Insurance and Business Vehicles
Courtesy of iii.org
Whether you own or lease a single business car or an entire fleet of commercial vehicles, you’ll need to purchase commercial auto insurance. Your insurance professional can help you weigh your risks and evaluate coverage options.
But even with insurance in place, you’ll want to take steps to prevent accidents and protect your employees and vehicles. Your business can reduce the chance of an accident by establishing and enforcing the following practices and policies.
Hard-and-fast driving rules
When it comes to the safety of employees and the protection of your vehicles, you should set certain firm driving rules that must be followed at all times, including:
- Mandatory seat belt use - Nearly every state has a seat belt law. Seat belt use helps prevent deaths and limit the severity of injuries in vehicle accidents. There is no reasonable excuse for not using a seat belt.
- Zero tolerance for intoxicants - Even one alcoholic beverage can impair a driver’s reaction time. Employees should never drink or use other intoxicants prior to using business vehicles.
- No cellphone use - Distracted driving is a leading cause of accidents, and cellphone use while driving is banned in some states. Prohibit employees from taking calls or texting while driving.
Vehicle use guidelines
Other rules may be more flexible, but you should consider instituting policies and adhering to the following practices yourself as appropriate:
- Limit non-business use of vehicles - While some employees use the same car for work and personal use, generally limit business vehicle use to work-related travel.
- Slow down - Scheduling should allow sufficient travel time between meetings and assignments. Do not create such a frantic pace of work that employees are encouraged to speed. In addition to reducing the risk of accidents, driving the speed limit also will help control fuel costs.
- Lock and secure vehicles - Employees should always lock vehicles when on the job. Whenever possible, vehicles should be parked in secure, well-lighted areas.
Employee-focused practices to reduce vehicle risk
- Know your employees - Before hiring employees to drive company vehicles, check their driving record with the motor vehicle department for past infractions. Limit or ban driving by employees with a history of accidents or moving violations. Employees should also be required to report any accidents they have while not working. In addition, recognize that some personality traits—such as a bad temper—can raise the risk of auto accidents.
- Provide training - Employees who regularly drive work vehicles—or are taking on a new assignment requiring vehicle use—should be provided with drivers training. This course may just be a refresher for some, but it should cover key safety practices such as following distances and proper backing techniques.
- Recognize safe drivers - For businesses in which driving is central—such as a florist or a moving company—establish a program to recognize and reward safe drivers. You may also want to reward a department or the whole company for accident-free periods.
Responding to an accident
The above practices and policies can help minimize the risk to your business vehicles, but they cannot entirely prevent accidents from happening. If a business vehicle is involved in an accident, you’ll want to help your employee-driver respond appropriately and proceed with filing an insurance claim. The following practices and steps will help your business and the involved employee recover and get back to work.
- Establish procedures in the event of an accident - Employees using company vehicles should be trained what to do if an accident occurs. This includes not leaving the scene of an accident, contacting the police, and collecting information (license plate numbers, contact information, insurance information, etc.) from the affected parties and any witnesses. The accident should also be reported to appropriate personnel at work. Consider using the incident as an opportunity to educate all employees who drive company vehicles about what to do if they are involved in an accident.
- Contact your insurance professional and file a claim with your insurer - As soon as possible, contact your insurance professional to report the accident and begin the claims filing process. It’s especially important to work immediately with your insurance team if anyone has been injured in the accident. Follow the guidance of your insurer in a timely manner, such as getting estimates for repairs.
Remember too, that auto insurance claims are not limited to accidents. You may also need to file a claim if your vehicle is vandalized, stolen or damaged from an event other than an accident, such as fire or severe weather.
Condominium Insurance
Courtesy of iii.org
Because co-op and condominium owners share their building structures, two policies—a master policy and an individual policy—are required to fully protect all parties involved. Learn more about insuring a co-op or condo.
If you are purchasing a condo or co-op, the bank will require insurance to protect its investment in your home, and your co-op or condo agreement will likely require you to have insurance, as well. There are actually two different policies necessary to fully insure co-ops and condos—a master policy for the building, and an individual policy to cover you for liability, to protect your belongings and to insure any apartment structural elements that are not covered by the master policy.
Here's what you need to know about each type of insurance.
The master co-op or condo policy
This is the policy that protects the entire apartment structure; the building management is responsible for it and its premiums come out of your maintenance fee or association dues. The master policy covers the common areas you share with others in your building like the roof, basement, elevator, boiler and walkways for both liability and physical damage.
In some cases, the association is responsible for insuring the individual condo or co-op units, as they were originally built, including standard fixtures. In these instances, the individual owner is only responsible for insuring alterations to the original structure of the apartment, like a kitchen or bathroom remodel.
In other co-ops or condos, the association is responsible only for insuring the bare walls, floor and ceiling. In the event of a disaster, the owner is responsible for elements like kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures etc.
It is important to know which structural parts of your home are covered by the condo/co-op association master policy and which are not, so you can properly insure your apartment through your individual policy. This information should be in your association’s bylaws and/or proprietary lease, which can usually be obtained from the co-op or condo board, or from the company that manages the building. If you have questions, talk to your co-op board, condo association, insurance professional or family attorney.
Your individual co-op or condo insurance policy
Your mortgage lender and your co-op or condo by-laws will likely require that you have your own insurance on top of the master policy because your ability to repair your apartment after a disaster protects the value of the unit.
An individual policy provides coverage for your personal possessions and for any structural elements not covered by the master policy if you are the victim of fire, theft or other disaster listed in your policy. Like a standard homeowners policy, you also get liability and, likely, additional living expenses (ALE) protections.
It’s a good idea to find an insurance professional who has experience in co-ops and condominiums. When selecting a policy, don’t forget to ask about available discounts, such as for extra bolts on the doors or additional fire alarm systems. If you insure your unit with the same company that underwrites your building’s insurance policy, you might also get an additional reduction in premiums.
To adequately insure your home and protect your assets, you may also want to consider the following, additional coverages. Consult your insurance professional for advice on what's right for you.
- Unit assessment reimburses you for your share of an assessment charged to all unit owners as a result of a covered loss. For instance, if there is a fire in the lobby and all the unit owners are charged the cost of repairing the loss.
- Water backup insures your property for damage by sewer backups or drain back ups—these are not covered by either your co-op/condo policy or your flood policy.
- Umbrella liability is an inexpensive way to get more liability protection and broader coverage than is included in a standard condo/co-op policy.
- Flood insurance or earthquake insurance may be necessary if you live in an area prone to these disasters.
- Floater for additional coverage for expensive jewelry, furs or collectibles.
Do You Need More Insurance?
Courtesy of iii.org
Coverage needs change as circumstances in our lives change; an annual insurance review will ensure you have the proper coverage for your needs and budget.
Our insurance needs change as circumstances in our lives change, which is why we recommend doing an annual insurance review. When you’re reviewing your insurance coverage, these ten questions can help you figure out whether you may need to talk to your insurance professional about making a change to your coverage.
1. Have you gotten married or divorced?
If you have gotten married, you may qualify for a discount on your auto insurance. Couples may bring two cars into the relationship and two different auto insurance companies, so take the opportunity to review your existing coverage and see which company offers the best combination of price and service.
If you are merging two households, you may need to update your homeowners insurance. And you may want to consider increasing your insurance for any new valuables received, such as wedding gifts, and for jewelry, such as wedding and engagement rings.
After getting married, it is important to review your life insurance needs. If one spouse is not working, he or she might be dependent on the working spouse’s income; if so, reviewing life and disability insurance coverage is prudent. The spouse who is not working outside the home should also consider having a separate life insurance policy because, in the event of premature death, the services he or she provides for the household would need to be replaced, and that could prove costly to the surviving spouse. Moreover, even if both spouses are working, couples often make financial commitments based on both incomes so the loss of one spouse’s income due to death or disability could be financially devastating without adequate insurance.
In the other hand, if you got divorced over the past year, you will probably no longer be sharing a car with your former spouse and have likely moved to a different residence. If this is the case, you should inform your insurer as you will need to set up separate auto and homeowners policies.
If you have recently added a child to your family, whether by birth or adoption, it is important to review your life insurance and disability income protection.
If you are planning for your life insurance to match your survivors’ expenses after your death, the new child will no doubt add to those expenses, requiring more life insurance to keep your family secure. If you plan to save for your child's college education, life insurance can assure completion of that plan. And if you keep your current life insurance policy, don’t forget to update the beneficiary designations to include the new child.
3. Did your teenager get a drivers license?
It is generally cheaper to add your teenagers to your auto insurance policy than for them to purchase their own. If they are going to be driving their own car, consider insuring it with your company so you can get a multi-car discount. And choose the car carefully—the type of car a young person drives can dramatically affect the price of insurance. You and your teens should choose a car that is easy to drive and would offer protection in the event of a crash.
Also, encourage your kids to get good grades and to take a driver training course. Most companies will give discounts for getting at least a “B” average in school and for taking recognized driving courses.
If your teenagers move at least 100 miles from home—for example, to go to college—you can get a discount for the time they are not around to drive the car (assuming they leave the car at home).
4. Have you switched jobs or experienced a significant change in your income?
If you had life and disability insurance through your former employer, and your new employer does not provide equivalent protection, you can replace the “lost” coverage with individual policies.
In the case of an income increase, you may have taken on additional financial commitments that your survivors will depend on. Make sure to review your life and disability insurance to ensure it is adequate to maintain those commitments.
If your income decreased, you may want to cut your life insurance premiums. Term life insurance is a good option, as the premium rates are very reasonable. And if you already have two or more policies you might be able to replace both with a single policy at a lower rate because you may reach a “milestone” amount of insurance. (For example, at many life insurance companies, $500,000 of insurance costs less than $450,000 because of the milestone discount.) But don’t drop existing life insurance until after you have a new policy in place.
5. Have you done extensive renovations on your home?
If you have made major improvements to your home, such as adding a new room, enclosing a porch or expanding a kitchen or bathroom, you risk being underinsured if you don’t report the changes to your insurance company. An increase in the value of the structure of the home may require an increase to your homeowners insurance coverage limits.
And don’t overlook new structures outside of your home. If you built a gazebo, a new shed for your tools or installed a pool or hot tub, you should speak to your insurance professional.
If, as part of a renovation, you purchase furniture, exercise equipment or electronics, you may need to increase the amount of insurance you have on your personal possessions. Keep receipts and add any new items to your home inventory.
6. Have you decided to buy a second home?
If you are searching for a vacation home or a second home you might retire to, make sure you research the availability and cost of homeowners insurance before you commit to the purchase.
The very factors that make a vacation home seem ideal, whether it is a waterfront property or a mountain retreat, can often introduce risks that make it costly and difficult to insure, such as proximity to the coast and the likelihood that it will be vacant for long periods of time.
In the event you have already bought a vacation home, don’t skimp on the insurance. The risk of theft or disaster is just as significant, if not more so, in a second home as in your primary residence.
If your new property is close to the water, be sure to ask about flood insurance. Damage to your home or belongings resulting from flood is not covered under standard homeowners insurance policies. Flood insurance is available from the National Flood Insurance Program (NFIP), as well as some private insurers, and is generally sold though private agents and brokers. You can ask your insurance professional whether your home is at risk for flood, or enter your address on the NFIP website to find out whether your home is in a flood zone. If you have a very valuable home, some homeowners insurers offer excess flood coverage over and above that provided by the NFIP policies.
7. Have you acquired any new valuables such as jewelry, electronic equipment, fine art, antiques?
A standard homeowners policy offers only limited coverage for highly valuable items. If you have made purchases or received gifts that exceed these limits, you should consider supplementing your policy with a floater or endorsement, a separate policy that provides additional insurance for your valuables and covers them for perils not included in your policy, such as accidental loss. Before purchasing a floater, the items covered must be professionally appraised. Keep receipts and add the new items to your home inventory.
8. Have you signed a lease on a house or apartment?
If you are renting a home, your landlord is responsible for insuring the structure of the building, but not for insuring your possessions—that is up to you. If you want to be covered against losses from theft and catastrophes such as fire, lightning and windstorm damage, renters insurance is a good investment. Like homeowners insurance, renters insurance includes liability, which covers your responsibility to other people injured at your home, or elsewhere, by you and pays legal defense costs if you are taken to court.
Regardless of whether you are a renter or an owner, you will have the following options when it comes to insuring your possessions:
- Actual cash value pays to replace your home or possessions minus a deduction for depreciation.
- Replacement cost pays the cost of rebuilding or repairing your home or replacing your possessions without a deduction for depreciation.
Think carefully about what your financial position would be in the aftermath of a disaster, and make sure you have the type of policy that is right for you.
If you are a frequent carpool driver, whether it is to work, or ferrying kids to school and other activities, your liability insurance should reflect the increased risk of additional passengers in the automobile. Check with your insurance professional to make sure your coverage is adequate.
If you commuted regularly to your job, in retirement your mileage has likely plummeted. If so, you should report it to your auto insurer as it could significantly lower the cost of your auto insurance premiums. Furthermore, drivers over the age of 50-55 may get a discount, depending on the insurance company.