Page 10 - Network Magazine Spring 2019
P. 10

                   Think you have all your "Risk"
Covered? Time for a Review?
TOM BARTHOLOMEW, CLU, CHFC, STATE FARM
While driving home from the NETWORK MAGAZINETM event at Boos Rock last week, I was sharing my thoughts with Kelly on what I wanted to write this article about. As an insurance professional in my 4th decade of practice, I am increasingly alarmed at the “commoditization” of auto insurance. Very few companies advertise protection; it is all about low price. Now don’t get me wrong, everyone wants the best quality at the lowest price, but I suspect the majority of drivers have no idea what stacked underin- sured coverage really protects or the difference between limited tort and full tort and the hundreds of thousands of dollars of protection that are in play for pennies of premium per day.
As Kelly and I continued this conversation, we heard sirens coming from all directions. Next, the Upper Macungie Police cruiser flew by. Then the Fogelsville Fire police and first responders flew by. I always get nervous when I hear sirens, hoping and praying it’s not someone I know or insure. As it turns out, I did get THAT call the very next morning. It was a near-fatal auto accident, involving one of my clients, actually the son who is in his 20’s. He was completely innocent in this accident, just a simple case of being at the wrong place at the wrong time. We proceeded to set up the claim, and I invited the family to come to the office to review their auto policy in person. They were distraught with many questions. Hopefully, I was able to offer some semblance of assurance that they will be well protected if litigation is brought. As it turns out they have high levels of liability protection, plus a personal liability umbrella in place. We discussed how the repairs would be handled once the car is released from impound and set them up in a rental car. Finally, we explained how the medical transport and other medical bills would be handled.
The competition for Auto insurance has never been fiercer. Advertising is directed at a low price, minimum coverage. The minimum liability limits in PA are 15,000 per person/ $30,000 per occurrence for bodily injury and $5,000 of property damage liability. The state legislature set these limits in 1974. In 1974 the average price of a new car was $3,500. In 2019, the average price of a new car is tenfold; $34,000. Back in 1974, when you bought your
first car, your father took you by the hand to his Insurance Agent. That Agent gave you the protection you needed, and you forged a life-long relationship. Today, the first time car buyer, typically Googles “cheap car insurance," absent an insurance professional, finds a low-cost cover- age minus consideration of inflicting serious bodily injury upon others, or giving up rights if injured by someone else. I get the feeling that there is a lot of underinsured drivers with misguided priorities based on irresponsible advertising.
Another major shift in transportation is the advent of rideshare, i.e. UBER and LYFT. There are an estimated 1.5-2 million UBER drivers in the US and 41.8 million UBER users. Total UBER usage is about 15 billion trips since its inception a decade ago. Complicating matters, personal auto policies specifically exclude coverage when the vehicle is being used for livery (hired for pay). UBER has contracted with a third party to pick up when the personal auto policy excludes coverage. However, those limits are obscure at best and vary by state. Typically, there is a low level of liability protection when the UBER driver is “App On” minus riders. Limits of $50,000 / $100,000 per per- son/per occurrence for bodily injury liability and $25,000 for property damage liability is common. When trans- porting riders, the liability limits increase to $1,000,000. So, at any given moment, various companies are insuring a vehicle at various levels of protection all in a matter of seconds. A claims and litigation nightmare. This topic alone should make everyone increase their Underinsured Motorist coverage and stack it! And don’t be so quick to delete the collision coverage on your 10-year-old sedan.
In the past five years, the auto insurance landscape has changed dramatically based on new technology and a shift in advertising. Now more than ever it’s important to take inventory of your insurance portfolio to assure you are protecting your assets if you just happen to be the one who is at the wrong place at the wrong time. For a professional giving advice to clients, please ask your cli- ents to sit down with their Insurance Agent to make sure adequate protection is in place. What was adequate last decade may not adequately protect you today.
8 NETWORK MAGAZINETM
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