California Personal Injury and Insurance Blog

Insurance Commissioner Endorsement

After some long, hard thinking about this, I am officially making an endorsement:

Steve Poizner, Republican, for governor. Why? First, of the five others who are running, only Dale F. Ogden has any insurance experience. Mr. Ogden, while he may be a good choice, seems to have limited himself by his Small Government Pledge in which he pledges to vote against expanding all government plans. Under Mr. Ogden, the succesful low cost auto insurance program would never be expanded. That would be a loss, and it is one of the downsides to agreeing to such blanket statements.

Mr. Poizner has several things working in his favor:

1. He is not a career politician. Therefore, he can bring fresh, new, exciting ideas to the job. He also is not beholden to other politicians and does not have to worry about keeping their approval.
2. He is not accepting insurance money. This is a huge issue. Mr. Bustamante has accepted over $150,000 in insurance money and, while he gave back some of it, he has not given it all back. I think we learned from the Quackenbush administration that insurance money and the insurance commissioner just do not mix.
3. He has agreed to enforce Prop. 103. I expect Mr. Poizner to stand by his word and enforce the law of the state.
4. He has agreed to investigate the use it and lose it approach to insurance. This approach used by many insurance companies renders insurance useless. Insurance, under this approach, becomes a product that you pay for but never receive the benefits of using.
5. He has a plan to crackdown on uninsured motorists.

For those reasons, I endorse Mr. Poizner.

I would suggest that, in the future, candidates such as Mr. Bustamante take the race a little more seriously and stop writing about their weight loss and instead talk about the issues.

Insurance Commissioner Candidates: A Review

I could just come out and tell you who I am endorsing, but I would rather spend a few minutes and discuss the candidates. Then, in my next post (read: tomorrow), I will tell you who I am endorsing.

First, Tom Condit, Peace and Freedom Party. Mr. Condit supports eliminating insurance companies and using state run systems. Great. That's what we need: more government! He is comparing his single statewide auto insurance program to one in Canada. ICBC, Insurance Company of British Columbia, is one such example. One such poor example, in my opinion, primarily because it doesn't work. The other problem with this approach: there are a lot of unregistered vehicles in this state. Therefore, there would still be a lot of uninsured drivers in this state.

Second, Dale F. Ogden, Libertarian. Mr. Ogden is a third party candidate with actual insurance experience. I can't find it now, but I wish I had the quote from Cruz Bustamante when he said he had the most experience of anyone in this race. Mr. Ogden has impressive credentials. His basic idea is to reduce the size of the department, while trying to take the politics out of the office. Great ideas, but can they actually succeed?

Third is Green Pary Candidate Larry Cafiero. Mr. Cafiero apparently shares the ideas of Mr. Condit, at least to the extent that they both think there should be some sort of gas tax or registration tax to pay for auto insurance. I am not sure how that would work for our out of state visitors who would then have double coverage. And how exactly do you charge by the gallon?

Fourth, is Jay Burden, American Independent Party. I am sure Mr. Burden is a nice enough guy, but he doesn't seem to have any positions or any qualifications. If he wants to share those with us, he can do so by email to me here. I will post them for you to read.

Fifth, is Steve Poizner, Republican. Mr. Poizner is a very rich guy who has contributed over $8 million to his own campaign. Poizner's campaign is basic: enforce Prop. 103, stop the "use it or lose it" theory of insurance and fix workers compensation. Mr. Poizner has no insurance experience, but seems to be running for this job like it is CEO of a big company: get the job and then surround yourself with the right people.

Finally, Cruz Bustamante, Democrat. From Mr. Bustamante's website, it appears that he wants to be Insurance Commissioner so he can help us lose weight. I guess that would decrease the costs of health insurance premiums for all of us. Mr. Bustamante ignored my request for an interview and therefore, other than his weight loss, I am not sure what he stands for!

There you have it. The six candidates in my words. Come back for my endorsement.

Race for Insurance Commissioner

I generally do not get political on this blog. That is not the purpose. The purpose is to provide information and insights into insurance matters to you. But, I think the race for Insurance Commissioner is important. So, a few thoughts.

First, I am going to contact the candidates and ask them for a plain English statement from them for you to read. I am also going to ask to interview them, either telephonically or by email. I will let you know the results, including those who say no.

Second, I am going to provide you with links to the websites in the next week or so. I want you to be able to do your own research.

Third, sometime before the election, I will let you know who I think should be the next insurance commissioner and why.

Of course, as always, if you have any thoughts, ideas, questions, etc... about this, let me hear it.

Copy of your policy

When you buy insurance, your agent gives you a copy of your policy. And then the insurance company starts adding endorsements. Some endorsements help you, some take away coverage and some are completely meaningless. However, which are which?

There is an easy way to figure this out: every other year ask your agent for a certified copy of your policy. This is different from a regular copy. A certified copy comes from underwriting and certifies that this is the policy and all endorsements that effect your coverage. Keep track of this copy and put it away somewhere safe. Then, when you have a claim, you will know what is, and is not, covered.

Hartford Ins. Accused of Charging Illegal Fees

Hartford Insurance has been accused by the Department of Insurance of charging an illegal fee. The fee was charged by a general agent of Hartford's and Hartford denies any wrongdoing on its part. Hartford is also, according to the company, cooperating with the Department of Insurance investigation.

This does not surprise me. Well, the allegation does not surprise me, and if Hartford had no knowledge, that would not surprise me as well. Agents, especially managing agents, have a lot of leeway and very little oversight, in my experience. They sometimes do things like this without anyone ever catching on.

The point for consumers, and this includes small businesses, is that you MUST shop around. Do not settle for a quote from one broker, even if it includes 5 or 10 insurance companies. Get quotes from two or three brokers. Sure, there will be some overlap, but you will see if you are really getting the best rate.

Auto Accident for Self Employed: What Policy Covers You?

I work for myself and was going to do a personal errand and a business errand when I got into an accident. I have a personal auto policy and a business liability policy. Who will protect me?

If both insurance policies provide coverage, they each pay a pro-rata share. The long discussion can be found here. The short portion of this is that each insurance company pays a percentage of the total.

However, if you have a general liability business policy it probably excludes automobile use. Your personal auto policy should provide coverage to you. However, you should report it to both companies and see if there is any other coverage that may apply.

You should also talk to your insurance agent about getting a business auto policy.

Zurich to pay fine for price fixing

Zurich Insurance is paying $171 million dollars to settle charges of bid rigging and price fixing. The settlement effects 9 states, including California. The money will be refunded to policyholders after court approval. According to Massachusetts Attorney General Tom Reilly: "Insurance companies will not get away with deceiving their customers, inflating prices, or manipulating the insurance marketplace."

This is one more example of the way insurance companies put their needs first, and yours last. The insurance companies do not care about competition, doing the right thing, and protecting their policyholders, for the most part. They care about profits for their shareholders. (Don't get me wrong, there are plenty of other businesses that do the same thing.)

When you are shopping for insurance, especially commercial insurance, you need to shop several brokers, several agents, and compare, compare, compare. It is the only way to make sure you are getting what is in your best interest.

More Changes Loom for Workers Comp?

Apparently, the current state administration is not happy with the workers compensation system in California. There are some within the administration who would like to lower costs even more. And, not surprisingly, there are some who think the system is still not fixed, as awards for permanent disability have been slashed by 50 percent.

The Governor's proposal was, without a doubt, lacking. The Governor attempted to make his business allies happy without understanding the system. Now, he has created a system where:

• Businesses want more reductions in premium
• Injured employees and their advocates want fair awards for permanent disability
• Doctors want payment for their services

Interestingly, the insurance companies seem happy with this arrangement. They still charge high premiums, but now they pay out less. So, they make more money and everyone else is left holding the bag.

Maybe it is time to revamp the system and start from scratch?

The BEST Insurance Company

Someone asked me who the best insurance company is. My answer is quite simple: I don't know.

Yes, I admit it. I don't know. Why? Because the best insurance company depends on a variety of factors. Here are things you should consider:

• Price
• Service
• Membership in groups
• AM Best rating
• Availability of an agent
• Claims handling
• Department of Insurance complaints

Let me explain each one. Price is pretty easy. You may want the cheapest, if price is important. But make sure you are comparing apples to apples.

Service is a bit more complex. Service includes underwriting, customer service to change your policy, etc.... The only way to find out about this is to ask around.

Membership in groups is another easy one. Are you military? USAA might be best. Are you a teacher? California Casualty takes care of teachers. If you are in a group or association, see if there might be a special insurance policy. It can make a big difference in how you are treated, even if it cost a few dollars more.

AM Best, as I have said before, rates the company's ability to pay claims. A or better is what you are looking for. Simple enough?

Agent availability is important to me. Some people do not care. However, when I have a problem, I want to be able to call someone who has a financial interest in making sure I am happy. The only way that happens is with an agent.

Claims handling is very important, but very hard to measure. I want a company that has a good reputation for resolving claims. And not just its insureds claims, but if I injure someone, I want that company to pay the claim so I don't get sued. How do you measure this? Search the internet, or better yet, call around and ask personal injury attorneys in your area. They will have the pulse on this.

Department of Insurance complaints can be checked at the website. Look at verified complaints and not just total complaints. Anyone can complain, but it is when the Department of Insurance considers it something with merit that you need to consider it.

When you have all of this information, rank it and figure out what is important to you. Then you can pick the best insurance company for you. Of course, feel free to listen to my podcast about buying insurance and ask me, if you still have questions.

Actual Cash Value - What is it?

I have had several people ask me a very important question. What is actual cash value? The funny part is that no one really knows for sure. It is not defined in your insurance policy. See, the auto policy will pay either the cost of repairs or the actual cash value, whichever is less. For your homeowners policy, the policy will pay actual cash value for personal property. But, the insurance company does not tell you what that is.

These are actually two separate but similar issues. For your auto policy, the actual cash value of your vehicle is what the car is selling for used. Read here for how to do that. That is pretty simple, right?

But what about your personal property? Face it, no one is selling men's small pajamas with feet on them used. And if they are, no one better be buying them. In this case, actual cash value usually becomes the cost to replace the item less depreciation. And this is where the trick comes in.

Some adjusters want to add up the value of everything you had damaged and take depreciation on the entire amount. So, if you had 3 suits and 2 sneakers and 1 television, they would add up the cost to replace these items and take 20% depreciation on the whole thing, for example. And this is.............WRONG!

Actual cash value requires the adjuster to take the depreciation on EACH item. Yes, that makes more work for the adjuster. However, that is the correct way to calculate it. So the suits would have depreciation taken, then the sneakers and then the television. And if the suits are of different quality (one was bought at Target and one at Nordstrom) they would have different depreciation rates applied to them.

When you have a loss, make sure the adjuster is calculating actual cash value correctly. And if you have a question on it, ask.