Commercial Auto Policies: Hired and Non-Owned Coverage

By: William Forbes

This is a great article from ErieSense on commercial auto policies and some of the coverages they offer (link here). I wanted to specifically highlight something called "hired and non-owned" coverage.

This coverage protects you, the business owner, when your employees are driving their personal vehicles for work use. And, also, when your employees rent vehicles for business use. It provides liability coverage if you are sued following an accident.

It's important to remember that coverage is not automatically extended to an employee's personal vehicle, when he/she is driving it for work use. To get this protection, you must have hired and non-owned coverage on your business auto policy.

If you are a business owner with a commercial auto policy, talk to your agent to verify your coverages.

(Full link to article: https://www.erieinsurance.com/blog/business-auto-coverage)

Why Are Car Insurance Prices Rising?

By: William Forbes

Being an insurance agent, I get asked every day, "Why is the cost of my car insurance going up?" And, the majority of the time this question isn't even coming from one of my clients. I get asked by friends, family, my supermarket cashier...it seems to be a question on everyone's mind.

Believe it or not, there are some very specific reasons for the increased cost of auto insurance; and none of them have to do with insurance companies being out to get us (I hear this suggestion quite a bit as an agent, too).

Forbes recently published an article (link here) that does a nice job of explaining some of the reasons. As stated in the article, "the driving force in the upward march in premiums is an auto insurance industry that’s been finding it increasingly difficult to sustain healthy profit margins."

This means auto insurers are finding it difficult to make a profit off insurance premiums, when the expense of running an insurance company is considered.

The article points to a few main reasons why profits have been down for insurers:

  1. More costly accidents. Both the severity of accidents and the number of fatal car accidents have been trending upward. So, fulfilling these types of claims, particularly those that include high medical costs, is very costly.
     
  2. A decline in investment revenue. The article explains that insurance companies hold large investment portfolios, and when interest rates and investment income is lower, they can't offset losses.
     
  3. Bad weather. As comprehensive claims from bad weather (tornadoes, hail, flooding) continue to rise, so does the amount insurance companies pay out to their insureds. I would also add to this that cars are getting more expensive to repair - the cost of parts is increasing, and added technology features make what used to be simple repairs, more costly. For example, windshields now have cameras in them, and this increases the cost of replacing them.

For a deeper dive into these three points, check out the full article on Forbes.com. And, if you have questions about your policy, always feel free to contact your agent.

(Here is the full link to the article: https://www.forbes.com/sites/ccasazza/2017/05/23/why-are-car-insurance-rates-still-going-up/#3315a8cb7753)

Claims Increase the Cost of Insurance

By: William Forbes

In last week's blog, I shared a story from Crain's Chicago Business, which said State Farm has just reported its worst year ever in terms of claims reported and the amount of money it lost insuring cars. The article hit on a number of trends insurance agents are seeing across the industry - distracted driving is leading to increased claims, and the increased claims are driving the price of insurance up for all of us. Even those of us who do not report claims are feeling the effects, as insurers raise rates for everyone in an effort to maintain profitability.

And, now, on the heels of that article, NBC News 10 recently published findings from an annual study conducted by insuranceQuotes that indicates people pay more for insurance after reporting a single claim. The article says specifically, "drivers now pay an average of 44 percent more for car insurance after making a single claim of $2,000 or more." Reporting a second claim is even more costly.

I'm not writing about these articles to scare people away from reporting claims. There are times when insurance claims are necessary, and in those cases, that's why you pay for insurance. The point I would like to make, however, is that you should really have a detailed discussion with your agent before you report a claim. Having a conversation with your agent is an important part of managing your finances. The fact is, reporting claims will result in higher insurance premiums, and possible surcharges.

More broadly, the increase in claims across our state have caused insurance premiums to go up for everyone. Even if you don't report claims, your bill is being affected by these industry trends. That's why it's so important for us, as a community, to put an end to distracted, aggressive, and unsafe driving.

Check out the NBC article here: http://turnto10.com/i-team/consumer-advocate/study-looks-at-impact-of-claims-on-car-insurance-rates 

Insurance Concept of the Week: Commercial Package Policy

Each week we will post and define an industry term or concept for our readers.

A commercial package policy is a business insurance policy that includes multiple coverage parts. It is beneficial for the insured because it minimizes gaps in coverage, and often it includes package discounts that lower the total premium for the customer. Examples of coverages usually included in a commercial package policy are: commercial property, general liability, and commercial automobile insurance.

Give us a call to find out more about our commercial offerings.