Monthly Archives: June 2012

What determines Washington life insurance rates?

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Many
people may think that insurance rates come out of a hat like a magic trick.
However, this is not really the case. Information and facts are collected.
Applicants often need to receive screening before approval for Washington
life insurance
. Understanding a little bit about what is involved when applying
for life insurance may help you to understand the process.

When
applying for life insurance, insurers are looking to assess how much risk and
what type of risk they are taking on when examining your application. Many
factors and the level of risk help to determine rates.

·        
Your
occupation can increase or decrease the cost of insurance coverage. For
example, someone who works in an office, which has lower risks, is likely to
have a lower rate than a miner or deep-sea angler with more risks.

·        
Good
health helps to ensure lower rates. Smokers and obese people tend to pay more
for life insurance.

·        
Whether
you are married or single may make a difference on rates. Applicants who are
younger normally get lower rates where there are no other matters affecting the
level of risk.

·        
A poor
driving record may mean receiving higher life insurance quotes.

Another
major factor that will determine how much you pay for Washington life insurance is the type of policy you choose. To find
out about the different types of life insurance and obtain quotes, speak to us
today.

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Silicosis – it may be the next asbestosis

Almost 2 million
U.S. workers are exposed to silica dust in industries and occupations,
including construction, sandblasting, and mining where most exposures take
place.  While the peninsula does not have
a lot of industry that increases the risk of exposure, it is worthwhile to look
past these large targets and understand that farming, ceramic work and shipyard
employment are smaller occupational areas that risk exposure to breathable
crystalline silica.  In fact, among the
common names for silicosis, “Grinder’s Disease” and “Potters Rot” reflect the
prevalence among concrete and ceramic workers.

The list of
materials containing crystalline silica is long and includes many materials
folks on the peninsula may be in contact with – granite, sand, gravel,
sandstone, blasting abrasive, concrete, concrete block and cement are just a
few of the entries on the list.  Pottery
and ceramic workers are at risk and that may even include art ceramicists and
potters.  Farm workers and in act anyone
working in dusty environments may have some exposure.  Soil, especially sandy soil, is likely to
contain crystalline silica. In shipyards, blasting abrasive is of real concern.

In most cases,
silicosis develops after years of exposure to silica. The disease is classified
for medical purposes as chronic, accelerated or acute and generally symptoms
include fatigue, shortness of breath (especially after activity), chest pain
and weight loss. A chest X-ray may determine lung damage.  If silicosis is diagnosed in one worker,
other workers should be tested and followed.

Why be
concerned?  Extensive exposure to
crystalline silica – usually 10-15 years — can lead to Silicosis, an
irreversible lung disease. About 300 American workers will die with silicosiseach year and the crystalline silica exposure is implicated in lung cancer,pulmonary tuberculosis, and airways diseases in general; the good news is that
silicosis is preventable with just a few precautions. 

If you are an
employer, you need to know that silicosis claims and lawsuits are becoming more
common. The more serious claims involve long-term health issues and there have
been reports of large damage awards. It is important to look for ways to avoid
having anyone contract silicosis and preventing crystalline silica exposure is
a combination of engineering controls and good work practices.  Use engineering controls like adequate
ventilation to reduce silica dust levels, and make sure they are properly
maintained. Minimize the dust in the air by removing dust with a water hose, or
vacuum with a high-efficiency particulate filter rather than blowing it clean
with compressed air.  You should also do
wet sweeping instead of dry sweeping to keep dust down.  Train yourself and employees in how to monitor
work situations and to recognize and report silica related problems.  Substitute less hazardous materials than
crystalline silica when abrasive blasting if it is possible to do so.

Wear, maintain,
and correctly use approved particulate respirators when engineering controls
alone are not adequate to reduce exposures below permissible levels. Beards and
mustaches interfere with the respirator seal to the face, making most
respirators ineffective. Use positive pressure respirators for dangerous work
like sandblasting and in general use a respirator any time you may be exposed
to dust.

If you work in,
or are responsible for, sites that may have exposure to crystalline silica be
sure to discuss solutions with your Washington insurance professional at Homer
Smith Insurance.

The Birth of the Corvette

June 28 is a
significant day in American Automotive history; it was this day in 1953 when
the first Chevrolet Corvette was hand assembled at a Chevy plant in Flint,
Michigan.  The car was put into
production immediately and he first production car rolled off the assembly line
just two days later.  It was one of just
300 Corvettes made that year.  The Vette
is still being produced and is the longest running American car in production
at 59 years. 

The Corvette was
designed and developed by General Motors’ designer Harley J. Earl.  He had begun developing plans for a
competitive American sports car in 1951 during the era of the MG “T” series and
other rapidly evolving European sports cars. 
The name Corvette was derived from the history of naval warfare where a
corvette is part of a class of small, fast and lightly armed vessels. 

The first
Corvette was shown as a “concept car” at a January 1953 auto show.  It was so well received it was rushed into
production.  As displayed at the auto
show and in the first production cars, the Corvette had a fiberglass body a 150
horsepower six cylinder engine, an automatic transmission and detachable
plastic windows.  The early Corvettes had
no exterior door handles – like the Triumph TR2 of the same year – and were
designed to be opened by reaching in through the window.  All 300 of the first year’s production were
white with red interiors.  They did have
amenities some other cars of the period did not; a clock, cigarette lighter and
a red warning light that lit up when the parking brake was applied.  The first Corvettes were underpowered with
the small 6 cylinder engine and turned 0 to 60 in a bit over 11 seconds – not
that fast even by standards of the period. 
The car was priced in 1953 at $3500 – equivalent to $30,000 in today’s
dollars. 

In the beginning,
sales were not great Chevrolet thought about considered discontinuing the
car.  Fortunately for car fans, Ford
introduced the Thunderbird in 1955 and used Ford’s big V-8 to power this light
two seater.  Chevrolet was not going to
fold in the face of competition and the T-bird sold 14,000 cars in its first
year of production.  In 1955, Chevrolet
dropped their small block 195 horsepower V-8 in to the Corvette and the race
was very literally on.  The Corvette’s
performance steadily improved along with its appeal to car fans.  Over the years songs have been written about
the Corvette by artists as far apart as George Jones and Prince and featured in
over a dozen movies – it has really earned the title “America’s sports
car.”

In its 59 year
history, around 1.5 million Corvettes have been built.  There are 6 series, conveniently labeled C1
through C6.  The C3, or Stingray, series
made from 1968 to 1982 accounts for over half a million of the one and a half
million Corvettes made. The Corvette public is currently awaiting the C7 seriesrumored to be appearing in the 2013 model year.

If you happen to
own a 1953 Corvette in the State of Washington, you can use a collector plate
on the car.  The collector plate is
permanent but does limit your use of the car to mostly ceremonial events.  Your 59 year old Vette would also qualify as
a “horseless carriage” under Washington law and does not need to carry
mandatory Washington auto insurance
However, when you consider that a 53’ Corvette sold at auction in 2007
for $440,000 our well-considered advice here at Homer Smith Insurance is that
you really ought to get the car insured. 
Call us if you need help!

 

Insuring A Mobile or Manufactured Home

The Manufactured
Housing Institute (MHI) defines a mobile home as “a single-family house
constructed entirely in a controlled factory environment, built to the federal
Manufactured Home Construction and Safety Standards, better known as the HUD
(Housing and Urban Development) Code.” The preferred terms today are
“manufactured home” or “modular home” and the term “mobile
home” is less often used.  Here on
the peninsula a mobile home or manufactured home is a welcome option for manyresidents seeking affordable housing.  We
have mobile home parks, manufactured home developments and plenty of homes on
single lots. 

If you rent a
manufactured home, your coverage isn’t much affected by your residence’s
construction type. Your main risk as a renter is to protect your personal
property and manage any liability risks that may arise from your tenancy.  A common form of insurance called a Tenants
policy offers both property and liability coverage. 

If you are the
owner of a manufactured home, there are a few more things to consider.  In general, when you insure any home, you
should be looking at three areas of risk. 
The first is damage to the home itself, whether from fire, wind water,
snow or ice.  The second is theft of property
from your home or any covered outbuildings. 
The third is your liability for injuries or property damage. Coverage
for manufactured homes is similar to a conventional homeowner’s policy as
modified by endorsements that change definitions or other provisions of a
conventional policy to fit the manufactured home situation. The resulting
policy protects the home, outbuildings (unattached garages, sheds, etc.),
personal property and personal liability. 

Some policies
offer “name perils” coverage but “all risk” policies are also available.  You may find that these different policy
types vary considerably in coverage and price; either policy type will include
liability coverage. You can also elect a policy that offers “replacement
cost” coverage or “actual cash value” again with attendant differences in
cost.  The coverage is more likely to be
offered on an actual cash value basis because of the more rapid depreciation of
manufactured homes.

Whichever
coverage option you choose, the coverage and the premium costs will reflect the
different risk associated with manufactured homes.  Manufactured homes are designed to support
mobility and that affects premiums and coverage.  These homes are able to move – if not under
their own power, by transport, they are more susceptible to wind damage and
they depreciate more rapidly than conventional homes. 

A manufactured
home policy is likely to include a provision that requires you to get
permission to move your home because of the need to protect the financial interest
of the business that lent the money to purchase the home.  Once permission is granted, the policy can
provide a set period of special transportation protection for collision,
sinking, upset or stranding.  Another
common coverage feature is an emergency coverage in case of an attempt to move
the home to prevent a loss. For example, there would be some limited coverage
for moving a home to get above a flood line. 
Unattached buildings generally also receive a lower coverage as insurers
attempt to keep premiums low by avoiding claims on very low value structures.

For all practical
purposes, the liability protection offered with homeowners policies for mobile
or manufactured homes is the same as that provided to conventional home owners.
That is as it should be since the risk of a guest being hurt at your home, or
your probability of being sued, tends to be the same.

Your Washingtonhome insurance agent is your best resource for making sure the manufactured
home owner gets the information needed to make the best and most cost effective
decisions.  With a little help, you can
be sure your home and property are adequately protected at a reasonable price.

Managing Auto Insurance Costs

For years, the
folks in public health have been telling us that we can have some control over
our health and longevity.  Eating right,
watching our weight, exercise, avoiding smoking and doing a little to relieve
our stress can have a very beneficial effect on our health and contribute to a
longer life.  The factors we can control
ourselves are generally called “behavioral risk factors.” There is a similar
phenomenon in auto insurance, even down to the behavioral aspects of risk. 

Insurance costs
may differ from company to company, but they often seem to go in only one
direction – up.  There are reasons for
this price creep. 

  • An individual
    insurance company’s loss experience affects premium prices – more claims equal
    higher losses
  • Automobile
    prices are on the rise and so are repair costs; the mix of auto’s on the road
    is changing as more SUV’s come on line.
  • The potential
    for increased costs of judgment amounts awarded in auto liability suits affects
    an insurers planning for the reserves necessary to cover claims.
  • Auto insurers
    business and administrative expenses are increasing.
  • As cars are
    more reliable and auto loans are lasting longer there are increased repair
    costs for older cars. 

These are not the
sort of changes you as an individual can do anything about directly, but there
is a different list of factors that affect individual underwriting and these
are items you can have some control over. 

It is a good idea
to review your coverage with your Washington auto insurance agent every year
around your policy anniversary date.  Get
your insurance records and other car-related information together and plan to
spend a few minutes with your agent to review your coverage. You will want to
pay particular attention to any circumstances that have changed since you last
dealt with your coverage and to make sure your agent or insurer has the
information they need to make the best underwriting assessment. 

You should pay
particular attention to the following items because these are factors that youcan have an effect on.

  1. 1. Is my home and
    auto insurance with the same company, is a discount available and what
    insurances can I add in to maximize my discount – boat, motorcycle, RV, etc?
    You should always be sure to take advantage of the discounts offered for
    multiple policies. 
  2. 2. Am I getting a
    multiple vehicle credit if I have more than one car?
  3. 3. What are my
    deductibles at present and what do I really need?  If you can afford to absorb a $500 repair yourself,
    it may make sense to raise your deductible. 
    And, in a related consideration, if you have an older vehicle insured,
    do you need physical damage coverage insurance at all?
  4. 4. Are any
    lifestyle discounts available – you may quit smoking or drinking for your
    health, you might as well check to see if there’s a benefit in your insurance
    as well. 
  5. 5. Can I get any
    benefit for educational achievements –a son or daughter on the honor roll in
    school or children who have taken driver’s education or seniors who have had a
    defensive driving course?
  6. 6. There are
    discounts for special security features – car alarms, LoJack and other
    features.  Are they offered and can I
    qualify?
  7. 7. Is the
    information about my expected driving distance correct? Have I reported where I
    garage the car correctly?  Am I paying a
    higher premium for my car because of its type or performance? 
  8. 8. Am I on any
    preferred program and, if not, it there any preferred program I might qualify
    for such as a loss-free history or policy longevity discount?
  9. 9. Finally, ask
    about your driving history and make sure it is correct – like a credit report,
    there are occasional errors in the system. 
    Find them; get them out.

Your Washington
insurance agent is your best resource for handling errors and for helping you
put your best foot forward to the underwriters. 
Walking may help you bring down your weight; giving your agent accurate
information and checking your options can help bring down your insurance premium! 

Managing Cyber Risk

According to the
Wall Street Journal, computer hackers have begun to set their sights on small
to medium size businesses – any business that stores data in electronic
form.  Reports from Symantec reported
that the average annual cost of cyber-attacks for small and medium
organizations was $188,242.  Hacking
related problems include things like theft of credit card data, access to
corporate financial systems, and destruction of data and remediation of these
problems can be expensive.  For the
hacker, the small business with less sophisticated security, the work may be
relatively easy and even a few credit cards can yield a big return.

Hackers can
access a company’s systems in a variety of ways.  Email viruses that may be blocked by large
companies with robust cyber security may be easier to introduce in small
companies with less sophisticated computerized systems.  Viruses called Trojan Horses can collect
information on an infected computer and transmit it to a remote source, or open
a door to the internet the hacker can come through.  “Phishing” emails tempt unwary employees to
navigate to seemingly legitimate websites and enter valuable data – like login
names and passwords.  Armed with these a
criminal can walk in the front door of the computer system. It only takes one
relatively unsophisticated employee to unknowingly create a breach and digital
records, particularly credit card data, become the hackers’ main target. 

Hacking isn’t the
only cyber risk to be concerned about. 
Pirated software abounds and software companies are vigilant in trying
to identify instances of piracy and recover their product investment.  The whole area of enforcing copyright
infringement has spawned its own businesses. 
The Copyright Enforcement Group will – for a fee – protect a copyright
owner’s interest worldwide.  Any
copyrighted material you, as a small business owner, put on the web, knowingly
or unknowingly could draw legal attention. 
If you market extensively on the web, you could be at risk for an
interruption in your marketing if your ISP host has a failure, or if your
business is attacked in a denial of service breach (where hackers literally
direct so much traffic to your website it overwhelms the site).  A denial of service attack is the web
equivalent of a mob jamming the doors to your store so real shoppers can’t
enter.

Managing your
risks is a three part effort – first fully understanding what types of attacks
could affect you; second working to minimize those risks and finally look into
obtaining a cyber-liability insurance policy. A cyber liability policy can
cover copyright & trademark infringement, damage from viruses and the costs
of recovery, business interruption, and the costs of data restoration,
unauthorized access, and activities involving business use of the Internet.

Talk to your
Washington business insurance agent. Since the underwriting for this type of
insurance considers exposures and types of risk, the application process itself
represents an opportunity to learn what your company can do to better protect
itself.   If there are specific risks
that are of concern, you may save money by selecting a “named perils” coverage
rather than an all risk policy. 

If your business
holds client information such as Social Security numbers, health records,
credit card data, passwords, buy or sell products, or allow clients to view
account information over the Internet, you need cyber insurance.  Depending on your needs, coverage can be very
broad, including: 

  • Notice Costs – to
    cover direct costs of informing in the event of a security breach and credit
    monitoring after it has occurred;
  • Damages -
    coverage for technology professional liability, information security and
    privacy breaches and  
  • Crisis
    Management, Business Interruption and Data Restoration – covers costs
    associated with getting your network back up and running, restoring lost data
    and public relations services to restore the company’s reputation.

 

The cost of
adding Cyber-Risk insurance to a coverage plan will vary depending on both
exposures and the systems, policies and procedures that exist or can be
instituted for protection. Because cyber risk is both dynamic and complex and
you should continue to address mitigating your risk during each planning cycle.

Happy Birthday to the US Constitution

June 21 is an
important date in U.S. history; the official date of the ratification of the US
constitution, the oldest written constitution in the world. 

A Constitutional
Convention had been convened in May of 1787 to write a constitution to replace
the Articles of Confederation.  George
Washington himself moderated the debates that took place at Independence Hall
in Philadelphia.  It took three months
for the assembled representatives to argue their way to a conclusion and the
debate then – as now – centered on how much influence the central government
should have.  On one side, the
Federalists argued for a stronger central government; anti-Federalists argued
against.  One of the antifederalist’s
chief concerns was an interest in the preservation of individual rights and
fear that a strong central government would override them. 

The Constitution
which came out of this debate created a strong federal government, but imposed
a system of checks and balances intended to allay the fears of
antifederalists.  The document was signed
by 38 of the 41 delegates who had lasted till the end of the convention, but
according to the document itself, it would not become the law of the land until
it was agreed to by nine of the 13 states. 

Our forebears may
have been a little better at compromise than we seem to be today, but they were
no less contentious.  Connecticut,
Delaware, Georgia, Pennsylvania and New Jersey ratified the new constitution
quickly.  Other states were not so quick
to agree.  Massachusetts, in particular,
was very opposed to the constitution as it was drafted by the convention.  Massachusetts, supported by other states,
argued that the states should retain any powers not specifically given to the
central government and that certain basic rights should be guaranteed,
including freedom of speech, religion, and the press.  It took until February of 1788 to engineer a
compromise where Massachusetts and other states would agree to ratify the
Constitution with the guarantee that amendments would be proposed immediately
to plug some of the holes.  Massachusetts
ratified the Constitution on February 8, 1788 and was followed by Maryland and
South Carolina. Finally, on June 21, 1788, New Hampshire became the ninth state
to ratify the Constitution and the United States of America had a governing
document – if not a government.  It was
agreed that government under the U.S. Constitution would begin on March 4,
1789. Virginia did ratify the Constitution in June as well, followed by New
York in July, but by then it was all over but the shouting. North Carolina
became the 12th state to ratify the U.S. Constitution in November 1789.  Rhode Island, the smallest state, opposed
federal control of currency and was unhappy about a compromise on the issue of
slavery.  They actually resisted
ratifying the Constitution until May of 1790 when the U.S. government
threatened to sever commercial relations with the state.

The new US
government did uphold its end of the bargain with Massachusetts and the first
Congress of the United States debated and adopted 12 amendments to the U.S.Constitution—the Bill of Rights.  Ten of
these amendments were ratified in 1791.

So what happened
to the other two amendments?  All twelve
amendments were submitted to the states, but only ten were ratified.  The two “missing” amendments: 

Article the first
… After the first enumeration required by the first article of the
Constitution, there shall be one Representative for every thirty thousand,
until the number shall amount to one hundred, after which the proportion shall
be so regulated by Congress, that there shall be not less than one hundred
Representatives, nor less than one Representative for every forty thousand
persons, until the number of Representatives shall amount to two hundred; after
which the proportion shall be so regulated by Congress, that there shall not be
less than two hundred Representatives, nor more than one Representative for
every fifty thousand persons.

Article the
second
… No law, varying the compensation for the services of the Senators
and Representatives, shall take effect, until an election of Representatives
shall have intervened.

The missing
amendments are interesting.  The first
amendment because, if honored literally over the years, would mean congress
could have one representative for every 50,000 people.  With our current population at a bit over 300
million, that is about 6,000 congressional representatives.  Imagine that in today’s political
environment!

The second
article is equally interesting and may be of interest to those cynical about
the interests of our elected representatives. 
It would appear to bar congress from raising its own salary – at least
not without another congress agreeing to it.

We hope you will
join us at Homer Smith Insurance, your Washington insurance agency on the
peninsula in wishing our constitution a very happy birthday and hope it
continues to serve as well as it has for over 300 years.

Having a Peace of Mind with Washington Renters Insurance

Many people think they automatically have insurance coverage while renting. Some people think apartment owners cover the apartment building, including a renter’s personal belongings. In most cases, this is incorrect. Apartment renters are responsible for obtaining their own Washing tonrenters insurance. This type of coverage is relatively inexpensive and certainly worthy of consideration.

  • Renters’ insurance covers your personal belongings. Policies can provide theft and firec overage for jewelry, clothing, furniture, computers and televisions and other personal possessions. Fire and theft are very real concerns, so having insurance provides peace of mind.
  • You may feel safer knowing your apartment has medical coverage. Entertaining guests and friends is part of life. However, what happens if there is an accident in your apartment and a visitor suffers injuries? It would be nice to know that there is medical expense coverage if guests are injured in your home.
  • You cannot always pick the neighborhoods you live in. People who live in higher crime areas would do well to purchase insurance just in case of burglaries.
  • Did you know that if you have other insurance policies you might be able to obtain a multi-policy discount?
  • Although you keep your apartment tidy and watch out for safety issues, your visitors could have an accident. Your boss or friend could trip on a rug and fall down the stairs, resulting in a lawsuit, and that is why you need liability insurance. This type of coverage can be obtained in a renter’s policy.

Washington renters insurance offers many great benefits to tenants. Contact our agent and set up a policy today.

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Lifestyles of the rich and heavily insured

A few days ago,
the Seattle Times introduced us to a new financial term, “Henry”: High Earner
Not Rich Yet.  Apparently these folks in
the $100,000 to $250,000 income range are known to retailers as a big part of
the national economic engine.  They are
described as the heavy lifters of the consumer economy, and they are said to be
slowing their spending. One hopes that the “Henry’s” are paying attention to
their insurance needs, because if they make it past this stage and on into real
wealth, they are likely to find the insurance truth of F. Scott Fitzgerald’s
observation: “The rich are different from you and me.”

The truly wealthycan accumulate a variety of risk exposures that boggle the mind of the averagehomeowner.  An art collector, for
example, may need to assess their collection every few years to assure adequate
protection.  While a homeowners policy
may cover fire damage and theft, their loss limits fall far short of a range
that includes fine art and don’t cover accidental damage, “mysterious
disappearances”, holdings in transit, on loan or holdings in multiple
locations. These are more the province of marine insurance or specially crafted
policies that can offer protection for these risks. 

Exposure to
liability is also a problem, as Mark Twain once observed – “It is easier for a
needle to go through a camel’s eye than for a rich woman to sprain her ancle
& keep it out of the papers.”  The
very wealthy are also very visible and can quickly become a target when
actionable events occur.  Liability
issues around “personal assistants” and household staff are fodder for yellow
journalism, they are also insurable under an Employment Practices Liability
Coverage, sometimes referred to as “Nanny Coverage” that is often a rider on an
umbrella policy that offers protection for claims by personal employees for
discrimination, wrongful termination or sexual harassment. 

Even community
service can be problematic for a high net worth individual.  Service on a nonprofit board of directors is
a community minded thing to do, and most nonprofits will carry Director’s and
Officer’s liability coverage to defend their boards.   What happens though when a suit exhausts the
limits of a D&O policy?  A wealthy
director may find themselves next in line on a suit.  To paraphrase Apple, “there’s a policy for
that.”

There is also a
tendency to overinsure against minor risk, while underinsuring against major
risk by carry low minimum deductibles on homeowners and auto policies where
they could save substantially by self-insuring accident repairs. At the same
time, they may have low home and auto policy limits that leave a gap before an
umbrella policy kicks in.  In doing that,
they are literally self-insuring the amount of that gap.

In the motor
vehicle arena, your standard Washington auto insurance policy may not prove
adequate to the task of defending a client when there are eyes focused fully on
their pocketbooks.  Not long ago, Hulk
Hogan of pro wrestling fame discovered that when his son was involved in a
devastating accident.  Once the
automobile policy limits were hit, the attorneys plowed right on through to
seek additional compensation for the victim and they were looking right at Hogan’s
estimated $30 million net worth.  Automobile and other liability coverage for
some folks needs to go past an umbrella policy with limits and literally extend
into the unlimited coverage arena.

So, perhaps the
super rich are not so different from you or me in that we all need sound, experienced
counsel on our insurance needs, and guidance on the most cost-effective ways to
manage our risks.

Premium Evasion

In 2009, 24
people – 17 New York residents, six from New Jersey and one Pennsylvania
resident – were charged with insurance fraud and other related offenses after
claiming falsely to be Pennsylvania residents in order to obtain lower rates on
their automobile insurance.  This sort of
scam is called “premium evasion” and it is a crime. 

It may seem
harmless enough, particularly if one person is doing it, but this is crime that can become big business.  Near major
metropolitan areas where premiums are high there are literally criminals who
take advantage of the lower premiums in nearby rural areas. The offer is
simple, for a fee the crook will drive to a neighboring state with your
automobile information where he will title, register and insure your car at a
rate much lower than you can get where you actually live. In cities like New
York, Boston or Washington DC the differences can amount to thousands of
dollars a year.

Premium evasion
costs automobile insurers millions of dollars every year, but it also costs you
and me. Since evasion schemes always move from high-cost areas to lower premium
areas and since insurance company’s rate accidents back to where the car is
registered, the effect of the scam is to raise the rates for everyone in the
lower premium area. The city has its own problems. In 2005 in New York City,
there were over $14 million in unpaid parking tickets issued to Pennsylvania
residents. The absolute size of the problem is difficult to gauge however one
insurance carrier is known to have recovered over $3 million in premiums by
scanning and analyzing 19,000 files of suspected premium evaders.

Premium evasion
is not restricted to your Washington auto insurance policy, it can occur in many
areas.  In business, workers’ compensation
premium calculations are based on factors like Payroll, type of work, loss
history and location of work.  Experts on
workers’ compensation premium fraud suggest declining economic conditions may
result in more employers falsifying employee classification or understating
payrolls in order to evade premiums. 

In general, when
businesses apply for insurance of any kind, they provide information that
allows underwriters to assess risk, analyze coverages, and calculate premiums
properly. Business owners who intentionally provide false information during
this process to evade premiums are actually committing application fraud.  This form of evasion can affect any line of
business, including general liability, commercial auto, and inland marine.

So what happens
if you evade premium?  There are a number
of, mostly unfortunate, consequences of premium evasion.  In addition to having an impact on other
insured’s, there are direct consequences. 
The most extreme is an exposure to prosecution for fraud but insurers
have their own recourse, misrepresentation on an insurance policy can be a
cause for rescinding the policy (cancellation) it can result in denial of
claims or in reduced settlements based on the coverage the premium would
actually have purchased. 

When people
complete insurance applications, there are plenty of opportunities to falsify
information; it is a temptation that should be resisted for the sake of the
insured and for all policyholders.