Recently, I read an article in Property Casualty 360 regarding older agents trying to adapt to new technologies.  The article describes an aging independent agent industry struggling to cope with changes to technology.  Simply put, the speed of life has caught up with  the Independent Insurance Agents and Brokers of America; and passed these guys by.

These articles amaze me.  In the past, insurance agents heavily relied the broken retail business model while companies like Geico, Esurance, and 21 Century commoditized personal line and built large distribution systems that survive regardless of the independent insurance agent.  Working as a  Geico supervisor in the 90s,  I took literally hundreds of calls from independent agents testing my representatives and threatening complaints with their local state insurance departments.   Keep in mind, companies like Geico have deep pockets and extremely profitable books of business.  They consider an investment in technology as an investment in the future.  Instead of fighting the Geicos of the world, agents should have been focusing on adapting to emerging technologies; and becoming the best independent agent in the business.

Direct Writer  - Insurance Company Employee

A direct writer is an insurance agent that works for one company and is involved in their selling system.  Generally, these type of agents earn a base salary (and production bonuses)  through call center distribution centers.  Renewal commissions are not paid to the agent.  Instead, the agent earns salary increases based on their results.  The insurance company owns the clients sold by a writing agent.  Become a direct writer is a good position for someone new to insurance and lacks the experience or funds to become purchase an agency or start one on their own.  Examples of direct writers include; Progressive, Geico, Liberty Mutual, USAA, and 21^st Century

Captive Insurance Agent – Independent Employee  Agent

A Captive agent is one that represents one company.  Generally, this type of agent can offer several different products under one company’s umbrella.  Captive agents are generally compensated by commission and other bonuses for writing profitable business that stays with a  company from year to year.  The captive agent usually specializes in auto and home insurance but they may offer a limited number of life insurance and business insurance products.  Ownership of the client base varies based on the agent’s contract with the insurance company.   Generally, these types ofcompanies require a large capital investment for things like purchasing a client book and location from a former agent, opening new offices, marketing, etc.  Because of the large capital investment needed to become a captive agent, these companies tend to have high quality training programs.  In essence, the agent buys the business with his initial capital investment. Examples of companies with captive agents include: State Farm, Allstate, Farmers, and Nationwide.

Independent Insurance Agent

Independent insurance agents and brokers come in  all shapes and sizes.  These agents offer different products from different companies.  Becoming  authorized as an independent agent can be rather difficult if you have little or no experience.  Some companies will offer appointments to virtually every agent that applies to become an agent while others will want to know more information about your background, experience and business plan.  Many independent agents have production goals.  As a result, many agents join clusters, aggregators, and MGAs to avoid production goals; in exchange for reduced compensation and service.  Generally, captive agents become independent agents after transitioning from being a captive agent.  Compensation for independent agents simple, commission and bonuses.  Examples of companies that use independent agents include: Travelers, The Hartford, Liberty Mutual, Progressive, and Kemper.  Commissions tend to be higher for independent agents because  the companies know independent agents can place business with any carrier they are authorized to sell.  The independent agent owns his clients.

Ultimately, You decide your path

There are pros and cons to each agent type.  The Direct Writer of a base salary offers the ultimate security of a base salary and home office training, while limiting the agent’s ultimate earning power.  On the other hand, having a big name like State Farm or Allstate combined with all the structure, training, and support that goes with a  large company can make becoming an insurance agent much easier.  However paying for your own expenses and  only representing one company and requiring large initial investments could make the life of the captive agent difficult during tough markets.  Ultimately, the independent insurance agent presents the agent with the option of selling any and every product available on the market without exception.  Companies like Liberty Mutual, Allstate, and Farmers write business through independent and captive agents alike.  Commissions and bonuses are available to agents of all types.  Ultimately, you must decide which route to becoming an agent is best for you.  Whether you want to start as a direct writer or captive agent and transition to becoming independent the choice is yours.

After spending an entire day with residents during the cleanup effort, I noticed that homeowners fell into three distinct categories.

Scenario 1: Force Placed Insurance – Undercovered and underinsured.

The first homeowner  I spoke to, initially thought she was uninsured.  Here concern was that her voluntary home insurance policy lapsed over a year ago.  Because her home was currently financed, the mortgage company force placed an insurance policy to protect her home’s structure. After asking a few questions, I suggested she called her mortgage company to determine if coverage existed.

Luckily for her, she has a limited amount of coverage.  The downside is that she was underinsured.  When a mortgage company insures your home, their insterest is in their ultimate financial interst.  As a result, this homeowner only had approximately $70,000 available to rebuild or repair her 1500 square foot home.  I used insurance industry valuation software to determine an actual replacement value of $153,000.  This means she was under insured by $63,000 on her structure alone.  Ultimately, this homeowner may need to pay for some of the repairs and her additional living expenses out of pocket.  At this point, she should hope that FEMA steps in with grants and smaller loans in order to help bridge the gap between her insure losses and her actual losses.  Needless to say, the road for this homeowner may be very difficult.

Scenario 2:  Uninsured Homeowner – No Mortgage Company and No Home Insurance In force

The second homeowner I spoke to, had an even worse scenario.  Their home was finally paid for.  Prior to paying off the home, he had force placed insurance.  As a result, there was no mortgage company or force placed insurance company to supplement his losses.  As a result, his home is destroyed.  He has enough cash reserves to rent a property for about a year.  As for his home, he has the option of demolishing his home and finance the building of another home.  Otherwise, he could wait and see if FEMA will kick in assistance in the form of grants and low interest rate loans.  His replacement value  was approximately $143,000.  Therefore, his dwelling was underinsured by $143,000.  It was also a total loss.

Scenario 3:  Insured Homeowner – Coverage insured at 100% ITV.

By now, I got extremely discouraged.  Until I met the next neighbor.  He made me laugh when he called himself a “professional insurance company bleeder.”  After I stopped laughing and composed myself, he told me his story.  This homeowner was a gun collector and former law enforcement officer.  He said that he paid extra insure his wife’s jewelry as well as his gun collection and his gun safe.

The tornado tore the roof completely from the home leaving every room exposed to the elements.  He said that his insurance company immediately gave him a debit card for his emergency expenese and additional living expenses.  His adjuster  was scheduled to visit his home in 2 or 3 days, but they assured him that he was covered.  His policy was different.

Not only did he have enough replacement cost, but his agent even increased his dwelling by 25% by adding an endorsement that kicks in if his $130,000 replacement cost was not enough to demolish his old home and rebuild a new home.  As a result, while  his neighbors were living with relatives and borrowing money to get by, this homeowner benefitted from the following:

Additional Living Expenses:  This coverage pays for your increased cost of living while your home is being rebuilt due to a covered claim.

Personal Property Coverage:  This coverage pays for any personal effects that were lost or destroyed as a result of the storm.

Of all three scenarios, which do you think cost more?  This is a trick question.  Generally, the force placed insurance is more expensive than the insurance you find on the voluntary market.  That held true in this case.  After pricing what the insurance “could” have been for scenarios 1 and 2, I found that the insurance was under $100 per month in both cases.  This is unfortunate considering the fact that $100 stood between them and complete  peace of mind.

Which scenario scenario best fits your current situation?  If a storm were to destroy your home, are you uninsured, underinsured, or properly insured?  Knowing the answer to this question could make the difference between your borrowing money and staying with relatives or living in a hotel having your additional expenses taken paid.

The average home insurance premium in North Texas is approximately $1400 per year.  If you paid $1400 year for 30 years, you still would pay less than the insurance company after a fire or tornado.  If you have questions about your homeowners insurance policy, contact us here to schedule a free  insurance evaluation.

The Texas Department of Insurance is having an informal meeting that could change the way uninsured/underinsured (UM/UIM) motorist coverage is priced on a Texas auto insurance policy.  The proposed changes to the coverage could mean more diversity in pricing for larger and smaller car insurers in Texas.  Additionally, consumers could ultimately benefit from a the proposed changes.

A strongly worded commissioner’s bulletin released  in July 2011 by former commissioner Mike Geeslin’s office, ordered insurers to make changes to the way in which they price uninsured/underinsured motorists bodily injury and uninsured/underinsured motorists property damage coverages are separate coverages.  The bulletin further stated the following:

“…Insureds must be given the option to purchase only UM/UIM bodily injury coverage, only UM/UIM property damage coverage, or both UM/UIM bodily injury and UM/UIM property damage coverages together.”

Subsequently, on November 29, 2011, Eleanor Kitzman the new Texas insurance commissioner issed a statement to all insurance companies stating the following:

“…Commissioner’s bulletin No. B-0032-11 changed long-standing interpretation and practic regarding insurers’ offering of uninsured/underinsured (UM/UIM) motorist coverage for bodily injury and property damage.”

Until the final ruling, Texas auto insurance companies can continue handling how they handle uninsured motorist coverage.

The new bulletin further stated that the department of insurance will engage insurers, gather public comments  publish an informal draft of the resulting rule.  The pulic informal hearing for UM/UIM coverage changes is scheduled for Marc 9, 2012 at 1:30pm vial conference call and in the room 102 of the Hobby Building.

The state welcomes input from all stakeholders of the Texas auto insurance industry.

Dial-in instructions and agenda information can be found on the TDI website.

The Patient Protection and Affordable Care Act or health insurance reform law remains a hot button for some.  For others, the law represents access to affordable healthcare.  For most, the law remains shrouded in confusion and secrecy.  As a result, the National Associate of Insurance Commissioners released a video highlighting new rules regarding health insurance reform.

According to the NAIC, most of the law’s provisions will be phased in over the next few years.  Most provisions will not take effect until January 21, 2014.  However, as of 2010, some new protections like the new federal high pool provisions were implemented.  Currently, the Texas Health Pool has coverage available for hard to insure cases.  For more details, visit the Texas Health Pool.

The primary goal of the Health Insurance Law was to ensure that everyone has access to affordable coverage, and to ensure that no one is denied credible coverage for pre-existing condition.  Another provision of the health insurance law is the setup of state and federal health insurance exchanges.  The purpose of the exchanges is the provide a resource for consumers to find and compare insurance options available in their states.  These exchanges will also facilitate CHiPs, Medicaid, and health insurance subsidy programs.

According to the NAIC, consumers are not required to purchase insurance through state or federal exchanges.  However, government subsidy programs can only be obtained through exchanges.

Health insurance rates are expected to continue increasing over time.   NAIC and government officials hope that by mandating the purchase of minimum amount of health insurance, the rates will begin to level because of the increased number of health and unhealthy insureds purchasing coverage.  Compliant plans are designed to match high deductible HSA plans.

Self Employed individuals and their families will now be counted in the group markets.  Self employed individuals will also be able to purchase health insurance through the exchange.  Small businesses with fewer than 50 employees are exempted from being required to purchase health insurance for their employees.  Employees of small businesses may also purchase insurance through the exchange.

No such luck for businesses with greater than 50 employees.  These businesses will be required to purchase insurance for their entire state of pay fines for each employee.  For details regarding the fines visit www.naic.org or the department of health and human services.  Businesses with coverage purchased prior to 1/23/2010 and individuals with policies purchased prior to 9/23/2010 are grandfathered into the new law.

Senior Insurance plans remain relatively the same.  In fact, the new law has provisions that will reduce the medicare donut hole.   The NAIC states that seniors in the donut hole have started receiving rebates.  Provisions will phase in a reduction of the donut hole provision until it is completely gone in 2020.  As for some seniors with medigap (medicare supplement) policies, there has been a cost sharing option added to plans C and F.

For a section by section analysis of the PPACA law

According to the Insurance Journal, Pierre, “a man born with half a left arm is suing Starbucks for failing to hire him as a barista.”  In the suit, Pierre claims that the “store manager told him that the coffee flavoring syrups were placed high up and a one-armed man couldn’t work there.”

Starbucks disputes the story, but suit further claims that Pierre, a former bartender” was cpabable of doing the job but was never given a chance to fully explain his capabilities or “possible accommodation as required by California state law.”

For a company of Starbucks’ size, this lawsuit is merely a small blip on the radar.  What about your business?  The EPLI policies is designed to transfer the burden of defending your business in case of claims of this nature.  Generally, EPLI policies are very inexpensive and can be added to many business owners insurance policies.

If your business sued for  wrongful termination, discrimination, or sexual harrassment, do you  have enough set aside to pay the legal costs associated with a discrimition suit?  If the answer is no, you and your business are good candidates for Employment Practices Liability Insurance.  Next time you’re looking for a business insurance policy, make sure you get a quote with this coverage included.

The American Trucking Association petitioned the U.S. Circuit Court of Appeals for the District of Columbia asking the court to review the Federal Motor Carrier Safety Administration’s rule that changes  the hours-of-service regulations for commercial truck drivers.

This is quite a substantial change for Texas Truck Drivers.  According to the FMCSA, changes include limitations on the minimum 34 hour restarts, required rest breaks for each 8 hour period worked, along with changes to the definitions to on-duty time.

The new rules are effective February 27, 2012, and the compliance date of a few of the provisions is July 1, 2013.  Visit the FMCSA’s Hours of Service Final Rule here. The Department of Transportation announced the HOS changes last December as a way to help prevent fatigue-related truck crashes.

The American Trucking Association believes that  rules that have been in place since 2004 have contributed to improved highway safety improvments.  The ATA released the following statement on their website:

“We regret that the FMCSA and the Obama administration have put ATA and its member companies in a position to take this legal action…safety initiatives that will have a far greater impact on highway safety.”  Although the ATA is taking legal action, they openly  support FMCSA’s move toward mandated electronic on-board recorders to ensure greater compliance.

With the new rules, drivers  will have to take at least 2 nights rest from 1:00 am to 5:00am.  This is part of the “34-hour restart” provision.  Texas Trucking companies that allow drivers to exceed the 11-hour driving limit by three or more hours could be fined $11,000 per offense, and the drivers themselves could face civil penalties of up to $2,750 for each offense.

Commercial truck drivers and companies must comply with the new HOS requirements by July 1, 2013. The regulation is available on FMCSA’s website here.

If you’re shopping for insurance and need full coverage, you’d be surprised to find out that the term “full coverages” means different things to different people.  As a result, different insurance agents will quote different coverage combinations.  As a result, calling different agents could result in drastically different policy combinations.  It may surprise you to find that there is no standard definition for “full coverage”.  As a result, how do you know if you have the right coverage?  To answer your questions, we’ve broken down the Texas insurance policy into these manageable sections.  That way, you can easily decide which auto insurance coverages fit your needs.

Liability is a requirement in “full coverage”

Generally, while discussing coverages, I start with liability.  All registered vehicles must carry liability.  If you operate a motor vehicle without insurance in many jurisdictions like Dallas county, your motor vehicle could be towed and impounded until you provide proof of financial responsibility.  Texas minimum auto liability limits are as follows:

• Bodily Injury Liability – $30,000 per person / $60,000 per occurrence or per accident
• Proper Damage Liability – $25,000 per accident

While the 30,000 per person/  60,000 per occurrence is the minimum, it is wise to look at higher limits.  You should always consider carrying higher than the minimum limits for liability.  If you cause accident that exceeds your policy’s limits, you are still responsible for the damage you cause.  Therefore, it is always wise to talk to your local insurance agent about  carrying higher coverage.

Physical Damage covers damage to your vehicle

The second component that is required if you need full coverage car insurance is physical damage.  Physical damage is broken down into to main coverages; comprehensive (which is also referred to as “other than collision”) and collision.   If you need to drive a financed vehicle off the car lot, these are the two coverages that your finance company and car salesman want you to have when you leave.

Collision coverage provides protection in case your car collides with another object or is over turned over in an accident.  This coverage will pay for damage to your car regardless of whether the accident is your fault.  When choosing this coverage, you must choose a deductible.  The deductible is your portion of the of the insurance claim that you will pay.  So, if you have a $500 deductible during a claim, you pay the first $500 of damage done to your car.  Your insurance company pays the rest.

The second physical damage coverage you’re required to carry if you need full coverage is comprehensive coverage or “other than collision”. This cvoerage provides a form of “all risk” protection for your auto from perils or causes other than a collision or upset.  Comprehensive  protects you financially against perils like fire, theft, vandalism, glass breakage, hail, vandalism or damage caused by collision with an animal.  Just like collision, you must choose a comprehensive deductible as well.

Other important Texas car insurance coverages

If you’re looking for the minimum full coverage to get by, liability and physical damage are all you need.  However, if you really want to get the most protection for your insurance dollar, you should consider the following coverages.

Personal Injury Protection or Medical Payments

Personal injury protection (P.I.P.) provides protection for bodily injury and up to 80% of lost income if you or your passengers are injured in an accident while in your automobile. The minimum limit available is $2500 per person per accident.  This coverage can be used regardless of whether you or someone else causes the accident.  Unlike other states, Texas does not require d this coverage.  However, you must reject coverage if you do not wish to carry P.I.P.   If you reject P.I.P, you can either reject medical coverage altogether or select medical payments coverage for you an your passengers.

Generally, most insurance companies will allow you to choose whether your want personal injury protection, medical payments, or no medical coverage at all.  If you choose to carry medical payments, your policy will pay for medical expenses  for an insured or passenger that is injured in an auto accident.  The minimum limit available for medical payments will vary based on the insurance company.  It is up to you and your insurance agent to discuss the right level of medical payments for your insurance needs.

Uninsured Motorists Coverage

Another coverage that you should consider when looking at full coverage auto insurance is uninsured motorists protection.  In Texas uninsured motorists coverage provides extra protection for you and the passengers in your vehicle in case you’re involved in an accident where someone is no insurance or insufficient insurance.  Just like the liability limits, this is written in split limits for bodily injury and proper damage.  However, you have the right to reject uninsured motorist protection just as you can reject personal injury protection.

Unlike other states, Texas uninsured motorist coverage is broken down into bodily injury and property damage.  That way, if your car has liability only, you can still have physical damage coverage in case you’re hit by an uninsured or underinsured driver.  Uninsured motorists property damage carries a $250 deductible.

Towing, and Rental Reimbursement coverage

Towing coverage is coverage that adds lots of value for little cost.  Today, many standard and preferred companies offer emergency road service instead of towing.  That way, if you lock your keys in the car or need a jump on a cold morning, you can call your roadside assistance company with paying money out of your pocket.  Companies that do not have the roadside assistance version of towing, offer a reimbursement form.  In these cases, if you pay for the roadside assistance, you can submit your receipt to your insurance company’s claims department and they will in turn reimburse you after the claim is handled.

Rental reimbursement adds coverage for a rental car in the event of damage to your automobile.  While your car is in the shop due to a car accident , selecting this coverage gives you protection while your insurance company pays to have your vehicle repaired.  Like other coverages, you must select a limit you think is best for you rental coverage.

So the next time you’re looking for full coverage car insurance, remember that full coverage means different things to different agents and companies.   Bookmark this blog post so that you can make sure you understand what coverages are available to you.  If you have further questions, feel free to contact us at 214-717-4326.

Bobtail insurance is an insurance policy that provides non-trucking liability for large commercial vehicles.  You may have heard that while your truck is on permanent lease to a motor carrier, your insurance problems are solved.   However, most fleet policies only cover scheduled vehicles while they are under dispatch.  As an owner operator, what does that mean to you?   Here are a few insurance considerations you should consider when leasing your truck to a motor-carrier.

How often is your truck under dispatch?

Generally, when your truck is under dispatch, your motor carrier’s fleet policy covers your truck for liability and physical damage as described by the lease company’s insurance policy.  However, once your truck is no longer under dispatch, you no longer have coverage.  Your  fleet policy’s coverage ends at that point; causing  a gap in coverage for your truck.  From that point, you need to have bobtail insurance (or non-trucking liability) on your truck to fill in your gap in coverage.

Non-Truck Liability for Maintenance

Are you required to maintain your truck?  Did you know that even though your motor carrier has purchased coverage, their liability on provides protection when a truck is being operated for business.  Not only does your truck need liability, but you also need physical damage coverage to cover your truck against an accident.  Consider this, if your truck has to go to the shop for repairs and your driver has an accident on the way to the shop. Who covers your truck during this claim?  In this case, if your fleet policy doesn’t cover your truck, your bobtail non-trucking liability should cover your rig.  Again, in a case like this you and your company should carry non-trucking liability.

Consider Texas State Law

Since we’ve established that your fleet insurance policy probably does not cover you while you’re bobtailing, consider state law.   Consider this.  If you simply drive your truck to a truck wash during, you have to carry at least the minimum liability requirements for the state of Texas.  While this is a very small amount for such a large vehicle, non-trucking liability (or bobtail insurance) satisfies  Texas minimum auto liability requirements.

Do I Need Life Insurance for My Mortgage?

Do I need life insurance for my mortgage?  The simple answer is yes.  Lets face it for the average person today in the United States the largest expense will be the home that they purchase for themselves and their family to live in.  Most people choose the home they live in for the location, school district, night life, etc.  Regardless of the reason why a home was chosen, the home is very important to a family’s stability.  Most families require dual incomes to afford the home that they are living in.  Ask yourself, could you afford your mortgage payment on a single income?

Why protect my home with Life Insurance?

Regardless of your answer to if you could afford your home on a single income, what will be the emotional impact if you had to leave your home in the midst of the loss of a loved one because you couldn’t afford the mortgage payment?  We make sure that we can replace our homes in the event of a fire, flood, or any other choice of disaster but we far too often don’t take the measure to protect our homes in the event of the loss of a loved one.  It only makes sense to protect your home in the event of losing a loved one to not add to the emotional stress involved when someone passes on.

How much Life insurance do I need to protect my home?

It depends.  You will want to make sure that you will be able to pay off your mortgage if you are planning on staying in the home.  Also keep in mind the other expenses that also go with a home such as property tax, home owners insurance, utilities, and maintenance as these expenses will affect the amount of insurance you will need to ensure that your family will be able to stay in your home.  It’s important to take action today to protect your family so they can stay in their home because of being prepared for the unexpected.  Give us a Call at TxInsurancePro.com so we can help your family be prepared with all of your insurance needs.