DO I HAVE ANY CONTROL OVER MY AUTO INSURANCE PREMIUMS?

SHOULD I BUY INSURANCE FROM A RENTAL CAR AGENCY?

BY ALAN PLAFKER, PRESIDENT & CEO
MEMBER BROKERAGE SERVICE LLC
A MELROSE CREDIT UNION SERVICE ORGANIZATION

Do I have any control over my auto insurance premiums?

In today's market, where affordable personal auto insurance seems less and less available, you may wonder if there's any way to control rising premiums. You've already taken one step by choosing an independent insurance agent representing multiple companies so we can give you the right insurance to fit your needs. Besides choosing the right insurance company there are some other tips to help you control the rates you pay for auto insurance.

Driving record

An operator's driving history affects rates and could predict future claims activity. Obeying the rules of the road and driving defensively are your best ways to lower premiums.

Type of vehicle

A major factor in the rating of the coverages that pay to repair your car is the type of vehicle you own. In assigning a rate, most insurance companies begin with the cost of the vehicle and the model year. Generally, the higher the cost of the vehicle and the newer it is, the higher the rate. However, further adjustments are made for the vehicle's weight, body type, engine performance, actual loss experience from past years for that model, etc. We can give you a premium comparison for vehicles you are considering purchasing or leasing which will give you some control over the cost of your insurance.

Coverage

Some people prefer to assume more of the risk of loss on their autos and save on premiums. It may make sense for you to remove coverages on older vehicles, or increase your deductibles on newer vehicles. A common rule of thumb is that for vehicles more than 10 years old many do not cover them for other than collision or collision coverage. However, to obtain glass coverage on a vehicle you would have to maintain other than collision coverage.

Use and residence

Your employment opportunities and lifestyle most likely will dictate the kind of use your vehicles get and the location at which they are garaged—two things that impact your premiums. However, there is a way you can gain some control over the rating of your vehicles. You may want to consider driving the lowest rated vehicle, for example, an older vehicle without physical damage coverage for activities that have the highest rate for use as you would for either business use or long
distance commuting to work.

Timely premium payment

Always pay your premiums on time. Late payments can affect the rates you pay. Issuing cancellations, processing late payments, and then issuing reinstatements add significant costs to the servicing of auto insurance policies. Some companies have a low tolerance for late payments under policies that are eligible for their preferred pricing.

Credit management

Many insurance companies have established a link between a person's credit history and that person's probability of having a car accident. As strange as this may sound, there appears to be an objective basis for using credit analysis known as insurance credit scores to predict which policy holders will have greater than average loss experience or less than average loss experience. Managing your credit and your credit report will help to lower rates on your auto insurance.

Discounts

There are some standard discounts, such as those for taking a driver training course or a defensive driving course, qualifying as a good student, insuring multiple vehicles on the same policy, installing certain anti-theft devices and maintaining certain safety equipment, for example, passive restraints or anti-lock brakes. Some insurance companies have developed their own discounts for such things as buying your homeowners policy from the same company. Our agency would like you to take advantage of every discount that is available to you so don't hesitate to call your agent for a discount review.

Fight fraud

Lawmakers are working on bills that would help prevent fraud. If you are concerned about your auto insurance costs be sure to contact your state legislators and urge them to reach agreement on reforms to drive the cost of fraud out of the state's auto insurance system.

In the February 2011 issue of TLC Magazine the article Renting a Car? Insurance Mistakes Can Be Costly provided by the Insurance Information Institute discussed the issues involved in renting a car. The following article more clearly defines some of these considerations, particularly, how they are applicable to New York State rentals. Editor

SHOULD I BUY INSURANCE FROM A RENTAL CAR AGENCY?

Many rental car companies offer insurance to protect drivers against liability for damage to the rental vehicle. Should I buy this insurance?

These collision damage waivers, known as CDWs, do not need to be purchased if you have a New York state auto policy insuring your own car. By law, your policy must cover you for all obligations assumed by you for damage to a rented car. There is no deductible, no limit and no requirement to have similar physical damage coverage on your own car, only liability coverage is required.

What if I don't own a car and, therefore, don't have an auto insurance policy to cover the rented car?

If you have no other insurance available then you may want to purchase the insurance suggested by the rental car company. However, if you are using a major credit card then rental car coverage may be available through the credit card company.

Most major credit card companies provide such coverage with their credit cards. Typically, the coverage is secondary to a cardholder's own auto insurance policy within the United States and primary overseas. This coverage, generally, is in effect for daily or weekly car rentals only, not on a long term lease basis. Check with your credit card company for details and to confirm coverage.

What should I do if the rental vehicle becomes damaged?

First, be sure to check the car's condition prior to driving it. If it already is damaged, record the damaged areas on the rental contract. If damage occurs after you rent the vehicle do not allow the rental car company to charge such damages to your credit card.

Secondly, If you are involved in an accident or suffer a loss contact your insurance provider, either our insurance agency or, if you have no auto insurance, your credit card company as soon as possible. This is important because the company providing the coverage needs time to inspect the vehicle and to be sure that all repair charges imposed by the rental car firm are proper and reasonable.

Should I buy the bodily injury and property damage liability or medical coverage options that the rental car agency offers?

You should only buy it if you have some reason for wanting more coverage than you carry ordinarily. Remember, the coverages on your New York state auto insurance policy apply when you rent a car for brief periods. People who have no personal auto policy are advised to purchase these coverages when renting a car.

Does the state or country in which I rent a car matter?

Yes, it matters greatly. With respect to any of the coverage provided by your auto policy there is no protection when renting and operating a car outside the United States, its territories and Canada. There are many auto insurance plans available. For the policy that best meets your needs contact your agency.

The unique treatment of coverage for damage to rented vehicles under New York law continues to bewilder insurance practitioners and consumers. From time to time, a refresher course is necessary to restore clarity on the issue. What we are talking about is a physical damage loss to a rented vehicle.

Effective April 1, 1989, Insurance Regulation (now Section 60-1.5) implemented the Insurance Law by requiring a prescribed Rental Vehicle Coverage Endorsement to be attached to every motor vehicle liability policy (personal or commercial) insuring less than five private passenger autos, station wagons, pickups, delivery sedans, panel trucks or vans.

The required endorsement addresses the problem of covering a rented vehicle in several ways:

• every policyholder has access to the coverage with or without physical damage coverage on their policy;
  
  
  
• the coverage has no dollar limit;
  
  
  
• rentals by resident relatives of the named insured are covered;
  
  
  
• payment for the rental company's loss of use of the vehicle while being repaired is covered as well as any other expenses the renter is obligated to pay under the terms of the rental agreement;
  
  
  
• no deductible applies to the loss;
  
  
  
• the coverage extends to all states, U.S. territories and Canada;
  
  
  
• payment is without regard to fault and requires only an obligation under the contract;
  
  
  
• and business use, except for-hire risks, of the rental vehicle is covered.
  

Certain restrictions should be observed, however:

• rental agreements over 30 days are not covered;
  
  
  
• the endorsement does not apply to named nonowner policies;
  
  
  
• the endorsement does not apply to policies where the only scheduled auto is a pickup, delivery sedan, panel truck or van used for business purposes other than farming;
  
  
  
• the endorsement does not apply to policies where the owner or hirer of scheduled autos is not an individual or husband and wife, except family farm co-partnerships or corporations;
  
  
  
• and rented trucks other than pickups, delivery sedans, panel trucks or vans are not covered. Since a pickup, delivery sedan, panel truck and van are not defined in the law, we suggest that you consult your insurers for their interpretation.
  

For New York policyholders this results in payment by insurers for not just $100, but any amount the renter is liable for over $100. Whether renting a vehicle inside or outside the state of New York coverage under the New York mandatory endorsement guarantees that the renter's insurer will cover the full obligation under the rental contract.

Renters who do not have a New York policy may need to consider purchasing the Optional Vehicle Protection (or CDW) authorized by Chapter 656 to be offered to renters who have no other protection. The law limits the cost of this coverage to $9 per day or $12 per day if the manufacturer's suggested retail price of the vehicle rented is greater than $30,000.

New York rental car coverage only applies to a rental agreement having a term of 30 days or less. There is no coverage for a 31 day rental agreement. And when I say no coverage,
I mean NO coverage.

A somewhat impractical solution is to rent a vehicle for 30 days, turn it in and then take out a contract for another 30 days continuing this process for as long as needed. The only other solution is to pay the additional cost of the CDW which could get expensive.

There are so many things to love about New York (obviously, this is not a political article)—the lakes, the rivers, the forests, the seasons, the diverse communities, etc. One thing very high on the insurance industry love list is the mandatory Rental Vehicle Coverage Endorsement. New York policies dutifully provide coverage for rented vehicles as described above.

Your Professional Insurance Agent…
We want you to know about the insurance you’re buying.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves as Treasurer on the Board of Directors the PIANY (Professional Insurance Agents Association of NY), serves on the Board of CIBGNY (Council of Insurance Brokers of Greater NY), and was appointed to the New York Independent Livery Driver Benefit Fund Board of Directors. His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082, or visit the website at: www.MemberBrokerage.com.