SPRING SEASON INSURANCE TOPICS

by Alan Plafker, PRESIDENT & CEO Member Brokerage Service LLC

A Melrose Credit Union Service Organization

Does your spring cleaning involve damage caused by winter storms?

This past winter left the Northeast covered in snow and ice. People were stranded without power for days and homes and vehicles were damaged. Now that the spring thaw is here it’s time to think about getting to the repairs that may have been put on hold.

When the damage originally occurred people affected by the storms should have taken pictures to serve as a visual record and kept receipts of all the repairs they may have made in the interim. But now what? First, give your insurance agency a call. They can go over your homeowners or automobile policy with you and let you know exactly what’s covered and what isn’t.

For your home …

Under a standard homeowners policy damage caused by wind, trees and other falling objects, as well as a structure collapse caused by the weight of ice or snow are usually covered. Damage caused by frozen pipes might not be covered if precautions were not taken to avoid the damage.

Interior water damage, flooding, removal of fallen trees if they don’t land on your home or other structure, and spoiled food are not covered under a standard homeowners policy.

Endorsements, however, may exist that can be added to your policy to cover these types of damages. If you are interested in adding these coverages to your homeowners policy your independent agent will be more than happy to help you. Just remember, certain coverages like flood insurance have a waiting period before they become activated so don’t wait until the height of the spring thaw to ask about flood insurance.

For your car …

Report car accidents to the police and to your insurance agent as soon as possible. Keep a detailed account of when and where the accident happened, the road conditions, the make and year of all the vehicles involved, damage and injuries, and your version of what happened. Exchange insurance information - names, addresses, telephone numbers and drivers license numbers of all those involved at the scene of the accident. Make sure to get the contact information of any witnesses.

Being without a car can be a hassle. We will help get you back on the road as quickly as possible. It’s a good idea to review your auto insurance policy now before an accident occurs. Make sure you have the necessary coverage for repairs and coverage that will pay for the use of a rental vehicle if necessary.

Crash taxes

A traffic accident is one of the scariest and most unnerving events a driver can face. Even if both drivers are unharmed damage is likely to one or both cars involved. The police are often summoned, insurance information may be exchanged and you may have to file a claim with your insurer. In the unfortunate scenarios where an accident is severe, emergency responders may need to work to clean up spilled automotive fluids, glass and repair damage to roadside fixtures such as signs and lights.

In the past, motorists expected that the police, emergency and medical responses were provided by and paid for by the taxpayers of the municipality where the accident occurred. However, many accident victims are surprised to learn recently that the municipality expects to be compensated for responding to an accident. Many of the municipalities that have adopted this practice are located in resort or vacation destinations where a majority of the accidents that occur are between cars owned by nonresidents. Accordingly, the municipality wishes to recover from those receiving the benefit provided by the locality’s residents. Generally, the driver at fault in an accident is more likely to receive a bill, but this is not always the case.

A variety of municipalities have begun charging crash fees. Towns in New Jersey, Connecticut and the Northeast have instituted this policy. Although various localities of New York state have not pursued collecting accident response fees with any vigor, New York has not joined the ranks of states outlawing it. Of course, a New York driver would be subject to the jurisdiction of another state while operating his or her vehicle there.

Fees can range from $70 for fluid clean up in one town to more than $2,000 for extraction of a trapped motorist in another. Motorists being hit with these fees wonder if they are required by law to pay, and whether their insurance covers it. The answer to both questions is that it varies between municipality and insurer. Some towns have enacted laws giving the emergency responders legal authority supporting any request for payment while some have considered the issue and actively declined to do so. Various insurers take differing stances on this issue; some pay while others decline to do so, or pay only in specific instances. In any case call your agent if you are in an accident. He or she will help you navigate the process of submitting your claim.

The shocking truth about the GAP

Is “shocking” the right word? I guess it depends on your tolerance for surprise billings in the amount of several thousand dollars. If your insured vehicle is damaged in an accident and is determined to be a total loss the insurance company will pay an amount equal to the actual cash value of the vehicle. However, the loan or lease balance can be higher than the insured value and this difference represents the GAP which typically becomes the owner or lessee’s responsibility to pay.

Have you noticed that large sport utility vehicles have lost their value due to unstable fuel costs? A business owner discovered just how severe this depreciation can be when he suffered a total loss on his Ford Expedition. He had borrowed $23,000 when he purchased the vehicle in 2003. Recently, it was damaged in an accident and declared a total loss. The insurer priced the vehicle and offered the owner $10,000 leaving him $8,000 short from paying off the outstanding balance on the loan. Are you feeling the shock yet? These gaps also can arise when little or no money is paid down on a new loan or lease.

A remedy for this GAP was intended by sweeping banking reform legislation enacted in 1994 which amended both the insurance law and the personal property law in order to authorize GAP waivers and GAP insurance. Creditors and lessors have the option to not hold you responsible for the GAP. However, in most cases, you will have to either assume responsibility to pay the GAP or pay an additional charge to waive the GAP limited to the insurance expense incurred by the creditor or lessor.

However, despite these statutory protections that give you some control over your options it is still possible to fall through the cracks. If the auto dealer finances the purchase or if a financial institution is assigned the loan by the dealer, the creditor must offer the waiver or assume responsibility for the GAP. On the other hand, if you obtain financing for the vehicle independently through your bank, credit union or finance company, then that creditor is not obligated to offer the waiver or assume responsibility for the GAP. This means you could get stuck paying for the GAP without protection. Unfortunately, there may be no remedy an insurance agency can offer under these circumstances in New York because no personal auto GAP coverage is readily available in New York.

If you decide to finance your vehicle outside the dealer’s control our agency recommends that you ask whether the creditor is assuming the GAP or offering a waiver. If not, evaluate the GAP risk carefully before you proceed with the transaction.

Gear up for summer

Summer’s almost here—time for camping, fishing and all the fun warm weather activities summer brings. But before slipping into your swimsuit and slathering on suntan lotion consider this: Do any of your favorite summer time hobbies involve a recreational vehicle? If so, do you have insurance protecting that vehicle against loss?

What exactly is a recreational vehicle?

A recreational vehicle is just what it sounds like: one that is used primarily for enjoyment or relaxation. For example, a speedboat that you run only during the summer or the motorcycle you ride on the weekends both count as recreational vehicles.

Why do you need special insurance?

Most recreational vehicles don’t come cheap and represent a substantial investment. Shouldn’t you protect these assets just like you do your home or automobile? Additionally, if another person uses your vehicle and is injured an insurance policy would reduce the legal liability you might face.

Need further convincing? Here are specific examples of recreational vehicles and reasons you should insure them:

• Motorcycles. According to the National Highway Traffic Safety Institute motorcyclists are 35 times more likely than passenger car occupants to die in a crash. If that isn’t enough to make you seek coverage keep in mind that, according to Insurance Crime Bureau Statistics, nearly a quarter of motorcycles that are stolen are never recovered.
  
  
  
• Motorhomes. A motorhome is a vehicle and it also is a home. Obviously, the coverage needs are going to be somewhat unique. These needs sometimes can be met by adding coverage to your auto policy, but a separate policy often is required.
  
  
  
• All terrain vehicles. A typical homeowners policy will cover liability for vehicles like ATVs so long as they remain on your property. Of course, any seasoned ATV rider knows that half the fun is cruising on one. Additionally, ATVs have a notoriously high theft rate so why take any chances by not purchasing the needed insurance protection?
  
  
  
• Boats. Different boats require different types and levels of coverage. For example, a speedboat would create higher risk than a rowboat. Like so many other recreational vehicles listed here boats are an expensive investment that you should be prepared to protect.

Summer fun is just around the corner. Before the temperature heats up ensure your favorite summer toys are protected. Give us a call if you have any questions or concerns about your recreational vehicles.

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 on the Board of Directors the PIANY (Professional Insurance Agents Association of NY) and on the Board of CIBGNY (Council of Insurance Brokers of Greater NY). 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.

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