The Concerned Insured: Kids Away at School

It’s a Beautiful Morning In the Insurance World

It’s Tuesday and another great question has been asked and answered by CounterPoint Insurance.  We hear this question a lot from homeowners with kids who are away at college.  As we all know kids start to acquire a lot of stuff at this age, and some it can be pretty expensive.  Under a Homeowner’s policy, personal property is covered on a replacement value basis under “Coverage C” on your policy.  This coverage level is reserved specifically for your personal

Beautiful

property (laptops, furniture, instruments, etc.).  Some of these items can be worth a lot of money, like antiques or jewelery, and homeowners will often “schedule” these items on their policy to ensure that should something happen, they will be covered in case there is a loss or a theft.

The great thing about Coverage Part C on your Homeowners policy is that your personal property is covered not only in your home, but anywhere in the world.  However, if you have your property off of the insured premises, that coverage extends only 10% of the amount you are insured for under Personal Property Coverage.  It might not seem like a lot, but take a look at your policy, and it may be more than you think.

Ask Your Insurance Questions Here!

So the question that was posed is this:

My son is away at college.  He has a lot of musical instruments and a laptop with him in his room.  If something should happen, is there coverage for a loss of his personal property under our Homeowner’s policy?

And there are two sides to this answer.  The main question is:  Is your child staying in on-campus housing?  Or are they staying in an apartment off-campus?  We’ll look at this from the last question and get to the first.

Renter’s Insurance

Kids.

If your child is staying in an apartment off campus, that usually means that they are no longer considered a “member” of the household.  They have their own place, their own rent and utilities, and so their personal property would not be covered under your Homeowner’s policy.  The way that your child could have their things covered is if they start up an individual Renter’s policy for their apartment.  These policies are relatively inexpensive and cover any personal property owned by the insured inside the walls of the apartment.

Homeowner’s Insurance

Now, if the student is staying in on-campus housing, this is where your homeowner’s policy Coverage Part C kicks in.  Although it’s only 10% of your personal property coverage, that is usually enough to cover any personal property off-premises.  It may seem that this is your answer, but there is more to it so hold onto your hats!

Often with a Homeowner’s policy, your deductible can be much higher than the value of the personal property that was stolen, destroyed, etc.  Because of this, you may end up paying out-of-pocket to replace these items.  Scheduling property on your policy can only go so far if the value of the items is less than your deductible.  But if the total of the items that have suffered a covered loss total more than your deductible, your insurance company will cover the rest.

Help Where it’s Needed

Many colleges and universities offer insurance products that are much like Renter’s policies for students staying on-campus.  These policies have low-deductible plans and can be very beneficial for this type of risk.

That just about sums it up!  It was a great question and one that we feel many homeowners with kids in college will find useful and informative.  More answers lay with your independent agent so don’t hesitate to give them a call!

The Concerned Insured: Flying Ice

We've all got questions

Always with the “what if’s.” 

We had another question from an insured recently about the determination of fault under certain circumstances.  Dave asks:

“Let’s say that I am driving on the highway on the way to work.  We’ve just had snow accumulation, followed by freezing rain the night before.  The snow that was on my car that morning had become frozen stiff and I had to break it off of my roof and windows.  Now, you are supposed to clean the top of your car off before you start driving so as not to create a hazard for other drivers.  But as I am driving, I end up behind a truck that has not cleared their roof of snow. 

Suddenly, a large sheet of the frozen snow (We’ll call it ice) flies up into the air, crashes into my windshield, cracking it, and inhibits my view.  I then veer off the road and hit a guard rail before I am able to regain control of my vehicle.  From an insurers standpoint, would the driver of the truck be at fault for the accident?  How does the insurer determine fault in this situation?”

And it’s a great question, although the answer may not be a favorite of insureds.  Usually, when determining which party is at fault in a situation where the insured hits a guard rail, the insurance company will take the stance that the driver is supposed to be in control of the vehicle at all times.  This same stance is held if you slide on ice through a stop sign or hydroplane into an object.  So when you as the driver have cause damage in these cases, you will be considered at fault for the accident.

In the case where ice from the roof of the truck flies off and hits your windshield, if you do not have a license plate number or information for the driver of that truck, the insurance company has no ground to subrogate and investigate the other party.  If the ice cracked your windshield, but you were able to obtain the information from the vehicle, then the claims adjuster would be able to factor that into the fault determination and subrogation.  But not everyone is thinking of remembering the license plate of the vehicle in front of them unless you are in New Hampshire and see one of the thousands of vanity plates that drivers have. 

Light When You Need to See

So the summary of all of this:  If you hit the guard rail and get stuck on the side of the road, the insurance company has no one to go after in regards to the flying ice.  You will be at fault for losing control of your vehicle, but there is still coverage for the damage.  Just pay your deductible and your insurance company will take care of the rest.  And if you don’t know if you have a deductible or what your deductibles are, that is when you give your agent a call and they will help to make sure you are properly insured.

We appreciate your questions so much that we want to share them with the rest of the world! Give us your questions and we’ll answer them as best we can.

Oh, and thanks for letting us use your question Dave! 

The Concerned Insured: Raise it or Risk it?

The Market Is Changing

The insurance market is constantly in a state of flux.  Risk rating goes up or down depending on how many claims are paid out, competition between rivals in the market, and changes in the environment.  To counteract premium increases to insureds, insurance companies must be prepared for the market and buyers incentives to change.  But sometimes, it’s not so easy to predict what kinds of changes are going to occur and that can leave some insurance companies frazzled, trying to keep their processes on an even keel.

The Soft Side of Insurance

Insurers describe the insurance market in two different types:  Soft markets and hard markets.  A soft market, in simpler terms, is where the number of buyers of insurance products is down, and there are many more sellers of products in the market.  There are more sellers because people are less willing to buy new products or change their current policies, and this has insurers actively looking for new business.  Competition between insurance companies tends to increase during this time which has buyers looking at more options to place their business.  Because these insurers are looking to acquire more business to drive sales, underwriters will usually accept more risks than usual and better rates.

What does this mean for the insured?  Well generally, this is good for buyers of insurance products.  Premiums are lower, and as a result, this allows insureds to have better coverage at lower prices.  Insurance companies are competing with one another to offer better rates as a buyer incentive, so insureds really benefit from a soft market.

Then Things Get Hard

Things can’t always be the best for the insured, however.  Insurance companies need to make money so that they can continue to provide valuable coverage to buyers.  When there is an influx of insurance claims paid out by many insurance companies, we start to see the market shift gears.  Underwriters start becoming more stringent with their rating policies,  and this makes it harder for previously insured risks to be available at such low prices.  This usually happens after a natural disaster that has insureds looking to their insurance companies for reimbursement. 

After a tropical storm has passed through an area and done some significant damage, people start to buy more insurance and the coverage becomes more in demand than usual.  But, because so many claims have been paid out, in order to balance things out, insurance companies become less willing to offer coverage for certain risks.  Currently insured risks come under review and are re-evaluated to meet revised standards of underwriting.  When there are more buyers in the market than sellers, this is evidence that we are experiencing a “hard market.”

What does this mean for me?  Generally when we see a hard market, premiums increase and insurance companies start to balance out to equilibrium.  They experience less losses because they are insuring less risks, and profits increase.  Then, as insurance companies yield more profits, underwriting guidelines begin to shift again, and the cycle starts to revert back to a soft market.

So Where Are We Now?

We have gone through a long period of a soft market.  But after various natural disasters and high numbers of claims being paid out, experts are starting to see a shift in the cycle.  A Hard market is in the making and it is the duty of insurance brokers (independent agents) to inform their insureds about their options as we travel into the future.  We know that it is ludicrous to believe that buyers will be willing or even able to handle an increase in their insurance policies.  But although it seems there won’t really be a choice, in reality, there is.

The choice is ultimately yours.  If a hard market really is on the way, then you can choose to wait it out and take the premium increase.  But if you cannot afford the first option then this is where a discussion with your agent comes into play.  You may not be willing to take an increase in premium, but how about an increase in risk?  Changing your deductibles or coverage may leave you susceptible to more risk, but it can help you keep insurance within your budget if things start to change and the market begins to harden.  Looking at some extra coverages and either reducing their limits or temporarily eliminating them is something that speaking to your agent about will prove beneficial, or at the very least, informative.

Don’t Be Scared.

If you feel I have thoroughly frightened you and given rise to a new worry in

A "Cat" on the Back

your life, just take a deep breath and relax.  It’s unsure when a hard market is near or far, but it’s good to be prepared.