Why does my credit rating affect how much my insurance costs?
This is a great question, and one that our customers ask frequently. There have been a number of studies in Texas and other states that have shown a direct relationship between credit and claims. The state of Texas allows credit as a rating factor because the impact of credit can be proven like other factors including prior claims, driving experience or the age of a home.
For example, we know that more young drivers will have accidents than experienced drivers. Even though not every young driver will have an accident, they all pay more for insurance. And everyone else pays less. The same is true when credit ratings are used to develop premium for auto and homeowners policies. Those with good credit ratings typically pay less for their policies.
Why is my neighbor’s homeowners insurance premium less than mine?
Homeowners policies are like cars. There are different types with different options. And all of those options affect the premium. Your neighbor may have chosen a higher deductible, or chosen to buy a policy that does not provide as much coverage, or chosen to buy a lower amount of insurance.
Should I purchase the Loss Damage Waiver offered by the rental agent when I rent a vehicle?
Rental Car Coverage
This is a great question, and one that our customers ask frequently. Whether you rent a vehicle for personal use while on vacation, or as a substitute while your vehicle is out of commission for repair or service, or for business use while out of town, there comes that time when you’re standing at the rental car counter and the agent asks the inevitable question: “Do you want to buy our loss damage waiver (or our insurance coverage)?”
Most loss damage waiver (LDW) fees are outrageous. Sometimes they cost more than the daily rental fee itself. But are they worth the additional cost? The answer may depend on your tolerance for risk and inconvenience. You must decide if the extra cost is reasonable, considering the potential for an uninsured loss should something happen to the vehicle during the term of the rental contract, and the resulting inconvenience of dealing with the rental company and your insurance company to satisfy the rental company’s demands.
First, you should know that the LDW is not actually an insurance policy. It is a waiver of the rental company’s requirement in the rental contract that you bring the vehicle back in the same condition as when it left their lot. Most rental contracts make you responsible for any damage to the vehicle, including theft and weather-related damage. When you purchase the LDW, the rental company is removing that provision from the contract on a conditional basis.
If you don’t purchase the LDW and the vehicle is damaged, here are some of the costs for which you could be held responsible under the rental contract:
Cost to repair damage to the vehicle, or the full value of the vehicle if it is a total loss
“Diminished value” of the vehicle – the difference between what the vehicle was worth before the accident and what it is worth after repairs have been made
“Loss of use” – the amount of money the rental company loses on rental fees while the vehicle is out of service for repair or replacement
Administrative or loss-related expenses incurred by the rental company, such as fees for towing, appraisal, and claims adjustment, plus general office expenses for handling the paperwork
Whether all or any of these costs are covered by your personal auto policy depends on several factors. One big factor is the type of personal auto policy you have purchased. Insurance companies sell different policies in Texas and the coverage and exclusions are not the same from one company to the next. Some companies sell a policy that covers damage to the rented vehicle in the liability section of the policy, while others sell a policy that covers damage to the rented vehicle in the physical damage section. Each type of policy is discussed separately below.
We encourage you to ask your agent which type of policy you have, because as you will see, the differences are significant.
Reasons to purchase the Loss Damage Waiver when you have a policy that covers damage to the rental vehicle in the liability section:
What is Deductible, Co pay, Coinsurance and Out of Pocket Maximum?
Deductible
The deductible is the amount an individual must pay for health care expenses before insurance covers the costs. In most cases insurance plans are based on yearly deductible amounts. Co Pay and Deductible are typically exclusive of each other. If a certain service has a co pay then typically the policy deductible won’t be applicable for that service. Typically the deductible applies to the hospitalization and Lab & X-ray service. If the plan (like an HSA plan) does not have co pays for doctor’s visits or prescription drugs then the deductible will typically also apply for these services.
Co Pay
Co pay is a predetermined fee that an individual pays for health care services, in addition to what the insurance covers. For example, some plans require a $30 copayment for each office visit, regardless of the type or level of services provided during the visit. Copayments are not usually specified by percentages. Co Pays may also be applicable to Prescription Drug Benefit.
Coinsurance
Coinsurance refers to money that an individual is required to pay for services, after a deductible has been paid. Coinsurance is often specified by a percentage. For example, the insured pays 20 percent toward the charges for a service and the insurance company pays 80 percent.
Out of pocket Maximum
A predetermined limited amount of money that an individual must pay out of their own savings(towards the deductible, coinsurance etc.), before an insurance company will start paying 100 percent for an individual’s health care expenses.
Note: Information provided here is for general information purposes only. Please refer to your policy contact your agent for specific questions regarding coverage.
