Totaled: Upside-down car loans and when Gap Insurance could be a good idea

Boston Public Library Collection - Leslie Jones

Boston Public Library Collection – Leslie Jones

We recently came upon an excellent vintage photo collection of Boston-area car wrecks from the 1930s. Part of a larger Boston Library Collection, the photos were taken by Leslie Jones, a well-known news photographer of the era. Despite the big solid appearance of the cars, the damage is impressive. There weren’t very many safety features built in to these old behemoths. Many of the wrecks look like the vehicles sustained a total loss.

Generally, a car is “totaled” when it will cost more to repair the car than the car’s actual cash value (ACV) is worth. Of course, it’s a little more complicated than that, as Gary Wickert explains in Claims Journal: When is A Vehicle Considered a Total Loss?

The criteria for deciding when a car is a total loss and when it can be repaired vary from insurance company to insurance company and might even be dictated and controlled by state statute or regulation. Further complicating the issue is the fact that insurance companies do not all use the same sources for determining the value of a vehicle. The threshold used by your insurance company to make this determination can be discovered by calling your insurance agent. Insurance professionals, on the other hand, have to be familiar with these rules, criteria, and thresholds in all 50 states.

If your car is totaled, you’ll be paid only for the ACV of the car after any deductibles have been satisfied. If you own the car outright, the check will be sent to you. But if your car is financed, the payment will go to the bank or finance company.

What if you still owe more on the car than the car is worth?

With today’s low down payments and long-term financing arrangements, it can be easy to find yourself under water in a situation where you owe more than a vehicle is worth – in the auto industry this is called being upside-down on a loan – and today, “… it applies to roughly half of all new-car buyers.” Unless you have Guaranteed Replacement Cost coverage or Guaranteed Auto Protection (Gap insurance), you could be out of luck.

Would you still have to pay what you owe on the wrecked car? Absolutely: the folks at NOLO explain: My Car Was Totaled But I Still Owe Money on It

But what happens if your loan amount is larger than the amount of the insurance company’s check? The very short answer to this question is: you are still legally obligated to make your monthly loan payments to the bank or financial lender until the loan is paid off. The fact that your car was a total loss does not change your loan repayment terms. Your legal obligation to repay the loan continues. The bank or lender still has the right to full repayment of the loan, even though you may no longer have your car.

Nobody plans to be in a car crash, but when buying a new car, Gap Insurance might be a worthwhile option if you’ll be putting little or nothing down for a deposit or if you plan on financing the car over an extended period of time.  Here’s what the Insurance Information Institute says about times when Gap Insurance might be a worthwhile investment. If you:

  • Made less than a 20 percent down payment.
  • Financed for 60 months or longer.
  • Leased the vehicle.
  • Purchased a vehicle that depreciates faster than the average.
  • Rolled over negative equity from an old car loan into the new loan.

III says that car dealers often offer a type of gap coverage, but that it might be cheaper to purchase through your  regular insurance company.  Why not check with your local insurance agent to know your coverage options before buying  a new car?

Why it’s important to monitor your credit history every year

creditYour credit history is very important. A good credit report can help or hurt you when you look for a car loan, a mortgage or some insurance policies. You may be denied loans or credit cards if you history is poor, or you may end up paying higher rates on credit cards or for insurance coverage. (See: Credit-Based Insurance Scores: How an Insurance Company Can Use Your Credit to Determine Your Premium) Some employers may even look at your credit rating as a factor in whether or not to hire you.

You should monitor your credit rating yearly, learn more about what helps and hurts you, and review reports to be sure there isn’t anything inaccurate. Some reasons you should monitor your credit annually:

  • Find problems that are hurting your good rating and try to improve
  • Identify mistakes and get them corrected
  • Watch for signs of potential identity theft
  • Somebody else’s information might be mistakenly attributed to you
  • You might find accounts that are not yours

By law, you can get one free copy of your credit report every year. That includes one copy from each of the three major reporting companies: TransUnion, Equifax and Experian. But you need to be careful about where you get your free credit reports from. Here is the authorized source:

Annual Credit Report at 1-877-322-8228
AnnualCreditReport.com

You will hear a lot of promotions for “free credit reports” – but consumer beware! Many of them make reports free but have some type of a catch – see this short video to learn more.

 What if you find problems in your credit report?

According to consumer.gov, you can take these steps to fix any mistakes or problems:
Write a letter. Tell the credit reporting company that you have questions about information in your report.

  • Explain which information is wrong and why you think so.
  • Say that you want the information corrected or removed from your report.
  • Send a copy of your credit report with the wrong information circled.
  • Send copies of other papers that help you explain your opinion.
  • Send this information Certified Mail. Ask the post office for a return receipt. The receipt is proof that the credit reporting company got your letter.
  • The credit reporting company must look into your complaint and answer you in writing.

The FTC offers more information:

Boston Marathon Monday 2016 Toolkit

Marathon runners on the run in cityThis year will mark Boston’s 120th Marathon and the forecast is sunny and warm. If you plan to attend, we’ve gathered some links and tools to help you prepare … or if you’re an armchair observer, we have links to mobile devices, social media sites and online streaming. Remember. Marathon Monday coincides with Patriots Day, which is  a legal holiday in Massachusetts – one of only two states to commemorate the day as a holiday.

Boston Marathon Event Information

Get a route map or download a mobile app to track runners

Policies for 2016 Boston Marathon Spectators (PDF)

Mile-By-Mile Guide To The Boston Marathon

Your guide to the 2016 Boston Marathon route, start times and more

Transportation in the Greater Boston area on Marathon Monday

Follow on social media: Boston Marathon Twitter and Boston Marathon Facebook

Watch online: Official Online Streaming site

Spectator Guidelines – what not to bring (click link for larger)

Boston Marathon security - what not to bring

Security: If you see something, say something

As summer approaches, are your windows kid-proof?

window safetyWe’re a little late in jumping on the National Window Safety week bandwagon – it runs from April 3 to 9 this year – but we’d maintain that window safety isn’t an issue that should be confined to a single week of the year. The National Safety Council says that “Window Safety Week coincides with the arrival of spring, when homeowners naturally want to open the windows and let in fresh air. Its goal is twofold: For families to understand the role of windows in escaping a fire or other emergency and to learn to safeguard against accidental window falls.”

Every room should have two ways to exit – usually, that is at least one door and one window. The National Safety Council offers these window safety tips as part of your escape plan.

  • Make sure windows are not nailed or painted shut
  • Do not install air conditioners in windows that may be needed for escape
  • Make sure at least one window in each bedroom meets escape and rescue requirements
  • Window guards, security bars, grilles or grates render windows useless in an emergency unless they have a release mechanism; update them if necessary
  • Develop an emergency escape plan and practice it during the day and at night
  • Keep emergency escape ladders in second- or third-story bedrooms and teach everyone in the home how to use them

If you have young children, you have another safety issue to consider. Every year, more than 3,300 children under the age of 5 fall from windows, suffering injuries serious enough to send them to the hospital; sadly, about eight children a year die from these falls.

The Window Safety Task Force offers these tips to protect children from window falls:

  • Avoid the placement of furniture near windows to prevent children from climbing
  • Do not rely on insect screens to prevent a window fall
  • Keep children’s play away from open windows and doors
  • Install building code-compliant devices designed to limit how far a window will open or window guards with release mechanisms to help prevent a fall
  • Teach your child how to safely use a window to escape during an emergency

Here are some additional tools:

Window Safety Brochure
Fire Escape and Window Safety: A Balanced Approach
Window Safety Checklist

April Fool’s Day on the Web: 2016 edition

April Fools Day

It’s late enough in the day that you’re probably already suspicious of pranks, so we don’t think we’re issuing any spoilers here with our April Fool’s Day roundup.  We’ve gathered a few of our favorites from around the web. But warning – if you live in China, don’t go any further because April Fool’s Day has been banned in China. (Unless that’s a great big prank from China!)

Think insurance is a serious business? Usually we are very serious, but we like to kid around, too.  Here are a few of today’s jokes — but we think most of them are a little too close to the truth to be funny!

Google always has a few tricks up their sleeve:

We liked this Jobs for Babies idea and wish it was a real thing.

 

Here’s an item we think would be a big seller: Trulia’s real estate map to help home buyers avoid hipster neighborhoods

Here’s one we think wouldn’t be a big seller: The Mark Zuckerberg fashion line for HM

The Washington Post has a really good roundup – it’s YUGE: April Fools’ Day hoaxes: 2016’s comprehensive, updating (and upsetting) list – just be warned that we can’t vouch for everything being work safe or work appropriate!

See our April Fools Day roundup from 2014 for more oldies but goodies.

We wish the prediction for snow this weekend was a big joke, but unfortunately it looks real! We remember an actual April Fool’s Day storm in 1997 that dumped the region in about 30 inches of snow!

Motorcycle Insurance Coverage and a Toolkit for Spring

Don’t last week’s snow fool you – it’s just about time to take that motorcycle out of mothballs and get it on the road. But first, before you do anything else, check to be sure that you have motorcycle insurance to protect that investment.

The Insurance Information Institute (III) offers the lowdown on motorcycle insurance:

“Most states require motorcyclists to carry a minimum amount of liability insurance, to cover bodily injury and property damage costs caused to other people involved in an accident. In addition, uninsured/underinsured (UI/UIM) motorist coverage is recommended, or even required, in many states as part of a motorcyclist’s policy to cover expenses for damage were caused by another driver who either does not have insurance, or whose insurance is inadequate.
The mandatory minimum limits for these coverages in states where they are required for motorcyclists are generally similar to those required for automobiles.”

We think its a good idea to have some of the optional coverages, too: collision, first party medical coverage, emergency road service and coverage for customization and equipment.

III offers more details on motorcycle coverage here with tips on saving money such as a lay-up policy or those who suspend use in the winter and multibike discounts.

Motorcycle laws, safety tools & other resources

msfThe Motorcycle Safety Foundation (MSF) is an internationally recognized developer of the comprehensive, research-based, Rider Education and Training System (RETS). Some insurers offer discounts for certified safety training so check to see if your insurer does. In addition to courses, MSF offers many free resources in their online library. One we like is the booklet You and Your Motorcycle Riding Tips – MSF says that many manufacturers include this booklet with their new motorcycles. They also have similar booklets for 3-wheeled motorcycles and scooters. Their Tire Guide looks pretty handy, too.

The American Motorcyclist Association has a good resource on motorcycle laws by state.
The guides cover information like eye protection, handlebar height, lane splitting and other information that bikers need to know.

The Insurance Institute for Highway Safety has a good guide on Motorcycle helmet laws by state. They note that, “Currently, 19 states and the District of Columbia have laws requiring all motorcyclists to wear a helmet, known as universal helmet laws. Laws requiring only some motorcyclists to wear a helmet are in place in 28 states. There is no motorcycle helmet use law in three states (Illinois, Iowa and New Hampshire).” IIHS also has a good Q&A about motorcycle safety and related topics

BikeBandit offers some excellent tips on how to prep your motorcycle for spring – he touches on everything from batteries to fluids.

Do you need some out-of-this-world insurance?

alien abductionYou can insure against almost any adverse event. In prior posts, we’ve talked about celebrities insuring body parts and people insuring some rather unusual objects and special collections.

But here’s one that you may not have thought about: Are you insured against alien abduction? The website says that it is “the perfect policy for anyone who thinks they have everything covered.” We particularly like some of their promotion lines:

  • “Don’t Leave Earth…Without It.”
  • “Beam Me Up…I’m Covered”

A Single Lifetime Premium coverage can be had for $19.95, and it offers a $10 million payout if you can prove you were kidnapped by aliens.  What do you need to do to qualify? They say: “We accept all pre-existing conditions – You cannot be turned down regardless of Age or Frequent Flyer Status.” There is one stipulation.  They will only pay out once.

Most people buy it for someone else but name themselves as the beneficiary. They say they have had claims!

Learn more in this video clip:

Hoverboards, e-cigarettes & the dangers of lithium-ion batteries

Depositphotos_71338717_s-2015

You may have seen the viral video – a man is at a checkout in a convenience store in Kentucky when suddenly his pants burst into flames. He runs out the door of the store, removes his pants and a good Samaritan comes to his aid. He was hospitalized but expected to be OK. But yikes, what happened?

The man – Josh Hamilton – reported that an e-cigarette in his pocket was the cause of the fire – he associated it with the lithium battery that came in contact with change in his pocket.

An NBC news report – What’s Causing Some E-Cigarette Batteries to Explode? – says that there could be many reasons ranging from lack of industry standards to misuse by users. Because they are unregulated, nobody is tracking injuries but Josh Hamilton is not alone – they’ve been other reports of explosions and serious burns to the mouth, face and hands.

Many associate the risk to the lithium-ion batteries:

The lithium-ion batteries used to power e-cig vaporizers are small and powerful. When they fail, the results can be disastrous. We’ve seen that with cellphones, laptops and most recently, hoverboards.

In another recent article, The New York Times talks about The Risks in Hoverboards and Other Lithium-Ion Gadgets, noting that the problems can seemingly occur without warning.

“The problem of exploding hoverboards is serious enough that hoverboards have been banned from college campuses, airlines and subways and buses in New York. The Consumer Product Safety Commission sent out a stern letter this month warning that the two-wheeled vehicles “pose an unreasonable risk of fire to consumers.” And fire marshals have issued warnings and tips to minimize the risk.”

Are lithium ion batteries safe?

Cheaply made batteries or cheaply made charger devices may be the root of many of the problems but the safety of the batteries is a significant enough issue that regulators are taking note. The Claims Journal reports that e-cigarettes were recently banned in airline checked bags.

“The Department’s Pipeline and Hazardous Materials Safety Administration (PHMSA) previously addressed safety concerns relating to the transport of electronic cigarettes. In October 2015, the agency issued an interim final rule to prohibit passengers and crewmembers from carrying battery-powered portable electronic smoking devices in checked bags as well as ban passengers and crewmembers from charging the devices and/or batteries on board the aircraft.

“We know from recent incidents that e-cigarettes in checked bags can catch fire during transport,” said Transportation Secretary Anthony Foxx. “Fire hazards in flight are particularly dangerous. Banning e-cigarettes from checked bags is a prudent safety measure.”

Passengers may continue to carry e-cigarettes in carry-on bags or on their person but may not use them on flights.”

In a related story, UN panel bans lithium-ion batteries from passenger plane cargo

Lithium-ion batteries are commonly used in rechargeable consumer products like cellphones and laptops. The batteries can still be transported in cargo planes, but starting April 1st they will be prohibited from commercial aircraft. The International Civil Aviation Organization (ICAO) said the ban will be in place until a new fire-resistant packaging standard is designed to transport the batteries, which is not expected until 2018. The prohibition is mandatory for ICAO member states, which include 191 countries around the globe.

Batteries are something we use everyday but we don’t often think about the hazards or safety precautions. Obviously, that should change: See our post about another battery type: The little-known fire hazard of 9-volt batteries

We aren’t chemists or product safety experts, but we’ve gathered a few lithium-ion battery safety tips from people who are:

  • Buy lithium-ion batteries and chargers from reputable vendors and producers – it’s not a place to cut corners
  • Do not leave charging batteries unattended
  • Check the expiration date and dispose of any batteries that have expired
  • Store batteries carefully:
    –Do not allow them to come in contact with metal objects like coins, keys, tools or jewelry
    –Do not expose them to extremes in temperature, direct heat or sunlight
    –If you suspect a battery may have been damaged, replace it

The basics Business Insurance: What you need to know to manage your risk

managing riskAny new or existing business needs to factor the costs of business insurance into the planning process – it’s a vital mechanism for managing risks and planning for adversity. Some coverages are optional while others, like workers’ comp, are mandated by law.

There’s a great primer on business insurance that appeared in the Boston Globe this week, sponsored by Rockland Trust and written by Wayne Taylor: First rule of insurance: don’t run the risk of being unprotected. Taylor notes: “For a small or medium-sized business, not being protected for uncovered losses could mean the difference between survival and failure.”

The article offers a good overview of business insurance basics, as well as coverages that are unique to specific industries.

We’re delighted that the article includes commentary from one of our Renaissance Alliance members:

“Many small businesses have a unique set of risk exposures that larger businesses don’t always have,” said W. Jeffrey Helm, president and founder of Atlantic Advisors Insurance Agency, Inc., in Norwell. “Often the small business owner is the one who is emptying the waste baskets and booting up the computers in the morning, as well as making sales calls and strategic operating decisions.

“What happens if this key player gets injured or falls ill? The company may not yet have a lot of savings in the bank, nor access to a large line of credit. Having disability coverage, for example, or business overhead expense insurance can help provide a temporary income stream so that the business continues to operate and meet its financial obligations.”

The article suggest brushing up on “the language of insurance” and finding professional guidance. Here are two excellent resources learning more about insurance.

As for a business insurance advisor – if your business is in New England, you can’t do better than a Renaissance Alliance independent insurance agency member – fine one near you!

Insurance & the Academy Awards

movie film reel and popcornWhile insurance doesn’t feature too prominently in any of this year’s Academy Award nominees, Tom Hanks does star as an insurance lawyer in Bridge of Spies. There’s a lot of competition this year so although it’s nominated in several categories, it isn’t heavily favorited on most critics’ lists.

Even when insurance doesn’t play prominently in the script, it is a vital behind-the-scenes component of any film. The Insurance Information Institute weighs in with The Role Insurance Plays in Movies. You can also see our prior post on Behind the scenes: the film industry is risky business. Speaking of risk, one film that elicited a fair amount of criticism: ‘Revenant’ Shoot Didn’t Take Crew’s Safety Issues “Seriously,” Says Union Rep. Actor and crew safety has been on the minds of many since the 2014 – see: Death on a Georgia Railroad Trestle Sparking Calls for Safety Reforms in Hollywood.

Insurance & the Movies

If you just can’t get enough of insurance-themed films, here are some suggestions:

And for those of you who’d like a deeper diver into the behind-the-scenes business of insurance, risk management & the movies, here’s a reading list: