North Carolina Auto Insurance Policyholders – Your Adult Children Should Not Be Driving Your Cars

With the North Carolina auto insurance policy there is a relatively unknown loophole that could cost you or your adult child a lot of money. This loophole is triggered if they are driving a car you own and insure but they don’t live with you. The solution to avoid this coverage gap is pretty simple but most people just aren’t aware that they have this problem in the first place.

First of all, let me cover the exact situation that can trigger this coverage gap, then I will explain the gap itself and give you a solution. You will run into this gap in protection if you have a child who is over 23 years old and lives outside of your home but is still driving a car that is title in your name. This happens so often as we help our kids out with a car and then want to keep helping them by keeping the car on our insurance policy to pay the insurance costs on the vehicle. But this type of kindness is very dangerous. I will explain.

The problem is not that your child won’t have protection driving his or her car that you insure on your auto insurance policy. Not at all. After all, you have insurance protection for that car spelled out on your policy. The problem occurs when your child is driving a friend’s car and gets into an accident. You see, since your child is an adult, living outside of your residence, he or she will have no excess protection for cars that aren’t listed on your policy. So, assume your adult daughter is driving her friend’s car and has a bad accident where she is at fault. Her friend’s auto insurance policy will pay the claim but her insurance company can then subrogate against your daughter for those losses. Normally, your daughter could just have your insurance company pay for the losses, but since she is not a resident of your household and is over 23 years old, she will not have this protection. And this could be a very expensive mistake.

So what is the easy solution? Well, you should retitle the car into your child’s name, and have him or her purchase a personal auto policy in his or her name. This will give them the excess coverage protection needed when he or she drives someone else’s vehicle.

At Clinard Insurance Group in Winston Salem, NC, we want all of our clients to be well informed insurance consumers. If we can help you with your auto insurance, home insurance or your business or life insurance needs, please call us, toll free, at 877-687-7557, or visit us online at www.ClinardInsurance.com.

The source material for this article was drawn from articles originally posted at www.InsuranceAnswerGuy.com.

Renting A Car? Your NC Auto Insurance Policy Could Leave You With A Huge Bill

North Carolina Auto Insurance Companies have some protection available for people who rent cars when they travel but even the broadest protections offered don’t protect you against all the losses you are signing up for when you sign your name on the rental contract. Here are three big risk scenarios that you need to be aware of before you sign the rental agreement.

While your NC auto insurance policy will provide you with protection against losses to rental vehicles as long as you have collision and comprehensive coverage on at least one care on your policy, the truth is that this is not the entire picture. The differences in the rental car contracts from the different rental companies may leave you responsible for some losses that your insurance policy doesn’t cover. And in at least 2 of the 3 risk areas, you probably will not be able to find any coverage for this exposure at all. So, what are these gaps in insurance protection?

The first gap area deals with loss of use losses. If you wreck a rental and the rental car company chooses to repair the vehicle, then your contract with them will generally hold you responsible for the loss of rental income on that car until it is fully operational again. This can run into quite a bit of money but the good news is that most NC auto insurance policies have an endorsement that you can add to your policy for a couple dollars a year to provide you with this coverage. You can read more about loss of use coverage for rental cars by clicking here.

The second gap area comes into play if your contract with the car rental agency says that they can choose to replace the car, rather than repair it and you are responsible for all of these costs. The problem here is that your North Carolina auto insurance policy will only pay for the cost to repair the vehicle. If the car was worth $20,000 when you rented it, and after you damaged it, it is worth $8000 and the cost to repair it is $4000, then you will be out another $8,000 after the rental company replaces it and deducts the salvage value of $8000. This is because your car insurance policy will only pay the $4000 to repair the vehicle. As of this time, I know of no insurance company that has protection for this gap in coverage.

The third gap area is called the diminished value gap. This happens when the rental contract specifies that after you cause damage to the car, then you are responsible for the perceived diminished value of the vehicle after it has been repaired. Let’s take the previous example. The car was worth $20,000 and you caused an accident with it that will cost $4000 to repair. Now after the repairs are completed, the car rental company declares the diminished value of the vehicle to be $17,000 because it is now a previously wrecked car. Your NC auto insurance policy will pay the $4,000 to repair the vehicle but the additional $3,000 for diminished value will be your responsibility. In some states, you can purchase coverage for diminished value losses but in North Carolina at this time I am unaware of an insurance company offering this protection.

Taking a trip with the family and renting a car is supposed to be a fun and exciting time. I do want you to enjoy your trips but it is important that you be aware of the limitations of your auto insurance policy for protecting you. At Clinard Insurance Group in Winston Salem, NC, we want all of our policyholders to be informed consumers. If you have any questions about car rental coverage, or if you need any help with your auto insurance or your home insurance, please call us, toll free at 877-687-7557 or visit us online at www.ClinardInsurance.com.

The source information for this article can be found in a blog at www.InsuranceAnswerGuy.com.

The Consent To Rate Form - In North Carolina This Is A Big Red Flag

More and more insurance companies are sending out a consent to rate letter, also called a consent to rate form to their North Carolina Auto Insurance and North Carolina Homeowners Insurance policyholders. The letter may seem like harmless little form that you sign and return but it isn’t. In fact it should be a big red warning flag to you about your insurance company and your status with them. Alarm bells should be going off in your head and there are a few things you will want to understand before you sign anything.

To understand what a consent to rate letter is and how it works, you must first understand a little bit about how auto insurance and home insurance rates are established in North Carolina. You see, all rates for these policies have to be approved by the NC Insurance Commissioners office. In most all cases, the Insurance Commissioner sets the maximum rates allowed for a North Carolina auto insurance policy and a North Carolina home insurance policy. The various insurance companies then create their own many rate tiers for their policies by deviating, or reducing their rates to something below the maximum allowed rate which is often referred to as the state rate.

What a consent to rate letter does is ask you to give the insurance company permission to charge you rates on your policy that exceed the state maximums. When you sign and return this letter you are essentially giving your ok to be charged rates higher than those established by your insurance commissioner.

Why would the insurance company want to charge you rates above those allowed by the commissioner’s office? Well there are really only two reasons. One is a macro reason and the other is micro in nature. Let me explain.

The macro reason means that the company is doing this for either all or many of its clients. We are seeing this with the North Carolina Homeowners policies from some companies who have too much exposure to possible storm assessments as a result of the beach plan insurance crisis. To read my latest blog about that, please click here.

The micro reason would be that the insurance company has singled you out as a client that they find too risky to insure at their usual rates. Before they can accept you as a customer and issue your policy, they have to know that they can charge you more than the state maximum rates.

Either way, a consent to rate letter is bad news for you as a customer of that insurance company. It implies that either your company is having some difficulties or that you are a bad risk. The implications for you are that you may be seeking insurance from the wrong company. You may not be a good fit for that company for a whole host of reasons. With so many other insurance companies out there, all fighting for your business, your best course of action may be to seek insurance elsewhere.

Before you sign and return any consent to rate letter, you should get an informed second opinion. At Clinard Insurance Group in Winston Salem, NC, we work hard to make sure that our clients and friends are well informed insurance consumers. We can help you better understand what that consent to rate letter means for you. Call us, toll free at 877-687-7557 for any help you may need with your North Carolina auto insurance, home insurance, umbrella insurance or even life insurance. We can give you an informed second opinion on your insurance questions.

The source material for this article was drawn from information found at www.insuranceanswerguy.com.