It’s Vacation Time: Does Your Insurance Cover Rental Cars?

So you’re going on vacation. Great! But don’t forget, if you’re renting a car, you still need insurance protection. Don’t wait to get to the checkout counter to think about coverage; you may be pressured into purchasing unnecessary rental insurance.

If you have comprehensive auto insurance, you might already have car rental coverage, but there could be stipulations. Play it safe; check your personal policy first.

Insurance companies may provide rental coverage only up to a certain amount. If the rental car is totaled, your policy may only reimburse the rental company for actual cash value. Many rental car contracts state that reimbursement should be for the full retail value.

While you’re reviewing contracts, ask your insurance agent if possible loss of use is covered. If your insurance policy includes a Use of Non-Owned Cars endorsement, you should be covered, but it’s important to know the coverage limits. If the rental company makes a claim for diminished value, your personal policy will not cover this.

Driver coverage is an important consideration, especially if you’re traveling out of town. Anyone listed on your policy should be covered, but for others be sure to check first.

If you’re traveling abroad and don’t have a comprehensive policy or a high deductible plan, you may need additional coverage. Many agencies require a credit card for purchase and, depending on the card, your rental may be covered. If not, bite the bullet and purchase the rental insurance.

It’s better to be safe than sorry, especially on vacation.

Don’t Be a Victim of These Contractor Scams

The recent popularity in do-it-yourself repairs and renovations has many homeowners rolling up their sleeves and getting to work. Replacing a faucet may be easy, but installing a roof or dishwasher can be daunting.

These larger projects are better left to the professionals, but hiring a contractor can be a job in itself. Protect yourself from less-than-honest contractors by watching for these telltale signs of fraud.

A knock on the front door

One prevalent scam occurs when a “contractor” not known to you offers to conduct a free inspection of your home. The contractor then “finds” serious problems. Of course, you want it fixed. And not only do you have to pay the scammer, you may have to make a claim on your homeowners insurance. Seniors and people without much repair knowledge can be susceptible to this scam.

The negotiator

If a contractor offers to negotiate your insurance claims, walk away. A contractor cannot ensure that your claim will be approved and no amount of negotiating will change this.

A reputable contractor lets you handle the insurance company.

A work in progress

If a contractor is in the process of repairing your home and asks you to file another claim, you may want to get a second opinion. Many contractors will agree to fix repairs cheaply and then intentionally cause more damage. If you agree, you may be participating in insurance fraud.

Make sure you aren’t duped into making unnecessary homeowners claims; do your research before hiring a contractor.

Successful businesses don’t go door to door. Check your insurance company’s recommended contractor list and the Better Business Bureau. Ensure your contractor has proper licensing.

Avoid being scammed, and that kitchen repair that was done properly and came in on time and on budget will make you happy every time you look at it.

Now Your Adult Child is Covered Under Your Health Plan

Until recently, health insurance carriers and workplace plan sponsors were not required under federal law to cover any dependent over the age of 18.

Some states offered college students the opportunity to be part of their parents’ health insurance plans, but there was no requirement to do so.

Federal law now requires carriers and plan sponsors who offer plans with family coverage to extend health insurance to adult children up to age 26 – even if the adult child gets married. Effective January 1, 2014, adult children can remain on their parents’ plans despite qualifying for coverage from their employers.

Adult children who are about to lose their insurance coverage because they are graduating from college may re-enroll in their parents’ plan during the open enrollment period. For plans that began on or after September 23, 2010, they can also expect an offer of continued enrollment.

The young adult is entitled to the same full benefit package he or she had prior to leaving the plan; however, the carrier may still require the primary enrollee – the parent – to pay a higher premium. With workplace group plans, the employer pays at least half of the premiums. The employer’s contribution is not included in parental compensation for income tax purposes.

An exception to the rule occurs when the parent is on Medicare. Adult children will not be permitted to enroll in Medicare unless he or she is otherwise qualified – if, for example, the adult child has been diagnosed with advanced renal failure or amyotrophic lateral sclerosis.

Health Insurance Exchanges: What’s Happening?

As part of the health insurance reform package under the Affordable Care Act (ACA), each state was to create its own online marketplace (Health Insurance Exchange) to connect consumers to health insurance products.

The idea was to allow insurance carriers to compete on a level playing field, to facilitate the comparison of plans, and to make it easy for individuals to obtain coverage.

The deadline for online exchanges to become operational and begin to accept enrollees for their 2014 plans is coming up fast: The law requires them to start enrolling in October, 2013 – and that’s proving to be more difficult than expected.

To date, only 17 states, plus the District of Columbia, have thus far committed to setting up their own plans. The remaining states have elected to have the federal government set up their exchanges for them. It’s harder than it sounds.

While securities – such as stocks, bonds and mutual funds – are regulated at the federal level, insurance contracts have a long tradition of state-by-state regulation.

As a result, each state has its own diverse set of insurance laws and regulations, with different procedures for rate-setting, different mandated insurance coverages, and different licensing and authorization for carriers and agents.

Therefore, the US Department of Health and Human Services cannot create a one-size-fits-all website. Every exchange has to be customized to conform to each state’s unique set of laws and regulations.

As a result, both the federal government and the states are becoming concerned about the ACA timelines.

According to a recent report, some states have begun to approach federal officials for extensions; however, at press time it appeared the October 2013 deadlines were firm.

It’s critical to be up on what’s happening in this area: To ensure you have the most current information, discuss this and other health insurance issues with your insurance advisor.

Some Universal Life Holders Face a Conundrum

Many holders of universal-life insurance bought their policies years ago, at a time when interest rates were high. Today, many of these policyholders will have to pay more or face cancellation, according to news reports.

To understand why, you have to understand that we’re talking about permanent life insurance. Unlike term life insurance, this insurance type doesn’t limit the time period for payout: It stays in effect for the policyholder’s life.

Categories of permanent life insurance

Permanent life insurance is subdivided into two categories. Under the permanent life umbrella is whole life insurance, which generally charges set premiums, and universal life insurance, which generally comes with flexible premiums.

Universal life insurance holders often use the cash value of their policies to pay for the policy’s future costs. Now, that’s become a problem, given the low level of interest rates.

Because interest rates are so low, the cash value of many life insurance policies is rising at a rate that is less than expected.

Policyholders facing a conundrum.

As a result, many policyholders who depended on that cash value to pay the policy’s premium can’t afford to do so. The worst case scenario is that the policy, then, could be cancelled.

Those at risk are primarily consumers who bought life insurance policies before interest rates fell sharply in 2008 – and that could be a lot of people. Industry association Limra has said that, in 2008, the percentage of life-insurance premiums from universal policies totaled 40 percent.

If you’re in this predicament and interest rates stay low, you can opt to pay the premiums yourself rather than out of the cash value. Or you could accept a lower payout or abandon the policy.

Steps can mitigate the impact

However, there are some steps you can take to salvage at least part of your coverage. Discuss your options with your advisor.


Contractor or Employee? The Difference is Critical

In what has been called “The New Agent Economy,” more and more employers are opting to use contractors – or “agents” – to outsource any number of tasks that formerly were performed by employees.

For employers, this can be a real money-saver: By using outsourced labor, companies pay less payroll tax, unemployment insurance, and workers’ compensation premiums. However, in this era of increased regulatory scrutiny, it is critical that you correctly categorize your independent contractors to avoid a long list of potential problems.

Problems relating to on-the-job injuries

What many employers fail to realize is that a contractor who is hurt while working on their behalf can make a negligence claim. While it’s easy to assume an independent contractor does not fall under workers’ compensation rules, it may not be so.

It’s important that employers recognize the real costs of losing the protective shield that workers’ comp provides to employers against such lawsuits.

To start defining your employer-employee relationship, one great place to start is with the IRS rules established to classify contractors.

Note, however, that you cannot rely solely on the IRS rules to shield you from a workers’ compensation claim filed by a contractor.

State industrial commissions have been liberal in determining whether a contractor is an employee or not when that worker is injured.

Additionally, the federal government and many states are cracking down on companies’ use of the independent contractor status.

Guidelines to determine status

Here are some guidelines to use when determining the status of a worker. In general, the more “yes” answers, the more likely it is that your worker is an independent contractor.

  • Is your worker employed by another company, or his or her own business entity?
  • Does the worker generally set his or her own hours and supply his or her own tools to complete the job?
  • Is the worker licensed or has he or she devoted significant time and expense to learning the trade?
  • Does the worker advertise or offer his or her services to other companies, as well as to your organization?
  • If the worker makes mistakes, is he or she is responsible for fixing the problem or paying for any damages resulting from the problem?
  • Do you pay the worker on commission or on a per-job basis?
  • Does the worker make or lose money from the work he or she does for your company?

Whether to classify employees as contractors is not always an easy decision.

In most states, if contractors do not have their own coverage, anyone who uses their services can be charged for workers’ compensation exposure on their business policy if the carrier discovers the contractor payment; calling someone a contractor may prove wrong on audit and create problems in other areas.

If you determine you have workers who are independent contractors, ask them to furnish their current certificate of insurance so that you are not charged additional premiums at audit.

Taking the time initially to correctly classify your “agents” will save you money and heartache later.

Rising Tort Costs May Mean Your Business is at Risk

According to a number of major insurance carriers and other experts, tort costs – those costs associated with defending and paying liability claims – are on the rise.

Here are just a few of the latest concerns for business owners.

  • The United States Liability Insurance Group (USLI) states the average cost to defend an employment claim is $150,000, with an average jury award of $250,000.
  • Approximately 75 percent of all corporate litigation is employment related, according to the USLI.
  • Jury Verdict Research reports that the average jury verdict for an employment lawsuit in 2010 was $317,032.
  • The cost to defend a class-action suit can range from $5 million to $100 million, according to Marsh USA, one of the world’s largest insurance brokerages.
  • According to a 2010 study by the US Chamber of Commerce, businesses pay 33 percent of tort costs out of pocket. No insurance coverage will reimburse you for staff time lost in administering a claim or a lawsuit, or for a product line that you don’t bring to market for fear of litigation.
  • Claims alleging negligence in maintaining buildings and parking lots, plus failure to provide adequate security, are on the rise.
  • Product liability cases also continue to increase.

No longer is purchasing liability coverage a one-size-fits-all endeavor. To find the product that’s right for you, contact your advisor, who has years of experience in helping businesses adjust to changing environments, such as rising tort costs.