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Insurance

Counting the Cost

By HUB International New England

 

When do you need to list your teen driver on your car-insurance policy, and how can you make this additional coverage fit in your budget?

It is certainly not inexpensive to get car-insurance coverage for a new teen driver. When a teen driver is added to their parent’s policy, the typical insurance premium for a one-car family is likely to increase by 40% to 50%. If you’re a multi-car family, then you will probably see your insurance rates rise even higher. And if you’re opting to reward your new driver with a car and expecting them to secure their own insurance policy, you should prepare yourself — or your teen — to pay at least a couple thousand dollars in car-insurance costs.

So we understand why parents might want to hold off on getting auto insurance for their teen driver until absolutely necessary. However, even if you think your teen will only occasionally be borrowing the family car, the fact is they are now a licensed household member. As such, if you do not add them to your current policy as a covered driver, you risk being denied by your insurance carrier for any future claims, having your coverage terminated, or both.

In addition, should you decide you want to shop around for a better car-insurance rate, you will also need to make sure your teen driver is listed on all of your insurance applications so that you get an accurate quote and adequate coverage.

 

Six Tips for Saving Money

At HUB International, we have several strategies for saving money that we discuss with our clients:

• You can take advantage of discounts such as Good Student, which rewards teens with a grade point average of ‘B’ or higher. If your student is eligible for this discount, it may save you hundreds of dollars on your car-insurance premium.

• Completing defensive-driving courses can also earn you and your teen significant monetary credits toward your policy premium. Even more, your teen will hopefully drive away from this course with a better understanding of how to keep safe behind the wheel. Since even minor fender benders can drive up your insurance costs, it’s critical that your teen — as well as all other family members listed on your policy — do their best to keep their driving record clean of any accidents and moving violations.

• Investing in accident forgiveness can limit the financial impact in the event your teen does get in a car accident. Since 16-year-olds have higher crash rates than drivers of any other age, we recommend that our clients with teens strongly consider this endorsement, which can cancel out the surcharge points that are typically assessed by your insurer after an accident.

• Sharing a vehicle with your teen rather than giving them their own vehicle may allow you to classify your youngster as an occasional driver rather than the primary driver, which is another excellent way to keep your insurance rate lower. If you decide, however, that your teen will need a car of their own, it may make financial sense and keep your insurance costs down to assign them as the primary driver of the family vehicle that is the least expensive.

• Are you adding a vehicle to your household for your teen to drive? Look for a car with safety elements, such as anti-lock brakes, airbags, and anti-theft devices, as insurers will often reward you for having these features with lower car-insurance rates.

• Monitoring your teen driver with today’s technology can not only help you keep an eye on your teen when they are on the road, but also earn you discounts on your car-insurance premium. Some insurers are now offering devices to parents that can be installed under a car’s dashboard and create a report card of your teen’s driving behavior. Information may include the number of miles the car covers, how fast your teen is driving, the hours the car is on the road, and how often your teen slams the brakes. Insurers with this program are providing discounts ranging from 15% to 30% to drivers who achieve predetermined safe-driving benchmarks.

• Raising your deductibles lowers your premiums. However, this is only a smart choice if you are comfortable knowing that you might end up having to pay a larger share of costs for an accident out of your own pocket.

 

What Are the Options?

The team at HUB International has helped thousands of families across New England adapt to having a teen driver in their home. We know that your child’s newfound independence is exciting but may also cause you some stress and anxiety. But we can help make sure you and your teenager are insured properly.

While there is a natural desire to look for ways to cut costs on your insurance as your teen becomes a full-time driver — and drives up the cost of your premium — it’s definitely not the time to decrease your coverage limits or eliminate optional coverages. In an effort to save money, you could leave your teen and all other drivers in your home dangerously underinsured and at financial risk should they be involved in an accident.

Instead, it’s an excellent time to review your current auto policy with your insurance agent. We strongly recommend that our clients with teens carry more coverage than the state’s minimum required auto-insurance levels and that they opt for additional coverages such as collision and comprehensive. We also want to make sure that they are taking advantage of commonly overlooked car-insurance policy options that can save them money, stress, and time, like Bundle & Save, Disappearing Deductible, and Loan/Lease Gap Endorsement.

Finally, because teen drivers are, unfortunately, an accident-prone age group, once your child gets behind the wheel, your liability risk inevitably increases. So it’s not a bad idea to consider adding an umbrella policy to your insurance solutions for those worst-case scenarios where your teen is in an accident and is found at fault for bodily injuries to others or damage to other people’s property. For a minimal investment, this type of coverage may give you the peace of mind that your savings, investments, retirement accounts, and your family’s financial future are protected from an accident-related liability claim.

HUB, along with our partners, is committed to improving driver safety. Nationwide, well over half of new drivers crash in their first two years behind the wheel. Safety Insurance has partnered with the In Control Family Foundation to improve driver safety in Massachusetts. The In Control program offers a half-day, hands-on driver skills-development program that teaches drivers to avoid the most common and serious collisions. In Control’s crash-prevention training course has been shown to reduce crashes by new drivers by 70%.

With Safety Insurance, you can save 5% on your auto insurance by completing In Control’s crash-prevention training course, as well as saving more than 70% on the course itself.

Contact HUB for all of your insurance needs, and for additional information on programs such as In Control, call (833) 462-2554.

Insurance

Beyond the Bottom Line

If a customer wants insufficient coverage, Mark Lussier says, he or she should at least have a conversation about it and understand the risk.

Mark Lussier tells the story of a newly licensed driver backing out of her driveway in South Hadley who didn’t see the 85-year-old walking along the sidewalk. They met, and he fractured his hip and was in rehab for six months.

“Fortunately, the lawyers weren’t bloodthirsty, and they settled for the policy limit for bodily injury,” said the co-owner of Lussier Insurance in West Springfield, noting that, too often, lawyers aim for the maximum award, putting the defendant’s house and savings at risk.

Yet, “in its infinite wisdom, the Commonwealth of Massachusetts has determined that $20,000 of bodily-injury coverage is all you need to be legal,” he told BusinessWest.

Then there’s property-damage coverage on auto-insurance policies, which has a minimum requirement of $5,000. “I had a case not too long ago where someone hit a hydrant and a parked car, and then a porch. I’m guessing $5,000 wasn’t enough to pay for all that stuff. But it’s interesting to see how many people have only $5,000 for property damage.”

Many bare-bones policies come from the direct writers like Geico and Progressive that saturate the airwaves with ads focused only on premium price. But, in reality, insurance customers can get policies for not much more than the bare-bones pricing of the online marketers, but with much better coverage, explained in detail, simply because of the flexibility Massachusetts insurers have enjoyed over the past 12 years — flexibility that, for the most part, didn’t exist before.

Indeed, for much of the past century, auto-insurance rates in Massachusetts were set by the state Division of Insurance. Anyone who requested a premium quote for a certain level of coverage would receive the same price from any number of companies, unless they were eligible for a group discount.

Managed competition, which began in 2008, allows insurance companies to offer their own rates. Although these rates may vary, they must still be approved by the Division of Insurance — hence the term ‘managed.’ The result is that Massachusetts drivers are able to compare the different rates, benefits, and services offered by the insurance companies competing for their business.

“So many people are gathering information online without talking to the agent to explain the coverage, so they don’t understand at all what they’re purchasing. It’s the same old story,” said Trish Vassallo, director of Operations at Encharter Insurance in Amherst.

And, while $5,000 won’t cover the cost of a telephone pole or guardrail, injuring a person with one’s car and being undercovered is usually far worse, she explained. But that doesn’t have to be the case, as the premium difference between $100,000 and $250,000 in coverage can be as low as $10 per year — well worth the peace of mind.

Trish Vassallo

“I don’t think there’s an agent in Massachusetts who doesn’t welcome clients calling and talking to them. We like getting away from billing questions and talking about the nuts and bolts of insurance. It’s what we live for — sharing knowledge. It’s so important to make sure you understand everything you’re getting. You don’t want to learn about it after a loss.”

“That’s what we explain to them. Accidents happen, and if a building is hit, $250,000 might not be enough, but it certainly gets you closer,” she said, adding that, if a pedestrian is hit and successfully sues, $100,000 isn’t going to cover the costs.

Auto insurance, like all personal lines, is all about understanding risks and making an educated decision on what one’s comfort level is, she said — and not just settling for the lowest bottom-line price.

Bundle of Options

Under managed competition, carriers have been able to offer individualized add-ons and rider endorsements, from accident forgiveness to gap coverages to good-student discounts, and local agents say it’s important to have a conversation to get the best price for the coverage that’s actually sufficient.

“Today’s market is all about packaging and bundling insurance, and when you shop just one product, you sell yourself short in the money game,” Vassallo said.

To that end, she said, picking up the phone and talking to an agent is far superior to pressing a few buttons online.

“It’s about educating yourself, and I don’t think there’s an agent in Massachusetts who doesn’t welcome clients calling and talking to them. We like getting away from billing questions and talking about the nuts and bolts of insurance. It’s what we live for — sharing knowledge. It’s so important to make sure you understand everything you’re getting. You don’t want to learn about it after a loss.”

Part of that education, Lussier added, is understanding what’s most important to insure.

“Why buy auto insurance? In the consumer’s mind, it’s to protect the car; that’s the thing they care about,” he said. “I was the same way when I was a brand-new driver. ‘Give me what I need, whatever’ — until you have a claim. One thing I hear is, ‘I thought I had coverage for that.’”

Under the prior, regulated system, insurance providers were required to apply specific surcharges for certain accidents and traffic violations. Now, insurance companies are permitted to develop their own rules, subject to state approval, for imposing surcharges for at-fault accidents and traffic violations.

They can also include a raft of incentives, such as bundling auto and home insurance when both policies are bought from the same carrier, offering multi-car discounts or AAA membership credits, or using disappearing deductibles to reward drivers for not having accidents over a long period of time.

Then there are away-from-home discounts for college students who are on their parents’ policies, yet spend much of the year away from home without access to the family car.

“A newly licensed driver can add $800 to $3,000 to a premium, depending on whether they have their own car or not,” Lussier said. “A good-student discount can take some bite off that, and then you can get a discount while they’re away at school. Some companies require you to be at least 100 miles away to give you the discount, some only 25.”

What parents should not do in that situation, Vassallo said, is take their child off the policy completely to save some money.

“You don’t want to do that — God forbid he gets in his roommate’s car and gets into an accident, and the roommate has minimal [coverage] limits, and now the family is looking at potential harm to their assets. Companies can give discounts for students who go off to college, but you should keep them on the policy. Even though they’re not a regular driver anymore, it still provides protection.”

Limited Thinking

One rule of thumb when it comes to liability and coverage, Lussier said, is to ask, ‘how much am I worth?’

“If I’ve got a house, a savings account, a 401(k), I have to protect that with bodily-injury [coverage], then $20,000 isn’t going to be good enough,” he told BusinessWest, noting that, often, the difference between coverage levels doesn’t translate to all that much in the annual premium. For instance, he asked, what if the difference between $100,000 and $300,000 is just $80 per year?

“Do you want to take a risk for 80 bucks a year? When an accident happens, we want to know that we had the discussion and that you’re OK with understanding the risk after considering your driving habits and where you drive and what you have to protect,” he explained. “You’re saving 80 bucks to have crappy limits. We can keep your crappy limits, but we want you to tell us that’s what you want.”

Joseph Bednar can be reached at [email protected]

Banking and Financial Services

A Primer on Record Retention

By Emily White

Emily White

Emily White

These days, it’s hard to imagine holding on to paper copies of every paid bill, invoice received, or other financial document. Today’s society has moved from paper copies of documents to digitized, searchable files — all within the click of a mouse or stroke of a keyboard. Many practices even have copies of important documents secured by fingerprints or facial recognition on iPhones or tablets.

However, while the methods of retaining documents have changed, having a record-retention policy is still important and should serve as a guide within a practice, no matter where or how files are kept.

Retention of specific documents should be easily identifiable in a practice’s record-retention policy. A basic record-retention policy should include a listing of recommended retention periods for specific financial items. The length of time certain records should be maintained depends on services offered by the practice, types of files, and any specific regulations that may determine the holding period.

“While the methods of retaining documents have changed, having a record-retention policy is still important and should serve as a guide within a practice, no matter where or how files are kept.”

The retention policy should be reviewed by a practice’s legal counsel to ensure proper compliance with all laws and regulations.

Records retention generally falls into four general time-specific categories: two years, three years, seven years, and permanently. Documentation to be retained for two years includes items such as bank reconciliations and general correspondence. Typical three-year retention-policy items include bank statements, insurance policies, internal reports, and employment applications. Records to be kept for seven years include items such as payroll records, personnel files (for terminated employees), sales records, and subsidiary ledgers. Items to be retained indefinitely include audit reports, active contracts, legal correspondence, meeting minutes of board of directors and stockholders, retirement and pension records, and union agreements.

In addition, specific guidelines provided by the IRS govern retention of income-tax returns and related documents. Generally, income-tax returns are kept indefinitely, along with related depreciation schedules, financial statements (audited or unaudited), and year-end trial balances.

As the world becomes more technologically advanced, it is becoming easier for practices to store files on the ‘cloud.’ Cloud-based storage has become the newest method of storing records and files. Keeping files on the cloud not only frees up physical space, but also significantly reduces the risk of potential for loss of work and crucial documents. Medical practices are recommended to back up their computerized files to the cloud daily, at a minimum.

Record retention on the cloud is a secure and paperless way to keep all required files. Many practices opt to scan in all paper copies of files, support, or related documents and keep these files on the cloud. This method of record retention is a great way to reduce physical paperwork but remain in compliance with applicable laws, regulations, and company policies on record retention. As e-mails have become a significant form of communication, their storage timelines have also become important. E-mails are subject to discovery as evidence in the event of a lawsuit, so ensuring that e-mails are retained for an appropriate amount of time is crucial.

The storage of e-mails should be outlined in a practice’s record-retention policy, dependent upon the nature of the e-mails. Some may need to be kept indefinitely if they include significant legal correspondence or other agreements. Practices should refer to the general guidance for these matters.

Practices should consider the necessary requirements for record retention based on their service offerings and areas of expertise. Practices should also consult with legal counsel to develop an appropriate record-retention plan that follows all appropriate laws and regulations, including specific IRS guidance for tax-related items. In today’s digital world, it is easier than ever to engage in cloud-based storage for the purpose of complying with record retention. Additionally, a record-retention policy should be reviewed annually for possible changes and updates. After all, who knows when paper copies will come back in style?

Emily White is a senior audit associate for the Holyoke-based public accounting firm Meyers Brothers Kalicka, P.C.; (413) 322-3531; [email protected]

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