How Do Car Insurance Companies Set Rates?

All types of insurance, including car insurance, involve a transfer of risk between two entities - the insured and the insurer.  As a car insurance policyholder, you're contracted with your insurer for them to underwrite a number of the risks posed by the ownership/operation of your vehicle.  The number of risks being underwritten will partially determine premium rates.  The greater the risks being underwritten, the greater the policy premium costs.

These risks protections may include:

• Liability coverage for bodily injury or death of a third person or persons (legally required coverage in NC)
• Liability coverage for property damage of a third person or persons (legally required coverage in NC) 
• Uninsured motorist coverage (legally required coverage in NC)
• The risk of collision
• The risk of a non-collision loss such as fire, theft, vandalism or severe weather damage
• Personal Injury Protection to help toward the medical costs of your own injuries, regardless of who is found to be at fault

Collision coverage is typically the most expensive portion of a car insurance policy, since the risk of a costly claims payout may be greatest in a serious collision deemed your fault.  This high cost can be reduced by increasing your deductible amount from, say $500 to $2000.  The amount of your policy deductibles is another factor affecting your final policy rate. 

Other Factors Affecting Car Insurance Rates

A broad range of data is used by car insurers to determine rates.  Some factors are more important than others but, taken together, they give underwriters a good idea of what kind of insurance risk you represent to their company.  Consider the following:

• A major rating factor, especially for young drivers, is policyholder age.  The most expensive rates are for teenagers and the least expensive are for those drivers in their 50s.  The reason is because teens have proven to be faster, more reckless and aggressive drivers.  Higher risks equal higher premium costs.
• Driving history - a history of moving violations and/or accident claims are a red flag and will cause higher costs.
• Location plays a role because certain zip codes show higher accident rates and higher risk of theft, vandalism, wildfires or floods.
• Gender - primarily affects young drivers.  Young males are more likely to drive recklessly than females.
• Mileage traveled - more miles driven means higher risk to your insurer.
• Age and value of your vehicle plays a role in rating your insurance.

 

What Does Rideshare Insurance Cover?

 

If you're interested in going to work for a rideshare company such as Uber or Lyft, you should take time to consult your current auto insurance agent to find if there's a rideshare endorsement available for your auto policy.  If you drive for a rideshare company without telling your insurance company and you have an incident for which you file a claim, that claim will likely be denied.  In addition, your auto coverage will probably be canceled.

Standard car coverage does not cover rideshare drivers and if you drive for a company like Uber or Lyft, you'll need to get a special rideshare insurance policy.  While these insurance companies do offer some coverage for their drivers, it's incomplete protection that doesn't cover the entire duration of your trip.

Rideshare Insurance From the Rideshare Company

Rideshare companies break down a rideshare trip into three parts, only two of which are covered by their  provided insurance.

1. Period 1 is when you're logged into your rideshare app and waiting for a ride request.  At this point, you're not being covered by your employer-provided insurance but, since actively on the app waiting for a ride request, you're technically on the clock and not being covered by your personal auto insurance either.
2. Period 2 is when you've received a ride request and are on your way to pick up a customer.  While you're covered by the rideshare company's insurance at this time, it's probably just limited liability coverage such as the minimum required by the state.  This is $50K per person per accident for bodily injury liability, $100K bodily injury liability for all persons per accident and $25K liability for property damage per accident.
3. Period 3 is the time during which you're transporting your passenger.  During Period 3, you have the same coverage as in Period 2.  Once your fare has been dropped off, you revert back to zero coverage as in Period 1. 

Purchasing Additional Coverage

As a rideshare driver you're not legally required to buy extra coverage to provide yourself with full protection but it's a good idea.  The gap that exists when you're not covered, which is when you're logged onto the rideshare app and waiting for a ride request, needs to be addressed.  If you're involved in an accident during this window, you're not covered by your rideshare company's commercial insurance policy or by your personal auto insurance coverage.

Does Homeowners Insurance Cover Debris Removal?

Your Greensboro homeowners insurance policy is designed to protect your financial interests in the event your home is damaged or destroyed by a peril covered in your policy.  This includes such events as fires, wind storms, lightning strikes, hurricanes and much more.  The purpose of the policy is to help fix the damage done to your home or to rebuild the home if it's been destroyed.  The house should be brought back to the condition it was in before the damaging event occurred, within your specific policy dollar limits.  

Debris Left Behind

Certain events that may happen to your home that cause you to file a claim against your homeowners insurance policy may also leave behind debris.  This debris must be cleared away in an effort to get your home back to the condition it was in before the damage event occurred.

An example is a wind storm that topples a tree in your yard that ends up going through your home's roof.  Coverage A (dwelling) benefits in your policy will be the part responsible for paying toward the repair of your home, but the tree debris left behind in your yard may be considered for payment benefits in one of several ways.  Most homeowners insurance policies make some provision for debris removal, but dollar limits may vary depending on your particular insurance company and your policy.  Here are some examples:

• Some homeowners insurance policies contain what's called a "Debris Removal Clause."  This is a special provision in a homeowners insurance policy that allows for debris removal from your property that's the by-product of a loss covered by the policy.  Often this coverage will be limited to an amount equaling a percentage of your full policy value, such as 5% or 10%.  Check your policy wording for specifics.  
• Some policies provide for debris removal based on a fixed dollar amount.  The debris must have been created by a loss covered by the policy.
• Debris removal is often covered in a section of your policy called "additional coverages."  See page 14 of this N.C. Consumer's Guide to Homeowner's Insurance.  You'll also see that this section provides up to $500 for the removal of a tree that's felled in a covered peril if the felled tree damages an insured structure, blocks your home's driveway or exit/entryway of the home designed for handicapped persons.  Pose any questions to your agent. 

Do I Need Uninsured Motorist Coverage?

 

Although you probably carry vehicle insurance coverage as required in North Carolina, you may never expect to be in a car accident, although accidents happen every day here in the Triad Region of N.C.  What's worse than being in a car accident is being in an accident where the other driver is at fault and he or she doesn't have insurance.  This may surprise you: according to the Insurance Information Institute (III), nearly 10% of North Carolina's drivers are driving without vehicle insurance.  

Required By Law

In answer to the question of whether or not you need uninsured motorist coverage (UM), the answer is "YES."  UM is required of all drivers in NC in the same minimum amounts as liability protection, which is also required:

• $30,000 bodily injury protection for one person per accident
• $60,000 bodily injury protection for all persons per accident
• $25,000 property damage per accident

How Much Is Enough?

If you're carrying the mere minimum coverage for either UM or your liability protection, consider what the real costs would be if you were involved in a serious auto accident, your fault or not, $25K may be enough to cover the repairs or replacement of a single vehicle, but maybe not.  Medical costs have shot through the roof in the past few years, including hospital and doctor's costs, not to mention long-term costs for disabilities resulting from a car crash.  There's also lost wages to consider.

Experts suggest that when purchasing your liability coverage and your uninsured motorist coverage that you increase the benefit amounts to several times the minimums required.  Any costs not covered by your uninsured motorists benefits may likely have to come out of your own pocket, although you may be able to claim against your base policy if you have collision protection or medical benefits protection.

When Does Uninsured Motorist Insurance Pay?

Uninsured motorist insurance typically covers the following:

• An accident that's caused by an uninsured driver
• An accident caused by a driver whose insurer has gone bankrupt
• An accident caused by a motorist whose insurance company denies liability
• An accident caused by a driver driving an uninsured vehicle despite having insurance himself

Besides the fact that uninsured motorist and underinsured motorist coverages are required by North Carolina state law, it would still be an important coverage to have in light of the fact that NC has so many uninsured motorists.

Does Business Equipment Insurance Cover Burst Pipes?

 

A good commercial property insurance policy can be comprised of many different types of insurance protection, many of which most businesses need.  Damage caused by leaking or burst water pipes is included in the coverage provided by many commercial property insurance policies, but check your policy to make sure.  Each business policy written is unique and available protections must be spelled out in the policy contract.

Business Owner Policy

A Business Owner Policy, or BOP, is a combination of insurance coverages providing protection for many of the liability and property risks a business owner faces, bundled together in one package.  While a BOP provides a bundle of basic insurance coverages most business owners need, it's sold at a discount from what the individual protections would normally cost. 

Typically, a BOP provides protection against losses stemming from:

• Property damage
• Liability
• Business Interruption

Businesses can also usually opt to add on additional coverages not provided by a basic policy.

Water Damage

While water damage from something like a burst pipe is likely covered by your commercial business property insurance policy, not all water damage to which your business may be subject is necessarily covered.  Flood damage, for example, is something that could possibly require coverage by a separate flood policy or special endorsement to your base policy.  It's also important to realize that if your water pipe bursts because your property was left unheated during a winter freeze your claim could be denied due to neglect.  Water damage caused by an overflowing sump pump will probably not be covered by the property damage portion of you policy.  Check the specifics of your policy.

Other Applicable Coverage

Several types of coverage may apply to damage caused by water from a burst water pipe.  If you have a great deal of expensive equipment used in your business and it gets damaged and requires repair or replacement, the costs may exceed the benefit limits on your property damage coverage.  Additional equipment coverage may be needed to ensure your full protection in the event that property or equipment damage is greater than your base policy can handle.

If water damage sustained requires you to shut down business operations or move them to a temporary location, business insurance can help cover loss of income because of business interruption.  If you're found liable by your landlord for damage done to his or her property a BOP can help there, too.

What Does ATV Insurance Cover?

 

Greensboro ATV insurance, although generally not required by law in North Carolina, is available to ATV owners in similar fashion to motorcycle insurance.  Certain parks or other venues catering to all-terrain vehicles (ATVs) may require riders using their facilities to carry a minimum amount of liability coverage to protect others using those same facilities.  This liability coverage comes in the form of bodily injury protection and personal property protection.

Bodily Injury Liability and Personal Property Liability Coverage

Greensboro ATV insurance is similar to Greensboro motorcycle insurance as far as the various coverages that are available and, for the liability protection, basic minimum amounts are identical.  Liability insurance is protection "for the other guy" when you're involved in an accident where someone suffers a loss and the accident is determined to be your fault or responsibility.  

Minimum amounts of liability coverage include:

• $30K coverage per person per accident for injuries or death.
• $60K coverage for all persons per accident for injuries or death.
• $25K coverage per accident for damaged property, fixed or moveable.

How Much is Enough?

While North Carolina State law sets out minimum amounts of liability coverage required for cars, motorcycles and ATVs, these minimums may be woefully inadequate in the event that you're involved in a serious accident and found liable for someone's injuries, damaged property or death.  Bear in mind that any amount of money for damages not covered by your insurance will have to come out of your own pocket.

Someone seriously injured in an ATV accident could require huge amounts of medical treatments and hospitalization as well as expensive therapies afterwards.  Obviously, $30,000 of insurance coverage could represent a mere drop in the bucket, leaving you with a huge debt that could lead to the loss of your assets and even bankruptcy.  ATVs can be dangerous.  Consider carrying as much liability insurance as you can comfortably afford, or invest in an umbrella policy.

Optional ATV Coverage Available

Just as with other vehicles, there is a menu of optional coverages available for ATVs, including:

• Uninsured/underinsured motorist coverage
• Collision coverage - may be required if your ATV is being financed
• Comprehensive coverage - may be required if your ATV is being financed
• Personal Injury Protection (PIP) - also called medical payments coverage

Though optional coverage isn't required, it's better to have it and not need it than the other way around.

 

Making the Most of Your RV This Spring and Summer

A major factor in making the most of your RV travel this Spring and Summer is proper de-winterization in plenty of time for your first road trip.  Making sure that everything is ship-shape on your vehicle will allow you to enjoy yourself much more than if you have to spend your time worrying about things that might happen or actually having to deal with things that DO happen.  We all know that an ounce of prevention is worth a pound of cure, especially if you find yourself stuck in the middle of nowhere, broken down, with no cell signal and no working jack or spare tire.

Avoid Mechanical Problems Before They Happen

To avoid the no working jack or spare tire problems, simply go through your RV with a list of things that need to be checked before your RV travel to make sure they're covered.  If you're pulling a fifth wheel or travel trailer, many of your RV safety checks will be mechanical since the towing vehicle requires most of the attention to make sure it meets the safety standards that everyday driving require.

Common sense tells you that before going anywhere you should gas up, air up your tires, make sure your battery is charged and that your fluids are topped up.  What may not be so obvious is to check your brakes, your shock absorbers and your axel bearings.  These last items may require service by a professional mechanic, so it's important to get these things done in plenty of time before your departure date.

First Aid Travel Kit

An important item you need to make sure you have on hand during your RV travel is an emergency first aid travel kit.  This should be a collection of items to deal with minor emergencies or illnesses, basic first aid items, medicines for skin problems, for stomach and respiratory problems.

In addition to these important first aid items, you should also have a basic emergency travel kit in your vehicle.  This kit should include, among other things, a flashlight, battery-operated or hand-cranked radio, extra batteries, local maps, pet supplies and basic hand tools.

You'll also want to make sure you have some entertaining activities for the kids if you have any children along on the trip.  This can include books, comics, video games, puzzles, etc.  These items may come in handy during a long drive to overcome the boredom.