AccidentsMost of us know that each individual state requires that you carry auto liability insurance. In the state of Arizona, you are required to carry at the least 15/30/10. To break it down, what this means is that you have up to $15k (per person) and $30k maximum (per accident) for BI (bodily injury) should you cause injury to someone during an accident for which you are at fault. The $10k is the maximum coverage for PD (property damage) that was caused by you. Although your premiums for this type of coverage are very cheap and may be within your tight budget, there are several things to consider before making a quick, impulsive decision that might end up haunting you for the rest of your life.

The average cost of a vehicle these days is a little over $30k. Sure, you wouldn’t be responsible for the cost of a brand new vehicle if you caused an accident because we all know that the value of a car depreciates immediately after you drive it off of the lot. In fact, the average cost of an accident in which there is ONLY property damage was $9078 in 2011, according the AZ Motor Vehicle Department. You have $10k in coverage, no big deal, it’s just under your limit right? Keep in mind that this is an average figure only! This doesn’t guarantee that any damages caused by you won’t be over $10k. You should also consider that property damage is not just limited to someone else’s vehicle. You can damage a number of things…a lamp post, a yard, or even a house. PD coverage also pays for your legal defense costs if you are sued as a result of these damages and you don’t need to be an expert to guess how much that could run you.

Now it’s time to get serious and address bodily injury. If you have the required state liability limits in the state of Arizona, then you are covered up to $15k (per person) which maxes out at $30k (per accident). We all know that accidents happen and according to the AZ Motor Vehicle Department, the average cost per incident in 2011 in regards to BI was $22,746 and this was just for Non-incapacitating injuries. The average cost per incident for incapacitating injuries jumps to $70,854 and the average cost per incident for accidents that involved fatalities was $1,438,200. I don’t think anyone is in disagreement that 15/30 is definitely not enough BI coverage for anyone.

What can you expect if your insurance coverage comes up short? It’s simple really. If the amount of BI and/or PD exceeds the limits of your coverage, you are at risk of being sued. Depending on the amount in which you are sued for, you can potentially have your wages garnished for the rest of your life. Think for a moment of the victims as well. Not only have you disrupted your own life financially, mentally, and possibly physically, you have also disrupted someone else’s life in the same manner. Think of it in terms of your family and if the tables were turned. It’s not something we are necessarily comfortable thinking about, but what would the implications be if someone caused an accident involving you or your family members and they did not have the coverage to make you whole again? It’s a disturbing scenario.

We choose not to write state limits for any of our clients. It’s something that we feel strongly about and believe it is in the best interest of our clientele to carry liability limits of at least 100/300/100. If you currently have state liability limits, ask yourself “How much am I really saving in the long run?” There is no better time than now to get with your agent or insurance carrier to discuss increasing your auto insurance limits. Be safe, but most importantly, be protected! Call our office for a free quote today at 480-288-5900!

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Fire

Is your business adequately insured in the event of an unplanned event? (image via public domain image.com)

One of the mostly costly mistakes business owners make is not having the right kind or amount of insurance in place to protect their business and their income.   Thinking they understand the ins and outs of business insurance, they forge ahead without working with an expert or getting a true picture of their true needs and the insurance coverage they need to mitigate their exposure.  Unfortunately, making this kind of mistake can actually cost more than just money; it can cost you your business.

Here are 6 common mistakes businesses make with their insurance.

  1. Not Buying Insurance

This is by far the biggest mistake business owners make.  Whether it seems like the benefit doesn’t seem to justify the cost or they don’t realize they need coverage, not buying insurance is the biggest mistake any business can make.  Business owners don’t realize that it only takes one lawsuit to wipe them out.  They feel that as long as they follow the rules, operate legally, and do what they are supposed to do, they will be ok.   What they don’t realize is that even if they are sued and win, the cost of defending themselves against even an unfounded lawsuit may be enough to bankrupt their business.

  1. Buying Inadequate Coverage

Many businesses that do purchase insurance don’t actually buy enough to cover their potential losses.  Business owners don’t realize this mistake until it’s too late and they are stuck paying for attorney fees and legal settlements out of pocket.  Purchasing inadequate coverage is only slightly better than not having any coverage at all.

  1. Buying the Wrong Coverage

Alongside buying inadequate coverage is buying the wrong coverage.  Business owners who don’t work with an insurance professional to assess their risk and secure the right coverage to protect their business from losses, run the risk of having to cover costs that are not covered by the policy they purchase.

  1. Going Without Business Income Coverage

Business income coverage which is also called business interruption insurance provides financial support when something interrupts your ability to conduct business.  Going without this coverage can endanger the business as much as going without liability or property coverage.  For example, there is a fire in a retail shop that destroys or damages all the merchandise forcing the shop to close for three weeks.  The business owner’s property insurance covers the lost merchandise, but without business income coverage, the business owner has no way to recover the lost income from having the shop closed for three weeks.

  1. Misunderstanding Coverage

Business owners who buy the right amount of the right coverage can still run into problems if they don’t understand what things are specifically excluded from their policy.  Most business insurance policies are full of exclusions and business owners who don’t understand these exclusions can be left holding the bag when they thought they were covered.

  1. Carrying Low Deductibles

Business owners can decrease their costs while still protecting their business by increasing the deductible on their policies.  Carrying a low deductible on your policy may seem like the better business decision because it offers more protection, but it may not be the right decision for your business.  High deductibles reduce your overall operating costs while offering protecting you from the kinds of losses that could compromise your business.

The best way for business owners to ensure they have the coverage and protection they need is to work with a qualified insurance professional.  Their agent or broker can assess their needs and then help them find the best insurance package to meet them.

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Business Insurance

Is your business adequately insured? Image via cancocom on Flickr

According to the Small Business Association (SBA), small home based businesses make up more than half of all businesses in the U.S.  These types of businesses are more likely to have the wrong insurance coverage for their needs.  If you are a home-based entrepreneur, here are 6 mistakes you can’t afford to make with your business insurance.

1.     Not Having Insurance Specific for the Business
One of the most common mistakes home-based business owners make with their insurance is making the assumption that their personal insurance policies cover their business.  This is almost never true.  In fact, most homeowner’s and umbrella policies specifically exclude business activities and business property.  This means that if there is a fire in your home, your homeowner’s policy will not pay to replace the computers, equipment, and supplies belonging to your business.

2.     Not Believing that the Company Can Be Sued
It doesn’t matter if you are just starting out, don’t have any real assets, or whatever other reason you are telling yourself, if you own a business, that business can be sued.  In addition, it may be possible for you to be sued personally as well.  If you have a judgment against you, the court can seize your assets, bank accounts can be frozen, and future earnings can be garnished.

3.     Not Planning for Bad Things to Happen to Them
Another big mistake home-based business owners make is not protecting their business in the event something happens to them.  Many small business owners forego disability insurance for both the short and long term without realizing that their odds of being disabled at some point, even temporarily, are much greater than the odds of them dying.  Most home-based businesses could not withstand the loss of their entire workforce, even for a few weeks.  Most small business owners would find it difficult to pay their bills and take care of their families if a disability made it impossible for them to work in the business.

4.     Not Having the Right Insurance
Small business owners are often strapped for cash and strapped for time.  This can lead to bad decision making in the area of insurance.  Business owners cannot rush through the process of identifying their insurance needs without running the risk of buying the wrong policies and being over insured in some areas and underinsured in others.

5.     Not Verifying that All Insured, Entities, and Locations are Listed on Policy Documents
Regardless of the way you have structured your business, you need to make sure that all entities, companies, LLCs, etc. are listed on your insurance policies.  The same goes for all locations that are covered by business property and commercial general liability policies.  In order to ensure they are covered, they must be listed on the policy.

6.     Not Purchasing an Umbrella Liability Policy
Business owners, just like individuals, need umbrella coverage in order to protect themselves and their business from catastrophic circumstances.  Umbrella coverage kicks in after your standard policies hit their limits and hopefully, you will never need it.  However, this is the kind of coverage that if you need it and don’t have it, it can end your business and impact you financially for the rest of your life.
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Small Business

Is your small business adequately insured? image via aboutTime on Flickr

One of the unfortunate realities of our world is that the threat of a lawsuit is around every corner and inherent with every employee you hire, customer you serve, or client you sign.  No matter how small your business is, what products you sell, or services you offer, there is some part of your business that is leaving you exposed to a lawsuit that could bankrupt both you and the company.

Here are 7 reasons every business needs to protect itself with the proper types of insurance.

1.     It Only Takes One

It only takes one accident, one broken contract, or one disgruntled worker to put your entire business at risk.  If your company is sued fornegligence, even winning can easily put you out of business because of the amount of money it will cost to mount your defense.

2.    Things Happen

If you own property where customers come to do business, you are open to a personal injury liability claim every minute of every day.  People fall and accidents happen but if they happen on your business premises and you don’t have insurance, you will have to pay for medical bills, lost wages, pain and suffering, and other expenses out of your own pocket.

3.   Your Corporate Shield May be Flimsier Than You Think

Many small business owners believe they have protected their personal assets from any business liability claims or judgments by using a “corporate shield”.  However, there are circumstances where that protection doesn’t stand up in court and without business insurance, you could literally lose everything you own.

4.     Exclusions Apply

If you have a general liability policy, any employment liability claims may be excluded from that policy.  If you have a commercial liability policy, property loss may be excluded.  If you are a home-based business owner with homeowner’s insurance, it is unlikely that your business assets are covered under that policy.

5.   Losses are Often Out of Your Control

If you walked in tomorrow to find your office had been robbed and every computer was gone, would you be able to replace them today and get back to business?  Losses from theft, natural disaster, and other accidents could bankrupt your business if you don’t have insurance to help replace what is lost.

6.     Accidents Happen

You may be thinking that your auto insurance policy that covers your personal auto will cover you if you are driving your car on company business.  This may or may not be true. If it isn’t true and you are in an accident where you’re at fault, you could find yourself paying for someone else’s pain and suffering out of your own pocket for the rest of your life.

7.   Other People’s Insurance Isn’t Enough

Let’s pretend you have a storefront on Main Street in your town and another person causes an accident which ends with a car coming through the front window and destroying your merchandise.  Their auto policy, if they have one, might cover the damage to the shop and for replacement products, but it may not cover or have enough coverage to compensate you for the income you lost in the four months the shop had to be closed for repairs.

Don’t wait until something happens or procrastinate at least doing something while you figure out whether or not you can afford to purchase the insurance your business needs.  The question you need to focus on is how can you afford not to insure your business.
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Do you need an Umbrella Policy?

If you own a home, you know you need to have homeowner’s insurance.  If you own a car, you know you need to have auto insurance.  But do you know if you need an umbrella policy? 

Many consumers are unfamiliar with this type of coverage and those who do know what it is often think they don’t need it.  However, if you own a house, drive a car, have an investment portfolio, have retirement savings, or want the peace of mind that comes from knowing your financial future is protected, you need an umbrella policy.

Umbrella policies sit atop your homeowners and/or auto policies and provide coverage over and above the limits of those policies.  For example, if you were at fault in an auto accident where your car slid into someone else’s house causing damage that exceeded the $25,000 property damage limit on your auto policy, you would have to pay for every dollar over that limit.  If you had a $1M Umbrella policy, the insurance company would pay for any damages from $25,001 to $1M.  This can be crucial if another person is injured as a result of your negligence.

To provide a clear picture of why you might need the protection of an umbrella policy, here are three reasons investing in the protection of an umbrella policy might be the right decision for you.

1.     If You Drive a Car

 

The primary reason that every person who drives a car should be covered by an umbrella policy is that serious injuries from a car accident result in huge medical bills and big pain and suffering payouts.  A policy with a $100,000 liability limit may seem like a lot of coverage, but the Arizona Department of Health Services estimates that the average cost of a hospital stay caused by a traumatic injury is $53,000.  When you add that to the cost of future medical care, any rehabilitation, psychiatric treatment, lost wages, and damages awarded for pain and suffering, it is easy to see how even a minor accident could easily result in expenses and damages that exceed $100,000.

2.     If You Own Anything

 

If you own a home, land, rental property, or a business, an Umbrella policy is an inexpensive way to protect these assets from being seized in a lawsuit.  When people think of their available assets, they don’t often think of investment portfolios or retirement accounts as being in the same category as a home or property.  But these assets are also vulnerable to seizure in a lawsuit and can be protected by umbrella coverage.

3.     If You are a Wage Earner

 

Many people don’t realize that if you lose a lawsuit and the amount of the settlement exceeds your insurance coverage, the court can seize your assets and attach your future earnings.  This means that one car accident in your twenties could result in a portion of your wages being taken until you retire.  In a Kiplinger article explaining why everyone needs an umbrella policy, they recommend anyone who makes over $100,000 a year have at least $1M in umbrella coverage.

Your insurance carrier may require you have higher limits on other policies like the ones you have for your home or car.  However, in the face of a million dollar lawsuit, small increases in these premiums and the low cost of the umbrella policy may be the best money you spend this year.