A Parent’s Guide to Insurance for College Students

It’s that time of year again: football season, fall weather, and children leaving for college! It’s an exciting time; however, it’s important to address some insurance issues that could arise. Here are some helpful tips to discuss with your insurance professional:

Auto Insurance:

1. Will your child be taking a vehicle to college with them? If so, it’s important to let your insurance company know so they can update the garaging address for that vehicle. Since rates are dependent upon the zip code of the garaging address, you may see a slight rate change.

2. If you’re sending your child to college without a vehicle, let your insurance company know! Many companies offer discounts for students that are at least 100 miles away from home (attending school) without a vehicle. Furthermore, it’s imperative that you don’t remove your child from your auto insurance policy (even if they don’t have a vehicle at school) – they will still need coverage when they are home for the holidays (and also in the event they drive a friend’s vehicle who may not have insurance on their vehicle).

3. Lastly, many companies offer a discount for maintaining at least a ‘B’ average (whether or not they took a car to school). Just be ready to furnish a copy of their most recent report card showing their grade point average to the insurance company.

Renters Insurance:

1. Providing coverage for your children’s belongings in their dorm or at their residence at school can be a tricky task. Each company will treat this situation differently, so it’s important to discuss with your insurance professional. Typically, 10% of the ‘personal property’ limit on the parent’s home or renters insurance policy will extend to an ‘off premise’ location. However, there are sub-limits and restrictions on certain items (jewelry, computers, etc.). In some instances, this 10% extension is adequate for the student. If it’s not (or if your insurance company has other restrictions), it’s best to purchase a renters insurance policy for the student. Renters insurance policies can be purchased for about $10/month.

As exciting as the fall season can be, it’s important to take a few minutes to ensure that you and your children are covered properly. As always, please read the policy forms for exact coverage details and discuss your specific situation with your insurance professional.

7 Simple Steps to Get More Value from Your Insurance Plan:

Let’s run through seven simple, cost effective tips and tricks to getting more value from your insurance plan!

  • BUNDLE your policies with one company

I hope that the insurance commercials have convinced everyone that putting all of your personal policies with one insurance company is beneficial; however, we still see many people that are reluctant to do it for one reason or another.  99% of the time you will save money on your costs if you package the policies with one company (be sure to look at the total plan’s price – not just the price of one policy!).  Furthermore, and just as important, it provides your agent with more leverage if you ever have a claim or renewal issue when an underwriter may be considering non-renewing a policy or rating the policy in a different tier.

  • Inform your agent of any utility and (especially) roof updates!

This one is easy – let your agent know if you’ve gotten a new roof, purchased a new furnace/air conditioner, or updated your electrical panel (more applicable to older homes).  Many companies offer discounts if you’ve updated these items and all companies have now started rating for the age of your roof.  So, it’s very important – and very easy – to make sure the age of the roof is correct on your insurance policy, especially if you’ve replaced your roof in the last few years!

  • Lower your comprehensive deductible.

Yes, you read that right, lower your comprehensive deductible.  But, won’t my price go up!?  Yes; however, it’ll go up minimally.  Furthermore, most comprehensive claims (animal hit, glass damage, hail damage, vandalism, etc.) are much smaller than if you’re involved in an accident with another vehicle (which is then a collision claim).  They are also much more common – which means if you want to keep filing claims, you’ll need to keep paying your deductible!  Unless you want to self-insure any damage to your vehicle (and at that point, remove all physical damage coverage from your policy) – it makes sense to lower your comprehensive deductible.

  • Increase your liability limits! PS – buy an umbrella policy!

Wait, won’t this also increase the cost of my insurance!? Yes.  But it will provide you with additional value and coverage at an exponential rate vs. the cost.  The cost of insurance may increase a few percentage points, but you can increase your protection by a multiple of 2-3 times.  Most people think they’ll never need that much liability protection; however, if you have to carry insurance (and you do in the state of Wisconsin) – you might as well purchase enough to protect you, your family, and your assets in case you ever do hurt someone or damage their property.  And, if you really want peace of mind – for less than $10/month (or less than 3 cups of coffee at Starbucks) – you can purchase an umbrella policy!

  • Additional Expense/Rental Car

If you are in a household where there are as many drivers as there are vehicles – it’s essential that you have additional expense/rental car coverage.  Contrary to what most people think, this coverage does not provide protection if you go on vacation and rent a vehicle (that coverage is extended elsewhere in most insurance contracts).   This coverage covers the additional cost of rental/loaner vehicle that you may need while your car is being repaired after being in a covered insurance claim.  For example, I hit a deer and file a claim with my insurance company.  I bring my vehicle to the body shop and they tell me they are backed up and it’ll be 2 weeks before my car will be repaired, but they will give me a loaner while my vehicle is being repaired.  You’ll be on the hook for this cost (usually about $30-$35 per day!) unless you have additional expense/rental car coverage on your policy!

  • Pay the premium in full, if possible!

Many companies are offering SUBSTANTIAL discounts if you pay the insurance premium in full.  We have companies that are offering up to 11-12% discount for paying the premium in full.  That is a considerable savings off any expense – especially insurance expenses.  It’s always painful to pay the full amount at once, but if the company is offering a meaningful discount to do so – it often makes sense.

  • Buy TERM Life Insurance

Yes, I think everyone needs life insurance and that it is an important part of any comprehensive and inclusive risk management program.  No, I don’t think the policy that your employer is providing is sufficient protection (topic for another day).  I do believe that TERM life insurance is the best option for most individuals.  Term life insurance is the most cost effective life insurance option and is the easiest to understand (pays a death benefit if the insured dies during the term of the policy).  Whole life insurance and universal life insurance policies both have their place in some risk management programs and may be the best option for some; however, for most people – term life insurance is the way to go.  But, Chris – my whole/universal life insurance policy builds cash value!  Yes – but it’s often at a minimal rate of return.  What we recommend doing is taking the cost difference between term and the other options and investing it with a professional – like Fox River Capital – that are experts at maximizing your rate of return.

Personal Insurance 101: Actual Cash Value – what does it mean?

The insurance industry does itself no favors in terms of being clear, concise and unambiguous (contrary to what the law says).  If you’ve ever attempted to read your insurance policy forms – you know exactly what I’m talking about.  This is where soliciting the advice of an educated, insurance professional is recommended – because it’s our job to decipher it for you and explain it in an understandable way!  It also helps clients and consumers understand how  potential claims may be settled ahead of time.

Automobile insurance policies are traditionally settled on an actual cash value basis.  This is contrary to standard homeowners policies which settle damage to the building on a replacement cost  basis.  What’s the difference?  Actual cash value (commonly referred to as ACV) is calculated by determining an item’s original value and subtracting the amount of depreciation it has incurred.  Replacement cost is calculated by determining the amount necessary to replace an item with a new one.


Replacement Cost:

We’ll explain replacement cost in detail in our next blog post (I can’t hardly wait, can you!?).  However, here is a quick example:  you own a home that was built 10 years ago.  A horrific fire destroys your entire home (no one was injured!).  Your homeowners policy will provide coverage for this loss and pay to replace the damaged home with a new home (including cost of materials and cost of labor) after you pay your deductible.  The important distinction to make is that there is no reduction in the payout for depreciation.

Actual Cash Value:

You’re driving down the highway on a fall night in Wisconsin and BAM! – you hit a deer and total your 8 year old vehicle.  You consequently file a claim with the insurance company and find out that the loss is covered as long as you carry comprehensive coverage.  The insurance company will pay for the car that you have now – not the one you had 8 years ago.  They’ll take the original cost of your vehicle, subtract 8 years worth of depreciation, and provide you a check for that amount (less your deductible).  This, in its simplest form, is an example of an actual cash value loss settlement.  We’ll explain some finer details in a later post – for example, if you lease a vehicle and you owe more on the lease than what the vehicle is worth.

Congratulations!  You’re now an educated consumer! As the spring rolls on, we’ll continue to try and define many common policy terms.  As always, ‘knowledge is power’.

American Advantage Insurance named 2015 ‘GEM’ Agency

American Advantage Insurance is thrilled to announce that we have been named a 2015 ‘GEM’ Agency by IMT Insurance Company for the 2nd year in a row!   American Advantage Insurance has been recognized as one of the highest performing agencies in its six state territory (Iowa, Illinois, Minnesota, Nebraska, South Dakota, and Wisconsin).  Of the approximately 900 IMT Group agencies eligible for consideration, only 63 (7%) of the top performing agencies received the GEM distinction this year.  The IMT Group awards the GEM distinction to only those agencies that demonstrate outstanding performance in the areas of rank, growth, loss ratio, and profitability.

The IMT Group is a leading provider of personal and commercial insurance products and is headquartered out of Des Moines, IA.  American Advantage Insurance is proud of its partnership with IMT Insurance Company and looks forward to continued growth and profitability.  Congrats to all other GEM agencies!

Uber: “Criminal Enterprise” or Innovative Leader?

Uber Technologies Inc., a popular app-based transportation network, is quickly becoming one of the most controversial businesses of this decade.  Among millennials, Uber is a popular transportation mode – easier, quicker, and cheaper to use than normal taxis.  However, traditional taxi drivers, taxi cab companies, state insurance agencies and law enforcement officials are taking Uber to task.  Recently, a Philadelphia cab company called Uber a “criminal enterprise” in a lawsuit seeking to block the on-demand car service from operating in the city.

Is this a case of a traditional modeled business lashing against an innovative, disrupting company – or is there any legitimacy to the cab companies claim?

uber blog

After raising $1.2 billion last month, Uber is currently valued at $40 billion (which, hypothetically, makes it more valuable than Delta Airlines, CBS, and General Mills).  At that kind of valuation, the company will be the target of much scrutiny.  In the case in Philadelphia, cab companies are arguing that only taxis that have a certificate of public convenience and a medallion valued at $520,000 are allowed to operate in the city – which Uber does not comply with.  In other cities, there have been other disputes about insurance requirements and whether or not Uber carries adequate insurance protection.

Is this a smear campaign or are these legitimate concerns?  One thing is clear:  nothing is clear when an innovative company leveraged with investor’s capital disrupts an industry and operates prior to getting approval from regulatory agencies.  I do not know who is in the right or wrong nor whether Uber is a ‘criminal enterprise’.  We’ve written extensively about the insurance implications with ride-sharing companies previously (read here).  Regardless of how this plays out, it’ll be a fun ride.