Insurance 101 - English Edition

Commercial Auto Insurance 101: Avoiding A Sticky Situation

2009-09-02T14:49:00.000-07:00

Maybe you are a contractor, a plumber, an electrician, a painter, a locksmith or a gardiner. Maybe you are a one man (or woman) show and you hop into your truck or van each day and off you go. Or, maybe you own a large plumbing company with employees and multiple vehicles. Or, maybe your CPA, Tax Attorney, Brother-In-Law or other trusted advisor told you to register your personal vehicle in the name of your business for tax or other purposes.

Now, I won't ask you all to raise your hands, but answer this question to yourselves. "Is your vehicle that you use for business on your personal auto insurance policy?" I'm sure many of you are nodding or uncomfortably looking around the room. Now, those of you, and you know who you are, who answered in the affermative, I have an additional question for you. Suppose you are at a client's house, in the middle of a remodel and need to bring in those custom made cabinets from your truck. If you accidentally shatter your client's glass sliding door bringing the cabinets inside, who is going to pay for that? Well, your personal auto policy offers no coverage for that. But, your commercial auto policy would.

Let me give another example. Let's say you are Paul the Painter and you are a one man show and you use your pick-up truck for work. You have two other vehicles that you wouldn't dream of getting paint or paint supplies near that are simply your personal cars. You've got a personal auto insurance policy that covers all three vehicles. Now, let's see what could happen to you, Mr. Paul the Painter.

You get up in the morning, shower, have breakfast, hugs and kisses to the family and you are out the door to your first job of the day. You stop by the paint store to pick up the colors you need and various brushes and supplies that you are going to need for the day. On the way from the paint store to your first client's house, something catches your eye and you look away from the road for a moment. *POW* Doing the right thing, as you always try to do, you immediately pull over and see what you hit. Unfortunately, in that split second, little Johnny and his mother were crossing the street and you hit them. The ambulance arrives and carts them off to the hospital where you later find out that mom is ok, but sadly, Little Johnny is going to be wheelchair bound for the rest of his life.

Of course, you put the claim in under your auto insurance policy and prepare for a long claims process. Unfortunately, you have a false sense of security that while all of the events leading up to this point were horrific on Little Johnny, his mother and yourself, you feel confident that your personal auto insurance policy will pay the claim.

Well, during one of the interviews, your claims adjuster asks where you were going and where you were coming from when the accident happened. You honestly explain that you are a painter, were at the paint store and was subsequently off to your client's house. Guess what? Your personal auto policy specifically excludes losses that happen during the course of business. Why is that? Because that is what a commercial auto policy is for. We will go over the different coverages available on each policy and why it is imperative to have the proper policy for the proper vehicle/use in just a moment.

Needless to say, your claim is denied and now you have to go through the litigation expenses on your own. You may have to sell your home, your business, drain your own child's college fund or perhaps even declare bankruptcy in this case. Paul, we want you to avoid this catastrophe on top of a catastrophe.

So, that was the unfortunate tale of Paul the Painter, who did not have the right type of policy. Here at Goldhammer Insurance Services, we want to help the Pauls of California avoid his fate.

On a much lighter note, let's go over how your commercial auto insurance policy works and the major coverages provided therein.

The following coverages will be similar to those on a personal auto insurance policy:

1. Liability - In the case of Paul the Painter, if he had a commercial auto insurance policy for his truck, the liability portion of the policy would pay up to the policy limits for the associated medical bills, lawsuit settlements, etc. The liability coverage pays "the other guy".
Now, here is a major difference between a personal auto policy and a commercial auto policy. Included in the liability coverage on a commercial auto insurance policy is a coverage called "Loading & Unloading". On your personal car insurance, if you injure someone or damage property while loading up your truck or unloading it, there would generally be no coverage. However, on your commercial auto insurance policy, your liability coverage would extend further to offer coverage in this scenario.

2. Uninsured Motorist - If, for example, you are involved in an accident that is determined to be "the other guy's" fault, and he does not have insurance, your uninsured motorist coverage would pay you what you would have collected had the other guy had insurance.

3. Comprehensive and Collision coverage - These are the coverages that are available to fix any physical damage to your vehicle in the event of a covered loss. As on a personal auto policy, your collision coverage covers accidents involving actually colliding with something. Comprehensive coverage covers incidents that are other than collision. Fire, theft, vandalism hitting an animal, etc would all be covered under your comprehensive coverage.

Ok, everyone still with me? Good. There'll be punch and cookies at the end. Now, the following are the coverages offered on a commercial auto insurance policy that are not offered under a personal auto insurance policy.

1. Employer's non-ownership liability - Ok, let's say Paul the Painter has his commercial auto policy in force. Paul has a part-time employee who helps him with some jobs, but mostly runs errands such as dropping off the daily deposit at the bank. So, let's say Paul's employee, Franz, is going to the bank one day and hits Bobby Bicyclist in the parking lot. Bobby could sue Franz, and when it comes out that Franz was running an errand for his employer, Bobby could sue Paul as well. This employer's non-ownership liability coverage would protect Paul's interests. Otherwise, poor Paul could find himself in the same financial situation as he did when he accidentally hit Johnny and his mother and had the wrong type of policy for his truck!

2. Hired auto - Paul won a bidding war for a huge painting job and realizes he's going to need to rent a couple of more trucks and hire a few more employees for this job. Are those rented trucks covered under his policy? YES! The hired auto coverage can be set up in such a way that those rented trucks are insured the same as if they were owned by Paul.

3. Drive other car - Ok, let's give Paul a break for now. I have a good friend Greg the gardiner. Greg is a single guy and the only vehicle he owns is his work truck. He has it properly insured on a commercial auto policy. If Greg goes on a road trip with his buddies and they rent a car, Greg's commercial auto policy would cover him driving another car, as long as he had this coverage.

Hopefully, getting through all of that was relatively painless...well for everyone except Johnny and his mom. In any event, those are the major points to cover in our commercial auto policy and the reasons to properly insure vehicles commercially as opposed to on a personal policy if they are used for commercial use.

As always, if you have a question, would like a quote or simply have a comment, please do not hesitate to email us at allcaliforniainsurance@gmail.com, leave a comment in the space provided, give us a ring at 1 800 947 8887, or come on by the office at 21820 Burbank Blvd #226 Woodland Hills, CA 91367.

And remember, when you are sick and tired of the sledgehammer sales approach, come to Goldhammer Insurance where you are always in good hands with our white glove treatment.

Mortgage Protection Insurance...Demystified

2009-07-27T13:12:00.000-07:00

In other words, cheap term insurance to protect your loan amount and your family in the even of an unfortunate, unforseen and untimely passing. Here's the situation many of us are finding ourselves in:

1. We have a family.
2. We own a home.
3. We have that fat mortage payment every month.
4. And, we have this thing, this little Jimmney Cricket on our shoulders that is constantly nagging us. "What happens to my family and my house if something were to happen to me?"

That little nag means that there is something missing. That something missing is Cheap Term Life Insurance for the purpose of Mortgage Protection and Family Protection.

As an example, most mortgages are for 30 years. A 35 year old man who does not smoke could get a $250000 30 year inexpensive term life insurance policy for less than $30 a month. For $30 a month, this guy would be able to sleep well at night knowing he has protected his family and has life insurance to take care of his mortgage and pay off the loan.

Since these policies are rather inexpensive, every homeowner should have one.

Life Insurance 101: It's Not About The Policy, It's About Your Family

2009-07-03T09:26:00.001-07:00

Greetings and salutations from all of us at All California Insurance! I wanted to start off this post by wishing everyone a happy, healthy and safe 4th of July. The 4th of July signifies a major milestone in America's history, our freedom and independance. Back in the colonial times, we were concerned with our independance from England. We were concerned about where our next meals were coming from. We were concerned about staying warm in the winter.

Today, we have many of the same concerns, yet in a different context. Today, British rule is not a concern of ours, because that was resolved long ago. Thanks to those who fought for our freedom, we are now able to have more internal concerns. This is a double edged sword. Now, we get the privlidge of taking care of ourselves and our families. With that privlidge, we have a huge responsibility to take care of our families, whether we are here to do it ourselves or after we are gone.

Which is a longwinded, roundabout way of arriving at our topic of the day: Life Insurance. This is a very touchy and personal topic to everyone. It reminds us of our own mortality. It reminds us perhaps, of a deceased loved one. There are many many emotions, thoughts and feelings that come up when the topic of life insurance is discussed.

While it is not a pleasant topic to think about, Life Insurance is quite possibly the greatest gift parents can leave to their children. It is about peace of mind. Peace of mind in knowing that if something unforseen should happen to us, our families will still be financially stable.

Before we get into the mechanics and the nitty gritty, I'd like to share a story about a client of ours with all of you. Years ago, as a green insurance agent, I sold life insurance as a product. I was too young and inexperienced to fully understand what life insurance can do for a family in their most dire time of need. I had a particular client who I sold a policy to. He and his wife had 4 young children at the time, a mortgage and all of the usual expenses we all have. Well, unfortunately, a couple of years after the life insurance sale, he passed away. When I got the emotional, tear ridden phone call from his eldest son, something in me finally clicked. After the funeral, he pulled me aside and gave me a hug I will never forget.

He tearfully said to me, "You know, after my father's death, bill collectors started calling. Everybody came to our family with their hands out, wanting to be paid for one thing or another. But you, you came to us with a check in hand, a tear in your eye and a shoulder to cry on. I really don't know what my sisters, mother and I would have done were it not for the life insurance my father had. I don't know how to thank you."

I told him that he owes me no thanks. The one he should be thankful for is the one whose life we are celebrating and remembering today. He stepped back and looked at me somewhat crosseyed and confused. I said, "Dave, you, your sisters and your mother were your dad's pride and joy and number one priority in life. He guided you, provided for you and helped mold you and your sisters into the wonderful, caring people you are today. He took care of you all and took pleasure in doing so."

I continued, "He blessed you and the rest of your family with many many gifts throughout his lifetime. The last gift that he made sure was available to you all was the gift of life insurance. The gift of peace of mind. Of course, I know and he knew that you would hand that check right back over if it meant 5 more minutes with him. But, the gift he left you all was the ability to live his legacy, follow in his footsteps and the financial means to continue your lives in the way that he made sure you were all accustomed to."

He nodded. I said, "Your mom does not have to worry about the mortgage on her house, your two youngest sisters do not have to worry about how they will pay for college. Your dad took good care of you all while he was alive, and will continue to do so in memorium."

He hugged me and thanked me again and returned to his family. It was that day that I realized that I was not selling policies. I was giving families the opportunity to continue to care for their loved ones long after they are gone. Life insurance is a gift, and not one to be taken lightly.

Now, I'd like to go into a short glossary and explanation of the different types of policies available so that everyone can be well informed consumers.

There are essentially two main types of policies, Term Insurance and Permanent Insurance. And yes, there are various subgroups and hybrid type policies, etc.

Basic Term Life Insurance is pretty much exactly what it sounds like. This type of policy is purchased for a specific amount of time, usually 10, 20 or 30 years. This is just pure life insurance. If John Smith takes out a $500,000 20 year term policy, and passes away in year 16, his policy will pay his beneficiary $500,000. Conversely, if John Smith passes away 25 years after taking out the policy, the term has expired and there is no coverage.

One might ask, "Why would I want this type of policy if it's just going to expire and then I'm out all of that money for no reason?" Excellent question. Of course, there is a multi-part answer.

A) This is the type of policy that we call "peace of mind insurance". You have the peace of mind for a set number of years that should the unforseen happen, your family will be financially taken care of. Therefore, you had the coverage for all of that time. Just like a homeowner policy, you may never put a claim in, still make your monthly payments, but have the peace of mind in knowing that if your home were to burn down, you have the coverage to rebuild your home and your life.

B) These policies are, on a monthly basis, cheaper than others. For a young family with limited resources, it's the perfect starter policy to get the coverage in place and then later on, there are other options available.

C) Return of Premium option - Some Term policies have an optional enhancement called Return of Premium. This is the answer to the people who say, "I don't want to spend all that money for 20 years to not get anything in the end." Those who have this option on their policies are people who plan to keep the coverage in force for the entire duration of the plan (in this example 20 years), and will recieve a check at the end of the term for every penny that was paid in premiums. So, now, John Smith will have been covered for the 20 years, and assuming he is still alive at the end, he'll get back all the money that he put into it.

D) Conversion opportunity - Most Term policies include a clause that allows the policy owner to convert the term policy to a permanant one before the term expires and usually before a certain age, depending on the policy. What is the benefit in this? This is a HUGE benefit to the policy holder and here is why.

The price of life insurance is based on many things. The two items that carry the most weight in the cost are the health of the person taking out the policy and the age that they are when they take it out. As a general rule, we will never be as young or as healthy as we are today. And we were younger and healthier yesterday. Obviously an obease individual with high cholosteral and blood pressure will be more expensive to insure than a fit individual with no health problems. There is a much greater probability that the less healthy person will pass away sooner than the more healthy one. At the same time, a 20 year old is much less expensive to insure than a 60 year old, because all things being equal, statistically, the 20 year old has much less of a likelihood of passing away than a 60 year old. The 20 year old statistically has many more years to pay premiums, than the 60 year old, so his premium will be less.

The wonderful thing about the conversion option, is that it allows the policy holder to convert their term insurance to a permanent policy (which we will go over in a moment) while locking in the health rating that was recieved at the time of the original policy. The policy will convert based on the original health rating and the current age. This is of a huge benefit to those whose health has unfortunately deteriorated over the life of the policy.

Alright, now that we have a clearer understanding of Term Life Insurance, let's go over Permanent Life Insurance. As the name suggests Permanent Life Insurance is generally set up to be Permanant and be in force for the life of the insured (that's you!).

Now, Permanant Life Insurance is sometimes referred to as Whole Life, Universal Life, Variable Universal Life and Guaranteed Life, to name a few. The main difference between a permanent policy and a term policy is that a Permanent Policy has many more options.

The policy contains two main parts. The first being the basic life insurance coverage. And the second being somewhat of a "savings account". The way that these two parts come together to form a comprehensive policy with many options and benefits is that a percentage of the premium goes to pay the basic cost of insurance and another portion goes into this "savings account". Now, generally speaking, these policies have a minimum interest rate that paid on the money that is growing in the savings portion of the policy. These interest rates are usually market sensitive, so as interest rates in the marketplace go up, the interest rates that the policy will pay will go up. As interest rates in the marketplace decline, the interest rate of the policy will decrease, but never lower than the floor set by the policy contract.

One very nice thing about these policies is the flexibility that afforded to the policyowner as far as premiums and savings go. As an example, let's say that John Smith has just taken out a Permanent Life Insurance policy and his minimum monthly premium is $100. He could decide that he wants to pay $150 per month, having that additional $50 per month go directly into the "savings portion" of the policy. Over time, that overpayment of premium will grow due to compound interest.

Let's say that he pays his $150 per month for the first 20 years of the policy and then finds that he has fallen onto hard times and cannot afford to pay the additional premium. It's possible that there is enough money built up in the "savings portion" or "cash value" that the premiums can actually just be deducted from that pot of money for a period of time. Or maybe his child is going to a private university and he has built up a lump sum of money in there. He can withdraw the money to use towards whatever he would like, in this case, his child's education.

And this brings us to the end of our class on Life Insurance 101. Almost. One very important thing to remember about life insurance is that the most important aspect of it is not the company, type of policy or even the death benefit amount. The most important aspect of life insurance is that it is one of the greatest gifts that a parent can give to a child. The gift of love, life, legacy and the future. The proceeds of a life insurance policy can never make up for the loss of a loved one; but the gift of life insurance can help ease the financial burden and leave your family with peace of mind.

Auto Insurance 101: A Glossary and Comparison

2009-06-03T09:12:00.000-07:00

In other words, cutting off your nose to save your face. Although, I'd cut off my nose to lose a pound.

What am I talking about? Good question. I'm glad you stuck around to ask. When it comes to insurance, but for the purposes of this posting, auto insurance, we have found that the majority of people are extremely price conscious. And that is a very smart way to be. Unfortunately, we tend to be more concerned about price than value.

I want to talk about auto insurance today. First, let's visit the Auto Insurance 101: English Edition Glossary.

There are 3 sections to your auto insurance policy. The first part protects the other party, the second protects you and your family and the third protects your vehicle.

Part 1

1. Bodily Injury Liability: If you cause an accident and people are hurt, you could be held legally responsible for medical costs for everyone involved. This coverage can help shield you from losing your home, your savings or having your wages garnished to pay for the injured party's medical, loss of income, pain and suffering, etc. In California, the state minimum is $15,000 per injured person and $30,000 for the entire accident.

2. Property Damage Liability: If you cause an accident and damage another person's car or their property, you could be held legally responsible for repair or replacement costs. In California, the state minimum is $5000. If you are driving around with minimum limits, pray that you do not rear end a Bentley, drive through a storefront because the damages will be exceedingly more than $5000.

Part 2

Uninsured/Underinsured Motorist Coverage: We know that most states, California included, require that all vehicles are insured at least up to the state minimum limits. Unfortunately, not everyone follows the law. If a driver with insufficient or no insurance coverage hits you and you are injured, without this coverage, you would be left holding the bag, so to speak. Having this coverage allows you and your passengers to collect what would have been collected from the other party's insurance, from your own. This inexpensive coverage could be invaluable in the event of an accident.

Medical Payments: Also called "Med Pay". This coverage pays up to the policy limits when you are in an accident that is your fault and you and/or your passengers are hurt.

Part 3

Collision Coverage: Pays for damage to your car if you collide with another car or something else, such as a tree, wall or lamppost.

Comprehensive Coverage: Also known as "Other than collision". This pays for damage to your car caused by something other than a collision. This would include theft of the vehicle, storm damage, a bird flying into the windshield, etc.

Deductible: The amount of money that you are responsible for before the insurance company pays out. As an example, if Joe Smith backs into a pole while exiting a parking garage, this would be covered under the Collision portion of the policy. If the damage to the vehicle is $2000, and the deductible is $500, the insurance company would pay $1500 for the loss.

Now that we have a clear understanding of the basic auto policy coverages, let's get more into the nitty gritty.

Trent Teenager is 19 years old, works as a cashier, lives in an apartment and drives a 1995 Camery. Now, this is someone who is just starting out, doesn't really have assets to protect and is driving an older vehicle. We would recommend to Trent, that he have moderate bodily injury liability limits, usually about double the California state minimum, that he have uninsured motorist liability coverage for the same limits as his bodily injury liability, and then we would discuss whether or not it is worth it to him to have Comprehensive and Collision coverage.

On older vehicles, some people feel it isn't worth the extra premium to carry physical damage coverage for the car, because the car is not worth very much. On the other hand, some people feel that no matter what, they will carry these coverages because even though the vehicle is older, they would rather have the coverage to fix damage caused by an accident.

Now, Henry Homeowner is married, in his 40's, has a family, owns a home, and has 3 luxury cars in his garage. Now, for Henry, the difference between having high liability limits and not could mean the difference between keeping his home or not in the unfortunate event of a catastrophic accident. We would generally recommend he carry very high bodily injury liability limits, with matching uninsured motorist liability limits. Since he owns luxury cars, we would recommend that he does take the Comprehensive and Collision coverages.

Now, whether you are more like Trent Teenager or Henry Homeowner, or somewhere in between, your auto insurance coverage can be customized to meet your needs. Of course, there are additional coverages available that we can get into later.

If you are unsure of what you have and whether or not your policy meets your needs, we are now offering a free Coverage Check-up to anyone who would like a second opinion. We will also go over things such as Accident Forgiveness, Safe Driving Bonuses, Deductible Rewards and Ticket Forgiveness. Please visit our website www.allstate.com/StanGoldhammer , call toll free at 1 800 947 8887 or send us an email at allcaliforniainsurance@gmail.com .

Why Would I Need Renters Insurance? I Don't Have Anything!

2009-05-26T16:24:00.001-07:00

I can't tell you how many times I have had this conversation. The answer to that question is basically 3fold:

1. If your building/house you are renting/etc were to burn to the ground, your landlord is NOT responsible to replace your "stuff". Clothes, furniture, books, everything. If you had to go to the store today and replace every one of your belongings, could you afford to do that? How much do you think that would cost?

2. After the building burns to the ground and the landlord does not replace your stuff, where are you going to live while your place is being rebuilt or until you find a permanent place? Again, your landlord is NOT responsible to pay for your additional living expenses. If you had renters insurance, the policy would pay your additional expenses as a result of the loss. If you didn't, well, you are going to be in a tent in the park, back at mom and dad's house, or at a Red Cross temporary shelter.

3. Do you have a child? If the child bites another kid at school and you are sued by the parents, your landlord certainly is not responsible to pay for that. A renters policy includes liability coverage. If someone slips down your stairs and sues you for their injuries, who is going to pay? Only your renters insurance. Or your savings, credit cards...debt...wage garnishment.

A basic renters insurance policy is so inexpensive (think in the area of 50 cents a day sometimes), that it does not make sense not to have one.

Oh, and landlords: If you have a tenant, which you do, by virtue of the fact that you are a landlord, you can require your tenant has renters insurance naming you as an additional interested party as part of the lease or rental agreement.

If you are a California resident and a renter, give us a call for a free quote. Or, if you prefer, visit our website and follow the step by step instructions.

Lastly, please post any insurance related questions to our blog and we'll be happy to help you in any way that we can.

Greetings and Salutations

2009-05-20T15:09:00.001-07:00

Deductible. Peril. Liability. Subrogation. Conditions. Exclusions. Limited Guarantee. Permissive Operator. Insurability. Underwriting. Brush area. Comprehensive. Scheduled Personal Property. Extended Lifetime Rider. Return of Premium. Endorsement. Accidental Death and Dismemberment.

You didn't leave yet, did you? I could have been speaking Mandarin and most people would have understood more of what I said than trying to decipher all of the above insurance jargon. Let's take a few steps back and introduce ourselves properly.

For over 35 years, Goldhammer Insurance Services has made it's physical home in the beautiful San Fernando Valley. We are a family owned and operated full service insurance agency with deep roots in the community. AllCaliforniaInsurance.com has become our home on the web and we welcome you to our home, but please remove your shoes! http://www.allcaliforniainsurance.com/

This blog will be updated frequently and will discuss topics and offer explanations to commonly and not so commonly asked questions. If you have any specific questions, feel free to email them to AllCaliforniaInsurance@gmail.com, leave them as a comment on this blog, visit one of our many websites and forums or simply call our office toll free at 1 (800) 947 8887. Better yet, feel free to stop by our office at 21820 Burbank Blvd. #226 Woodland Hills, CA 91367

Also, if you have any idea on future blogs or articles or have any specific topics you'd like covered, please let us know!

I'll leave you with a homework assignment. When purchasing homeowners insurance should you insure your home for what the market value is or what it would cost to rebuild?

We'll answer that question next time.

Until then, thank you for reading our first blog post (the first of many!) and we look forward to helping you with any of your insurance needs...by the way, who felt the two earthquakes in the past week?

--- All California Insurance