What went wrong when your insurance company covered only 40% of the unpaid amount due on the car loan when you accidentally totaled your car? The sister of our account manager asked the above question when she learned that her co-worker is required to come up with the unpaid amount close to $10,000 after the co-workers accidently totaled her car.
You left holding the bag alone. What are the options besides paying up? Nil at this moment but you can fill the gap easily when you first take out your insurance policy. How?
There are two little promoted car insurance coverage* that can do the trick.
1. New Vehicle Replacement – that provides full replacement cost coverage to the damaged vehicle in case of a total loss. This mostly applies when the vehicle is less than I year old.
2. Auto Loan/Lease Coverage – fill up the gap between the unpaid loan/lease amount and the value of the auto at the time of a total loss.
*These are the only brief description of the coverage and you are recommended to refer to the actual coverage terms and conditions of your own insurance policy or to consult an insurance professional.
Why didn’t she get the coverage when she took out the policy? It may not be offered or explained to her when she was buying her auto insurance. Her needs are just not recognized. This triggers me to recall what I have read in the recent Consumer Reports Magazine about buying car insurance. In the report, readers are urged to shop around to find the most inexpensive car insurance. It even raised an optimum number of getting 10 different quotes. I am not here to give a thumb up or down on the recommendation but want to point to other direction.
Most of you would have visited a Starbucks Coffee Shop before and few of you without getting the caffeine boast; you may not get to the 10:00 morning meeting. Is Starbucks coffee cheap? Not the last time I visited. You can get much cheaper alternative from McDonald or other places but you rather brave the long line at your favorite Starbucks. Why? In short, it is the Starbucks’ experience. This is also the very thing that raised Howard Schultz, CEO of Starbucks, to becoming a billionaire. At Starbucks, you are not only getting a cup of coffee but the pleasant experience and satisfaction of having your particular craves fulfilled. You can order a double shot, soy milk, with chocolate sprinklers on top latte or any fancy combination that you may have but not in a place like McDonald.
Buying car insurance or any type of insurance in some ways is like buying coffee. You can get a cup of decent plain coffee at McDonald and the service is fast and cost little. Or you can line up at a Starbucks spelling out all your personal cravings to the barista and he or she is capable and delighted to satisfy your particular needs. Different person would have different insurance needs because of different life styles, financial status, family members, and location of residences and other factors. A single insurance product would not be able to fit all sizes of needs. You want one that is tailored to your particular needs. Insurance is still one of the most effective and affordable means to transfer your risks to the insurance carriers. Get what you deserve but not the same cloth cutting for all sizes.
Accident does happen and you may see more of it happening than seeing a full moon. Spend some times to find the agent that who appreciates your needs, knows well about the products, takes the effort to secure the right coverage for you.
Many business owners would be in shock when they see their group health insurance renewals these coming months. Effective from 12/1/2015, all grandfathered and grand mothered groups (those group plans that enjoyed low premiums because they stayed with the original benefits before the introduction of ACA) are to be renewed with plans in compliance with ACA minimum benefits. The new benefits would include pregnancy and pediatric dental coverage even the members are neither female nor minors. What can they do to counter the sharp increase? Not much as all health insurance carriers are required to offer the ACA plans after 12/1/2015 and there are no other alternatives unless they cancel their plans. But if they have 100+ employees (two part time employees counted as one full time), then they are required by law to provide the health insurance to their employees.
Brokers are cancelling their vacations and getting ready for exhaustive long hours to work with their clients trying to smooth the wrinkles of the “premium shock”. Carriers are sharpening their quoting tools and sales effort working to entice their competitors business transferring to their books of business. September and October would be the frantic months as few business owners would like to wait till the last minutes to make the changes.
To quote you a real life example – one of our clients with less than 30 employees are experiencing an unforeseen 45% increase in premium for their Grandfathered Health Plan. We checked with other carriers, similar plans are even offered at more than 10% higher rates.
Golden Gate Bridge by N. Yuen taken on Aug 30 2015
We would also like to share beautiful vista with you besides the awful news of premium increase.
When I was reading The New York Times, 4/26/2015 Sunday version, I came across an article which really caught my attention. The topic of the article is “Spurned by an Insurer After Filing Small Claims” by David Segal, under the Banner of The Haggler.
In the article, Mr. Segal was answering a write in question regarding a reader who is living in Forest Hills, N.Y. complaining about his homeowner insurance carrier- State Farm - non-renewed his homeowner insurance policy – because he filed two claims in the span of 2 years. The claims are for 1) A ceiling fan that dropped off the ceiling and 2) A stolen bike. The reader was puzzled why State Farm non renewed his policy as he has been a loyal customer of State Farm since 2010 and State Farm did not pay out a dime for the two claims.
This brings out an unspoken rule in insurance: insurance companies put more weights on frequency than severity. Severity means big or severe loss. The rationale behind such rule is if the insured is experiencing frequent losses; even they are small losses, then this insured is considered as careless and disinterested in risk management. A severe loss is bound to happen soon. Insurance companies either cut the tie with this insured or raise the premium to sky high to compensate the assumed increase risk factor. The insurance mechanism is designed to protect you from large or catastrophic loss not the minor loss that you can sustain easily.
Christoph Hitz, New York Times Company
This rule also applies to Workers Compensation Insurance Coverage. If your workers compensation insurance premium reaches a certain level, you would be assigned an experience modification factor calculated by the Workers Compensation Rating Bureau according to your loss experience. The base factor is 100 and if you get 125, you would have to pay at least a 25% surcharge on your premium; but if your factor is less than 100, say 88, then you would enjoy a 12% credit on your premium. High experience modification factor would also bring forth non-renewal.
Be careful! Make just a couple of small claims – nonrenewal. Is it fair? Think of it this way. If every insurance policy holder files a claim, even for a tiny compensation; then no insurance company can survive financially.
3-Day Sick Leave Law
Effective July 1, 2015, all employees (including full time, part time and temporary) in California will enjoy 3-Day Paid Sick Leave. All Employers are required to post a notice in the office and give individual notices to employees starting 1/1/2015. We provide free 2015 posters and individual notice samples to our clients.
Useful links: http://www.dir.ca.gov/dlse/Paid_Sick_Leave.htm
DLSE- Division of Labor Standards Enforcement provides a detailed list of Questions and Answers for employers and employees to learn more about the new law.
CoveredCalifornia - ObamaCare
You still have time to sign up for ObamaCare (from now to April 30) if you are required to pay for the Individual Shared Responsibility Payment (the penalty for not buying health insurance in 2014). The penalty will double for 2015. Act now to avoid the penalty.
If you have filed your taxes, you will be familiar with the IRS forms 1095 (A, B, or C), form 8962, or form 8965. If not, then please be prepared with these forms when you file your 2014 tax return. The IRS is using these forms to track your health insurance tax credit and share responsibility.
If you went without coverage for less than 3 consecutive months during the year you may qualify for the short coverage gap exemption and will not have to make a payment for those months. There are more exceptions that you may claim to avoid the payments. Call us to find out more.
The materials contained in this Newsletter are strictly for informational purposes only and are not intended as legal advice. Please consult your attorneys or legal advisers for proper interpretation and enforcement of the law.