Articles By David Newlin
Certified Insurance Counselor

Has Your Insurance Gone to the Dogs?
High Deductibles Are Good
Insuring the Home-Based Business
Minimizing the Cost of Young Drivers
What Insurance Companies Know About You

When it comes to dogs, insurance companies are not taking chances. Today, many companies no longer will insure your home if you own a breed of dog that they consider “aggressive.” Dog bites are resulting in thousands of claims each year. The most common breeds being “branded” by the insurance industry include pit bulls, rottweilers, doberman pinchers, chows, boxers, and German Shepherds. Instead of basing underwriting decisions on the individual dog’s temperament, insurance companies are canceling policies based on the reputations of certain breeds. So if you are considering getting a breed of dog that may be considered “aggressive,” you may want to talk with your insurance agent first.

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High deductibles can save you money and keep your insurance record clean. For those who can afford to pay out of pocket for small losses, higher deductibles are the way to go. On a homeowners policy, raising a deductible from $250 to $500 or $1,000 may save 10 percent or more. The homeowners market in Virginia has been a loser for many insurance companies in recent years. Most companies are quick to cancel customers who have had two or more losses in the last three years. Even small losses are counted. So take away the temptation to file small claims and enjoy lower insurance costs by raising your deductibles. As the old saying goes, “save your insurance for the big things.”

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Too often, people who have home-based businesses think their business property and liability are insured by their Homeowners Policy. They are seriously mistaken. The typical Homeowners Policy limits or excludes coverage on contents used in business and it excludes coverage on garages and outbuildings that are used for business. Also, Homeowners liability does not extend to business operations or exposures. Business owners who have an office in their home or who store business inventory at home need to ask their insurance agent about solving these coverage gaps. For home-based businesses that create very low exposure, a simple endorsement to the Homeowners Policy might be the solution. For the higher-risk businesses, separate commercial insurance may be required.

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Any parent who pays the auto insurance bill for young drivers “feels the pain” in the family budget. Insuring young drivers always results in higher premiums, but there are things you can do to minimize the increase. First, try to keep the young driver on the family policy instead of buying a separate policy. It is usually less expensive. An exception might be a young driver who has multiple accidents and/or tickets. In this case there may be no other choice but to isolate the young driver on a separate policy. Drop the physical damage coverage on older vehicles. This coverage is very expensive on autos driven by young drivers. If the young operator does not drive the car to school/work every day, ask if the vehicle can be rated for “pleasure use.” Also, try to avoid making the young driver a “principal operator” on your policy. This costs more than being classified as an “occasional operator.”

Remember that young drivers are at great risk, so don’t put them in a car without airbags. Also, don’t shortchange yourself on liability limits. Your family assets are at risk more when young drivers are involved, so you need high liability limits. A personal umbrella policy would be a wise addition to your coverage. Insurance companies handle young drivers differently, so ask your agent how best to minimize the high cost of youthful operators.

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As much as we hate it, big brother really is watching. Technological advances have made it possible for insurance companies to track your claims history and your credit score. And they use this information, along with other factors, to decide if they will insure you and how much they will charge you. Using a national database program called CLUE, most insurance companies share homeowners and auto claim information on their customers, so no matter where you go to purchase insurance, the company knows your long-term claim history. Your credit score also figures heavily into how much you pay for home and auto insurance. Insurance companies generate their own “insurance score” based on your credit history. That score is used by many companies to help determine if they will insure you and the price they charge.

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