Simple math and smart choices when renting a car
The next time that you step up to the car rental counter and are asked whether you want additional auto insurance coverage and you are tempted to decline, think again.
One of the first specific questions asked of you is, “Would you like to purchase the collision damage waiver?” Your response should be “yes.”
If there is any damage done to the vehicle, and this may include everything from hail damage to an accident involving another vehicle, you will be required to pay the collision deductible on your policy if you do not purchase the damage waiver offered by the car rental company.
If the car rental company can prove that they lost revenue during the time in which the car is being repaired, they can charge you as well. If you do not have the collision insurance, you simply don’t have as much leverage to argue this point.
Let’s say that you rent a car in which replacement parts are difficult to obtain so as to repair the damage. Weeks may elapse. And, unfortunately you are responsible for that time and what is commonly referred to as loss of use. It may take longer than expected for those parts to be shipped and the auto to be fully repaired. In the interim, you are financially responsible for that time and loss of use.
A rental car company can also charge you with what’s referred to as diminished value. If they can prove that after this accident the car now has decreased in value because of the damage, they can charge you based on the formula that they have devised. That’s also a caveat that is never covered by your automobile insurance.
Many believe that when presented with further options at the car rental counter, like whether to purchase collision damage insurance they are getting ripped off and that’s where these companies make their extra money. The unfortunate truth is that if you forego the extra coverage, you put yourself at risk.
If you are determined to check the “no” box, say no to a GPS. Most of us have some device on a mobile phone or a Garmen in order to help us get to our destinations.
Note that collision insurance runs anywhere from approximately $11 to $30 per day depending on the car you rent and the rental company that you choose. Do the math. If there were a collision or any unexpected damage to the vehicle, you would be responsible for your deductible ($500 to $1,000) and the possibility of additional charges.
Also, some states will not wait for an insurance claim to be processed, in which case you would not be able to board your plane to return home until you have paid for all of the damages to the rental vehicle.
Finally, take the time to walk around the car before driving off the lot. Certain rental car companies will review the vehicle with you and point out any dings or scratches before you sign off on the condition of the car. Otherwise, take the time to do this on your own.
The wise consumer should say “yes” to the additional damage waiver and walk out the door knowing that they are protected regardless of what may happen during the time in which the rental car is your responsible. There is a price for peace of mind.
Lisa Antonissen, insurance agent at Boland Insurance Agency, Inc. can be reached at [email protected] or at 920.465.6446.
What can I do with my CD?
The wise investor consistently evaluates their savings so as to ensure that each item is doing the job it was intended to do. The same holds true while evaluating insurance. And interesting enough, looking at savings while evaluating insurance needs can complement one another.
The other day while reviewing insurance with one of my clients, he asked me if I could advise him on an investment vehicle which returned a better rate of return than the 0.92% interest that his current CD was earning. I asked him how much was the initial CD investment and he told me it was $50,000. “Are you living off the interested generated by the CD?” My client indicated that he was, however, as far as the principle was concerned he wanted to leave that to his children. He was also very emphatic that he did not want to risk the principle in any investment that essentially carried any level of risk.
This client was making $460 in interest annually on his CD. I suggested looking at a single premium life insurance policy which he promptly scoffed at, because, after all he was 70 years old.
I then showed him that by using $25,000 of the CD he could purchase a paid up policy in the amount of $52,668. This policy is designed for a single payment and the benefit lasts until age 121. If you compared the growth of his CD it would take over five years to reach $52,668. Not surprisingly, he didn’t scoff at that idea. He was able to set aside the $50,000 for his children while still freeing up $25,000 to accomplish his savings goal.
This allowed my client the freedom to use the remaining $25,000 in any manner that he chose. In this case, he decided that he would use $1000 a year to supplement his retirement. If you look at the $1000 a year that he is now using that would equate to a 2% return that will now go to his children, tax-free.
This case worked out well for my client, because he could use ½ of his CD and purchase the minimum required amount of insurance ($50,000) with that sum of money.
As with all investment options, each case is unique to the person that is looking into such a proposal. An older person may have to invest in a higher single premium whereas a younger person could invest much less.
There are also underwriting factors that may affect the outcome. Keep in mind, however, that there are creative ways to free up substantial amounts of cash in order to accomplish goals beyond your expectations. This exercise is like giving yourself an end of the year bonus. It is well worth your time to explore. Make this year an exceptional one.
John Boland, president of Boland Insurance, Inc., can be reached at [email protected] or at 920.465.6446.
Small business owner on the lookout for insurance oversites
Today’s small business owner faces challenges on all fronts and choosing the right kind and amount of insurance is critical. We have red-flagged some common insurance mistakes to help you avoid pitfalls.
Being underinsured
Too often we see that businesses will take a short cut and choose a lower level of coverage in order to reduce their premium. Do you want a $1000 deductible in the beginning or a $50,000 self-insured deductible after the loss?
Automatically renewing and not reviewing your policies each year
When the time comes to renew your insurance policies, you need to reassess your risks along with evaluating your business year. Have a discussion with your agent about additional issues present that would expose your business whether it is market fluctuations, competition or even issues related to natural disasters.
Foregoing disability insurance
Disability insurance is vital for the small business owner. Statistically, we know that one in three Americans between 35 and 65 will be disabled for more than 90 days at some point in their careers, according to the American Council of Life Insurers. Would you be able to survive without your income for three months or longer? It’s critical to remember that disability insurance serves as an income replacement should you have a serious accident or are permanently disabled.
Failing to notify your insurance agent of business changes
It’s always wise to keep your insurance agent tuned into the details of your business including any changes that may have occurred over the previous year. Whether they are large or small issues related to your business structure, worker compensation claims, company vehicles or multi-state exposure, keep your agent informed.
Overlooking umbrella liability insurance
Umbrella liability insurance provides protection above and beyond the coverage included in your general liability, auto liability, and employer’s liability insurance. It’s an inexpensive way to increase your level of protection against someone suing you. Premiums can be as low as $450 per $1,000,000 of coverage.
Review your liability limits as compared to your annual sales and total business value. Scrutinize the daily activities of your business and the accidents or losses that may occur. Calculate the net worth of your company. How much do you have to lose? Then ask yourself, “What is the value of protecting my net worth?”
Realize that most liability policies have total aggregate limits of coverage. This is the maximum amount that will be paid for the total of all of your claims. One can quickly use up your insurance if you have multiple lawsuits against you. An umbrella policy can help by adding aggregate limit to your protection.
Buying insurance to cover non-catastrophic loss
Don’t use your insurance to pay for the bumps in the road. Look to insurance to help you through catastrophes. An insurance policy should be in place for when your roof is destroyed or for a loss that would have a devastating affect on your company’s financial health. It’s not there to replace a few shingles. We also suggest using high deductibles, like $5,000, $10,000 or higher on your property insurance to reduce your premiums.
Never pay liability claims out of pocket. Report damage you cause to other people’s property or injuries to your insurance company as soon as possible. Even if it seems that the injury is minor, report the claim promptly. Most insurers have 24-hour claim hotlines.
Fighting complacency
Failure to do your homework and shop around for the right insurance agent and their service does cost you time and will ultimately cost you money. And while you are browsing for the right insurance fit, be sure to select an agent who has access to many different insurance companies to tailor a policy to meet the specific need of your company.
John Boland, president of Boland Insurance, Inc., can be reached at 920.465.6446 or at [email protected].