewa Falls or elsewhere.

·         If using consumer fireworks, always follow instructions. Do not attempt to re-light “duds” or create homemade fireworks.

·         Never let children handle or light fireworks. Even sparklers, which burn at more than 1,000 degrees, can cause third-degree burns. Kids under the age of 15 account for approximately 40% of fireworks injuries, according to the U.S. Fire Administration.

·         A responsible adult should always be present when children - even teenagers - are around fireworks. More than half of fireworks injuries happen to those younger than 20 years old.

Protecting your home

·         According to the National Fire Protection Association, the best way to protect your home is to not use fireworks at home.

·         Remember, fireworks can cause grass fires and other types of blazes as well. Make sure you light fireworks in a safe area, away from homes and buildings, as well as other combustible material. Keep a fire extinguisher nearby in case of emergency.

·         Look out for tree limbs or bushes that could catch fire. Trimming vegetation to keep it away from your home is a good idea anyway, but it could save you from a catastrophic fire on the Fourth of July.

·         If your gutters have accumulated leaves, pine needles or other flammable material, clean them before using fireworks near your home.

·         Finally, if you won’t be home on the holiday, ask a neighbor to keep an eye on your house if others in your neighborhood will be using fireworks.

With some common sense and planning, the Fourth of July can be both safe and enjoyable for everyone. Whether you’re staying at home or heading up North, we hope you have a wonderful time celebrating our independence!