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.

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)

Snow adds to winter weather headaches for homeowners insurance

Icicles can be beautiful; however, they may also be a warning sign for ice dams.
Icicles can be beautiful; however, they may also be a warning sign for ice dams.

We are on the verge of having a record setting winter – both in terms of cold temperatures and upset residents.  As cabin fever approaches unbearable levels, I find myself saying that we are only a month or two away from spring (hopefully).

So, what does this weather have to do with homeowners insurance? Plenty.  Freezing temperatures are usually associated with freezing and cracking pipes; however, winter weather can cause other headaches as well.  

The biggest issue with snow – particularly in large amounts – is the stress it can apply to a home.  The first major risk associated with snow accumulation is the risk of the roof collapsing due to the weight of ice or snow.  It’s important to monitor the amount of snow on your roof and take preventive measures as needed.  A simple way to avoid this risk is to get the snow that has accumulated on the roof off of it.  There are many reasonably priced tools that assist this task.

A more frequent and common risk in cold weather climates are ice dams.  Ice dams form on your roof and can be cause catastrophic damage – a nightmare of any homeowner or renter.  Ice dams are caused by heat that collects in the attic and warms the roof – except for the eaves.  This causes snow to melt on the roof and freeze on the eaves. Finally, ice accumulates along the eaves, forming a dam.  Meltwater from the warm roof backs up behind the dam, under the shingles, and into the house – creating an array of damage and a potential homeowners insurance claim.  There are several precautions that can be taken to avoid ice dam formation.  First, as discussed previously, remove any accumulated snow off the roof.  Second, ensure that your home has proper insulation and venting – particularly in the attic – to avoid heat collecting in the attic.  This not only saves money on your energy bill; it also prevents potential homeowners insurance claims.  Lastly, keep an eye out for icicles hanging from your roof – it’s a sign that you may have ice dams.

Every homeowner’s insurance policy is slightly different so it is important to review your policies with your insurance adviser.  This should be done at least once per year.  It’s important to review coverage, deductibles, and discuss any potentially hazardous situations your property may present (and solutions for these hazards).

Now that it is officially March and daylight savings time is upcoming – spring is right around the corner.  Until then, enjoy what winter has to offer!

Say Goodbye to 40 and 60 watt bulbs in 2014

As of January 1, 2014, it will be ‘lights-out’ for forty watt and 60 watt light bulbs. It is now illegal to either manufacture or import these light bulbs – which are still common in many households. Per the article cited below, about 50% of households still use these old-fashioned light bulbs. Retailers will be allowed to sell their remaining stock; however, once they are gone – they will be gone for good. Beginning in 2012, 100 watt light bulbs were phased out and seventy-five watt light bulbs followed in 2013.

The mandate is a byproduct of the Energy and Independence Security Act, signed by President Bush in 2007. These old, incandescent light bulbs are highly inefficient – only about 10% of their energy is converted to light, the rest being lost as heat.

Once the nation’s four billion light sockets are replaced with higher efficiency light bulbs, a mere $13 billion will be saved by consumers and thirty large coal-burning power plants worth of electricity per year. How much money does this save you? For every incandescent light bulb that is replaced with a CFL (compact fluorescent light), you will save about $50 per bulb over their expected life. Although LED light bulbs are pricier with their up-front costs ($10 per bulb for their 60-watt equivalent), consumers are expected to save between $100 and $150.

To avoid common complaints from many individuals who have already converted, follow these helpful tips:

  • Don’t inadvertently buy a bulb that’s too bright. New bulbs are measured in lumens, not watts, which can be confusing. A 10-watt LED is as bright as a 60-watt incandescent, so if you purchase a 19-watt LED for a small accent light, it will seem glaring. The NRDC has a useful chart showing the light equivalences of various bulbs.
  • Choose different types of bulbs for different purposes. Meeker uses LEDs and CFLs to light hallways, stairwells, and basements, and for spotlighting objects. For living spaces, he prefers halogen incandescent bulbs. He says they are a great substitute for the old bulbs, especially if you use them on a dimmer.
  • If you want to use CFLs, choose the right color. Most people prefer the ones labeled “warm.” The bulbs that are labeled “daylight” are bluish.
  • Bring the bulb you want to replace to the store so you can find an equivalent that is the correct size and shape.
  • The new bulbs don’t work in recessed can lighting. You will still need to buy reflector bulbs, which are not subject to the same regulations.
  • If you have dimmers, chose a halogen incandescent bulb or LED. Most CFLs do not work with dimmer sockets.

While change is always tough – this one has all the properties of a win-win situation: consumers save money on their electricity bills and each household becomes less energy dependent. As always, knowledge is power and these helpful hints should make this transition as seamless as possible.

Information Courtesy of the following article: http://shine.yahoo.com/at-home/60-40-watt-bulbs-banned-2014-know-211800860.html