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Frequently Asked Questions

Do you know what’s covered in your insurance policies? More importantly, do you know what is NOT covered? Not all insurance is the same. Different companies have different exclusions. As an independent insurance agent, it’s our job to find the coverage each customer needs at a cost that fits the individual’s budget. The following questions raise important coverage issues. Take a minute to test your insurance knowledge by reviewing them. Then, if you have your own insurance questions, give us a call.

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We have answers.

Auto FAQ’s

Q. Am  I protected by my insurance when I drive a rental car?
A. Your motor vehicle liability insurance policy covers you for bodily injury and property damage liability, as well as no-fault, when you drive a rental vehicle.  However, this coverage is provided on an “excess” basis, which means that your policy will cover you if the amount of damage or loss exceeds the insurance coverage provided by the rental vehicle company.  If the vehicle was rented in New York State, the rental vehicle company must provide the minimum required coverage.

A rental vehicle company may hold a renter responsible for damage to, or loss of, rental vehicles, including loss of use. (“Loss of use” means you must pay the daily rental rate for every day the rental car is out of service being repaired.)  However, your motor vehicle liability policy may provide this coverage, subject to certain exclusions in the policy.  It is important to know that you as a renter may be held fully responsible for damage to a rental vehicle, unless “optional vehicle protection” (OVP) coverage is purchased from the rental vehicle company, or you have insurance coverage under your motor vehicle insurance policy or through your credit card.

In the past, New York State Law prohibited a rental vehicle company from selling Collision Damage Waivers (CDWs) in New York on motor vehicle rentals of 30 days or less.  A rental vehicle company was not, in most circumstances, able to hold renters liable for more than $100 in the event the rental vehicle was stolen or damaged.  However, changes in the law now give renters the option of purchasing a CDW, also known as Optional Vehicle Protection (OVP) from the rental vehicle company, and also permits the rental vehicle company to hold the renter liable for the full amount of damage to the rented vehicle.  You may want the CDW or OVP insurance just to cover potential “loss of use” charges which can be substantial.

Q. What if the standard Personal Insurance Protection required in NY isn’t enough for my family’s expenses? Can I get extra coverage?
A. The simple answer is “Yes.” The basic Personal Injury Protection (PIP) provides benefits up to a set amount if you are in an accident, including coverage for medical bills (up to $50,000), increased household expenses ($25/day for 3 years following the accident), 80% of lost wages up to a maximum of $2,000/month for 3 years, and a $2,000 death benefit in addition to the basic $50,000 PIP benefit. PIP is a no-fault coverage, meaning that your insurance company will pay PIP benefits to you, any passengers, and any pedestrians injured by your car, even if you caused the accident through your own negligence.

For an extra fee, you can also add to the basic PIP coverage. For example, Additional Personal Injury Protection is available, which raises the PIP benefit limit from $50,000 to $100,000. Guest PIP coverage extends PIP coverage to out-of-state passengers who would not ordinarily be covered. Optional Basic Economic Loss (OBEL) coverage is another additional PIP coverage-it adds an additional $25,000 worth of benefits for basic economic loss, which includes lost wages, medical bills, etc.

he answer is an important one. If you suffer losses, Replacement Cost provides you with a dollar amount needed to replace an item with a similar kind and quality. An Actual Cash Value settlement pays you for the amount needed to replace the item minus depreciation.

Q. What are restrictions for a learner’s permit?
A. No matter what age you are, if you hold a learner permit, you may not drive unless accompanied by a supervising driver age 21 or older who has a valid license to operate the vehicle you are driving. For example, only a person with a motorcycle license may supervise a person learning to drive a motorcycle. 1

You may not drive with a learner permit:

  • on any street within a park in New York City
  • on any bridge or tunnel under the jurisdiction of the Tri-borough Bridge and Tunnel Authority
  • on the Cross County, Hutchinson River, Saw Mill River, or Taconic State parkways in Westchester County
  • in a DMV road test area

he answer is an important one. If you suffer losses, Replacement Cost provides you with a dollar amount needed to replace an item with a similar kind and quality. An Actual Cash Value settlement pays you for the amount needed to replace the item minus depreciation.

Q. What are the NY requirements for child safety seats?
A. New York State law requires that:

  • all children under the age of 4 ride in child safety seats
  • all children ride in child restraint systems until their 8th birthday

Safety seats and child restraint systems must be certified according to Federal Motor Vehicles Safety Standard 213. Follow the instructions of the manufacturer of the seat or system, and make sure you install and use the seat or system correctly. The Governor’s Traffic Safety Committee website has a list of permanent child safety seat fitting stations in NYS.

An appropriate child safety restraint system

  • is required for all children until their 8th birthday
  • must meet the size and weight requirements for the child based on the Federal requirements and the recommendations of the manufacturer
  • can be a child safety seat, a harness, a vest or a booster seat attached with the vehicle seat belt system, but not the vehicle seat belt alone
  • should not be used in the front seat of the vehicle.

Q. What is the NY law regarding cell phone use while driving?
A. Under New York State law you cannot use a hand-held mobile telephone or portable electronic device while you drive. Illegal activity includes holding a portable electronic device and:

  • talking on a handheld mobile telephone
  • composing, sending, reading, accessing, browsing, transmitting, saving, or retrieving electronic data such as e-mail, text messages, or webpages
  • viewing, taking, or transmitting images
  • playing games

If you use a portable electronic device while you drive (except to call 911 or to contact medical, fire or police personnel about an emergency), you can receive a traffic ticket and be subject to a fine of up to $450 and a surcharge of up to $93.

Conviction of a cell phone use, portable electronic device use or a texting violation will also result in points being added to your DMV driving record.  If you receive 11 points in an 18 month period, your driver license may be suspended.  To learn more, see About the NYS Driver Point System. [LINK: http://dmv.ny.gov/org/tickets/cell-phone-use-texting]

Q. Do I need to inform you when I pay off my car loan?

A. Yes.  When you finance a large purchase like a car. motorcycle, boat, RV or home, your lender must be listed on your insurance to protect their investment.  If you suffer a loss, the claim check will be issued in both your name and the lender’s name.  Once you have paid off the loan, the lender should be removed as they no longer hold a lien on your property.  However, we have no way of knowing this unless you inform us when you make your last payment.   If you fail to do this, you will need to get the lender’s co-signature on any claim check  and that will unnecessarily slow down receiving your money for the loss.

Q. If my car is in the shop after an accident, will my insurance pay for a rental car?

A. Only if you have purchased Rental Vehicle Coverage (also called Substitute Transportation or Transportation Expense Coverage.)  You select an amount, typically from $15 to $100 per day, and your premium will reflect the amount of coverage you want.  Many people purchase $30 per day.  At today’s rates, that will probably only cover an economy car.    You may want to check rates online for the type of rental vehicle you need, and call us to adjust your policy amounts if necessary.

Q. What can I save by taking a Defensive Driving Course?

A.  If you complete the online Defensive Driving Course offered by the New York Safety Council, you save in two ways.  First, you receive a 10% discount on the motorist’s liability, no fault and collision portions of your auto insurance premiums for the next 3 years.  Also, if you do not have a “ticket free” driving record, you will be eligible to reduce your active driver violation point total by up to 4 points.  This means that the New York DMV will not count up to four points on your driving record toward license revocation or suspension.   Point reduction applies to points assessed for violations occurring in the last 18 months.  Cost for the course is $24.95 and you sign up at www.newyorksafetycouncil.com.

 

Homeowner FAQ’s

Q. What is the difference between “replacement value” and “actual cash value” for my personal possessions and valuables?
A. The answer is an important one. If you suffer losses, Replacement Cost provides you with a dollar amount needed to replace an item with a similar kind and quality. An Actual Cash Value settlement pays you for the amount needed to replace the item minus depreciation.

Q. If a tree or big branch falls on my car during a snow or wind storm this winter, does my homeowners policy pay for the damage?
A. No. At home or away from home, you are only covered for this type of loss if you have comprehensive coverage on our auto policy. However, if a tree or branch hits your house or another insured structure such as a detached garage or shed, you can file a claim for damages and removal of the tree under your homeowners policy.

Q. Are my trees and shrubs covered for damages by my homeowners policy?
A. Your trees and shrubs are covered for losses by vandalism, theft and fire by standard (HO-3) homeowners policies. But NOT for losses from wind damage. However, if a fallen tree damages your home or blocks access to it, you may be covered for its removal- generally up to a $500 limit.

Q. Does my homeowner policy cover other structures on my property?
A. Yes, BUT the standard limit of coverage is 10% of the amount of insurance on your main house. So if your house is insured for $400,000 then your outbuildings are covered up to $40,000. The definition of “other structures” includes your garage, sheds, pool, pool house and fences. If it would cost more to replace these than the 10%, you may want to increase your limit to cover their replacement cost.

Q. If we make major home improvements, like add a sunroom or remodel our kitchen, do we have to report this to our insurance company?
A. We encourage that any time you make substantial home improvements that increase the value of your home, that you alert your agent. You may need to increase the limits on your coverage to account for the increased value to avoid being underinsured.

QHow does coinsurance affect my homeowners policy?

A. Some homeowners are surprised to learn that their homeowners policy, especially if based on industry standard ISO policy forms,  has a coinsurance clause that can impact their coverage. In current practice, the coinsurance clause penalizes homeowners who fail to keep their coverage amount equal to or greater than a specific percentage, typically 80% or greater, of the value of the insured property.

For example, if a damaged home is insured for 80% or more of the full replacement cost, then the claim amount paid will be the lesser of the policy limit or the actual repair/replacement cost. But if the home is insured for less than the required 80% of the actual replacement or repair cost, then the loss will be settled on actual cash value, including depreciation of the home and contents.  Receiving a settlement less than the cost to rebuild is an unpleasant surprise on top of a traumatic experience!

If you haven’t had a recent home valuation which takes into account the cost to repair or replace your home utilizing current building codes and today’s materials, you are not properly covered. Contact your agent immediately for a home valuation and policy assessment to be sure you are protected.

QWhat is the difference between replacement cost and actual cash value coverages for personal possessions?

A.   The answer is an important one. If you suffer losses, Replacement Cost provides you with a dollar amount needed to replace an older item with a new item of similar kind and quality. An Actual Cash Value settlement pays you for the amount needed to replace the item minus depreciation.

Click here for more details: http://www.helpinsure.com/home/documents/acvvsreplace.pdf

Q. What is ordinance coverage and why do I need it?

A. State and local building codes and construction materials change over time.  If you have a loss from fire or storm damage, your contractor will have to repair the damage utilizing current codes to pass inspection.  These upgraded standards can greatly impact the cost to repair the damage.  Most insurance coverage is for replacement with similar quality materials.  If codes now require a costly upgrade, you will have to pay the difference unless you choose to add ordinance coverage to your homeowners policy.  Depending on the age of your home, this may be a good investment in your peace of mind.

 

Commercial Insurance FAQ’s

Q. Why do I need a commercial auto policy instead of a personal auto policy?

A.  If you are a business owner or self-employed professional and your car or truck is owned by the business or is leased by the business, you must have a commercial auto policy under New York law.  If you permit your employees to use the vehicle for business purposes, again you want a commercial policy to protect your business from the liability of potential lawsuits and claims based on their use of the vehicle.

If you are a typical small business, you have probably purchased a Business Owners Policy or BOP. Commercial auto coverage is NOT automatically part of a BOP and must be added at an additional cost.  If you have covered your business with a Commercial Multi-peril Policy (CMP) or Commercial Package Policy (CPP), this usually includes commercial auto or fleet coverage, depending on what the company has for vehicles and how the employees use the vehicles.

Q. Do I need Workers Compensation and Disability Benefits Insurance?

A. If you own a for-profit business in New York and have full time or part-time employees, you are required by law to purchase Workers Compensation to cover on the job accidents and injuries and also Disability Benefits to cover off the job illnesses and injuries.  Even non-profit institutions and organizations must carry these coverages if they pay employees.  Also by law, employers may not charge any portion of the cost of Workers Compensation to employees.  However, employees may be asked to contribute a small percentage of the Disability Benefits premium.

Costly fines and other penalties will be imposed by New York for failure to comply.

Q. Why do I need certificates of insurance from subcontractors?

A.  Any entity can be exposed to risk when using the services of outside independent contractors, subcontractors, service providers, vendors or any other organization that supplies them with services or materials.  Accidents and injuries happen and if they happen on your property or in your service, you have some liability.  Transferring the risk or liability to another entity through a combination of contracts and insurance is a basic means used for managing the risk.  An insurance certificate is merely a tool used as assurance that the types and limits of insurance required, such as Workers Compensation, Disability Benefits, and liability coverage, are in place and current.  By having the certificates in your file, you protect your company from additional charges for subcontractors when your company is audited by your insurance company.  However, it is also a good idea to require all contractors and subcontractors to provide a copy of their actual policy to check their coverages and limits to make sure they are sufficient for the actual risks.
QWhy does my insurance company require an audit?

A. The concept behind an audit is to assure that you are paying the correct amount of premium for the insurance you have…. neither too much nor too little.  This in your best interest as well as the company’s because conditions and risks change over time.  You want to be protected for the risks you have today, not the ones you had several years ago. The insurance company will request certain documents from you, such as payroll records to check Workers Comp or tax records to look at sales.  If you have considerable inventory that changes over time, they may ask to see inventory records. They may ask for a visual inspection of your premises.   The end result will be that you will know that you are adequately protected and are paying an appropriate premium.

Q. Why do I need Business Income coverage?

A. Business Income coverage, also called Business Interruption coverage, provides income for the period when you are “out of business” due to a covered loss, such as a fire, storm damage or flood.  The coverage applies to the economic loss suffered during the time required to repair or replace your damaged property so you can begin operating again.  It may also be extended to apply to losses suffered after the completion of the repairs for a  specified number of days while you ramp up to your previous level of activity and sales.

Q. How does a coinsurance clause affect my policy?

A. Coinsurance clauses are typically found in many different insurance policies from commercial insurance to homeowners to federal flood insurance to health insurance.  But even though the clause or requirement is named “coinsurance”, it means different things depending on the type of policy.

For example, in health insurance, it typically refers to a form of cost sharing for covered expenses above the deductible. However, in the case of property coverage, coinsurance is a way to establish a “standard” for the company’s total exposure. And a way for insurers to establish some degree of rate and premium equity. The insurance contract is the means to set the direct damage coverage limits and how any loss will be settled (replacement cost or actual cash value).  Typically insurers want coinsurance requirements that cover 100% of the insurable value, as established by recent professional appraisal of buildings and contents.

This process can get very complex because different policies and companies have different definitions and methods of evaluation. However, your insurance agent should be able to review your policy and explain how coinsurance is handled in your case.

 

Count on Lupton & Luce for Sound Advice for Sound Decisions.