Workers Compensation Insurance and Independent Contractors

Recently I did some work for a local small contracting company. Like many small contractors, they rely on 1099 or independent contractors as a mainstay for their labor requirements. This new client was surprised when he received a letter in the mail from the Virginia Workers Compensation Commission informing him, that pursuant to section 65.2-902 of the Virginia code, he was subject to a fine of up to $5,000 if he failed to comply with law, and secure a Workers Compensation policy.

Now, scary language aside, what to do? More often than not employers enter into 1099 arrangements to avoid engagements, like work comp, so it would follow that this regulation seems onerous. But let’s not be too hasty with that judgment, perhaps there is more to this?

What does a Workers Compensation policy afford a business owner? Like all insurance policies, it transfers risk. But, Ian – these are independent contractors, don’t they work at their own risk? Of course that’s the nub of the question, right; and the answer is sometimes. Yes, they are working at their own risk when they could be doing work for you, or someone else, at any given time and place, for example a software developer, to whom you give a task, and ask only that they return your order by a date certain. If however, your 1099 is told by you to report to a specific place, at a given time, and work only on your task, than you do have a workers compensation exposure, that contractor isn’t truly independent, at least not at that time, and should they get hurt, your business could find itself paying bills it never budgeted for. In this instance a Workers Compensation Policy is very useful.

Of course all of that is only the dry and rather boring insurance detention stuff. This whole aspect of 1099’s becomes far more complex when one actually goes to the market in an effort to secure a policy. Workers Compensation carriers as a matter of course ask for threes prior loss runs, as part of their application, fail to provide them, and most likely you’ll be declined. Rather a frustrating thing for many contractors, since they don’t have an existing workers compensation policy, with three years prior loss runs, they are brand new to the market. This often comes to ahead when a smaller contractor earns an opportunity to work for a larger contractor as a sub. The larger contractor will ask their new sub for a certificate of insurance, the sub, lacking a working compensation policy, is left scrambling.

This issue tends to set off a time consuming and aggravating experience of calling insurance agents and 800’s numbers in search of a work comp policy for their company. The business owners seeking a worker’s Compensation policy find themselves at a crossroads in the insurance industry, caught between their need to buy an insurance policy they need in order to manage their business, and insurance sales people who tend to shy away from difficult challenges without clearly defined commissions. Business owners will hear a range of response, but the bottom line tends to be, sorry but I can’t help you.

Sturdevant Agency is much different; helping to resolve these challenges affords us an excellent opportunity to better understand our clients, their needs, and their business.  Yes, these are more difficult cases, it is a challenge to find a carrier willing to work with a new enterprise, but we’re willing to do the work to earn our clients trust, respect and business. Workers Compensation doesn’t pay huge commissions, but frankly, commission growth is an endpoint of client satisfaction, and its client satisfaction not commission growth that is our primary motivation.

If you are seeking a Workers Compensation policy for your business, please give us shout, we’re always happy to meet new clients, and help new friends.

Sturdevant Agency

(703) 822 7505

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Usage based Auto Insurance article, (Smart Money)

Auto Insurance as you go?


More Americans say 
they’re willing to be spied on – if it reduces their auto insurance rates.

Of the more than 2,000 consumers surveyed for LexisNexis Risk Solutions, half said they’d sign up for usage-based insurance if they’d save at least 10 percent on their premiums.
That comes at a time when the average auto insurance premium soared by $153 between 2012 and 2013, according to a study by J.D. Power.
Not all insurers offer usage-based or pay-as-you-drive auto insurance programs, or they may only offer them in certain states, so you may have to check with a number of insurance companies to find one that has what you want.
The LexisNexis survey found that more than a third of consumers would be willing to switch companies if they could save at least 10 percent on their premiums.
While big savings are possible with pay-as-you-drive – some insurers tout discounts of up to 50 percent — there’s no guarantee you’ll save that kind of cash.
The sweet spot in savings comes to someone who doesn’t drive a lot, drives safely, and stays off the road in the middle of the night.
We did a TV news story about pay-as-you-drive insurance a couple of years ago. Check it out, and then read on for more.

How it works:

 

Programs such as Progressive’s Snapshot send you a device that plugs into your vehicle’s onboard diagnostic port, which is usually located beneath the steering column. It then records information on your mileage and driving habits and sends them to your insurance company.
State Farm’s Drive Safe & Save program uses your auto’s OnStar, In-Drive or Sync communication system to collect your driving information.

What it looks at:

 

What’s taken into account when setting your discount depends on the auto insurance company. Along with looking at how much you drive, some insurers are interested in seeing how you drive and when you drive.
Allstate says you should benefit the most from its Drivewise program if you drive no more than 12,000 miles a year. You could still see some cost savings if you drive 12,000 to 15,000 miles each year. (Your insurer may already provide a discount if you drive less than 12,000 a year. Call and ask.)
Besides tracking mileage, insurers may check to see if you brake hard, if you make jack-rabbit starts, if you speed, or if you routinely drive late at night or in the wee hours of the morning.

How much can I save?

 

Like everything auto insurance-related, discounts vary from person to person and state to state.
State Farm promises a discount of up to 50 percent with its Drive Safe & Save program.
With Allstate’s Drivewise program, you’ll get a 10 percent discount when you sign up, but the full discount won’t kick in until your policy renews. At that time, you can save up to 30 percent on your rates.
Progressive also offers you an unspecified initial discount when you try Snapshot, and the complete discount after your information has been collected for five months.

What can happen to my information?

 

While the insurance companies that have pay-as-you-drive programs make assurances that your driving data is safe from prying eyes, there are still privacy concerns about how the information might ultimately be used.
For instance, Brent Hunsberger wrote in The Oregonian:
“Can others get the information? Law enforcement certainly can, and the information could be sought as part of a civil lawsuit.”
Despite those privacy concerns, industry experts predict 20 percent of consumers will have usage-based insurance in the next five years, according to the National Association of Insurance Commissioners.
Are you willing to share more information with an insurance company to qualify for lower rates? Let us know on our Facebook page.


For more information: Sturdevant Agency or Ian Sturdevant 

Insurance what it is and what it’s not

InsuranceWhat is insurance?

I talk to a lot folks about their insurance needs, be they car, home, or business owners, and they all tend to ask me for the same thing – a cheap deal.
Let’s start with the basics, what is insurance? In its most basic form insurance is a transfer of risk. An insurance policy is a contract, where by you, the consumer, become the insured. The insurance company agrees to take the risk that you transfer to them, in exchange of a fee, known as a premium.
The premium is the part of this process most of know well, it’s related to us in the form of a bill that arrives every month or so. Our desire when we shop for a new policy is to get a better rate, or lower premium.
Fair enough, I’m always happy to help my clients and prospective clients save money, and there are many ways to program an insurance policy to make it less expensive, as reflected in the monthly premiums.

Price vs Cost

Thing is – the PRICE of insurance isn’t always the same as the COST of insurance. The price is what we just talked about, the premium, that bill you pay every month. The cost, of insurance is a formula, add your premiums, to your deductibles, plus any uncovered losses, and that is the real cost of your insurance policy.
Now, that’s a bit of a mouthful- so what does it all mean. Well, we know about the premiums, let’s talk about deductibles next.
Deductibles are the amount the risk you are retaining when you buy an insurance policy. If you have a $2000 loss on your car, and a $500 deductible, the first, and it’s key to remember FIRST, $500 used to pay for the repairs will come from your deductible, in other words, your pocket. A higher deductible will mean a lower premium, which is good, but at time of lose; you will need to dig a little deeper.

The impact of losses

The last part of that formula was uncovered losses. This is the hard part for me as an insurance professional. Sadly, I see the impact unfortunate choices, mostly when purchasing auto insurance, and how they play out later. Again, focused on premium, state minimum coverage limits are procured. To be sure, such limits can, though not always, make the final premium, less expensive. Once the policy provisions are maxed out, the balance of the loss, will be borne by the insured, you.
In our prior example, your car was damaged, which is a bummer, but in the grand scheme of things, survivable. Now imagine, instead of your car, it was someone else’s car that you damaged, and there are people inside, and they are hurt. These costs can be huge, much more than the state minimums.
What I’m talking about is liability. And to be fair, when you sit down with me to transfer your risk, it’s your liability risk that is first and foremost on my mind. The exposure you have to a liability loss is ever-present, and limited only by the imagination of the lawyer who sues you.
With that in mind, I advise my clients to buy insurance based on these fundamental principles.
1. Mitigate losses to your property – risk management (both personal and commercial)
2. Buy the highest deductible you can afford – this is a personal choice but a good rule of thumb is this question. If you would not put in a claim at that value (i.e. $750) than your $500 deductible is too low, and you should consider raising it.
3. Buy a policy with liability limits as high as you can afford – uncovered liability losses can wipe you out financially, remember what you are buying, a transfer of risk, and transfer as much of your risk as you can.
4. Work with an agent who will give it to you straight – it pays to shop your rate around and get some competitive quotes. You may also find some sales folks willing say just about anything in order to entice you with a lower premium. Find one you trust, willing to lay their cards out on the table for you. Remember the lowest price may not be the best deal for you and your family. It might just be a – cheap deal.
For more information: Sturdevant Agency  or Ian Sturdevant 
Illustration of a raised ranch

Homeowners Insurance Discounts

Saving on a Homeowners insurance Policy

 

Homeowners insruance

 

There are several ways in which a homeowner can find savings on their current insurance policy, but they must know where to look. Certain features can mitigate risks for a variety of extenuating circumstances. Taking precautio

nary steps to reduce risk and protect their property make them more appealing to insurance companies and eligible to receive discounted premiums on homeowners’ insurance policies. In order to know which discounts you are eligible for and how much you can save, it helps to work with an independent insurance agent, who can shop multiple carriers and find the best match for you.

As those of us in Northern Virginia look for ways to stretch our budgets many are neglecting to utilize all of the discounts that may be available to them. According to a national survey conducted by Trusted Choice, representing 53 

million households, over 34 percent of respondents were unaware of the homeowners’ insurance discounts they were missing out on.

Survey responses revealed that 26 percent of those involved are currently saving approximately 6-10 percent on their insurance premiums by using discounts already made available to them. In reality, many consumers could be saving an excess of as much as 30 percent. So how can you be sure to capitalize on all of the homeowners’ insurance discounts that are currently made available?

The following illustrates many of the homeowners insurance discounts that consumers often fail to take advantage of:

NEW WIRING

According to the U.S. Fire Administration (USFA), electrical complications result in 67,800 home fires, 485 deaths and $868 million in property losses every year. Those numbers are approximately two times higher than fires started by electrical appliances. Updating the wiring of your house can reduce the risk of these losses, and qualify you for reduced rates.

A ten percent discount may be applied to an individual’s insurance premium if they provide proof of new wiring installations.

Age of ROOFING

The condition of a roof is one of most influential factors when determining annual homeowner’s insurance premiums. The shape, and type of construction of your roof will further determine rate, and if you are eligible for discounts. In most of Northern Virginia, roofs are pitched or gabled designed with tar shingles.

Age is the single largest driving factor from an underwriting perspective. Regardless of type, a 20 or 30 year old roof will pose much more risk to an insurance company, than a 3 or 5 year old roof. New homeowners are wise to look into the age of their roof, and ask their re

Plumbing updates

altor, when shopping for their new dream house, about the roof.

Age of plumbing

Recently installed pipes do not exhibit a propensity for leaking, same hold with fixtures, drains, and hot water heaters. Therefore, those that have recently been renovated are the beneficiaries of several homeowners’ insurance discounts. Updated plumbing, even partial, is a meaningful measure of care to an insurance underwriter, and allows them to offer you a discount accordingly

GATED COMMUNITIES

Gated communities mitigate risk and present homeowners with lower rates of theft, vandalism and crime. The presence of added security has the potential to deter any malicious activity and should be taken advantage of whenever possible. Those who do may become the recipient of added insurance benefits. Many home insurance policies are able to credit their holders within gated communities, as they are less likely to need to file a claim.

A gated community discount can be as much as 20 percent.

The geographical region in which you reside also plays a significant factor in deciding homeowners’ insurance rates. If your house is close to a fire department, you’ll have a better rate than if it were further away from one.

NONSMOKER CREDIT

While the smoking population is in rapid decline, cigarettes remain the number one cause of home fire fatalities in the United States. According to the USFA, smoking caused 18,900 residential fires in 2007, killing 595, injuring 1,200 and causing $327 million in residential property loss. These statistics have caused insurance companies to reward those who don’t smoke with discounts.

PROTECTIVE DEVICES

Homeowners’ insurance discounts may be distributed to those who equip their property with designated protective devices. Certain locations may even be more inclined to benefit from specific protective devices. Those houses in areas associated with high crime rates will see a premium reduction with the addition of devices that prevent crimes. Deadbolt locks, and security systems can both help reduce the risk of an unwelcome intruder.Smoke detector

Similar steps may be taken to protect your house from more unexpected incidents. As a result, the use of sensory equipment has become increasingly popular. Homeowners may install carbon monoxide detectors, smoke detectors, sprinkler systems, heat detectors and even moisture detectors to reduce the risk of potentially dangerous situations. With these measures in place, the home is less likely to fall victim to unexpected loss

 

Some insurance providers offer up to eight percent off their annual premium for those who take these steps in protecting their assets.

In the case of smoke or fire detectors a greater discount is afforded if the detector is part of centralized reporting system, allowing the fire or police departments to respond without being called.

inuring your restaurant Old Ebbitt Grill

Insuring your Restaurant

Insuring good eats 

 

Having appropriate insurance is a must in the restaurant industry. Here are some of the key risks in today’s restaurants and cafes, and advice about coverage best suited to the industry.

 

Risk one: Fire damageOld Ebbitt Grill

Policy type needed: Property damage

Cafes and restaurants that cook on-site are susceptible to fires, particularly from grease, oil and electrical sources.

The risk of fire damage depends on the type of cooking carried out, the equipment used and the construction of the premises. For instance, a cafe serving prepared sandwiches and drinks has a much lower risk than a fish and chips shop with large deep fryers, grills and exhausts that attract grease.

A property damage contents policy can cover the cost of replacing your business assets and stock in a fire and from other perils such as rain, wind and hail storms. It can also cover the damage to the actual building, if you own the property.

It is important to cover the full cost of replacing your entire contents and stock or you run the risk of underinsuring. This can be a costly and – with some agent advice – easily preventable mistake.

 

Risk two: Equipment breakdown and food spoilage

Policy needed: Equipment breakdown

Cafes and restaurants are reliant on their cooking and refrigeration equipment for trade. Business owners need to be prepared in the event these machines unexpectedly fail.

Property policies include insurance for business contents and stock against external perils like fire or the weather. However, equipment, or machinery, breakdown covers the replacement of broken down equipment and parts when they fail unexpectedly.

The failure of refrigeration equipment can also put your perishable stock at risk, of spoilage. Fortunately, equipment breakdown cover normally covers the costs of replacing spoiled food due to the breakdown. In addition, one should seek endorsements to extend coverage for off-site power interruptions.

Risk three: Food poisoning

Policy to consider: Product liability

If a customer suffers food poisoning from a meal your business has provided, you could be legally liable to provide compensation for the injuries they suffer. If a customer – or worse, multiple customers – sues your business after contracting a bout of food poisoning, you may have to pay them damages for pain and suffering, medical expenses, lost income from being absent at work, and legal fees.

If multiple customers take action against you, the costs can quickly mount up. These costs can be hard hitting for restaurants or cafes, many of which operate with tight cash flows.

This is where product liability insurance comes in. Product liability covers your business if it is sued by a third party as a result of injury or illness caused by your product.

 

Risk four: Customer injuries

Policy to consider: General liability

Injuries, illness and property damage caused by customers slipping, tripping or falling are common in the food-service industry and can lead to very significant claims.

The most common claims of this kind experienced in cafes and restaurants include injuries from slips on spilt food or drink, tripping on furniture or fixtures and falling down stairs. It is also common for customers to fall from defective furniture, such as broken chairs.

Public liability cover is crucial for any cafe or restaurant owner. It can cover legal costs, medical expenses, and damages, the expenses incurred by rendering first aid to others and compensation for any damaged or destroyed customer property.

Also, while not related to injuries, public liability can also provide cover for any third-party property in your care if it is destroyed or damaged as a result of your business’ actions or negligence.

 

Risk five: Theft, fraud and burglary

Policy to consider: Employee Dishonesty

Your premises could be burgled while they are closed or held up by armed robbers while you are trading. Unfortunately, your customers and even your employees could also steal from the business.

It’s not only money at risk either, any particularly expensive stock, such as high-quality wines and whiskies, could be particularly lucrative for thieves.

The main cover offered by insurers is burglary (or theft) cover. It covers the loss of stock and contents from theft and armed hold ups. However, it does not normally include any cash stolen or items lost as a result of employee fraud.

Money provides cover specifically for any cash stolen, lost or damaged. Given the amount of cash that changes hands and kept of premises on a typical day of trading, theft is a key risk for cafe and restaurant owners. You can elect to insure your cash during business hours, outside business hours, in transit and at your private residence.

Employee fraud and dishonesty covers the loss of stock, business contents and money caused by an employee’s acts of theft or fraud. It replaces the more limited protection provided by burglary and, as unfortunate as it can be, it covers a broad range of circumstances where an employee may have been stealing from you.

 

These are only some of the various perils present in a restaurant. In order to gain the most complete picture of your risk profile, and how best to address you specific insurance needs, seek the advice of a well-qualified independent insurance agent one who is knowledge about restaurants’, such as the knowledge you can find at www.sturdevantagency.com

My name is Ian Sturdevant, I’m the owner of Sturdevant Agency. I’ve been serving small business owners of northern Virginia with advice about their insurance since 2005. Work comp, liquor liability, etc. What separates me from the competition?

1. I represent several carriers, so you get several quotes, which means a better deal for you in the end.

2. I know insurance and restaurants, in other words, I’m a specialist – I know how to protect what you’ve worked hard to build.

3. I’m local, Northern VA is where I do my business, and your customers are my customers too.

4. Most of all, advice. Every business owner needs a good CPA, lawyer, and banker, right? An Insurance agent should be on that list. The price of insurance is the premium you pay. The cost of insurance is the premium you pay, plus any unpaid claims… Would you like to know what you think is covered, but isn’t? Would you like to have an advocate when you have claim? (703) 822 7505

Effective Insurance Tips

TIP! In an effort to save on your insurance cost, do some research about your local insurance agents, insurance companies, and rates. Insurance companies use different criteria for determining policy premiums and everyone is different.

Understanding all the details of your insurance coverage is difficult and time consuming.  Everyone puts a high value on being protected against life’s accidents, but it is not necessary to pay high premiums good coverage, or spend days shopping rates. An independent agent, with knowledge and experience can provide you with the answers you seek, and comparison rates.

TIP! When it is time for new insurance, check out both your current provider and your potential new companies, by researching them through your municipal or state insurance department. States regulate how insurance companies operate, and the companies must report specific events, such as price increases or complaints.

There are several neutral parties in the insurance world willing to provide unbiased information about insurance companies and agents. Here are two links that you may find helpful. The Bureau of insurance for the common wealth of Virginia and Independent Insurance Agents of Virginia I use both these resources frequently.

 

Insurance Policies

TIP! Ask your independent agent if there are savings to be had by merging all the different types of insurance that you need with one carrier. A lot of insurers will offer discounts if you will put all of your policies together with their company.

Bundling your Homeowners, Auto, Life and Umbrella coverage with a single insurance company will save you money. Combining the policies of two recently married people is also a good way for two people to not only save money, but often times increase their coverage.

TIP! Look for an insurance company with a good AM best rating that offers competitive rates when you are shopping for insurance. Do your research on a potential provider before starting a policy with them; there is a lot of information available online.

Give your independent agent a call and ask them to send you information about a particular insurance company. Ask the agent if they have had any clients who have filed claims with that insurer and how that experience was?  You should also ask your agent how stable the rates have been over the past few years.

TIP! Before you make a decision on moving to a particular neighborhood, consider the insurance prices for that area. Companies charge various premiums depending on your location.

It’s true, population density, crime-rates, access to fire stations and fire hydrants’, traffic density, proximity to public transportation and parks are rating factors that insurance companies use to rate an a neighborhood. Limited access neighborhoods, gated communities, and apartment or condo buildings with 24 guards are given the highest marks among insurance companies.

Avoid the Home Insurance Catch-22

Follow through on repairs

There was one small but significant error with the Waterstons’ thinking: They never experienced an actual property loss due to the leak. The water never entered their dwelling, instead escaping into the soil and down the hillside; this was not considered a loss.
Because of this, the insurer denied their claim. The insurer ruled that if no loss exists, any expenses to repair plumbing fixtures would fall under the exclusions clause. So, in essence, even though the Waterstons were trying to do the right thing and prevent what might be a much more expensive covered loss, they were denied coverage because the loss hadn’t yet occurred. Those familiar with Joseph Heller’s novel “Catch-22” might be slowly nodding your heads right now.

But wait, it gets worse. After hearing that their insurer would not pay for the tear-out costs unless they actually experienced a covered loss, the Waterstons decided to leave the pipes as is and waited for a covered loss to occur. Huge mistake!
By admitting in their claim that they had intended to make repairs to their old plumbing fixtures, the Waterstons tipped off their insurance company that the pipes in their house were ready to fail. At that point, the insurer knew that any claims arising from future ruptures in the old pipes would no longer be considered “fortuitous,” and thus plausibly be denied.
Sure enough, several months later, the Waterstons did suffer a sudden rupture in their underground pipes, and this time there was minor flooding in the interior, costing tens of thousands of dollars in damage to wood floors, drywall and other possessions. The insurance company – cruelly, but correctly – denied them coverage again, saying the loss was entirely expected.
Would the insurance company have ruled the same way had the Waterstons never contacted them about repairs? It’s hard to say what they might have concluded without any prior knowledge of the pipe’s condition. Perhaps the insurer would have ruled it fortuitous after all. But the poor Waterstons did not do themselves any favors by tipping their hand with that first phone call and then shot themselves in the foot by not following protocol.

One partial reason for the confusion over these kinds of claims is the murky relationship between insurers and their policyholders over maintenance disputes. This is especially true when it comes to water claims.
For most policies, property owners have no contractual duty to make any specific home repairs. Most only require that property owners only “take steps to protect their property in the event of a loss to covered property.” But with some policies, the insurer can prove that a policyholder knew about, and ignored, a potential problem. In this case, when something bad actually happened, the insurer considered that peril to be non-fortuitous.
After reading this sad cautionary tale of the Waterstons, you can avoid a similar fate by following these three rules of thumb:
1. Make sure you have suffered a covered loss before you file a claim. If you aren’t sure, re-read your policy language closely or contact your state insurance department for guidance. Otherwise, leave your insurer out of it.
2. Don’t report to your insurer damage or deterioration that isn’t covered. Most phone calls and emails to insurance agents and adjusters are monitored and/or recorded. A slip of the tongue over the phone about the condition of your property could potentially cause a future claim denial or cause your premium to increase upon renewal.
3. If you do mention that your property needs repairs – for goodness sakes, make them! The temptation may be strong to save your money and hope for the best in this troubled economy, but this short-sighted frugality could come back to haunt you. Once word gets out about a home maintenance issue, think of the Waterstons and start bringing those repairs to a speedy conclusion.

If you have additional questions, or would like to speak to us at the Sturdevant Agency please drop us a line.
The Sturdevant Agency
Falls Church, VA
(703) 822 7505

Special thanks to Randy Woods, the author of this brilliant article.

Insurance, what it is, and is not.

Transfer of Risk

I talk to a lot folks about their insurance needs, be they car, home, or business owners, and they all tend to ask me for the same thing,  a cheap deal.

Let’s start with the basics, what is insurance? In its most basic form insurance is a transfer of risk. An insurance policy is a contract, where by you, the consumer, become the insured. The insurance company agrees to take the risk that you transfer to them, in exchange of a fee, known as a premium.

The premium is the part of this process most of us know well, we know it in the form of a bill that arrives every month or so. Our desire when we shop for a new policy is to get a better rate, or a lower premium.

Fair enough, I’m always happy to help my clients and prospective clients save money, and there are many ways to program an insurance policy to make it less expensive, as reflected in the monthly premiums.

Thing is, the price of insurance isn’t always the same as the cost of insurance. The price is what we just talked about, the premium, that bill you pay every month. The cost, of insurance is a formula, add your premiums, to your deductibles, plus any uninsured losses, and that is the real cost of your insurance policy.

Now, that’s a bit of a mouthful- so what does it all mean? Well, we know about the premiums, let’s talk about deductibles next.

Deductibles are the amount of the risk you are retaining when you buy an insurance policy. If you have a $2000 loss on your car, and a $500 deductible, the first, and it’s key to remember first, $500 used to pay for the repairs will come from your deductible, in other words, your pocket. A higher deductible will mean a lower premium, which is good, but at time of lose; you will need to dig a little deeper.

The last part of that formula was uninsured losses. This is the hard part for me as an insurance professional. Sadly, I see the impact of unfortunate choices, mostly when purchasing auto insurance, and how they play out later. Again, focused on premium, state minimum coverage limits are procured. To be sure, such limits can, though not always, make the final premium, less expensive. Once the policy provisions are maxed out, the balance of the loss, will be borne by the insured, you.

In our prior example, your car was damaged, which is a bummer, but in the grand scheme of things, survivable. Now imagine, instead of your car, it was someone else’s car that you damaged, and there are people inside, and they are hurt. These costs can be huge, much more than the state minimums.

What I’m talking about is liability. And to be fair, when you sit down with me to transfer your risk, it’s your liability risk that is first and foremost on my mind. The exposure you have to a liability loss is ever-present, and limited only by the imagination of the lawyer who sues you.

With that in mind, I advise my clients to buy insurance based on these fundamental principles.

1. Mitigate losses to your property – risk management (both personal and commercial)

2. Buy the highest deductible you can afford – this is a personal choice but a good rule of thumb is this question. If you wouldn’t put in a claim at that value (i.e. $750) then your $500 deductible may be too low, and you should consider raising it.

3. Buy a policy with liability limits as high as you can afford – uninsured liability losses can wipe-you-out financially! remember what you are buying, a transfer of risk.  Transfer as much of your risk as you can afford to.

4. Work with an agent who will give it to you straight.  It pays to shop around and get some competitive quotes. You may also find some sales folks willing say just about anything in order to entice you with a lower premium. Find one you trust, and who’s willing to lay their cards out on the table for you. Remember, the lowest price may not be the best deal for you and your family. It might just be a, cheap deal!