Simply Explaining Insurance

This episode covers what a collateral assignment is in regards to a life insurance policy. This is a formal agreement that comes into play when a client takes out a loan.

Some financial institutions, require a borrower to take out a life insurance policy in the amount of the loan. This secures the loan in the event of the untimely death of the borrower.

Collateral assignment is different from naming the bank as the beneficiary of the policy. Instead, collateral assignment ensures that if you die, the insurance company will use the death benefit to repay the loan. Any remaining funds will go to your named beneficiary or beneficiaries. You remain the policy owner.

If you already have a life insurance policy with a face value greater than the loan amount, you can collaterally assign that policy by requesting the paperwork from your insurer. If you don’t have a life insurance policy, or you need additional coverage, you will need to apply for life insurance and go through underwriting. Once the policy is in force, you can request collateral assignment paperwork from the insurer.

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Music by Roger Clyne and the Peacemakers

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The post Simply Explaining Insurance #115- Collateral Assignment appeared first on Dietz Agency.

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What does the term “full coverage” mean to you? It’s a term that is now creating confusion in the auto insurance industry. It used to be the simplest way to tell someone that they had liability AND coverage for their car (comprehensive and collision).

The thing is, there are more coverages on an auto policy than just liability and comp and collision. There are more optional coverages that one can select on their policy. Coverage like towing and roadside, rental reimbursement, gap coverage, uninsured and underinsured motorists, medical and more.

The term full coverage should no longer be used. It is confusing to the consumer. Some consumers believe that full coverage means they have ALL of the optional coverages. There may be a situation where an agent says that they have full coverage but it doesn’t have towing. This would create an issue when the client needs a tow and believes they have towing coverage.

Or some clients believe that full coverage means an unlimited amount of liability coverage. There is no such thing. Liability coverage has policy limits.

As a client, it is up to you to know what coverage you have and what limits you have. I would recommend reviewing your policy with your agent to clarify what your policy actually covers.

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The post Simply Explaining Insurance #114- “Full Coverage” appeared first on Dietz Agency.

The post Simply Explaining Insurance #114- “Full Coverage” appeared first on Dietz Agency.

This episode includes two of my favorite things. Insurance and math! I talk about coinsurance and what that means on a commercial property policy. This is not to be confused with coninsurance on a health insurance policy as these are different.

Coninsurance essentially is an agreement between the insured and the insurance company agreeing that the insured will cover their property or building to at least 80% (or 90% or 100%) of its value.

If it isn’t covered to at least that amount and there is a claim, the claim will pay out only a percentage of what the loss is. Let me show you an example.

Suppose that “80% coinsurance” appears in the declarations of your commercial property policy. The following example demonstrates what this means.

You own a building that will cost $1 million to replace. Because the coinsurance percentage is 80, you must insure your building for at least $800,000 (80% of $1 million) to avoid a penalty. You want to save money on insurance premiums so you insure your building for only $700,000. Your policy has a $5000 deductible.

A fire breaks out in your building and causes damage that costs $200,000 to repair. At the time of the loss, your limit of insurance was $700,000. To satisfy the 80% coinsurance requirement, you needed to purchase at least $800,000. The ratio of the amount you carried divided by the amount that was required (700,000 / 800,000) is .875. While your loss was $200,000, your insurer will pay you only $175,000 (200,000 X .875) minus the $5,000 deductible or $170,000. Your coinsurance penalty is $25,000.

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The post Simply Explaining Insurance #113- Coinsurance appeared first on Dietz Agency.

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Not the sexiest topic but an important one. This podcast is for businesses that have employees doing more than one type of job and how to properly set up your workers compensation policy as well as do the payroll audit properly.

The most important thing the business owner has to do in cases where there are multiple jobs being done is to be able to prove how much work is done in each class. And by how much work, I mean how much payroll.

For example, I insure a company and they are a residential window cleaning company. There are two class codes for this risk. One for ground floor and one for above ground floor. As you would imagine, the above-ground floor code is significantly more expensive (3x as much) as the ground floor code.

When the payroll audit comes around, the business owner needs to prove how much payroll is done per class code. The best way to do this is via your bookkeeper or accountant and it should show on their paystubs. It should segment out how much payroll is done per job.

If the business owner is unable to prove this, ALL of the payroll will go to the highest class code. This can result in a serious charge on your workers compensation policy.

The other topic this podcast covers how clerical work is defined. There are some very strict rules when it comes to this classification. It is important to know these rules and regulations to manage your policy properly. As always consult with your agent in regards to questions with setting up your policies properly.

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The post Simply Explaining Insurance #112- Workers Compensation Class codes appeared first on Dietz Agency.

The post Simply Explaining Insurance #112- Workers Compensation Class codes appeared first on Dietz Agency.

This podcast feels more like a public service announcement. I have seen some very real-world problems arise from clients not reading their mail from their insurance carriers.

I have seen clients that have been moved from one network to another with their health insurance. I have seen clients canceled because we didn’t get a proper signature. Discounts fall off all the time because we didn’t receive proof that the discount was earned in time.

Insurance companies probably send out 34% of all of the mail in the United States (I made this number up). I get it. It’s overwhelming. But we have to! The department of insurance makes us tell you about every little change. In effect, that rule has the opposite effect. By telling you everything, you don’t want to read anything.

I am here to urge you to please read your mail through. Just get the high points of the letter. You will want to know if we are canceling your insurance or taking off a discount you should have. This will save you time for sure, and possibly even $$.

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The post Simply Explaining Insurance #111- Read your mail appeared first on Dietz Agency.

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If you travel for work and need to rent a car, do you know if you are covered? Are you willing to risk a claim on your personal auto policy if you are in an accident while renting a car for work?

The rental car company does offer its coverage and it is excellent. You can purchase coverage that covers the vehicle (collision damage waiver). You can also purchase liability. You can essentially drive a car into the Pacific Ocean and walk away. There is a daily charge for these and it can add up pretty quick.

If you want to decline their coverage, there are a few checks and balances that you can do to make sure you are covered. There is a coverage called “hired auto” that is an optional coverage on a commercial general liability policy or a commercial auto policy. This will cover the liability portion when you rent a car, but not the actual car itself.

There is an additional coverage called, “hired auto physical damage” which will cover the rental car in the event of an at-fault accident. If you have both of these, you can rent a car and the proper coverage will be in place for you. The one thing that these may not cover, is the downtime the rental car company may charge while their vehicle is in the shop getting fixed.

The other thing that can help you is the credit card that you use to pay for the rental. Many credit cards offer coverage for both liability and physical damage when renting a car.

Get in and listen to the podcast.

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Music by Roger Clyne and the Peacemakers

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The post Simply Explaining Insurance #110- Renting a car for work appeared first on Dietz Agency.

The post Simply Explaining Insurance #110- Renting a car for work appeared first on Dietz Agency.

I was having a review with a client last week and he told me how many miles he had on his vehicles. My company used to care how many miles clients were driving. It hasn’t been that way in the better part of a decade now though.

Turns out, it wasn’t the best way to determine the right way to price a risk . There was no real way to prove how much people were driving without creating so much work that it became more of an impediment than an asset.

There are other companies that still use mileage as a factor. In fact, it’s making a huge comeback because now we can absolutely prove how many miles people are driving. Most companies have apps now that track everything from speed to braking to distracted driving to good ol fashioned miles.

My hunch is that in a decade, these apps or whatever iteration they will be, will be mandatory to qualify for an insurance company’s best rate. We will have your specific driving habits handed right to us and will be able to price accordingly.

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Music by Roger Clyne and the Peacemakers

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The post Simply Explaining Insurance #109- How mileage affects rates appeared first on Dietz Agency.

The post Simply Explaining Insurance #109- How mileage affects rates appeared first on Dietz Agency.

Does your auto policy cover other drivers who aren’t listed on your policy? This is a common question in the insurance world. The short answer is, “usually”. Almost all auto insurance policies include a clause that will cover drivers that you have permitted to drive your car. This is called permissive use.

Where you might run into issues, is if someone is using your car regularly and isn’t listed on the policy. I would define regularly as more than once a month. Insurance companies need to know who is driving the cars regularly in order to determine the proper risk to charge for. Many companies even have you sign a form stating that you will be forthcoming on who is driving regularly.

If someone is driving your car regularly and isn’t listed on the policy and this person is in an at-fault accident, the insurance company has the right to deny coverage for that claim.

There may not be coverage if someone is using your car WITHOUT your permission and gets into an at-fault accident. Then the driver’s insurance works as a secondary policy and would come into play.

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Music by Roger Clyne and the Peacemakers

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The post Simply Explaining Insurance #108- Permissive Use appeared first on Dietz Agency.

The post Simply Explaining Insurance #108- Permissive Use appeared first on Dietz Agency.

What is betterment when it comes to an auto insurance claim? If you are in an accident in your car and you file a claim to get it fixed, there is a chance that you will end up paying more than your deductible.

Insurance by nature isn’t to better your current situation. It is to get you back to where you were. Auto insurance policies are actual cash value policies. When it is being repaired at the shop, the parts you get put on of like kind and value. Some of the parts that get put on have to be new.

Tires are the most common thing that is subject to betterment. If your tires are 50% worn before an accident, you are going to have new tires put on if they are damaged in an accident. These new tires are putting your car in a better position than before the accident. There will be a betterment charge for this.

Other things that are subject to this are parts like, mufflers, batteries, and belts. Again, insurance isn’t to better your situation and if the vehicle is repaired and in better shape than before, you may run into a betterment charge.

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Music by Roger Clyne and the Peacemakers

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The post Simply Explaining Insurance #107- Betterment appeared first on Dietz Agency.

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What is diminshed value? Let’s say that you are in an accident in your new car. It’s a pretty good one too. The hood looks like a sound wavelength. The bumper is on the ground. It’s just a mess and you know in your heart that when you are ready to sell or trade in this car, it’s going to be worth less.

This is called diminished value due to an accident. Does insurance cover this? The simple answer is, unlikely. I am not aware of any formal coverage or endorsement that you can put on your existing auto policy to cover this. That’s not to say you can’t ask for it.

That is my only recommendation. Ask your claims adjuster for coverage because you know that the car will be worth less when you are ready to sell it or trade it in. I am aware of some cases where the adjuster added a little more to the settlement.

Now, if we are talking something a little more robust- like your Ferrari was t-boned but was still able to be fixed, then you may have a different conversation. I rarely suggest getting a lawyer involved. If you think you are getting a raw deal because your $150,000 car is damaged and they won’t kick in for some diminished value, a consultation with a lawyer might be worth it. Remember, when you take it to this step, you have to PROVE the value is diminished with hard data and FACTS.

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Music by Roger Clyne and the Peacemakers

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The post Simply Explaining Insurance #106- Diminished Value appeared first on Dietz Agency.

The post Simply Explaining Insurance #106- Diminished Value appeared first on Dietz Agency.