Collision Coverage & The Parking Lot Accident

Before you drop collision coverage on that old beater, read on.
What is collision coverage?
Collision coverage is coverage for your car when it is involved in an accident with another vehicle or a stationary object. It’s typically another car that you’ll hit, but trees, light poles, and guard rails are stationary objects that get hit. It covers the cost of repairs or replacements to your own car. Your liability coverage covers damage to the other person’s vehicle or property.
But my car’s worth little to nothing, why would I carry collision coverage?
While it may be tempting to drop collision coverage on the old beater it may not be the best idea. Here are a few reasons why:
1.    You need a vehicle to operate daily. If you can’t afford another vehicle if your current car is a total loss, you definitely need collision insurance.
2.    It gets very affordable. The older the car the lower the value. This typically translates to premiums being less than you think.
3.    You’ll typically forfeit rental car reimbursement and roadside assistance coverage options when you drop collision coverage. 
4.    The parking lot scenario. He said she said could cost you. See below.
The Parking Lot Scenario – Don’t end up in court.
You’re backing up in a parking lot when you hit another car. The other driver was also backing up. Commonly the fault in this accident would be shared. But the other driver tells her insurance company that she was parked and you hit her. You tell your insurance company that both vehicles were moving when they hit so liability should be shared. Neither driver carries collision coverage. He said, she said.
The other driver reports the liability claim to your insurance company for damaging her car. They call you for a statement. You tell them both cars were moving. Your insurance company denies her payment as her insurance company should pay the claim. Her insurance company denies the claim because she doesn’t have collision insurance.
She files a claim against you in small claims court. The judge determines you are at fault and orders you to pay for the damage to her car. With collision coverage each insurance company would pay to fix the insured's vehicle and proceed to arbitrate to determine percentage of fault. Collision premium or small claims court judgement? I’ll pay the premium.
Parking Lot Tips:
1.    Typically the police won’t come to a parking lot accident unless someone is injured. If you have an accident are able to get them to come and give a police report, this will be very helpful.
2.    Go slow. Slower than you think you should.
3.    Pull through to a spot or park further out in the lot. You’ll be out of the commotion and have full visibility when you are exiting your spot.


Buyer Beware - Loan & Lease Gap coverage at the dealership.

"I just bought a new car and financed it. The finance department encouraged me to get loan gap coverage for $500 - $600. I added it to my loan for only a ten dollars a month" 

What's the problem?

Total losses on automobile insurance policies are generally settled at actual cash value. Here's the problem. That new car you just drove off the lot. Well - Now, it's used. That usually costs you $5,000 or more in value. Let's say you finance 100% of the purchase price and the auto is in an accident the next day. It is a total loss. The insurance company cuts you a check for actual cash value and you're short the $5,000 you owe for your "new" used car.

What is loan or lease gap coverage?

The gap ($5,000 in the scenario above) is the amount between your loan or lease balance and the actual cash value of the auto. This coverage pays the loan balance off in a total loss, even if it's above actual cash value. We recommend this coverage for all financed new cars or leased vehicles.

This sounds good, why wouldn't I get it at the dealer?

The price for the coverage at the dealer is extremely inflated. That $600 cost that you rolled in to your loan was about $500 more than you should have paid for the life if your loan. And the nice finance guy at the dealership - he just made a $300 commission for selling you this policy.

I need this, where should I get it?

Call your local insurance broker and ask about adding it to your current insurance policy. You'll save money. It's also a great time to review your coverage on your new vehicle!

For More Information See this post. This information is for information of the reader only. Please see your policy for coverage, limits, and loss settlement.

Family Weekend Fun - take your kids to the airport… I’m not kidding!

I’m always looking for opportunities to get my kids out of the house. My two year old boy is really interested in trucks, tractors, trains, planes, police cars, and fire trucks. My three year old girl think’s they are pretty cool too. When my wife suggested a family outing to the airport I cringed. Any parent that’s been through the terminal with an obscene amount of luggage and a stroller know’s it isn’t exactly what we’d call “fun”. Not exactly what she had in mind.

Did you know, there’s an aircraft viewing area at the Minneapolis / St. Paul airport?

Yes, you can get out of your car in the open air and watch the planes take off and land. There are picnic tables, benches, and plenty of free parking. The pace was about a plane a minute, which could even keep my two year old’s attention. They each looked at incoming planes and shouted whether it was a “big one” or a “little one”. Of course, each thought they were always right (I wonder where they got that thought).

Here’s a link to the map

 Maybe your kids (or inner kid) will think it’s cool too!


I’m going to save 600 gallons of water this year for less than $1. Here’s how I’ll do it.

We can’t count on unlimited clean water forever. Here’s an easy way to save water at home without noticing or making a huge lifestyle change. (Hint. I still plan on showering regularly.)

The test subject, our main floor half bath. This bathroom gets the most use (TMI, I know). I don’t have the desire to install a new low-flow toilet. I found a solution that I believe will work just as well. Used plastic bottles. Here’s what I did:

1.       Remove all labels from the outside of the bottle.

2.       Fill the bottom of the bottle with pennies. You could use sand or gravel, I used pennies because it’s February in Minnesota. The goal is something heavy on the bottom so the bottles don’t float around in the tank.

3.       Fill the bottle top the top with water. I put the bottle on the counter and added more water until it was full.

4.       Carefully place the bottles in the toilet tank. Avoid any working parts of the toilet mechanism or being in range of the float.

5.       Enjoy the savings of 40 ounces of water per flush. If the toilet is flushed an average of 5 times per day, enjoy your 600 gallons of water saved this year!

Combined Single Limit vs Split Limit Coverage

There are two common types of liability coverage offered on auto insurance policies. I’ll explain the differences so you can determine which coverage is best for you.

What is Combined Single Limit Liability Insurance?

Combined Single Limit (CSL) Liability Insurance is the maximum dollar limit the insurance company will pay including bodily injury liability and property damage coverage. Commonly offered at these limits:
$100,000 CSL
$300,000 CSL
$500,000 CSL

These are the total liability coverage limits (bodily injury and property damage) for a single accident. Here’s an example to help understand how combined single limit works:

  • You’re at fault in an accident where you severely injure one occupant with bodily injury of $150,000, the second occupant sustains bodily injury of $25,000, and cause $125,000 damage to an exotic car.

Total liability in this scenario is $300,000. 
If you selected a policy with $100,000 CSL, you exceeded the limit by $200,000. 
If you selected $300,000 CSL you're at the limit. 
If you selected $500,000 CSL you’re $200,000 under the limit.

How is Split Limit Liability Insurance different from Combined Single Limit?

Split Limit Liability is the more commonly used type of liability coverage. The limits are broken down differently than Combined Single Limit. With split limit coverage there are multiple limits that apply per accident. They are: per person bodily injury limit, per incident bodily injury limit, and property damage limit. Commonly offered at these limits (in thousands):
30/60/10 (Minnesota State Minimum Limit)
The first number is the bodily injury per person number, the second is the bodily injury per incident number, and the last is the property damage liability number. Let’s use the same example as above and assume you selected 100/300/100 liability coverage limits.

  • You’re at fault in an accident where you severely injure one occupant with bodily injury of $150,000, the second occupant sustains bodily injury of $25,000, and cause $125,000 damage to an exotic car.

Total liability in this scenario is $300,000. However the per person limit of $100,000 is exceeded by $50,000 on the first occupant and the property damage limit of $100,000 is exceeded by $25,000. Policy limits are exceeded by $75,000.

Split limit coverage is more complicated than combined single limit. How much personal asset protection do you need? It’s important to know how your coverage limits work to make sure you choose the right amount of coverage.

8 Tips to Improve your Insurance Score

Here's another, perhaps unexpected reason to pay close attention to your credit report. Insurance companies use a version of your credit score called your insurance score as a factor to determine your premiums. 

What is an insurance score
An insurance score is based on your credit history, and it is used by insurance companies to predict the potential for future losses. Insurance companies use your insurance score, along with a number of other factors, to determine your rate.  Generally speaking, customers who have good insurance scores qualify for lower rates. It’s not the same as your FICO score. In my experience, the insurance score is more forgiving.

An insurance score includes: 
• Payment history
• Bankruptcy, foreclosures and collection activity
• Length of credit history
• Amount of outstanding debt in relation to credit limits
• Types of credit in use (i.e. mortgages, installment loans) 
• Number of new applications for credit 

Eight tips to help you improve your insurance score:
1. Pay your bills on time. Late payments hurt, on-time payments help. 
2. Keep your credit account balances at 75 percent of total limit or less. 
3. Avoid the new credit card discount temptation. Too many inquiries or new accounts in a short period will negatively impact your score. 
4. Get your free credit report at at least once per year, review it for accuracy and take necessary steps to dispute any mistakes. 
5. There’s no quick fix. It takes time to build good credit.
6. Have a plan. If your goal is to reduce your debt, consider ways to pay down debt without opening new accounts.
7. If you have no credit, start establishing it today. Start small, a fewlow limit credit cards that you use and pay in full monthly will report positive history
8. Resolve any outstanding balances before they go to collections. 

In some cases this score will have more of an impact than an accident or violation.  I encourage you to set a date on your calendar each year to review your credit report and take action. If you’ve improved your credit score since the last time you took out insurance, you should shop. There are lower premiums waiting! 

Auto Insurance Coverage Explained...

... with Real World Examples - Series Part 1.

We’re bombarded with advertisements about saving money on our auto insurance. Click here to save 15% on your car insurance, I just double checked my discounts and saved $500, etc. We’re led to believe that auto insurance is a commodity where one size fits all. This isn’t the case. We’re a do it yourself culture. Selecting insurance coverage without educating yourself is dangerous. 

This blog series takes a step by step approach through each component of the auto insurance policy. We will explain each coverage in everyday language and give an example of when you would use it. Our goal is for you to be educated to help make the best decision on your coverage. Once you find the right coverage, then find the right price. 

To drive your auto on Minnesota roads, you need liability insurance. The Minnesota state minimum requirements are currently:
$30,000 bodily injury per person, $60,000 bodily injury per incident (accident), $10,000 property damage. We’ll call these state minimum going forward.
It your reaction isn’t “Wow, that’s not a lot,” it should be. 

Bodily Injury liability protects you if you injure or kill someone while operating your automobile. If a party in the accident files a lawsuit against you, it also provides for a legal defense. Bodily injury liability covers injury to people, not your vehicle. Typical expenses covered include medical expenses, legal fees, loss of income, pain and suffering, and funeral costs. More on medical expenses and loss of income in our Personal Injury Protection (PIP) segment.

You’re driving and talking on your phone. You don’t see the traffic stopped for a lane closure until it’s too late. You hit a car. Inside are the driver and one passenger. Both are hauled off in an ambulance. The driver sustains minor injuries, $5,000. The passenger needs surgery, $40,000.  With state minimum limits, you are responsible for $10,000. Your limit of $30,000 per person was exceeded, even though you were under the $60,000 per incident limit.

Property damage liability protects you if your automobile damages someone else's property. If a party in the accident files a lawsuit against you, it also provides for a legal defense. You should have enough property damage liability to protect you from the amount of damage your auto might inflict on another vehicle or object. Remember, property damage liability covers other people’s property, not your own.

Same accident as above. The car you hit is a 2015 Honda Accord with an MSRP of $22,105. With state minimum limits, you are responsible for $12,105. Your property damage limit of $10,000 was exceeded.

In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit without jeopardizing your personal assets. Don't wait until an accident to understand your policy. Contact us today to find the option that best meets your needs.  We’ll talk about the different liability limits in our next segment. Remember – coverage can vary by policy type and state. Always refer to your policy for explanations of your coverage.


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