Monthly Archives: January 2014

Subrogation

Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to an insured.  It is a provision that is common in many insurance policies, and one that we, at Homer Smith Insurance, often find ourselves explaining to customers. There are many times that an insurance company settle a loss under a liability policy, but someone else is actually responsible.  Subrogation can be used in a variety of ways but the following is a classic example:

William and Harry get into a car accident. The accident is Harry’s fault, but William gets tired of waiting for Harry’s insurance to pay for the damages, so he uses his own insurance to make repairs to his car.  In this situation Harry or his insurance company owes William the money, because Harry is at fault for the damage.  William’s insurance company becomes the subrogee, as it has paid for the damages. William’s insurer has the right to collect from Harry or his insurance company and keep the funds as compensation for what it paid out.

The effort to recover payment made by William’s insurance company illustrates “subrogation”.  Most automobile insurance professionals in Washington understand the importance of subrogation.  Once an insurance company claims this right, it can pursue recovery from another person (including other entities such as partnerships or corporations) who is actually responsible for a loss.

When a contract includes a subrogation clause, it allows someone to stand in legally for someone else. There are many types of subrogation clauses. If people are not sure about how subrogation might apply to a particular contract, they should contact an attorney for more information.

When subrogation is used, it helps to keep everyone’s insurance costs down.  It also attempts to insure that liability insurance policies work as intended – by making sure that those parties who cause losses are the ones that end up paying for them.

HOLD HARMLESS AGREEMENTS

The safest way to avoid the dangers of pursuing an activity is…..don’t pursue the activity. Of course, this is unrealistic, as the quality of our lives is highly affected by how we choose to spend our time. Any activity involves a chance that a loss could occur:

  • A pick-up basketball game could result in a broken ankle
  • A tennis match could include your collision with a partner’s racquet
  • A hike through a forest path may end with a stumble and a broken leg
  • A twirl on the dance floor could include tripping on a chair and falling, ending up with an injury
  • A canoe rental could end up with a drowning

The key is to be aware of risks and to take steps to minimize them. One method that tries to decrease the likelihood of being sued involves hold harmless agreements.

Hold harmless agreements are typically in writing and involve a first party agreeing not to take legal action (sue) against another party. In exchange for this promise, the second party agrees to permit the first party to engage in a given activity.

These agreements can come in many forms. They can be separate contracts or, often, they are statements added to other contracts. They are also called different names, such as disclaimers or waivers. Schools use them in permission slips for student trips or activities, including team or individual sports. Youth sports leagues use them, vendors who rent recreational equipment use them, and many businesses with commercial policies through Homer Smith Insurance make such agreements part of their operations.

There are a number of issues to keep in mind with such agreements including:

  • Are they necessary
  • Are they enforceable (state laws often control this issue)
  • Are they valid (if not worded properly, they may be useless or may have unintended consequences)
  • Are they fair (this depends on the level and nature of risk involved)
  • Are they part of a business or strictly a non-business transaction

In some cases, it may make a lot of sense to use a valid hold harmless agreement. In others, one may have to make a decision whether a given activity is worth giving up that important right to hold another party responsible for serious injury or substantial damage to property. Be aware that it may not be valid to hold another party harmless on behalf of a child. Some states hold that a child’s right is separate from a parent’s and a parent may not legally waive that right.

Having fun and staying active involves risks and it’s important to be aware of which ones you’re assuming when you pursue those activities.

 

Do Renters Need Insurance?

Why Renters Should Buy Insurance

Renter insurance offers coverage similar to homeowner insurance. It’s for people who rent a living space, such as an apartment, condominium or house.  The landlord generally buys insurance coverage to protect his or her interest, such as the building and liability.  It does not cover your property.

Renters frequently either overlook or choose not to purchase insurance for reasons such as:

  • Insurance isn’t necessary because there’s no home, garage or similar property to worry about
  • Coverage is automatically provided by my landlord, host or relative with whom I’m living
  • I can’t afford it
  • I don’t have enough possessions to insure
  • There’s little chance that anything will happen to my possessions

Busting Renters Insurance Myths

The only thing true about the above reasons for not getting renters insurance is that they can cause real misery from an uninsured loss. Renters need to consider the following:

  • Possessions are purchased over time. This fact makes it less obvious that a renter may own tens of thousands of dollars worth of property that needs to be insured
  • Many belongings are very high-value. Renters should consider what jewelry they own and pay particular attention to their electronics situation (stereos, CDs, CD players, game systems, speakers, computers, etc.) Even modest living areas can hold lots of expensive property.
  • Renters insurance is affordable, often well under $200 per year.
  • Insurance policies carried by landlords typically offer little or no coverage for property that is owned by tenants and guests.
  • The same things that can damage a building can damage the property in the building, particularly natural disasters and fires; so a building’s contents are very vulnerable to loss

What about Being Sued?

Renters who don’t carry insurance should remember that they also need protection for their legal obligations to others. What if you’re on a softball team with your friends and your line drive seriously injures another player? Emergency treatment and medical attention is expensive.

If you rent in Sequim, Port Townsend or anywhere in Washington State and you don’t have renters insurance…then you have a very good reason for contacting an insurance professional at Homer Smith Insurance to get you covered… today!

Car Pooling – Part 2

Note: Please be sure to read “Car Pooling – Part 1″

You have already learned that many drivers use different ride-sharing arrangements. The typical automobile insurance policy covers these arrangements because the driving exposure is essentially the same. The common policy exclusion that refers to “public or livery conveyances” is to prevent coverage for business situations. Using a car or SUV that is insured by a personal auto policy to transport people or goods for hire is unfair to insurers. The premium a company charges for personal use is inadequate to cover “public or livery conveyances” that are typically:

  • driven more miles
  • exposed to worse (i.e., high density) traffic situations
  • driven under more pressure to meet delivery schedules
  • exposed to poorer driving conditions

In other words, such use calls for more careful underwriting, different or special coverages and a higher premium. However, group-driving arrangements are another form of personal use such as using a car for commuting, vacations, personal errands, etc. The result is that a “personal” premium compensates an insurer for most pool arrangements.

Are There Other Coverage Considerations?

Yes. Car owners may worry if their insurance is affected if another member of a pool is driving their car. The answer is that any person using the vehicle with the car owner’s permission is covered along with the car owner.  Persons who drive in carpools may want to discuss the details with their insurance agent. An insurance agent may recommend that you carry higher bodily injury liability insurance limits. Higher medical payments limits may also be in order. Providing full details can help an agent make sure that any fees involved in the arrangement represent coverage for the driver’s operating expenses and not additional income.

Conclusion

In most instances, using a car in a typical share-the-ride arrangement or car pool will not affect the protection under the personal auto policy. The fact that passengers offer financial help to cover auto expenses is unlikely to eliminate insurance coverage since the car is not being used as a “public or livery conveyance.” However, any fees received by a driver from car pool passengers should only reflect a reasonable share of the gas and oil expense and depreciation on the car.

If you have additional questions about your situation, please give one of our professional agents at Homer Smith Insurance a call at 888-433-0031.  They can also answer questions you may have about any number of Washington insurance coverages, such as auto, motorcyclehomedwelling fire, flood, earthquakeumbrella, lifewatercraft, charter boatsbusiness, bonds, workers compensation or commercial property.

Car Pooling – Part 1

At Homer Smith Insurance we know that many drivers, at least occasionally, have reasons to car pool between Port Townsend, Sequim, Port Angeles and places in between.  They sometimes have questions about how car pooling might affect their auto insurance coverage in Washington, and we thought we’d address this topic.

Environmental concerns, traffic congestion, convenience, desire to relieve driver stress, poor public transportation, lack or expense of parking are all factors that contribute to commuters forming driver groups or car pools. Parents use such arrangements to transport children to school, sports events and extracurricular activities. It is also common for a student owning a car to carry classmates back and forth between home and school.

Regardless of the name, driver groups, share-the-ride arrangements or car pools are a permanent part of the American scene. Typically, several drivers take turns assuming the responsibility for driving their companions. It’s common for the turns to last a week and may be done on a rotating basis. These people frequently live in the same area and work in the same office or plant, taking turns driving or regularly riding in one car and paying the owner a reasonable fee to help pay for gasoline, maintenance and wear and tear.

The practice of a parent taking a group of children on an outing, to a youth sports activities, and the like is commonplace. Other examples of group driving exposures are plentiful:

  • church group activities
  • book club members driving to their regular meeting or outing
  • coaches taking players to practices or games
  • adults traveling together to bowling league games, softball practices, etc
  • amateur musicians traveling in a van to a practice or performance

Liability Insurance Exclusion

Drivers involved in car pools and other group arrangements may wonder if the situation is covered under their auto policy. This concern is valid as many auto policies have restrictions. Typically, liability coverage under personal automobile policies does not apply to “…liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.” (A public conveyance is a vehicle used indiscriminately in transporting the public without being limited to certain persons or occasions. A livery vehicle is one that is offered for rental). There is slight variation in language among policies issued by various insurers, but the intent is the same: to exclude the use of a personal auto for transporting people or property for income. However, this exclusion does not affect coverage for car pool, driver group, and share-the-ride arrangements.

Please be sure to read Car Pooling – Part 2.

HSI Christmas Group Photo

Controlling Car Insurance

Happy New Year from all of us at Homer Smith Insurance!  We’d like to start the year by exploring ways to control the costs of auto insurance.  Although you may have seen something similar before, we offer a list of possible ways to save on all of your insurance costs and invite you to call for a free evaluation of your policies if you feel there may be room for some savings. You may be frustrated with car insurance premiums and factors that cause increases, some of which are out of your control, such as:

  • Your insurance company’s overall loss experience (due to more claims)
  • The increased value of newer model cars, particularly SUVs
  • Increases in judgment amounts awarded in auto lawsuits
  • Increased business processing and administrative expenses
  • Auto loans lasting longer, meaning increased auto repair costs for older cars

There are things you can do to address rising costs. First, gather your insurance records and any other car-related information. Next, determine if circumstances have changed since you last dealt with your coverage. Once this information is handy, call an agent at Homer Smith Insurance to discuss relevant items such as:

  • If your home and auto insurance are with the same company, is a discount available?
  • Does my coverage take full advantage of the discounts offered by my company?
  • I have more than one car; am I getting a credit?
  • Does it make sense to change my deductibles?
  • Do my cars really need physical damage coverage insurance? (An important consideration for older vehicles)
  • Do lifestyle choices such as drinking or smoking affect my premium?
  • My son or daughter is on the honor roll, does this affect my premium?
  • Did you know that my car has special security features?
  • Did you know that my son took Driver’s Education?
  • Does the company have accurate information on how often and how far I drive?
  • Am I with a standard carrier or do I qualify for any preferred program?
  • Is my vehicle charged an additional premium because of its type or performance?
  • Do I qualify for a loss-free history or policy longevity discount?

Giving your agent accurate information helps you get the best available premium. Provide your agent with complete details about your driving history. It’s important to be clear about who drives your cars and how they’re used. Sometimes just making a call to ask for a review of your policies can lead an agent to discover potential savings on your insurance premiums. Our company is able to offer insurance coverages from multiple carriers, and has been assisting customers with their insurance needs in the state of Washington, and beyond, since 1950. Call one of our knowledgeable agents at Homer Smith Insurance in Sequim (360-683-4970) or Port Townsend (360-385-3711) today!