Uber, Lyft and Auto Insurance

The Zebra, an internet-based insurance agency, recently posted a fantastic article on insurance coverage and how it relates to Uber and Lyft (the article can be found here).

Everyone loves Uber, UberX, and Lyft – and why shouldn’t they? They are easy to use, affordable, and convenient. They allow their drivers to reap the monetary benefits of taxi drivers – without any of the typical costs associated with a taxi driver. It’s a classic win-win, right!?

When you talk to Uber drivers – they often speak of how they don’t have to carry a commercial insurance policy because Uber has a ‘master’ policy. Yes, Uber does carry $1 million of liability insurance (including $1 million of uninsured motorist and underinsured motorist coverage, as well as contingent comprehensive and collision coverage). However, this ONLY applies while you are transporting an Uber/Lyft customer (as your personal auto policy has an exclusion for providing coverage while transporting people for hire). What insurance applies while you are on your way to pick up a customer? The personal auto policy would be primary and the commercial policy would provide excess coverage, as The Zebra has illustrated in this fantastic graphic.

 

Lastly, most personal auto insurance carriers would cancel your personal auto policy if they knew you were hauling people around for hire on your free time. It’s an exposure that their current pricing models do not account for. As always, the insurance industry is slow to accommodate new technology and business models; however, the state of IL has recently passed a rideshare legislation with an insurance component (which we’ll dive into in a future post).

There have been no major lawsuits against any of the large rideshare companies, yet. When (not if) one happens – it’ll be interesting to see how the insurance components will handle the situation and if $1 million of coverage will be enough to cover the exposure. As Keith McCullough of Hedgeye Risk Management says, “At first risk happens slowly, then it happens all at once”.

Golf Season is here! Does my insurance provide coverage if I hit someone!?

golfSpring is upon us (finally) and that means golf season is here!  I’ve been asked by a fellow golfing companion and a club pro the following question twice in the past few weeks, so I thought it may be worthy of a short blog post.

If I hit someone or hit (and damage) their car – does my personal insurance apply or is the golf course responsible?

Fore!!  Yes, if you hit the drive – you are liable for any subsequent damage.  The golf course may get named in the lawsuit – if it reaches court – but they are not going to be liable for any resulting damage from a golf ball that you hit.  You can try and run or hide; however, you are responsible for subsequent damages.

Coverage is afforded under the personal liability portion of your homeowners policy.  Generally, no deductible applies for this coverage.  If coverage is exhausted on the homeowners insurance policy, a personal umbrella policy may apply if needed.  There is no coverage under your personal auto policy (another common misconception)!

As always, it’s best to consult with your insurance professional to discuss any potential claim or coverage scenarios.  Furthermore, a golf lesson and some practice on the driving range may be the best way to avoid this claim scenario.

Does it matter what insurance company you do business with?

As an independent agency, we have many options and companies to work with.  Ultimately, this provides a great benefit to our customers – one advisor/professional to work with who has dozens of companies to choose from to find the best coverage and rates for you.  First, the customer needs to decide what is most important to them when choosing an insurance company.  Some factors to consider are as follows:

  1. Claims Service – Yes, different companies have different levels of claim service.  Some companies make the process very easy and provide great support during the process; however, other companies pay claims begrudgingly and can make the process painful.  This is one of our highest priorities when choosing a market for you because a successful claim settlement equals a happy customer.

  2. Price – Price is a dominant force in our industry and is usually a consumer’s top concern.  Price does matter but it is important to verify that other factors are not being omitted to create a lower price – specifically coverage (amongst others).

  3. Coverage Options – Do you have a unique risk exposure? Does the company you have your insurance with offer all the coverage you need?  These are important questions to consider when electing to place business with a company.

  4. Deductible Options – Many companies are increasing home deductibles and limiting deductible options.  If the company you’re with doesn’t have a suitable deductible for you, it may be worthwhile to ask your insurance advisor to explore other options.

  5. Size & Financial Stability – As an independent agency, we represent small, local mutual companies to Fortune 100 companies.  Size does matter – to a point.  It’s important that the company you’re with has enough capital surplus to cover any catastrophic events that may occur.  Furthermore, it’s important that the company allocates enough resources to critical functions of the company (i.e. customer service/support, claims, underwriting, etc.).  With that said, bigger does not always mean better.  We represent some regional companies that are AM Best A+ rated (financially stable) and provide good service, claims service, and pricing (if not better).

As always, it’s important to discuss these factors and any other factors that may apply to you with your insurance advisor to provide the best fit for you.  Every individual and family is different and subsequently, has different needs.  As an independent insurance agency, we feel that our flexibility and options provides a massive competitive advantage and most importantly, the best options for you.

8 Things to Know About Home and Auto Insurance

Fun factHere are 8 interesting facts about home and auto insurance (courtesy of www.insurancejournal.com).

  1. New Jersey is the most expensive state for auto insurance where the average expenditure is $1,183.95.  Idaho is the least expensive with ana verage expenditure for coverage at $535.15. — Insurance Information Institute

  2. The average auto liability claim for property damage was $3,073 in 2012, while the average auto liability claim for bodily injury was $14,653.  That same year, the average collision claim was $2,950, and the average comprehensive claim was $1,585. (ISO)

  3. 25% percent of consumers rent their primary residence; however, 46% of renters remain uninsured.  (J.D. Power)

  4. In 2013, the homeowners industry will generate its first statutory underwriting profit since 2007.  The GAAP homeowners results from 2011-2013 for four of the largest homeowners insurance companies (by market share) reported an aggregate homeowners combined ratio of 79.6% for 2013.  (Fitch Ratings)

    1. It’s important to note that this may not necessarily mean a decrease in homeowners premium, but if profitability can be attained for the full-year 2014, I would expect to see property premiums decrease.

  5. The most frequent type of homeowners claims are related to wind or hail (especially in WI!); the costliest are related to fire, lightning or debris removal.  About one in 20 insured homes have a claim each year. (III/ISO)

    1. About one in 50 insured homes have a property damage claim related to wind or hail each year.

    2. About one in 65 insured homes have a property damage claim caused by water damage or freezing each year.

    3. About one in 200 insured homes have a property damage claim due to theft each year.

    4. About one in 230 insured homes have a property damage claim related to fire, lightning, or debris removal ever year. (III/ISO)

  6. One in 800 homeowners policies have a liability claim related to the cost of lawsuits for bodily injury or property damage that the policyholder or family members cause to others. (III/ISO)

  7. Dog bites account for more than one-third of all homeowners insurance liability claim dollars paid out in 2012, costing more than $489 million.  (III)

Casualty Rates Expected to Rise, per Property & Casualty 360

A recent article in the February 2013 issue of Property Casualty 360 magazine outlined projections for casualty rates for the remainder of 2013.  For those that are unaware, casualty insurance is often equated to liability insurance but is insurance not directly concerned with life, health, or property insurance.  Casualty rates climbed during the fourth quarter of 2012 and shockingly, are expected to increase during 2013.

A recent report from the brokerage, Marsh, focused on four U.S. Casualty lines of business:  General Liability, Workers’ Compensation, Auto Liability, and Umbrella/Excess Casualty.

Umbrella/Excess:

  • 56% of clients experienced increase in rates
  • 29% experienced no change in rates
  • Average increase in rate was 4.9%

General Liability:

  • 54% of clients experienced increase in rates
  • 18% experience no change in rates
  • Average rate increase was 2.1%
  • Clients with superior loss history, good loss control measures, and lower exposures were able to secure rate decreases at renewal.
  • Underwriting scrutiny continued to increase = longer processing times

Workers’ Compensation:

  • 51% of clients experienced rate increases
  • 16% experience no change in rates
  • Average rate increase was 2.9%
  • Marsh reports in its study that this line of business has been operating at a “historically unprofitable level for insurers”.  Insurers will look to become more profitable via rate increases and higher retentions
  • Employers with good loss control programs tend to be better protected from rate increases

Auto Liability:

  • Rates were stable throughout 2012; however, Q4 experienced the most clients that experienced rate increases at 47%
  • 24% experienced no change in rates
  • Insurers sought rate increases for this line; but typically agreed to on rates that were lower than the original quote

The insurance rates that have grabbed the headlines had been property rates – due to the increased weather activity, deductible requirements, and other underwriting changes by companies.  However, it’s important to note that casualty rates continue to rise – especially in workers’ compensation.  Additionally, it’s is of particular interest to note that most insurers are willing to write policies at a lower rate if the client agrees to implement loss control measures and has a favorable loss history.

It’s important to remember these studies when you are reviewing your renewal policies this coming year.  As always, if you have any questions, don’t hesitate to contact us!