Saturday, February 17, 2007

Being an insurance customer for dummies, volume 1

On the one hand, it's insufferably pompous of me to tell people how they should buy their insurance based on the two and a half mighty weeks of experience I have being the claims representative for my agency. On the other hand, even two and a half weeks has taught me that most people don't really know what their coverage entails or how they can screw it up when push comes to shove.

So, here I go. But there's a disclaimer-- seriously, I've been doing this for two weeks. The only thing I can tell you with absolute certainty is that if you cannot sit down face to face with your agent and discuss what will happen with your coverage if you have an emergency, you need a better agent. And agents are not the companies they represent. John H. Doe Insurance Agency is probably representing one of the big national chains: know which one he represents, but know him, better. It's his office that will have to go to bat for you if there is a dispute.

Without further ado:

Headnote: your insurance carrier has certain preferred repair companies, whose work they will guarantee and who will get things done faster (because they are trusted to do estimates without an adjuster having to haul his ashes out there to look at the damaged goods) than other shops. I highly recommend using them if you don't have a strong preference not to.

1. Health Insurance:

Have it. If you need it, it will positively ruin you not to have it. If you don't, it'll be good for your blood pressure and peace of mind to know it's there.

Be aware that certain policies, such as Blue Cross', cover you up to a lifetime maximum limit (usually pretty robust, say, $5 million.) If you bill your medical care to this policy it will nickle and dime that maximum limit. For most people, this is not a problem; if you are in an accident that produces a coma and lots of need for rehab and surgery, it may dig a couple million out of that limit.

The only additional thing I know about this yet, thank goodness, is that because of the size and inertia of Blue Cross, if they pay some medical bills for you and you later recover a reimbursement for them from a legal settlement or an insurance claim against another party's carrier, it is very difficult indeed to get them to correct your limit back to what it should be. Again, usually, that is not a problem, but be aware that it can cost you lots of time if push comes to shove... so take the steps to fix it while you are hale, hearty, and unharmed.

2. Life Insurance

All I know about life insurance so far (thank goodness) is that if you ride a motorcycle and do not wear a helmet, it will become relevant. If you ride a motorcycle or work as a stunt-person or something, you may want to be sure you have a life policy. Also, if you have dependent minors or a non-working spouse.

Don't be afraid to ask your agency to take care of as much of the work as possible in getting something done on your claim, if you are a surviving beneficiary. They're there to spare you trouble, and emotional pain is trouble-- they will be generous with assistance.

3. Homeowners', Landlord Protection, and Renters' Insurance

Like car insurance, homeowners' policies (every flavor) have a deductible. This is the part of the bill that YOU end up paying when and if you have to report a claim, before the insurance will kick in a red cent. Make sure that this amount is something you can afford to pony up if something nasty happens to your domicile. If your deductible is $2500, that means that you will have to fork over that amount to fix your damages, and the insurance will pay the balance.

This is the most important thing to know about homeowners' policies: if your insurance policy pays one red cent in repairs, your premium (what you pay for the policy annually) will go up by about 33% for at least one year. So if you have a repair to make that will cost $500 to make, and your deductible is $250, you want to be sure that the rise in your premium won't cost you more than $250 (the remaining balance that insurance will cover) before you accept settlement. Here's the other boot (and it's encouraging): you can ALWAYS turn down a settlement so that your premium is not affected.

Appraisal by the adjusters and estimates by repair companies should cost you nothing. That and service are the things you get in return for paying your premiums.

Also like car insurance, if the problem from which the claim arises is from your negligence, faulty maintenance or faulty prior repair, you are NOT covered for insurance claims. The adjusters will come and inspect damages and make this determination. So make sure that you stay on top of little wear and tear issues as they come along, or they could cost you painfully somewhere down the road.

Insurance on your domicile probably covers the structure, its grounds, your stuff in the place, its fixtures, etc. If a windstorm chucks a tree branch through a French door and hits your TV, breaking it and your DVD player, and then your indoor fountain, causing it to break and spill water all over your prized Turkish rug... the door, the floor, the carpet, the DVD you can't get out of the machine, and the TV should be covered. Pretty neat, huh?

Mold is never, ever, ever, EVER covered. However, your agency will probably be able to recommend a mold remediation company, and it is a good idea for you to fix it promptly, because the damage will only increase (this will be if you are the building's owner; tenants can defer to their landlords.) This is because it's so prevalent and there was a huge class action lawsuit a few years ago in Texas and there is nowhere in the country that you will find a policy with a mold exception. None.

For water damage to be covered, the release of water has to be a "sudden and accidental discharge of water" (or hot soup, or molasses, or whatever) that does NOT result from a flood. (Flood policies are separate, as are earthquake policies where they are relevant.) Insurance will cover damages to your floors, cabinets, structures, and the contents of your property but will not cover the damage to the pipes that coughed out the water in the first place... pipes are more or less considered an alien, hostile entity that want to kill your home.

Likewise trees: if the wind blows a tree onto your building, insurance may repair your building, but not replace your tree. Tree removal is never covered. Damage caused by trees behaving normally is considered to be a maintenance issue that should have been dealt with prior to the crisis, and won't be covered.

Nuclear explosions aren't covered, but other ones are. Zombie apocalypse might be covered, unless the problem is that they vandalize things. Oh wait, no... pathogens aren't covered. So if it's a 28 Days zombie apocalypse, you might have some trouble. The point is, know which kinds of emergency and damage are exempt from coverage: read your policy and have someone at the agency sit down with you and explain it.

Commercial insurance is similar, but I am not savvy enough to know how they differ, yet.

4. Auto Insurance

A lot of what I said about homeowners' insurance pertains here. I *think* that the thing that makes your premiums go up is not the fact that you collected on a claim, here, though. I know that it involves an unsavory mix of the cars on the policy, the drivers listed for those cars (the length of time they have been driving, the tickets they have received, and the accidents they have been found at fault for causing.) I think it also might involve the sacrifice of a virgin brown goat and a lot of chanting. It's tricky, and I don't know the voodoo yet (and it'll be a long time before I do.) The person who calculates it for you at your agency should be able to sit down with you and explain where the charges come from, and should be able to spin it so that it's the best it can be, so long as you have multiple drivers and cars (put the lousier drivers with the lousier cars, and the cost goes down.)

DO look into making sure you have rental car coverage on your policy: that will cover the rental of a replacement vehicle for a while during the repair or replacement of your own vehicle. If you don't explicitly add it, it won't be there.

A word: cars depreciate. Adjusters estimate the lifespan of your kind of vehicle (there's a list somewhere) and knock off value for the vehicle accordingly. So if you have a $20,000 car that is expected to last 10 years under normal circumstances, its value drops by $2000 per year. Ouch. ADDITIONALLY, if your maintenance or wear and tear on a vehicle is heavy, the adjuster will deduct from the car's value, too: if your sheet metal is rusty and your engine is filthy, expect your car to be worth bupkis. I think mileage counts toward wear and tear, but I'm not sure.

The insurance company that covers an accident is the one that works for the person who caused the accident. However, the other guy's insurance can really drag its feet. If this happens, you can elect to cover the damages on your own side with YOUR insurance and then have the other guy's insurance policy pay back your own: this is called subrogation. Be aware that you can request this if you are not having things fixed in a timely fashion.

Know what your deductibles are and be sure you can afford to cover them (it's a balancing act: premium vs. emergency funding). Here are things that your deductible varies for:

Comprehensive: this insurance covers material damages to your vehicle and property in it if there is no other driver involved in the loss. In the event that it is stolen, vandalized (broken windows, stolen stereo*), you need a tow or a locksmith, a tree smashes your roof in, someone steals your CDs and cell phone, rats chew through your wiring (it's happened!), your air conditioning breaks (and is both unwarranteed and not due to an accident), if you hit a deer or a bird or rock breaks your windshield, etc, this covers you. Your comprehensive deductible is what you have to cough up to get these things fixed, while your insurance company picks up the rest of the tab; a low deductible means a more expensive premium, but it may be painful if you have a tree kill your car. Comprehensive is generally optional unless you have a lienholder on that vehicle (i.e. you are still paying on it.)

Glass: if you have a high comprehensive deductible, it is possible that you will have a glass deductible buyback program available for a few extra dollars a month: if you choose this option, it will lower your deductible for the purposes of replacing glass only.

Collision: this insurance covers material damages to your car if you are at fault in an accident. Without it, if you cause an accident and your car is totalled, as the person training me puts it, it is just "too bad, so sad." If someone runs into your car while it is parked and drives off, this is what covers you, too. You can gauge how much you want this. Collision is generally optional unless you have a lienholder on the vehicle (whom you are still paying.)

Personal Liability: This is the insurance that is pretty much required. It covers the other motorist's vehicle, and medical damages for people in both vehicles, in the event that you cause an accident.

Uninsured Motorist: This goes along with Personal Liability, I think. What it covers is YOUR vehicle if the accident is caused by another driver who is not insured. If you don't have comp and collision and you get hit by someone, pray that they are not insured: not only will your car get fixed by your own insurance, but they will waive the deductible. That's right: if the other party is not insured and causes the accident, you will not have to pay your deductible. Bonanza!


Discounts: you may apply for a discount for auto insurance based on your profession. I don't know why they picked the ones they did, as it seems odd to me, but it cannot hurt you to ask if you qualify. Good students qualify, too. If you DO manage to get one of these discounts and then you change profession, for heaven's sake, do not tell your insurance providers. :) They range from 5% to something like 15%. If you're a hard scientist (NOT an archaeologist, you filthy bastard!) or an accountant, well, come on down!

Safety feature discounts: if your car has features that help it avoid damages, you get a discount for each of them. Front/side/curtain airbags, 4 wheel drive I-think-they're-called-ABS-systems, On-Star, etc. Be sure to bring it up if your agent doesn't and see what you've got-- it can matter!

Exceptions: you can add extra insurance to a policy by adding an exception. If there's something special or nonstandard about your vehicle, ask how to provide insurance to protect it. If you have a sweet set of subwoofers worth $2000 in your trunk and they get stolen, they will NOT be covered unless you have this kind of coverage. It's happened on my watch already. :( I don't know if your Billy Bass Art Car qualifies, but I bet it does.

Lawsuits: THIS IS IMPORTANT. If you begin a lawsuit, or the other party begins a lawsuit, while there is any insurance claim open that is relevant to the damages your lawsuit is haggling over, it will bring your claim process to a screeching halt. By law your insurance provider cannot advise you and cannot pursue the claim. I have seen three of these, and they are heartbreaking. If you sue for whiplash and your car is totalled, make sure you are suing for the totalled auto, too; your insurance company's hands are tied regarding that accident. Better advice: wait til the insurance settles before you start your lawsuit. Turn down the settlement on the unit that you object to (medical vs. property damage, etc.) and then proceed to call a lawyer about recovering for medical damages. ALSO, and this is massively important to know: if the other party has shallow pockets, you'll end up recovering only from their insurance company... which will give you exactly what you would have had before, MINUS your own insurance company's help, and also MINUS the lawyer's cut (something like 33%). Don't shoot yourself in the foot by starting a frivolous lawsuit: make sure you have something to cry about before you cry wolf.

Haggling: You don't have to accept what they offer you. You can say, "I understand that my medical bills are only $2300, but my mom was flying down on my dime for Thanksgiving and I was unable to pick her up at the airport, hang out with her, or prepare her a Thanksgiving dinner. I should be able to recover half that airline ticket and something to compensate me for stress and suffering and for the loss of that holiday." You'll be surprised; it actually works. Expect them to lowball compensation for suffering, and reply with a slight highball-- you will settle somewhere in the middle. But be reasonable, don't annoy them and burn your bridges. You want to be able to fall back on "I have reconsidered your last offer."

Finding of Fault: Your insurance company will follow the police report for this, and there are formulas when there is no police report (i.e. the party backing up is always at fault if one car is going forward and one back; the person who hits the rear end of another car is at fault even if the driver ahead slammed on his brakes). Often, this is not fair. You might not be able to budge it, PARTICULARLY if the witnesses support the other guy or if there is a police report, but know this: you only have 30 days to object. If you don't like what they are saying, bitch about it quickly... don't stew about it for 3 years and then kick up dust.

Loss of Use: Particularly for homeowners' policies (all flavors), if you cannot live in a building, you can ask to be compensated for a move somewhere else in the same style to which you are accustomed on your insurance provider's dime. It might be 3 nights in a hotel while ServiceMasters dry out your floorboards after a toilet explodes. It might be up to a year's relocation funds when your house burns down. If you lose the use of your car, and it's the other driver's fault (or if you have rental car coverage) you will be able to rent a car -- but ONLY while the other car is in the shop -- on the insurance companies' dime.

Phew! I'm sure I forgot a lot, and I know this was a dry post. But, as Geordi LaForge says, the more you know...


Grampa said...

ABS=Anti-lock Breaking System (a safety feature which should help insurance rates)
AWD=All-Wheel Drive (a safety feature which should also help insurance rates)

king said...

As the population has gotten older, the need for health insurance has increased. Despite possible changes in the regulatory environment, healthcare is expected to continue its rapid expansion.

Jhon smith said...

really good experience...
thanks for sharing...
keep it up...

abdul said...

I always understood that insurance was protection against something that might or might not happen (e.g. fire, theft), and assurance was protection against something that was bound to happen sooner or later (e.g. death).
landlord contents insurance