Insurance Helper Blog
Automobile Replacement Cost Insurance, a NC Auto Insurance Policy Extra You Should Consider
You’ve probably heard it before; your brand new car drops about 20% in value the minute you drive it off the lot. Let’s face it, the first few miles you drive a new car are certainly the most expensive on a cost per mile basis. And if you borrow money to purchase the new car, you are even more vulnerable. A standard NC auto insurance policy will not protect you completely, but there is a way to cover yourself more fully.
I’m talking about replacement cost coverage on your new car. You may be familiar with this concept in terms of home insurance. If you house is burglarized and they steal your television set, if you have replacement cost coverage on your contents, then your insurance company will pay to replace your old TV set with a new one. But if your new car is totaled on the way home from the lot, without replacement cost coverage on your car (and most people do not have this protection), then you are paid the used car value of that car at the moment before it was lost. And this won’t be enough money to replace that car with another new one. This seems unfair and I can tell you, to most people who find themselves in this situation, it is unexpected.
Good news though, there is a simple solution. Most insurance companies can offer you replacement cost coverage on your new car. This means that if your car is totaled in an accident, the insurance company will pay for you to replace your vehicle with a brand new one of the same make and model. This is true even if the car is up to 5 years old.
Ok, you probably want to know what the catch is. And there are catches. First of all, this coverage will not apply to total loss by theft. And the insurance company will typically delete this coverage from your car after it gets to be about 5 years old. And, you must add this coverage within a short time of purchasing the vehicle brand new. Usually that time frame is 60 to 90 days. Last of all, you have pay for this additional coverage. The cost is usually around 15% more for your comprehensive and collision coverages.
If you are thinking about purchasing a new car, I would suggest that you seriously consider adding replacement cost coverage to that car on your North Carolina auto insurance policy. At Clinard Insurance Group in Winston Salem, NC, we have several insurance companies who offer this feature. If you have any questions about replacement cost coverage on your car insurance, or if you would like a free auto insurance analysis and quote, please feel free to call us, toll free at 877-687-7557 or visit us on the web at http://www.ClinardInsurance.com.
NC building and construction contractors – Here’s just what those uninsured subcontractors will do to you and how you can prepare yourself to minimize the damage.
It is a fact of life in the construction business. Almost all construction contractors , from the general contractor all the way to the landscape contractor will occasionally have to hire an uninsured subcontractor. There are hidden costs to this arrangement but knowing them in advance can help you prepare for the costs and minimize the damages to your insurance program.
It’s helpful to understand, from the beginning, that insurance companies don’t like for their clients to hire uninsured subcontractors. The reason is that they feel that your control over a subcontractor is much reduced and therefore losses are more likely. If they are uninsured, then the exposure for those losses is pushed on to your insurance company. And that makes you a less attractive risk for your insurance company.
So hiring uninsured subs causes two big problems that can generate increased insurance costs for you. Both are things you can prepare for if you do your homework in advance. And by taking the steps I will outline below, you can possibly reduce the cost to zero for each of these problems. And remember, if you use a subcontractor that is insured, be sure to take the appropriate steps to obtain a valid certificate of insurance. To read more about what you need to know about insurance certificates, please click here.
The first problem that uninsured subs will cause for you is increased insurance premiums on your general liability insurance policy and your workers compensation insurance policy. This is a stealth increase because if you don’t take steps in advance to protect yourself, then by the time you find out how much your subcontractor costs you, the sub may be long gone and your chances or wringing it out of the him or her will be nil. If you are unable to produce a valid certificate of insurance on a subcontractor, then when your policy is audited by the insurance company at the end of the policy term, they will include as payroll, the full amount of cost that you paid to the uninsured subcontractor.
You can defend against this problem by withholding from the amount you pay the uninsured subcontractor an amount equal to or greater than the amount you will be charged by the insurance company at audit. To understand how much to charge, you should contact your agent and find out the rate per $1000 of payroll for the subcontractor’s classification on both workers compensation and general liability insurance. I would suggest that you add an amount over the rates you face to cover your administrative expenses of handling this transaction.
The second problem caused by uninsured contractors has to do with the insurance company’s reaction to finding out you have used them. As I mentioned earlier, insurance companies do not like for their clients to utilize uninsured contractors but their appetite for them will vary. Check with your agent first and find out just what percent of payroll or gross sales paid out to uninsured subs will be tolerated by your insurance company. Some may not tolerate any and still others may be willing to let you go as high as 50%.
It is important to know in advance how high you can go so that you don’t break your insurance company’s rules unknowingly. If they find out on audit that you have been using more uninsured subs than their underwriting guides allow, they may cancel your policy or take away discounts that will result in much higher rates for you. In this case it is better to ask permission first then to ask for forgiveness later.
Remember, when you deal with an uninsured subcontractor you are now allowing them to use your insurance for their risks. Over the long term this is not advisable because they could cause a loss that is so catastrophic it might destroy your ability to get insurance at all, or it may create a high experience modification factor on your workers compensation policy that might cost you a lot of money for the next 3 years. It is always best to deal with subcontractors that have their own insurance.
Clinard Insurance Group, in Winston Salem, NC specializes in helping small contractors of all types all across
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