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How Does Your Driving Record Affect Your Auto Insurance Premiums?

Did you know that your auto insurance company has the right to review your driving record at any time?  Typically, they’ll review your driving record when you apply for coverage and when they issue a renewal offer for your car insurance policy.  This is to evaluate your risk potential, or determine if you are insurable at all.

Generally, what the auto insurance company will analyze are the incidents that are reported on your driving record.  When found guilty of a traffic violation (moving violations, parking tickets, at-fault accidents, etc.), the violation then appears on your driving record.  The more violations you accumulate, the worse your record. The violations on your driving record may or may not affect your auto insurance rate since each car insurance company has their own way of evaluating violations.

Car Insurance Companies  typically evaluate your violations using their own system to determine the amount of your rate increase (if your rates increase at all).  Most auto insurance companies, however, use a Safe Driver Insurance Plan, which lists the different types of violations and assigns a points value to each one, based on the severity of the incident.  Under this plan, as you accumulate points, your car insurance rates are subject to increase or to a non-renewal of your policy.

Your driving record isn’t the only information your auto insurance companies can use to underwrite your car insurance policy.  In most states, including Maryland, Auto Insurers can also use credit scores to determine rates. If you have a good credit score, your rates are likely to be lower than someone with a bad credit score. Auto insurance underwriters perceive a direct relationship between your credit score and the chances of you filing a claim.

Your auto insurance company can also us a CLUE (Comprehensive Loss Underwriting Exchange) report to underwrite your auto insurance policy.  Almost all car insurance companies report all of their claims activities to CLUE.  So when you apply to a new auto insurance company, they pull this CLUE report to verify the number of past accidents that you have been involved in.

Are the people you do business with insured? You may want to ask them (And Ask For Proof).

If a vendor, contractor, cleaning crew, gardener/arborist, or other service provider does not have insurance, you may be out of luck if they cause property damage or injury. Also, people who do not carry insurance are probably less likely responsible than those who are insured. They may not be the ideal people you would want to hire. It’s worth paying a little more to get someone who is insured.

Never just take the word of a vendor. Many who are not insured may say “yes” because it’s likely they don’t want to embarrass themselves. Instead, ask them to have their broker send a certificate of insurance. By having their broker send (fax or email) it to you, you know the policy has been paid for and has not been cancelled.

Some vendors, especially small firms, will try to convince you that they do not need insurance. Do not fall into this trap as you will be letting an amateur convince you to purchase product or service that lacks the protections an insurance policy provides. As a courtesy to existing clients, we can give you advice on any insurance certificate that is emailed or faxed to us.

Suggestions on who you should request insurance certificates from:

• Contractors who are working on a home or commercial remodel
• Repair or installation service for your auto, home, or business
• Service contractors, such as gardening and maids/cleaning services
• Independent Contractors or Contract Employment
• Professional Services, such as such as a CPA, Consultant, Mortgage Broker, Staffing Firm, Insurance Broker, Architects/Engineers, and others who provide professional services (professional liability)
• People who rent or lease from you (whether a business in a commercial property you own, or a resident in a residential property tat you own)

Types of Insurance you should request:

• General Liability Insurance
• Workers Compensation Insurance – for operations that have workers on your premise
• Commercial Auto Insurance  – for those who use vehicles on the job
• Professional Liability Insurance (Errors & Omissions Insurance) – for those who provide professional services

Should you request a certificate for every purchase? It’s your call, but if someone is entering your premise or you are purchasing a bigger ticket item, you should strongly consider asking for insurance documentation.

Your Teen is Starting to Drive.  Now What!

When should you get car insurance for your new teen driver?

As soon as they start learning to drive, whether they are starting with a learner’s permit or going straight to the license, you should inform your auto insurance company to have them added to your policy.  This is the best way to provide the best protection for your assets and usually much more cost-effective than placing them on their own policy, especially if you are a safe driver with a clean record.  Depending on your auto insurance company, they may nor may not rate them while they have their learner’s permit.  Some companies may not charge a premium for the the new driver until they get their full driver’s license.  But the main point here is to inform your company that your teen is starting to drive.  Failing to do so can be determined as a material misrepresentation and cause problems should their be a claim.

Statistics show that teens are more prone to auto accidents than those in other age groups, so starting out with the right amount of auto insurance coverage is extremely important.   Plus, it is also important to have them added as a driver on your umbrella insurance policy as well.  Because if they are involved in an auto accident while living with you, you most likely will be a party to a lawsuit as well.

When your child goes away to college, unless they are taking a car with them, you will probably want to switch them to “occasional drivers” under your policy.  Some other considerations:

• You may qualify for a multi-vehicle discount if your child’s car is covered under your policy.
• You may also qualify for a discount during the time your child is away at college (usually 100 or more miles away without a vehicle).
• Encourage your child to earn good grades, and take a driver training course.  Some insurers offer a nice discount due to good grades, and for completion of training courses.
• Serve as a good role model; your child will learn by example, so it is important to demonstrate good driving habits early on (i.e. not texting or talking on the phone, using seat belt, not drinking and driving.)

For more information, please check out our research page on Teen Will Drive Soon.

How do you properly insure a home based business?

With both technology and the internet, more and more people are running home-based businesses, either full-time or part-time. But will a homeowner’s insurance policy cover the risks of a home-based business? In nearly every case, the answer is no. The only exception to this might be if a homeowner’s insurance policy has a special endorsement, such as an endorsement to run a day care operation from your home. (And even then, it may be better for you to get a separate Daycare Insurance Policy) Yet fewer and fewer insurance companies offer such endorsements. Additionally, some home insurance policies may give a very limited amount of coverage for business property, such as a computer. The bottom line is, nearly all homeowners insurance policies clearly exclude business operations and not having a proper coverage in place can leave you with uninsured exposure. This is why you need separate business insurance to cover your home-based business risks.

Home-based business owners may feel that they do not need insurance coverage because nobody steps foot on their premises. The problem is that liability claims often happen away from the business premises. This can include a number of scenarios, including someone taking action for information on your website or someone getting injured from the product or service you provide. Most business insurance policies include coverage for personal injury lawsuits, which means someone takes legal action against you for things like libel or slander. Competitors and customers both can sue a business owner for personal injury. A business liability insurance policy also covers off-premises injury, such as if someone trips on, slips on, or is injured by any kind of property you take out in the field. It will also cover you during trade shows and usually meets the insurance requirements that some trade shows may require.

From a property standpoint, any business property you may have in your home is usually excluded or has very limited coverage under a homeowners insurance policy. Getting a business property insurance policy to protect your computers, equipment, furniture, inventory and any other physical assets helps keep your business in operation with minimal disruption and financial loss. A business insurance  policy also usually covers loss of income, which is payment for income you did not earn as a result of a loss covered under your policy. Policies may also include coverage for things like valuable papers, damage to property of others, property coverage off-premises and a number of other additional coverages.

A business owner’s policy includes the coverage described above, and is specifically designed to protect the unique interests and property of a business owner. This insurance package policy includes nearly all, if not most, of the coverage you need. However, if you are providing some kind of professional advice, consulting, or other non-tangible professional services, you may also need a professional liability insurance policy. This is also known as Errors & Omissions Insurance. In addition, if you have any employees, you are probably required by law to get Worker’s Compensation Insurance. Depending on the type and size of business you own, you may have further insurance needs.

Hoping that your homeowner’s insurance policy is going to cover you in the event of a claim will leave you frustrated if your business experiences a loss. Businesses have a much higher risk than a homeowners insurance policy allows for, and homeowners claims adjusters will quickly deny coverage for business-related claims in the event of a loss. Talk to a Trusted Choice Independent Insurance Agent today to explore your business insurance needs and options.

Intellectual Property Insurance Coverage

It seems as though virtually anything created can be patented, copyrighted, trademarked or otherwise protected.  Oddly enough, even with patent protection there is danger. It is easy to believe that if you hold a patent, copyright or trademark you cannot possibly infringe on someone else’s intellectual property – but that’s not true. George Harrison certainly had a copyright on his song “My Sweet Lord” but that didn’t prevent highly publicized and successful litigation against him due to its similarity to the old Shirelle’s hit “He’s So Fine” in the 1970’s.

With an average cost of $1.2 million to litigate, patent infringement trials weigh in as one of the most expensive types of litigation in the US today.  What was once the realm of the individual like Ben Franklin or Thomas Edison, or the very nearly individual (think Wright Brothers), has now become big business.  IBM, which annually tops the list of companies applying for and receiving patents, has received over 22,000 patents from 1993 to 2002, with patents accounting for about $10 billion in royalties during that ten year period according to the company’s website.  Complicating matters is the relatively recent innovation in its own right of the “Business Method Patent.”   Examples of these controversial patents are Amazon’s Internet shopping cart, or the “reverse auction” process that Priceline created and patented.

Contrary to popular belief, however, intellectual property is not the patent or copyright that one applies for, but rather the idea behind it.  The registration process, be it copyright, patent, or other method, is merely a form of evidence or proof of the origin of the idea, and its timeline.   The piece of paper that one might receive acknowledging a copyright is merely a statement that the Office of Copyrights has not received anything else prior to the submission of the material that resembles it enough to call into question the authenticity of the work.   Conceivably, one may apply for and receive a copyright or patent for a piece of work and yet be sued.  But where’s the insurance coverage you say?  Good question.  The answer is – it depends.

Take the Recording Industry Association of America’s litigation against numerous individuals in the summer of 2003.   Would your homeowners’ insurance policy apply if you were sued for negligent supervision of your teenager leading to the illegal uploading of music to the Internet?  The answer is probably “no” because there is no bodily injury or property damage (theft of intellectual property is unlikely to be perceived as a form of property damage), and the insurance policy is not designed to respond to pure financial loss claims.   So in a personal sense, you are probably out of luck.

For businesses the news is not as grim.  In a business scenario, the General Liability Insurance Policy has often been called upon for coverage in patent, copyright and trademark infringement cases.   If there is insurance coverage to be found, it is the Advertising Injury portion of the policy but the catch is that the offense must then occur in the course of advertising one’s product, and not, for example, in the delivery of the product.  So although a computer-consulting firm may infringe on another firm’s copyright or patent (source code is patentable), it is probably not covered under the General Liability Insurance Policy because the offense did not occur while advertising the firm’s services.

The good news is that there are an increasing number of insurance products that are available for intellectual property insurance coverage in the course of business operations.   Patent Infringement Liability Insurance is available from a select few niche insurance markets, though premiums are usually high, and coinsurance and retentions can be steep too.  Professional Liability Insurance for technology consultants and other companies with an intellectual property exposure can often be endorsed to cover copyright or trademark infringement, though usually not patents.  Advertising agencies or media businesses may find intellectual property insurance coverage available for their operations as well.  If you are concerned about your intellectual property exposure, you need to talk to your Trusted Choice Independent Insurance Agent to see what coverages are available.  Another good idea would be to speak to a lawyer who is well-versed in intellectual property law to learn what steps you should be taking to protect your intellectual property and minimize the risk of infringement.