With all of the recent hype regarding the Toyota recall insurance agents have received a number of calls from our clients asking us if they are in an accident while driving their Toyota and the accident is caused by your accelerator pedal being stuck under the floor mat in the open position or the accelerator pedal mechanism staying partially depressed or returning slowly to the idle position, will their auto insurance provide coverage for them? 

Well one of the insurance companies that I represent Erie Insurance came out with a statement to ease drivers worries:

If you own a Toyota included in the recent recall and have an accident, or if you are involved in an accident with a recalled vehicle, Erie Insurance wants you to know that the Toyota recall will not have an effect on whether there is coverage available to you for the loss.  ERIE will provide coverage for your loss, subject to applicable policy terms, conditions and deductible. Simply report the claim, as you would any claim, to your ERIEagent or call our 24/7 toll-free claims hotline at (800) 367-3743.

To find out the most recent information regarding the recall be sure to visit Toyota’s website at http://www.toyota.com/recall/?srchid=K610_p228906387.

I’ve grown up pretty much my entire life having dogs as pets.  Christine and I adopted a mutt named “Barney” from Lollypop Farm about 5 years ago.  I enjoy hauling my dog around with me when I can in the SUV (weather permitting, of course).  I’ll take him to the dog park or we’ll bring him on a hike with us, I never really gave much thought about what would happen if we were in a car accident, until I started to sell insurance and my perspective on everything changed. 

I have a grate that keeps him in the back of the vehicle, so he’s not jumping over the seat or licking my ear/face when I’m driving.  I figured this would help keep him in the back of the vehicle in case we were ever in an accident and help protect him and us.  Even though the grate will keep him from propelling into the back of us or even worse out of the vehicle, undoubtedly he would still sustain some injuries depending on the severity of an accident. 

Now I know that if I’m hurt in an accident or any of my passengers, my auto insurance policy with pay for my medical bills.  But what about Barney’s medical bills?  Two of the insurance companies that I represent will cover the medical bills for your dog/cat, Erie Insurance and Progressive Insurance.

Erie Insurance will pay up to $500 per animal for reasonable veterinary costs incurred due to an injury in a covered auto accident.  If the injury results in death, Erie will pay up to $500 to replace the dog/cat, which includes the first wellness visit and the cost to spay or neuter the dog/cat.  There is no deductible applied to this pet coverage.  Anyone that has an Erie Insurance Auto Policy automatically has this coverage built into their policy at no additional cost. 

Progressive provides up to $1,000 for veterinary bills for your animal that is injured in a covered auto accident.  Progressive will pay you up to $1,000 to replace your animal, even if you opt not to replace your animal.  Now in order for Progressive’s pet coverage to apply to your policy, at-least one of the cars on your policy has to have collision coverage.  If you have collision coverage on at-least one vehicle, the pet coverage is automatically included on your policy and applies to all vehicles on the policy even if they don’t have collision coverage. 

For all of the dog/cat lovers out there, these are great coverages to protect your pet. 

I received a call recently from a prospect looking for auto insurance that was a male, 20 years old, had 4 tickets in the last 2 years and 1 accident, and he lived in the city of Rochester and wondered why he was paying so much for his auto insurance.  He obviously didn’t understand that insurance premium rates are based upon your driving record.  Insurance companies reward you for having good driving habits and penalize you if you don’t. 

If you look at this prospect he is getting whacked for a number of reasons, first being his age.  At 20 years old he is still a new driver.  Once he turns around 24 he will start to see his rates decrease.  Second he is single, insurance companies give better rates to married couples because actuarial data has proven that married drivers are more responsible. 

Also being such a young age and having his driving record isn’t boding well for him.  Even if you take a defensive driving course to have points removed from your DMV report, your insurance company will still surcharge you for them.  Insurance companies assign their own points to your violations.  Having 4 tickets within 2 years not only results in him paying more, but it also excludes him from even applying to some preferred companies.

He is also getting charged a higher rate because he lives within the city of Rochester, not that the city of Rochester is a bad place to live, but insurance costs may be higher in the city compared to some of the surrounding towns and counties.  Insurance companies rate based on where you live, they have statistical data the proves that some areas where people live have more frequent or higher dollar claims. 

Now all of these factors make sense on why he would be paying a higher rate, but what most people don’t realize is that he may also be paying a higher rate because of his credit score.  Most insurance companies will run a insurance score which is based off of your credit score.  With this new rating factor companies are able to have many more tiers of rates than they did previously. 

Some companies will have over 100 different tiers to rate someone based on their insurance score, then once you take into consideration the rest of the factors like where you live, driving record, age, marital status and the car you drive, there are an infinite number of rating combinations.  I always think it is funny when people will ask me how much it will cost to insure their vehicle and think that I can tell them off of the top of my head.  There are so many factors that go into the rates that you can’t estimate accurately the premium without putting all of the information into the insurance companies rating software.  Everybody has their own individual rate for their car insurance.  Also, the prices can vary greatly from one company to the next as well.

Did you know that the NYS DMV requires you to pay an assessment in addition to any fines, fees, penalties, or surcharges that you may have to pay and it’s for a 3 year period? 

You must pay the driver responsibility assessment if any of the following incidents occur:

• you receive 6 or more points on your NYS driver record during a period of 18 months
• you are convicted of an alcohol-related traffic violation in NYS
• you are convicted of a drug-related traffic violation in NYS
• a DMV hearing determines that you refused a chemical test in NYS

The amount of the assessment depends on the type of violation and the total of your driver violation points.  If you are convicted of a traffic violation that is alcohol or drug related, or if you refuse a chemical test the annual assessment is $250 for 3 years.  If you receive 6 points on your driving record during a period of 18 months, the annual assessment is $100 for 3 years.  If you receive more than 6 points on your driver record during a period of 18 months the annual assessment is $25 for each point that is more than the original 6 points. 

This assessment is in addition to the fine for the actual traffic violation.  Not only are you getting hit with a traffic violation fine, but they’re whacking you with a 3-year assessment on top of it.  It can turn pretty costly to break the rules of the road in NYS!

Unfortunately, you are not able to reduce the amount of the assessment by taking a DMV-approved accident prevention course.  The accident prevention course will reduce your insurance premiums and reduce the total of your driver violation points, but will not eliminate the assessment. 

If you are looking to save some money on your insurance premiums, NYS has recently approved an on-line accident prevention course, visit

http://www.newyorksafetycouncil.com/?lgr=bc53ca64-8740-de11-9e2f-00c09f3f0f12

For more information on the driver responsibility assessment you can visit http://www.nydmv.state.ny.us/drp.htm

PIP is an important coverage on all auto insurance policies and it is particularly important to self-employed individuals.  PIP stands for Personal Injury Protection and this is what people commonly refer to as “no-fault”.  When you are injured in an auto accident and you have medical bills your PIP coverage pays for those bills.  People call it “no-fault” because it doesn’t matter who is at fault in the accident each persons policy covers their own medical bills. 

Now why is this coverage particularly important to self-employed individuals?  Because PIP will also provided coverage for loss of wages due to an auto accident.  If you are self-employed and have looked into disability insurance you know how expensive it is and difficult to obtain.  PIP won’t provide you as extensive coverage as a disability policy, but it will offer you at least some protection for loss of wages if you are in an auto accident.

The standard PIP coverage will provide coverage for 80% of your monthly wages up to $2,000/month.  $2,000 won’t get some people very far to cover their monthly expenses.  What most agents don’t point out is that you can purchase additional PIP coverage, which not only increases the amount of medical bills that will be covered, but can increase your monthly loss of wages to $4,000.  So how much does it cost to buy this increased coverage?  Around a whopping $15 per car per year! 

$4,000/month of wage replacement isn’t a lot for some people but it’s a heck of a lot better than $2,000/month.  If you are self-employed and not able to work because of a car accident, you know that your business will suffer and your income could drop significantly.  PIP can help bridge the gap between your earnings prior to the accident compared to after.

There can be some confusion as to who should insure a young driver’s car of divorced parents.  The young driver may primarily reside with his/her mother, but the father may have purchased the car for the young driver to use and it is titled in the father’s name. 

The mother will need to add the young driver to her policy because the child primarily resides with her, but the father will have to include the car on his policy with the child listed as a driver because it is titled in his name. 

If the car is titled in the child’s name then he/she can obtain their own separate auto insurance policy.  That is if neither of the parents wants to run the risk and increased premiums of having an inexperienced driver on their policy.  It will be much more cost effective for the child if they are added to the parents’ policy because they would get the benefit of the multi-car discount for having more than one vehicle on a policy and a multi-policy discount assuming the parents have their homeowners or renters insurance with the same company. 

It is important that the child be listed as a driver of the car on the father’s auto policy and listed as a driver on the mothers’ auto policy to make sure that they have the appropriate coverage in case they are in an accident.  It will also help the child when it is time for them to go out on their own and obtain their own auto insurance policy. 

I’ve had this happen a number of times when a young driver will come to me to get auto insurance because they are purchasing a new car in their name and they think that they’ve been listed as a driver on their parents’ policy, but unfortunately they were never added.  This dramatically increases the cost of insurance for the young driver because it looks like they’ve had no prior insurance.  The insurance company has no record to draw from to determine if this driver has been acting responsibly or not, so they charge them a higher rate.  If the young driver can show me their parents’ policy that lists them as a driver, I’m able to get them a substantially better rate. 

Once the youthful driver has their own insurance, the parents can remove the child from their auto insurance policy.  The parents’ insurance company will most likely want to see an actual policy showing the child has their own insurance before they remove them.

I get asked this questions a lot and like the answers to most insurance questions, it is subjective.  When you are considering dropping comprehensive and collision deductibles depends on the age, value and condition of the vehicle as well as your own financial position. 

The majority of people carry $500 deductibles, indicating that this is the amount that they will pay towards a claim.  So when considering removing collision coverage you have to ask yourself, what is my car worth now.  If the answer is $1,000 or less you should seriously consider removing collision coverage.

If your car is worth $1000 and you have an accident, most likely your car will be totaled and the most you will get is $500 ($1,000 the value of your car minus your $500 deductible).  If you are carrying collision coverage, you are paying more for that coverage.  Is it worth it to pay an extra $100, $200 or more for collision coverage a year in insurance premiums if your car is only worth $1,000?  I would think not.  You are better off removing the coverage and taking the savings and put it in a savings account to go towards a new car in the event of accident. 

Now what if your car is worth more than a $1,000?  That depends on you own financial situation.  If you would rather take the savings on insurance and risk the chance of having to pay for any repairs to your car or purchase a new car due to an accident that is deemed your fault, that is your choice.  You want to make sure that you would be able to do it comfortably though.  You wouldn’t want to find yourself in a situation that you couldn’t afford to repair or replace your mode of transportation. 

If you are considering dropping comprehensive and collision coverage, I usually recommend that you start with collision coverage.  Collision insurance is more expensive and will give you the most savings.  Comprehensive coverage is less expensive and provides you with some valuable coverage.  Comprehensive will cover you if you hit an animal; your car is stolen, a tree falling on your car, you vehicle catches on fire, a windshield crack/chip, pretty much anything that doesn’t involve hitting another car.   

If your car is older and the value has decreased you can even decrease your comprehensive coverage and you won’t see a dramatic increase in your premium.  If a client is considering removing comprehensive and collision coverage, I will usually recommend they start with collision and then if they are carrying a $500 deductible for comprehensive, I will recommend that they consider decreasing that to $250. 

The decision to remove or reduce coverage ultimately is up to each individual and will be based on their personal circumstances.  It would be nice if there was a clear cut formula, but it is a subjective decision for each person.