There are three professional consultants that are crucial for the success of the business. These professional consultants include an accountant, a lawyer and an insurance agent/broker (insurance contact). All three have to be very familiar with the business characteristics and forms of operations. All three have to configure their professional advice to fit the business requirements. All three are equally important for the success of the business.
Let us take for example a dentist!
(No insurance company will insure this guy!!)
What insurance does a dentist need?
Property Insurance
The dental clinic contains expensive equipment. Hence property insurance is required. Insurance is against burglary and fire. To reduce the premium the insurance contract may suggest to place alarm mechanisms and to place equipment against fire. All the equipment should be evaluated and the reimbursement conditions must be set in favor of the dentist.
Does the insurance offer coverage in any event?
For what events does the insurance not offer coverage?
Does the insurance supply temporary equipment to aid the dentist to continue working?
Liability Insurance
However professional the dentist may be, he is human. Therefore dentists are not immune to errors. Liability insurance is required to cover any damages that the dentist is directly responsible for during dental work.
How high is the coverage?
How about insurance for a bank?
Property, Liability ... What other event might occur that requires coverage?
The events that took place on September 11 resulted in a wave of claims against the insurance companies for reimbursement (coverage of losses).
Question: Were the business companies insured against a disaster of this sort? If it this kind of disaster is not explicitly written in the insurance policy then it is open for interpretation.
Now the business companies demand that the insurance policies state the coverage under those conditions. In turn the insurance companies demand DRP (Disaster Recovery Plans) to be applied in the business.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
Sunday, May 4, 2008
Wednesday, April 23, 2008
Players in Insurance
Insurance is a risk management game. To get along with the game one must understand who are the participants and their role. Every participant in this insurance game has his or her own agenda.
Policyholder (insured, insurant, assured – Generally YOU!)
The policyholder’s agenda is an insurance of maximum coverage and minimum premium.
Insurance underwriter
The insurance underwriter’s agenda is to protect the insurance company interests. Usually the underwriter is an employee of the insurance company. The underwriter strives for minimum coverage and maximum premium.
In this conflict the rules of economics kick-in.
Agent
An agent’s agenda is to bring [together] persons or firms (potential policyholders) requiring insurance together with insurance companies who provide it. The agent receives a commission from the insurance company. The agent has the right to bind coverage, hence to legally obligate the insurance company to provide coverage according to the terms and conditions set.
Broker
A broker’s agenda is identical to that of an agent. The difference between a broker and an agent is the right to bind coverage: The broker has no right to bind coverage.
Appraiser
An appraiser should simply assess the value of property in regard to a claim. The appraiser should always be an objective third part factor= party in this matter.
Fact 1
An agent/broker is as important as a lawyer or an accountant in your business.
Fact 2
An agent/broker should be selected wisely. Not every insurance company can supply the appropriate insurance for your business. Therefore not every agent/broker can help your business.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
Policyholder (insured, insurant, assured – Generally YOU!)
The policyholder’s agenda is an insurance of maximum coverage and minimum premium.
Insurance underwriter
The insurance underwriter’s agenda is to protect the insurance company interests. Usually the underwriter is an employee of the insurance company. The underwriter strives for minimum coverage and maximum premium.
In this conflict the rules of economics kick-in.
Agent
An agent’s agenda is to bring [together] persons or firms (potential policyholders) requiring insurance together with insurance companies who provide it. The agent receives a commission from the insurance company. The agent has the right to bind coverage, hence to legally obligate the insurance company to provide coverage according to the terms and conditions set.
Broker
A broker’s agenda is identical to that of an agent. The difference between a broker and an agent is the right to bind coverage: The broker has no right to bind coverage.
Appraiser
An appraiser should simply assess the value of property in regard to a claim. The appraiser should always be an objective third part factor= party in this matter.
Fact 1
An agent/broker is as important as a lawyer or an accountant in your business.
Fact 2
An agent/broker should be selected wisely. Not every insurance company can supply the appropriate insurance for your business. Therefore not every agent/broker can help your business.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
Wednesday, February 20, 2008
How to reduce car insurance premium?
Most insurance companies agree to reduce the premium if proof, suggesting a low chance for a claim, is supplied. Companies agree to reduce the premium not from the goodness of their hearts but for being more competitive compared to other insurance companies.
In every insurance type the parameters to be supplied for reduced premium are different. Specifically related to car insurance, the parameters are:
No Claim Bonus (NCB)
If you have a clean record of no claims then you can get a discount on your quote. Every insurance company sets the discount percentage per number of years with no claim in more or less the same way.
Car specification
The insurance company, based on your car specifics, determines whether statistically you are more likely to make a claim, or in other words, more likely to have an accident. A safer car, a car with statistically less accidents, will require a lesser premium. Note that a high standard car is not necessarily a safe car: The more powerful is the engine, the faster the driver speeds, the higher the chances of having an accident.
Who is insured?
The more people insured the higher is the insurance quote. Add to your insurance policy only those who will really drive your car. Consider a temporary short term insurance for a friend who takes your car for a spin.
Car care
If your car is kept in a closed garage, if your car has an immobilizer, if your car has an alarm mechanism, then the probability of having your car stolen is very low. Following these guidelines will reduce your premium quote.
Location
What is the rate of accidents and thefts in your neighborhood? The lesser the rate the lower the premium. Do not relocate just for that reason, but if you live in a good neighborhood do mention it.
Car usage
How much driving do you do? The more driving you do the higher the risk of having an accident. If you hardly drive then mention it – you might obtain a lower premium quote.
Multiple policies
If you buy one orange then you pay the normal price, but if you buy thousands of oranges then we can cut a deal. The same applies for insurance products. The more insurance products you buy the higher the discount the insurance companies are willing to offer.
In short, ask for a car insurance offer, ask for discount options based on the above parameters in case they apply to you. Only then should you compare the different offers from the insurance companies.
Inform the insurance company when these specifics change for the worse. If you have a claim and at least one parameter given for a reduced premium quote is incorrect at the time of the claim, then the insurance company will not play along.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
In every insurance type the parameters to be supplied for reduced premium are different. Specifically related to car insurance, the parameters are:
No Claim Bonus (NCB)
If you have a clean record of no claims then you can get a discount on your quote. Every insurance company sets the discount percentage per number of years with no claim in more or less the same way.
Car specification
The insurance company, based on your car specifics, determines whether statistically you are more likely to make a claim, or in other words, more likely to have an accident. A safer car, a car with statistically less accidents, will require a lesser premium. Note that a high standard car is not necessarily a safe car: The more powerful is the engine, the faster the driver speeds, the higher the chances of having an accident.
Who is insured?
The more people insured the higher is the insurance quote. Add to your insurance policy only those who will really drive your car. Consider a temporary short term insurance for a friend who takes your car for a spin.
Car care
If your car is kept in a closed garage, if your car has an immobilizer, if your car has an alarm mechanism, then the probability of having your car stolen is very low. Following these guidelines will reduce your premium quote.
Location
What is the rate of accidents and thefts in your neighborhood? The lesser the rate the lower the premium. Do not relocate just for that reason, but if you live in a good neighborhood do mention it.
Car usage
How much driving do you do? The more driving you do the higher the risk of having an accident. If you hardly drive then mention it – you might obtain a lower premium quote.
Multiple policies
If you buy one orange then you pay the normal price, but if you buy thousands of oranges then we can cut a deal. The same applies for insurance products. The more insurance products you buy the higher the discount the insurance companies are willing to offer.
In short, ask for a car insurance offer, ask for discount options based on the above parameters in case they apply to you. Only then should you compare the different offers from the insurance companies.
Inform the insurance company when these specifics change for the worse. If you have a claim and at least one parameter given for a reduced premium quote is incorrect at the time of the claim, then the insurance company will not play along.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
Tuesday, February 12, 2008
Car Insurance Coverage
The sole purpose of an insurance policy is to protect yourself and your family members in the event of loss suffered by you or others. If the level of protection is too low then you might be jeopardizing all you have. Analyze the insurance coverage to determine the level of protection you are being offered.
Read the insurance policy and fill out the following tables:
Read the insurance policy and fill out the following tables:
Bodily Injury Liability (BI)
BI covers the liabilities for the bodily injuries or death of other people for which you are held responsible. BI provides for a legal defense if another person decides to file a lawsuit against you. BI will cover medical bills, loss of income or pain and suffering.
Property Damage Liability (PD)
PD covers liability for other people’s property damage for which you are held responsible. PD provides for a legal defense if another person decides to file a lawsuit against you.
Comprehensive Coverage (COMP)
COMP covers your car for losses resulting from incidents other than collision.
Collision Coverage (COLL)
COLL covers your car for losses resulting from collision with other cars or objects.
Obviously there are more sections that should be reviewed in the insurance policy. In principle you should make a list of all events, their probability of occurrence as they apply to you, and the amount of “support” you are set to receive from the insurance company.
Disclaimer:
The information in this blog is provided for information purposes only. There are not intended as a substitute for informed professional advice.
Wednesday, January 2, 2008
Compare Insurance Policies
Why is it that when two guys compare cars they go into small details that justify the money they spent on it? The talk goes from engine consumption to the luxury that the CD player within the car offers. But when it comes to the car insurance they only compare prices. Why is that?
The most probable reason lies in the lack of awareness and knowledge regarding car insurance and insurance in general.
What is insurance?
Insurance is a contract between you the insurer and the insurance company. The contract is a legal document that sets down the rights and obligation of each side. As with many other legal documents, there can be many tricks and loopholes along the way.
The contract, aside from specifying how much premium you (the insurer) have to pay (payment for being insured), determines what the insurance company has to supply under specific conditions.
The contract, also referred to as the insurance policy, contains three elements that need your attention:
“Premium” – How much do you pay for the insurance company?
“Specific Conditions” – What are the conditions that require the insurance company to take action? Hamlet would say: “ay, there’s the rub.”
“Supply” – If the “Specific Conditions” are met, then what do you get? When? How? The supply is usually a reimbursement of money and/or services.
Now, when you compare insurance offers, do not just compare insurance quotes that is the “Premium”, but also the “Specific Conditions” and the “Supply”. When the “Premium” is low then there is a high chance that the “Specific Conditions” and the “Supply” specifics are in favor of the insurance company. When the “Premium” is high then it is more likely that the “Specific Conditions” and the “Supply” specifics are less in favor of the insurance company. The insurance policy can be regarded as a game based on chance in which both parties (the insurer and the insurance company) juggle between these three parameters to reduce the chance of loss.
Usually the “Specific Conditions” and the “Supply” lie in the territory of lawyers. Therefore a simple fellow might have a problem following or determining whether there is a catch. In other words, you have to read the contract very carefully, and if it is beyond your comprehension, you ask for professional assistance.
Suppose you found an insurance policy with a very low “Premium” for your car. And let us suppose, just suppose, that your car broke down on the way to work. Let us ask the following questions:
Question 1:
Does the insurance policy include towing service? If so, does the insurance company pay for the towing service directly or do you have to pay first and send the insurance company a receipt for reimbursement?
Well, your car is finally in the garage and the mechanic examines your car and specifies the damage and the required treatment.
Question 2:
Do the “Specific Conditions” apply? In other words, does the insurance policy cover the damage described by the mechanic? Did you uphold the prior conditions required by the insurance company? (Testing, installing a device, or following some rule mentioned in the insurance policy).
Suppose you pass the requirements of the “Specific Conditions” with flying colors. And here comes question number…
Question 3:
What is the “Supply”? Or in other words, how much money is the insurance company required to pay for the damage? Are they required to pay you 100% of the cost, or maybe 70% or just 30%?
Question 4:
Do you have to pay to the garage now and get reimbursed later? Or, do you pay your part and the insurance company pays the rest to the garage directly?
Are we done?! Well.… No! It takes several days for the garage to fix your car.
Question 5:
Is the insurance company required to supply you with a replacement? You have to drive to work and back every day. Maybe you have to take the bus.
The purpose of this Blog other than promoting Google advertisements is to open your eyes regarding insurance. When you have the chance to talk with a friend about insurance, do mention the “Premium” but do not let it be the highlight of the conversation.
This rationale does not apply only for car insurance but also for other types of insurance policies.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
The most probable reason lies in the lack of awareness and knowledge regarding car insurance and insurance in general.
What is insurance?
Insurance is a contract between you the insurer and the insurance company. The contract is a legal document that sets down the rights and obligation of each side. As with many other legal documents, there can be many tricks and loopholes along the way.
The contract, aside from specifying how much premium you (the insurer) have to pay (payment for being insured), determines what the insurance company has to supply under specific conditions.
The contract, also referred to as the insurance policy, contains three elements that need your attention:
“Premium” – How much do you pay for the insurance company?
“Specific Conditions” – What are the conditions that require the insurance company to take action? Hamlet would say: “ay, there’s the rub.”
“Supply” – If the “Specific Conditions” are met, then what do you get? When? How? The supply is usually a reimbursement of money and/or services.
Now, when you compare insurance offers, do not just compare insurance quotes that is the “Premium”, but also the “Specific Conditions” and the “Supply”. When the “Premium” is low then there is a high chance that the “Specific Conditions” and the “Supply” specifics are in favor of the insurance company. When the “Premium” is high then it is more likely that the “Specific Conditions” and the “Supply” specifics are less in favor of the insurance company. The insurance policy can be regarded as a game based on chance in which both parties (the insurer and the insurance company) juggle between these three parameters to reduce the chance of loss.
Usually the “Specific Conditions” and the “Supply” lie in the territory of lawyers. Therefore a simple fellow might have a problem following or determining whether there is a catch. In other words, you have to read the contract very carefully, and if it is beyond your comprehension, you ask for professional assistance.
Suppose you found an insurance policy with a very low “Premium” for your car. And let us suppose, just suppose, that your car broke down on the way to work. Let us ask the following questions:
Question 1:
Does the insurance policy include towing service? If so, does the insurance company pay for the towing service directly or do you have to pay first and send the insurance company a receipt for reimbursement?
Well, your car is finally in the garage and the mechanic examines your car and specifies the damage and the required treatment.
Question 2:
Do the “Specific Conditions” apply? In other words, does the insurance policy cover the damage described by the mechanic? Did you uphold the prior conditions required by the insurance company? (Testing, installing a device, or following some rule mentioned in the insurance policy).
Suppose you pass the requirements of the “Specific Conditions” with flying colors. And here comes question number…
Question 3:
What is the “Supply”? Or in other words, how much money is the insurance company required to pay for the damage? Are they required to pay you 100% of the cost, or maybe 70% or just 30%?
Question 4:
Do you have to pay to the garage now and get reimbursed later? Or, do you pay your part and the insurance company pays the rest to the garage directly?
Are we done?! Well.… No! It takes several days for the garage to fix your car.
Question 5:
Is the insurance company required to supply you with a replacement? You have to drive to work and back every day. Maybe you have to take the bus.
The purpose of this Blog other than promoting Google advertisements is to open your eyes regarding insurance. When you have the chance to talk with a friend about insurance, do mention the “Premium” but do not let it be the highlight of the conversation.
This rationale does not apply only for car insurance but also for other types of insurance policies.
Disclaimer:
The information in this blog is provided for information purposes only. They are not intended as a substitute for informed professional advice.
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