Monthly Archives: November 2011
Rental Car Insurance: To Buy or Not to Buy?
As the holiday season approaches, millions of Americans will take to the roads to visit family and friends. Since many will make the trip in a rented car, it’s an appropriate time to discuss one of the most frequently asked questions of agents and brokers all over the country: “Should I buy the insurance from the rental car company?”
Following are a few considerations when mulling this important decision:
DAMAGE WAIVER & YOUR PERSONAL AUTO POLICY
First, the good news: In many cases, a personal auto insurance policy will cover damage to a rented vehicle. That said—don’t get too comfortable! There are other costs associated with damage to a rented vehicle that the policy will not cover. For this reason, careful consideration should be given to purchasing the damage waiver offered by the rental car company.
On your personal auto policy, “Collision” insurance covers your vehicle for damage resulting from a collision with another object. “Comprehensive” (sometimes called “Other Than Collision”) covers your vehicle for theft, vandalism, falling objects and other causes not resulting from a collision. If you have a car loan, your lender will require you to purchase both. If you pay the loan off, the choice to purchase collision or comprehensive—and both or neither—is up to you.
Your personal auto policy will only cover damage to the rental car if you have the appropriate coverage type on at least one vehicle you own. For example, if you damage the rental car in a collision, you must have “collision” coverage on at least one vehicle covered by your personal auto policy. But if the rental car is stolen, vandalized, or damaged in any way not resulting from a collision, you must have “comprehensive” coverage on at least one vehicle covered by your personal auto policy. The key point: If your personal auto policy excludes the coverage type that damages the rental car—and you reject or violate the damage waiver—you will become personally responsible for paying all costs related to the damaged rental car out of your own pocket!
In contrast, the damage waiver usually offered at the rental counter will cover the damaged rental car regardless of what’s covered by your personal auto policy.
LIMITATIONS IN YOUR PERSONAL AUTO POLICY
What else could you possibly owe the rental company following an event or crash? These include administrative fees and the depreciated value of the vehicle after repairs—neither expense is covered by your personal auto policy. In addition, most personal auto policies only pay up to the actual cash value (ACV) of the damaged vehicle. If the contract requires the damaged rental’s replacement, the ACV payout may not be sufficient to cover the entire expense.
Again, in contrast, the damage waiver will cover all such expenses.
Also, the rental contract likely will require you to pay the rental company’s “loss of use.” These are expenses they incur resulting from the inability to earn income from the damaged rental. This cost could be hundreds of dollars or more. Some personal auto policies will pay a limited amount for this expense (such as $20 per day or $600 total). Others will not cover it at all.
In contrast, the damage waiver will pay the full cost of the rental company’s loss of use.
NO CLAIM NECESSARY
If something happens to the rental car, purchasing the damage waiver gives the rental agency management of the process. This will allow you to avoid filing a claim and possibly help keep the cost of your insurance from going up. It also will keep your deductible in your pocket.
LIMITATIONS IN THE DAMAGE WAIVER
Don’t forget that the rental car company’s damage waiver is a contract. It will include a list of restrictions that, if violated, may terminate the waiver and leave you personally responsible for paying the costs associated with the damaged rental car. Examples of such restrictions may include:
• Damage to rental while driven by someone not specifically named on the contract.
• Damage to rental while driven on unpaved roads.
• Damage to rental while it’s being occupied by more passengers than available seatbelts.
• Damage that occurs while pushing or towing.
This list is only a sample; the typical damage waiver may include additional restrictions.
Moreover, the car rental company’s loss damage waiver covers “diminished value,” the economic reduction in value of a repaired auto due to it having been damaged. Almost all auto policies and many credit card coverages exclude diminished value. What’s the impact to you? If you don’t take the damage waiver, you could get hit with a diminished value claim of $1,500 or more, depending on your type of damaged rental car.
DAMAGE WAIVER COVERS VEHICLE DAMAGE ONLY
Perhaps the most important fact to remember is that the damage waiver only applies to damage to the rented vehicle. It is not a substitute for liability, medical payments, uninsured motorist, personal injury protection, and any other personal auto insurance coverage.
OTHER PRODUCTS OFFERED BY RENTAL COMPANY
In addition to the damage waiver, most rental car companies offer a few optional insurance-type products. For example, some may offer a liability enhancement that gives you the option to increase the liability limits you already carry on your personal auto insurance policy. Depending on your available auto liability insurance, this option may be worth consideration.
Others may offer options such as accidental death, trip cancellation, or damaged luggage insurance during the rental period. Such options vary by company and may provide insurance dollars you cannot get elsewhere. However, they should not be purchased without first reviewing your current home, health and auto insurance policies as there may be duplication.
CONCLUSION
In light of the information above, you should seriously consider—and probably buy—the damage waiver from the rental car company. Deciding whether to purchase other products from the rental firm, however, depends largely on the insurance already available to you from other sources. For assistance in determining coverage you already have and comparing it to the rental company’s options, call Jon Jepsen at SentryWest Insurance, your Trusted Choice® independent insurance agent today.
Business Travel Note: When you rent a car on a business trip, that’s an entirely different set of decisions, so again please talk with your Trusted Choice® independent insurance agent.
RIMS Benchmark Survey: Average Renewal Premiums Are Up
Rate increases will likely be slowed by abundant capacity in the market, says Savage, but risk managers “should budget for somewhat higher insurance costs.”
Preventing Frozen Pipes
By: Alliance of Nonprofits for Insurance
Winter is fast approaching and it’s time to think about steps you can take to prevent a burst pipe. Did you know that an average claim for a burst pipe is $35,000? And that doesn’t take into account all of the variable costs of your time and resources.
When water freezes, it expands. That’s why a can of soda explodes if it’s put into a freezer to chill quickly and forgotten. It’s the same for water in a pipe. If it expands enough, the pipe will burst, causing water to escape and resulting in serious damage. An eighth-inch (three millimeter) crack in a pipe can spew up to 250 gallons of water a day. By taking a few simple precautions, you can save yourself the mess, money and aggravation that frozen pipes cause.
Before the Cold Hits
- Insulate pipes in crawl spaces and attic. These exposed pipes are most susceptible to freezing. Remember – the more insulation you use, the better protected your pipes will be.
- Seal leaks that allow cold air inside near where pipes are located. Look for air leaks around electrical wiring, dryer vents and pipes. Use caulk or insulation to keep the cold out and the heat in. With severe cold, even a tiny opening can let in enough cold air to cause a pipe to freeze.
- Disconnect garden hoses and, if practical, use an indoor valve to shut off and drain water from pipes leading to outside faucets. This reduces the chance of freezing in the short span of pipe just inside the structure.
When the Temperature Drops
- A trickle of hot and cold water might be all it takes to keep your pipes from freezing. Let warm water drip overnight, preferably from a faucet on an outside wall.
- Open cabinet doors to allow heat to get to un-insulated pipes under sinks and appliances near exterior walls.
Before you Go Away (do you shut down a program location and/or your operations?)
- Set the thermostat in the property to no lower than 55°F (12°C).
- Shut off and drain the water system. Leave a faucet open on the outside of the structure. (Be aware that if you have a fire protection sprinkler system in the structure, it will be deactivated when you shut off the water.)
If Your Pipes Freeze
Don’t take chances. If you turn on your faucets and nothing comes out, leave the faucets turned on and call a plumber. If you detect that your water pipes have frozen and burst, turn off the water at the main shut-off valve in the structure; leave the water faucets turned on. [Never try to thaw a pipe with a torch or other open flame.]
If you would like to make sure you are adequately insured for damage resulting from frozen pipes, please contact Jon Jepsen of SentryWest Insurance.
D&O Insurance: Protection from Boardroom Liability
As Thanksgiving approaches, many people will celebrate the holiday by giving back to their community. Volunteering time or services to a company or non-profit organization may be a selfless act of generosity, but these acts of goodwill can also expose volunteers to possible lawsuits if they are making decisions on behalf of the organizations or company. Fortunately, there is a way to mitigate the exposure to lawsuits and continue lending a hand.
A directors and officers (D&O) insurance policy protects directors and officers from liability risks associated with working or volunteering on the board of an organization or company. These risks can include negligent acts or omissions, antitrust violations, wrongful termination, libel and slander, and misleading statements that result in a lawsuit against the company. Whether you’re working or volunteering as a director or officer, it’s important to make sure you’re protected from these risks with a D&O policy.
Directors and officers can be sued by the company or organization they work or volunteer for or by other current or former directors and officers, employees, shareholders, investors, lenders, vendors, customers, competitors, various government officials, such as state attorney generals, the IRS and state and federal labor departments, consumer groups and numerous other third parties.
While the entities that can sue a board member are numerous, the situations in which lawsuits can be filed are limitless. Here are just a few examples of real D&O claims from the Independent Insurance Agents & Brokers of America:
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A minority shareholder in a family-owned electrical contracting business sued the two major shareholders on behalf of the company, claiming they breached their fiduciary duties. The minority shareholder claimed that the majority shareholders, by drawing excessively large salaries and bonuses, caused the company to lose money. The court ruled in favor of the majority shareholders, but the defense costs amounted to six figures.
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A mid-sized manufacturing firm hired an employee away from one of its competitors, bringing the person on as an officer. A year later, that new officer’s ex-employer sued the officer and his new firm, alleging that the officer misappropriated trade secrets and violated certain provisions of his termination agreement.
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The plaintiff filed a complaint against their competitor alleging that a former employee, now working at the competition, engaged in unauthorized use of confidential and proprietary information and committed other acts of unfair competition. As a result, the plaintiff alleged it has suffered irreparable and immediate injury. In addition, the plaintiff alleged that the defendant has possession of its confidential information and intellectual property.
There are several types of D&O insurance that can protect individuals from these situations. These coverages include corporate reimbursement coverage, which protects directors and officers of a company or organization; side-A coverage for directors and officers who are not indemnified by a firm; and entity coverage for protection against claims made against a company.
D&O policies can also be written to include coverage for employment practices liability for protection against lawsuits for wrongfully terminating an employee or sexual harassment.
Before you start working or volunteering in a director or officer capacity, you should check with the company or organization to make sure it has a D&O insurance policy in place. If you’re serving on a board and you’re unsure about whether you’re protected, Jon Jepsen at SentryWest Insurance (a Trusted Choice® independent insurance agent) can answer any questions you have about coverage and risk exposure.
Who Pays When a Tree Falls?
If a tree falls…
Find out the insurance answers to what happens when your (or your neighbor’s) tree falls.
Insurance Information Intitute’s Michael Barry interviewed by NBC: http://www.nbcnewyork.com/video/#!/news/local/Who-Pays-When-a-Tree-Falls-/132955043
