Personal Perspective

On average, there are more than six million auto accidents on U.S. roads every year. Sadly, 34,017 of these crashes proved to be fatal in 2008, according to the National Highway Traffic Safety Administration (NHTSA). Based on these shocking statistics, it might seem inevitable that we’ll all suffer from an auto accident at some point. However, there are numerous precautions you can take when you’re behind the wheel to reduce your risk of having an accident. Auto insurance experts implore drivers to wear their seatbelts, drive defensively, closely follow driving laws and be considerate to other drivers. Read on for more driving safety tips that will help you steer clear of auto accidents.

Keep your eyes on the road.

When you’re behind the wheel, it’s extremely important to stay focused on the road at all times. The NHTSA reports that driving distractions cause up to 4,300 accidents every day in the U.S. That’s why you shouldn’t take your eyes off the road for even a moment, whether you’re changing radio stations or dialing a number on your cell phone. Safety experts say you should pull over to a safe place on the side of the road if you need to do any of the following:

• Pick up an item you dropped
• Change CDs
• Look at a map
• Eat or drink
• Change radio stations
• Dial a number, talk on the phone, or send a text message
• Read a newspaper
• Apply makeup, comb your hair, or take care of any other personal grooming

Just say no to road rage. Safety experts say drivers should also avoid aggressive driving. Be courteous to other cars on the road, and control your road rage. Although it might be tempting to yell and gesture at another driver who cuts you off on the highway, try to keep your cool. If you antagonize an aggressive driver, the situation could escalate quickly. If you fear that another driver is putting you at risk, call the police immediately

Try to remain polite on the road. There seems to be a common phenomenon where people who are generally well-mannered in every day life lose their sense of common courtesy when they’re behind the wheel. You probably see it every day during your commute. For example, when you turn on your signal to switch lanes, the driver in the next lane speeds up and blocks you in. Although it can be easy to lose your temper in this situation, you’re better off letting them pass than trying to cut them off. After all, countless accidents occur every day because of aggressive driving.

Top 10 safety tips. Follow these top 10 safety tips to reduce your risk of having an auto accident:

1. Never drive after you drink alcohol, even if you’ve just had one or two drinks.
2. Don’t give in to distractions, such as playing with your iPod, reading a text message, or picking up a toy your child dropped in the backseat.
3. Avoid road rage. If you come across an aggressive driver, don’t antagonize or encourage them. Keep your cool and call the police if the driver is putting other motorists at risk.
4. Keep a safe distance between your car and the vehicle in front of you. For every 10 miles per hour of your driving speed, leave at least one car length between your car and the car in front of you.
5. Try to maintain a consistent speed. Don’t continually slow down and speed up unless the posted speed limit changes.
6. Keep your car in tip-top shape. Get regular oil changes and tune ups and check the condition of your tires at least once a month.
7. Stay alert when you drive through intersections. Most accidents occur in intersections, so be sure to look left, then right, then left again to make sure it is safe to pass through.
8. Keep your side mirrors and rear-view mirrors adjusted properly. As you drive, check your side and rear-view mirrors every 15 seconds to make sure you’re in the clear.
9. Be aware of road conditions and react appropriately. For example, turn on your lights if you’re driving at dusk or dawn or in the rain. If the roads are wet, snowy or icy and you feel your car starting to hydroplane, don’t brake suddenly or turn the steering wheel. This could send you into a skid. Instead, ease off the gas pedal slowly and steer straight until you feel your tires regain traction.
10. Sign up for a defensive driving class. With the proper training, you’ll be able to react more quickly to potential accidents on the road.

When it comes to cars, is it true that bigger is always better — and safer? Based on an April 2009 study by the Insurance Institute for Highway Safety (IIHS), the answer to this longstanding question is a resounding yes. The study shows that larger, heavy-duty vehicles are fundamentally safer than smaller, lightweight cars.

Considering recent announcements, this revelation is more important than ever. This May, President Obama unveiled his massive fuel efficiency plan. Under the new standards, auto makers will be ordered to increase the fuel economy of vehicles sold in the U.S. to 35.5 miles per gallon by 2016. This means manufacturers will have to produce smaller, more lightweight, fuel-efficient vehicles.

Although supporters of the plan say it will help cut our nation’s greenhouse-gas emissions, opponents argue that the mandate will result in thousands more Americans dying or becoming seriously injured in auto accidents. Critics say that the number of auto fatalities could swell if hordes of “unsafe” subcompacts hit the road in coming years.

The physics behind car crashes

Why are bigger cars intrinsically safer? It all comes down to physics. According to the IIHS report, “These tests are about the physics of car crashes, which dictate that very small cars generally can’t protect people in crashes as well as bigger, heavier models.”

Based on the law of physics, when a large object crashes into a smaller object, the larger object creates a greater impact. This rule holds true for car crashes, as confirmed by the IIHS study.

For this study, the IIHS conducted three front-to-front crash tests, each involving a microcar or minicar colliding with a midsize model from the same manufacturer. The Institute did not use SUVs, pickup trucks, or even large cars to pair with the micros and minis in the tests. “The choice of midsize cars reveals how much influence some extra size and weight can have on crash outcomes,” the report explains.

Instead, the Institute chose pairs of 2009 models from Daimler, Honda, and Toyota because these auto makers have micro and mini models that have earned good frontal crash ratings in barrier tests.

According to the final IIIHS report, “In a collision involving two vehicles that differ in size and weight, the people in the smaller, lighter vehicle will be at a disadvantage. The bigger, heavier vehicle will push the smaller, lighter one backward during the impact. This means there will be less force on the occupants of the heavier vehicle and more on the people in the lighter vehicle. Greater force means greater risk, so the likelihood of injury goes up in the smaller, lighter vehicle.”

Real-world car crash statistics confirm this theory. In 2007, the death rate in one to three-year-old minicars involved in multiple-vehicle crashes was nearly twice as high as the rate in large cars.

Good engineering makes a difference

Despite the recent IIHS study, some experts point out that vehicle safety doesn’t come down to car size alone. They say that quality engineering and design are more important to vehicle safety than the actual car size. Added safety features, such as front and side airbags, seatbelts with pre-tensioners and force-limiters, rollover prevention mechanisms, head restraints, and crash avoidance systems can also improve a vehicle’s safety greatly.

Experts also say the size of a vehicle’s front end can determine how the car fares in a crash. If a lighter vehicle is engineered with a large front end, creating a bigger space between the front of the vehicle and the front seat, the car would be much safer. That’s because a car with a large “crush space” decreases the severity of an impact and reduces the force to the car’s occupants.

Plus, auto makers can also reduce a vehicle’s weight without losing too much structural integrity by using aluminum, titanium, or plastic. Unfortunately, most manufacturers steer clear of these materials because they carry a high price tag.

Fear is an important motivator when it comes to buying insurance. We worry about what will happen to assets like cars or homes if they are involved in a disaster, so we buy insurance to help us maintain their financial integrity if something should happen.

But in spite of the fact that insurance is designed for this purpose, sometimes it can’t give us the outcome we expect. That’s not because of something inherently wrong with the policy, but rather it is the result of human failure. When you bought your policy, you might have failed to take into consideration the level of coverage you really needed, and what you have isn’t sufficient to restore your assets to pre-disaster condition.

That’s just one of the most common insurance mistakes that could end up costing you. Here are some others:

• Thinking you’re saving money because you bought the cheapest policy you could find – Initially those low premiums will seem like a savings; but if the cost of an accident ends up being more than your policy coverage limits, the rest of the expense will be out-of-pocket. In addition, the other parties involved could sue you, and if you don’t have any coverage, you could end up losing a large part of your assets.
• Failing to pay your premiums on time, or not at all – There could be a legitimate instance in which you don’t pay on time. However, when you don’t pay, your insurance company isn’t required to cover you. To avoid a disruption in coverage, set up automatic payments through your bank or insurer.
• Making assumptions about what is covered – There are limitations to the coverage a Homeowners or Auto policy will provide for high-ticket items. You should never assume that all of your possessions are covered. What you can do is add extra coverage to your policy with an endorsement, which gives you higher limits on these types of items.
• Overlooking the importance of Umbrella Liability policies – These policies got their name because they protect you from a financial downpour. They can be purchased separately or you can obtain one from the same company that insures your car or home. Buying from the insurer you already have usually entitles you to a premium discount on the liability coverage. Umbrella policies are usually sold in increments of a million dollars. Generally you would pay between $100 to $300 a year for the first million dollars worth of coverage and another $50 to $100 for each additional million. Keep in mind that when determining your premium, your insurer may take into consideration such factors as the number of traffic tickets you’ve received during the past few years, and your credit report.
• Failing to inform your insurance agent about changes that could affect your coverage needs – If you’ve added on to your home, or purchased an expensive sound system, you need to contact your agent to see if the policy you have still meets your needs. Your agent can also find ways to help you save money on premiums that won’t affect the quality of your coverage such as enrolling in a driver safety class, installing a home security system, increasing your deductible, or taking advantage of multi-policy or good student discounts.

Every insurance policy has a section popularly known as “the fine print,” though its actual title is “Exclusions.” Exclusions are provisions in an insurance policy describing losses that the policy will not cover. For example, a Homeowners policy does not cover losses caused by the use of cars, and a Business Auto policy does not cover injuries caused by a bulldozer on a construction site. Although it might appear at first glance that the insurance company includes these provisions to get out of paying claims, the reasons are more complex and less insidious than that. There are very sensible reasons why no insurance policy covers everything.

First, not every person or business has the same exposures to loss. Most homeowners do not own a dump truck used in a business; the owner of the dump truck might not have employees to insure for jobsite injuries; the employer with a dozen employees might not own the building it occupies. Imagine if there were one insurance policy that covered all of these exposures — it would be hundreds of pages long and very complex. Therefore, over time insurance companies have developed different policies for different exposures — Auto, Home, Business Liability, and so on. The Homeowners policy excludes losses that the Auto policy should cover, personal policies exclude losses that business policies should cover, and vice versa.

Related to this are the issues of cost and choice. Standard insurance policies contain coverages that apply to large groups of households and businesses, but they do not cover every possibility. Those with additional needs have coverage options to choose from. For example, Homeowners policies do not cover damage caused by water backing up from an overflowing sump or drain, but households that have basements with sumps or drains have the option of buying this coverage. Households without a basement do not have to buy it. This affords the buyer choices but does not force coverage on those who do not need or want it.

Furthermore, exclusions reduce the cost of the insurance policy. Every coverage comes with an associated cost — the company must factor in the costs of potential claims, expenses and profit for that coverage. The more coverages a policy provides, the higher its premium will be. Without exclusions, people and businesses would be forced to pay for coverages they do not need. Exclusions help keep the premium affordable.

Finally, certain types of losses are uninsurable. Insurance companies cannot accurately predict when certain types of losses will happen, and the potential loss amounts are too large for them to absorb. For example, almost all policies exclude losses suffered as the result of a war or a nuclear accident. These events would cause massive losses beyond the abilities of insurance companies to pay. Other losses are not insurable as a matter of common sense.

Because the purpose of insurance is to pay for losses from accidents, it will not cover most losses that a person causes intentionally. Because every household or business’s circumstances are different, standard policies might not provide all the coverage necessary for proper protection. Properties in flood-prone areas, businesses that have a lot of contracts with other businesses, and individuals who post to online message boards could all lack important coverage. Consultation with one of our professional insurance agents will help determine whether more coverage is needed, whether it is available, and how much it will cost. The time to find out the availability and cost of coverage is before the loss occurs.

Online shopping has become an American pastime, and can be an exciting adventure. For nearly everyone, it is enjoyable to receive surprising new packages and offers in the mail. But would you want your insurance coverage to be a surprise? You might want to ask yourself some essential questions before making the decision to buy insurance online:

• What questions should I be asking before making the purchase?
• Am I certain about exactly what coverages I need?
• Have I researched the insurance company, and are they legitimate?
• Will the personal information I provide online be secure?
• Will there be real savings in both time and money by making an online purchase?

When buying insurance, it is important to be confident about exactly what coverages you need. Since insurance varies widely from state to state, it is necessary to have a knowledgeable resource that understands your individual needs. If you need to file a claim, you want to be certain that the insurance you purchase will protect you. If you make the decision to use an online company that does not involve themselves personally with your insurance needs, you run the risk of being left without coverage. Take the time to ask questions. Additionally, an online insurance company should be asking questions of you, to ensure they are recommending the proper coverage.

Buying insurance online could endanger your personal security. You will be required to fill out long forms providing personal information about you and your family, including social security numbers and personal property information. The forms are sent over the Internet where there is a risk that they might fall into the wrong hands, especially if the online company does not take proper security precautions. Furthermore, how will you verify that the insurance company you select is legitimate? Despite the fact that one must have a license to sell insurance, there is no license required to establish a Web site that is designed to sell insurance online.

After studying insurance information such as your state insurance regulations, coverages you will require, and the security and legitimacy of an online company, you obviously will not be saving much time in making an online purchase. And, there is no guarantee that you will save money either. It might be convenient for the insurance company since they will not have to meet with you, but they will still need to provide you with the proper coverage for the dollar amount of protection you need.

An insurance purchase should take place only after careful consideration, and should not include surprises. The decision to shop online could result in uncertainty about what you really get. Selecting a professional agent to prepare a personal insurance policy is a more reasonable choice. When you work with an independent insurance agency such as ours, you receive the benefit of our expertise and industry knowledge. We can help you get the protection you need based on your individual requirements, rather than taking a one-size-fits-all approach.

Your credit rating can affect a lot more than you might think. Almost all insurance companies factor in credit ratings to set rates for new and existing Auto insurance customers. Yet, blemished credit doesn’t necessarily translate into higher insurance premium rates. Instead, it is the overall insurance risk score that can cause a rise in your rates.

Insurance risk scores are similar to those used by lenders to determine whether or not to approve a loan or line of credit because both look at your credit information. But credit risk models are formulated to predict the likelihood of loan default. Insurance risk models, by contrast, are built to predict the likely loss ratio of any particular individual. In other words, whether you will result in more or fewer losses than average to the insurer. The higher your insurance risk score, the less likely you are to file a claim.

Following is the information many insurance companies use to formulate a risk score and how each is weighted:

• Past payment history (approximately 35%). A past payment history is determined by: how you’ve paid your credit bills in the past; if your bills have been paid on time; items in collection status; the number of adverse public records (bankruptcy, wage attachments, liens); and the number and length of delinquencies or items in collection.
• Credit owed (approximately 30%). Credit owed is how many accounts, what kind of accounts, and how close you are to your credit limits.
• Length of time credit has been established (approximately 15%). Length of time credit established is how long you have had your credit accounts and how long you have had other specific accounts.
• New credit (approximately 10%). New credit is the number and proportion of recently opened accounts versus already established accounts; the number of credit inquiries; and the reestablishment of credit history after payment problems.
• Types of credit established (approximately 10%). Types of credit established are the various types of credit accounts including credit cards, retail store accounts, installment loans and mortgages.

In summary, insurers rely on factors that show long-term stability. So, by demonstrating responsible use of credit and keeping your balances low, you should be able to improve you insurance risk score. A lower insurance risk score could translate into lower insurance premiums if you’ve been impacted by a negative credit history in the past.

When you pack your family into the car this summer to head to the beach, the park, or the grocery store, the most important thing you can do for your children is to make sure they are properly secured in their seat belts. Safe adult drivers begin as safe child passengers. Teach your kids safe habits before they learn unsafe ones from someone else.

The National Highway Safety Administration has created some important guidelines every parent should follow when securing their children in the car. As a general rule, children 12 and younger should always sit in the back seat where they are away from active air bags. Air bags are made for adults and the force of the deployment can injure a young child seriously.

Infants from birth to 20-22 pounds and at least one year old have special guidelines for safety. Adults should make sure to use a rear-facing infant seat or a rear-facing convertible seat when securing a child in the back seat. If you have a car that seats only two, the air bag should be deactivated before placing the child in the passenger seat. The harness straps should be snug and placed in the lower slots at or below shoulder level. The top of the harness clip should be at armpit level. And the child passenger restraint should be installed at no greater than a 45-degree angle.

The switch to a forward-facing car seat can be made for toddlers 20-40 pounds and older than one year of age. Again, secure harness straps snugly in the appropriate reinforced slots at or above shoulder level and fasten the harness clip at armpit level.

Once your child has exceeded 40 pounds, is between ages four and eight, and is up to 4’ 9” tall, they may use a booster seat. Secure the booster seat much the same way as the child seat. Using a lap and shoulder belt, make sure to place the shoulder strap over the shoulder of your child and across their chest. The shoulder strap should never go across the neck, face, or arm of your child. Place the lap belt low and snug on the hips — never over the stomach. If the shoulder or lap belt is in the wrong place during an accident, it could cause serious abdominal injury.

At eight years of age and 4’ 9” or taller, your child has graduated to an adult restraint system. As with the booster seat, use a lap and shoulder belt to secure your child, taking care not to have the belts cross the stomach, neck, or arms. Children should learn that they cannot place the shoulder belt behind their back or under their arms, as this defeats the purpose of being restrained.

For general information on the proper use of child restraint devices, always consult the instructions that come with your child safety seat, as well as the information provided by your vehicle’s owner’s manual.

In recent years, our society has become what some people call “lawsuit happy.” In other words, an increasing number of people are filing lawsuits for everything from emotional injury to property damage — and they’re suing for larger amounts than ever before. If someone were to file a lawsuit against you, you could end up losing hundreds of thousands of dollars or more, even if you won.

Although you might have some Personal Liability coverage through your Homeowners or Auto insurance policy, it’s probably not nearly enough to cover a major lawsuit. Fortunately, you can protect yourself further with what’s known as an Umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages. Read on to learn more about these valuable policies:

Umbrella policies: A liability coverage “extension”

When it comes to lawsuits, the more assets you own, the more you stand to lose. A Personal Umbrella Liability policy can protect you from these potentially devastating losses. These policies act as an extension to the current liability protection you probably have through your Homeowners or Auto insurance policy.

Umbrella policies are typically sold in million dollar increments, and you can obtain a policy once your Homeowners and Auto insurance policies meet a minimum “attachment point” — typically a liability limit of $250,000 or $500,000.

What does it cover? Most Umbrella policies cover the following:

• Personal injury, including false arrest, mental anguish, malicious prosecution, libel, slander, defamation of character, wrongful entry or eviction, negligent infliction of emotional distress or invasion of privacy.
• Bodily injury, such as physical injury or death. In some jurisdictions, this also includes emotional injury.
• Property damage, including destruction of the property of others, cost of recreation and loss of use. However, it does not cover damages done to your own property.
• Defense coverage, including groundless, false and fraudulent suits, bail bond costs, loss of earning and other “reasonable” expenses.

Of course, it’s probably easier to understand exactly what an Umbrella policy covers by putting it into real-life terms. Here are a few examples of what this type of policy could cover:

• A deliveryman is hauling your new washing machine into your home when he trips on your door mat, falls and breaks his neck. Your Umbrella policy would likely cover the hundreds of thousands of dollars worth of damages.
• You’re driving down the road when an important corporate CEO steps into the crosswalk in front of your car. He sues you for millions of dollars in medical costs, lost earnings, and damages. Your Umbrella policy can cover you for these damages.
• Your daughter invites a friend over to play on her swing set. Her friend falls off the slide and suffers from serious injuries. When her parents sue you, your Umbrella policy will cover the medical costs.

How much does is it cost? The price of an Umbrella policy depends on how much coverage you want, the number of properties you rent or own and the number of automobiles or watercraft you own. The cost associated with cars and watercraft is much higher than those associated with properties. Let’s say you are single, you own one home and one car, and you want to purchase a $5 million Umbrella policy. You’ll probably pay somewhere between $270 and $550 a year. On the other hand, if you are married with two children, you own two homes, a rental property and three cars, and you want a $10 million Umbrella, you’ll probably pay a good deal more — anywhere from $970 to $1,750 a year.

Talk to one of our insurance agents to discuss whether or not an Umbrella policy is right for you. In the long run, by paying a few hundred dollars per year, you could save millions.

The number of Americans killed on U.S. highways in 2008 reached the lowest level since 1961, according to a recent release from the Department of Transportation. Higher gas prices, which caused many to limit their driving activity, certainly helped the cause together with increased seat belt usage in many states.

The Department of Transportation’s National Highway Traffic Safety Administration estimated that 37,313 people were killed in vehicle traffic crashes during 2008. That’s 9.1% lower than in 2007, when 41,059 died, and the fewest since 1961, when 36,285 deaths were reported.

Another positive, the nation’s fatality rate, the number of deaths per 100 million miles driven, reached a record low at 1.28 in 2008 down from 1.36 in 2007.

It’s not uncommon for tough economic times to cause similar declines in traffic deaths. From 1973 to 1974, such deaths fell more than 16% as the U.S. dealt with the oil crisis and rampant inflation. Similarly, deaths dropped nearly 11% from 1981 to 1982 as the nation battled a recession.

The government reported that miles driven in 2008 fell by about 3.6%, to 2.92 trillion miles, proving that many adjusted their driving habits as gas prices rose and the economy tumbled. The number of miles driven by motorists had risen steadily during the past three decades.

Nationwide seat belt usage reached a record 83% in 2008. Fourteen states and Washington, D.C. had usage rates of 90% or better. Michigan was the highest at 97.2%, followed by Hawaii with 97% and Washington state at 96.5%. Massachusetts had the lowest rate, 66.8%, while New Hampshire and Wyoming were also both under 70%.

When hiring a contractor to add value to your home investment, it makes sense to verify the contractor’s Workers Compensation coverage. Otherwise, you might be responsible for injuries incurred by the workers while they’re remodeling or repairing your home.

With this in mind, take a look at some important insurance issues before you select a contractor. To start, verify that the contractor you want to hire carries Workers Compensation coverage. If a contractor does not have this coverage, workers who are injured while working on your home could sue you. You might also want to see a copy of the contractor’s Workers Compensation policy and ask the same of subcontractors such as electricians and plumbers. It’s important to make sure all of the contractor’s employees are covered — full and part time. It’s advisable to get insurance policy numbers and to take that extra minute to call and verify that the insurance is still in effect.

You can also check the contractor’s or remodeler’s credentials, including whether the contractor or remodeler is licensed and/or a member of an applicable trade group. Of course, you’ll want to compare costs and solicit bids from more than one contractor or remodeler. When doing so, get all bids in writing and make sure each bid includes building specifications (what is being worked on and to what extent), labor costs, material costs, and time needed to complete the project. This will protect you from unforeseen costs while further protecting you from future misunderstandings and project mishaps.

You can call the Better Business Bureau (BBB) to verify local references quickly and easily. The local BBB office will also be a good source for letting you know if there have been complaints made against the contractor or remodeler.

Lastly, most contractors and remodelers will gladly show you work done at other nearby homes. Take them up on this offer and see for yourself their workmanship and check customer satisfaction. Talk to former clients and see what they think of the contractor’s ability to meet their needs while staying on schedule and within the projected budget.