By Ken May
When I started in the insurance business way back in 1982, the two things that excited me most were the insurance industry itself and running a small business for the first time. Believe it or not, the various facets of the insurance business are fascinating and being my own boss for the first time was both frightening and stimulating.
As I continued my journey in this business, technology became a magical tool which, as you all know, has accelerated to areas that I never dreamed of just a few years ago (when I started, a piece of carbon paper and a paper clip was the technology of the day).
Today, the latest technology still fascinates me but the one constant for me over the past 29 years that always piqued my interest has been human behavior. Observing how people react to a myriad of situations really interests me and I must admit, sometimes our clients give me a lot of joy and other times, not so much.
We are all experiencing a very difficult economy. And it seems that many of my clients in the North San Diego Tri-City area have been hit harder than others. My family and I, my employees, my friends, and my business have suffered as a result. But it’s important to remember to keep perspective, especially during this economical crisis.
I spoke with another insurance professional recently who told me that many of the clients they have at their company (a large nationally known direct writer) are reducing their liability limits to state minimums, even though they own a house or other property! A horrible move!
Recently, a client cancelled his auto insurance policy with us because he got a better “deal” with another agent. What our client didn’t understand was that he purchased a basic limits policy and his policy with us had substantial coverage, enough so that he could keep his umbrella policy (an excess limits policy) to protect his house, his business, and all of his assets. We had no choice but to cancel the umbrella policy because his primary policy was woefully inadequate to qualify for the umbrella policy. So now this guy who owns a house, rental properties, a business, and other assets is nowhere near adequately insured and could lose everything. Why? Because he lost sight of the big picture and put everything he owned in jeopardy. Was this really a great “deal”?
This morning, we had a gentleman come into the office very upset that the company that we placed him with paid out on a very minor claim, even though he was not charged for the “fender bender” that he was involved in. I explained that this was strictly a business decision that all companies make every day. His company decided that it is better to pay out a little now rather than pay for a big fight in court and potentially pay out a lot of money later. Then he became upset that he is being charged $75.00 for roadside assistance that he never asked for. I calmly explained that his company decided to provide all of their policyholders roadside assistance coverage for up to $75.00 as long as their vehicle has collision coverage at no additional charge. He reacted by cancelling his policy.
So here we have a situation where an insurance company professionally and properly handles a claim in his behalf and even though he was at-fault for this minor incident, didn’t charge him on the policy or his driving record for the accident. And, he was receiving additional coverage at no cost to him simply because the company feels that it gives their clients an extra incentive to stay insured with them.
There was no reasoning with this man. He had his mind made up that no matter what I said to him, he was going to show me by cancelling his policy. And I’m sure he went to another company where he is paying more for less coverage. Why? Because he lost perspective. Is he just blowing steam over what life has dealt him lately? Maybe, but why do something foolish that only hurts him further?
Recently, a young couple insured with us experienced a terrible accident. The problem was their insurance had been cancelled due to non-payment despite written warnings from the insurance company and numerous phone calls from us. They felt like they were successfully “gaming” the system when the worst thing possible happened. They are now personally responsible for the other party’s damages and medical expenses and are still paying a car payment on a car that no longer exists. This is a case where their perspective was obscure.
A few years ago, I worked at a start-up insurance general agency in Texas. I went “all-in” on this endeavor. I sold my house in Carlsbad and my prior insurance agency in Oceanside for what seemed like a dream opportunity. Unfortunately, the insurance division of the company went out of business after 3 ½ years and my family and I lost everything. In fact, we dragged ourselves back to California on credit cards to start over again and start Ken May Insurance Services.
It would have been easy for me to lose my perspective, to only look at the horrible short-term situation we were in and not the long-term possibilities. What I am trying to say is that I understand what we are all going through. I’ve been knocked to the floor but by keeping my perspective, I’ve been able to get up once again, dust myself off, and keep moving forward.
So as things get tough financially, please remember to keep your perspective. Before making a knee-jerk decision on anything financial, check with your advisors. In the case of your insurance, please call us before making changes that you may regret later. We are able to assist you in making the right choices emotion-free which otherwise could take you in the wrong direction. If we don’t help you in making the right choices and keeping you properly protected from potentially catastrophic financial decisions, then we aren’t doing our job and you rightfully need to find somebody else to take care of you.
Be careful. There are many insurance “professionals” out there who have lost their own perspective or are just plain ignorant that will sell you a bill of goods with nobody’s interest in mind except their own. Keep a level head, don’t panic, and feel free to stop into the office, call us, or go onto our web site at kenmayinsurance.com for answers. If we don’t keep our perspective (and yours), fire us. If you are happy with us, please tell your friends.
Ken May has been serving the North San Diego County insurance community since 1982 except for that brief 3 ½ year stint in Texas. He is also the president of the American Agents Alliance, a non-profit professional insurance agent’s organization that originated in California in 1963. And over 60% of those that leave Ken May Insurance Services for any reason come back later.
By Chris Stankiewicz
Let’s talk cars. In this first review we are going to look at a segment referred to as the 5 door hatchback. Back in the day, the 5 door hatchback was referred to as a station wagon, two words that will bring tears to the eyes of a car guy turned family man. By the way, about 6 months ago I was cruising to work in a 1992 Buick Roadmaster, one of last great, big station wagons which came with a big V8 that is currently getting 18 miles to the gallon!
The 5 door hatchback segment is an exciting class of vehicles and just about every automobile manufacturer has one on the market today. These vehicles are versatile, roomy, and most models allow you to lay down the rear seats for more space; which is great if you want to transport larger than normal sized objects. One of the drawbacks to this segment is that some of the vehicles can be underpowered, with a majority of automobile manufactures putting in small 4 cylinder engines for the benefit of better mpgs. What I love about this segment of cars is the exterior design. A few of my favorites are Mazda3 hatchback, Ford Focus hatchback, and Nissan Juke, which is a cross between a 5 door hatchback and a crossover. Besides the styling, each of the three vehicles mentioned have potent engines with the Mazda Speed 3 Hatchback’s 3.2L engine delivering 263 horsepower.
Thanks for reading! Comments and suggestions are encouraged.
Chris Stankiewicz has been a licensed insurance agent at Ken May Insurance Services since 2008 and a car guy since his first hot wheel. He specializes in personal lines insurance and is always willing to answer your insurance questions.
Don’t all of the agents have the same prices? Have access to the same companies? Offer the same customer service? Aren’t they cut from the same gray, boring cloth? Isn’t the whole thing one big scam?
Well, believe it or not, sometimes the answer is yes but most times it’s no and you need to be careful because the agent you choose is just as important as the company you are with.
Now, I’m not talking about the type of agent you work with but more importantly, the quality of the agent you choose to work with.
But it is worth a brief discussion on the different types of agents out there;
First, you have your Direct Writers. These are companies like the “Gecko” and “Flo” who cut out the agents and use the internet and call centers. This may work for somebody with just basic needs who don’t mind being 12th in line on the phone and working with different people who generally don’t have a lot of insurance experience and the employee turnover rate is high but hey, people have to start somewhere! And have you noticed that the lizard has opened up a few retail shops (I guess after dissing the independent agents for years, they finally realize the value of an agent). Even Progressive plays both sides of the fence by having Progressive Direct and working with independent agents. We call these “Pigs at the Trough”.
Next, you have the Captive Agents. These are companies like State Farm, Allstate, and Farmers. I know many great captive agents but because they can only sell insurance through their company (thus the reason that they are captive by these companies), I have seen numerous times where a captive agent will cut coverages to dangerous levels to be competitive with independent agents on price, primarily in the homeowners market. This is a very dangerous practice for the consumer which goes against what being an agent is supposed to be about.
Finally, you have your Independent Agents. These are agents like us (though many of our clients believe that we are owned by Mercury Insurance) who have many companies to choose from to be able to tailor your needs to the right program. Among the Independent agents you have preferred agents and non-standard agents. Non-standard agencies insure a lot of high risk or young drivers while preferred agents insure many of the low risk drivers who will usually have multiple policies with the same agent. Non-standard agents do not have access to many, if any, preferred companies while the preferred agents can insure both the preferred drivers and preferred property risks as well as the high risk drivers and property risks. Ken May Insurance Services is a preferred independent insurance agency who can cover the clean, preferred risks as well as the high risk clients. It’s all a matter of having quality programs in which to place each risk.
Why do some agents resort to cheating?
It’s simple really. It’s because they don’t have the experience, the expertise, or the ethical standards to be appointed with preferred companies so they feel that they have to cheat and cut corners to compete with agents who have years of experience and have shown the ability, professionalism, and ethical standards to have earned appointments with the top companies. They don’t have the client’s best interest in mind and will do almost anything to get the business even if it means engaging themselves and the unwitting client in insurance fraud and the real possibility of having a future claim denied. After all, the client signs the application which means that he states that the information on the application is true to the best of his knowledge.
Let me give you a real-life example!
Years ago, I briefly worked at an agency in Texas that I’ll call “The Cowboy Agency”. This agency wrote mostly high-risk and/or young drivers. One morning, a young lady called for an auto insurance quote. She was 16 years old and had already had 4 at-fault accidents! And of course, Daddy just bought her a brand new Ford Mustang GT convertible (Daddy wanted to be popular and cool instead of being a parent). The best price I could come up with was $800 every month! And you thought your payments are high!
I showed the quote to a co-worker (it’s not every day that a risk like this comes along) and she asked if she could take a look at the quote on my computer. I agreed and then she asked if she could call the young lady. Now I’m getting really curious so I agreed again. My co-worker then requoted the young lady a price of $450 per month. Incredulous, I asked how in the world she was able to come up with a price almost half as much as the one I came up with. First, she said that the girl is no longer 16 but she is now 26 because the company doesn’t ask for a copy of the drivers license. And, she now has a clean record because the company doesn’t look up driving records. And, she is now married with the name of a fictitious spouse on the excluded drivers list. Finally, for a final touch, she made a forged copy of prior insurance for the young lady to get an additional discount. With my mouth gaping wide open, I watched a single 16 year old with a horrible driving record (and a shiny new sports car from her Daddy) become a 26 year old married woman with a clean driving record with a long history of prior insurance. I left “The Cowboy Agency” shortly after this.
How do “bad apple” agents get away with this?
The sad truth is that the California Department of Insurance (DOI) simply does not have the resources to combat this type of fraud effectively. Even though the DOI tripled in size when prior insurance commission John Garamendi was in office, the department can’t go after the minnows when there are so many whales out there. And, many consumers don’t see the harm when they have a much lower rate so they don’t complain to the DOI. It’s like swimming in the pretty ocean not paying attention to the sharks lurking below.
How can I protect myself and my family from unscrupulous agents?
Ken May has been serving the North San Diego County insurance community since 1982 except for that brief 3 ½ year stint in Texas. He is also the president of the American Agents Alliance, a non-profit professional insurance agents organization that originated in California in 1963. And over 60% of those that leave Ken May Insurance Services for any reason come back later.
This article will explain betterment as it relates to a claim involving your insured automobile.
What is Betterment?
Webster’s Dictionary defines betterment as:
1) making or becoming better
2) an improvement that adds to the value of a property or facility
The goal of insurance is to put you back in the position you were in prior to a loss. In other words, you should not profit or gain from an insured loss. For example, in an automobile collision the maximum amount your insurance company is going to pay is the cost to repair your vehicle to its pre-collision condition, or an amount equal to the current vehicle value if the vehicle is deemed a total loss.
If you have owned your vehicle for a few years, it is not worth the same amount as when it was new. It has experienced some degree of wear and tear. Over time some parts wear out and need to be replaced as part of the regular maintenance of your vehicle. In the repair process after a collision, if partially worn parts are replaced with new parts you would have profited (gained) from the loss. Since the repair shop should be using new parts, betterment is a reduction in the reimbursement by the insurance company for the cost of new parts so that the settlement amount reflects and is equal to the value of the existing (pre-accident) parts.
Let’s say that you paid $800 for a new set of tires several years ago. You get in an accident and as a result you need new tires. The insurance company appraiser completes an estimate of the cost to repair your vehicle. He notes that the tires are worn and 50% of the tread is gone. You have your vehicle repaired and replace the tires. Your insurance company is going to deduct $400 (50% of $800) of the cost of the new tires from their payment to you. That $400 is called betterment. The tires in your loss only had 50% of their value left so they were only worth $400. If the insurance company paid to put new tires on your car you would be in a better position than you were prior to the loss. The $400 deduction puts you back in the same financial position that you were in prior to the loss.
Examples of parts that the insurance industry typically considers subject to betterment include:
-Brakes have an average life of 50,000 miles. Betterment is calculated at 2% per 1,000 miles.
-Transmissions have an average life of 150,000 miles. Betterment is calculated at .667% per 1,000 miles.
-Exhaust Systems have an average life of 10 years. Betterment is calculated at 10% per year.
-Convertible Tops have an average life of 10 years. Betterment is calculated at 10% per year.
Betterment is the financial adjustment made in a loss settlement to reflect the depreciation of value of a vehicle part as a result of prior use.
**Special thanks to Carnegie General Insurance Agency for today’s article
People come before cars so the first thing to do after an auto accident is check for injuries – to you, your passengers and the occupants of any other involved vehicles. If there are injuries that may be serious, call 911 for an ambulance and police or ask someone nearby to do it. Even if there are no injuries, police may need to attend to take an accident report. If you can, obtain the names of any witnesses before they leave the area. If you have a camera or mobile phone with camera, photograph the vehicles – unless it’s unsafe to do so.
Do not discuss the facts or the evidence with the other motorists involved and do not admit liability. Doing so may affect your insurance claim. When the police arrive provide them with a factual account of the accident without admitting liability. Exchange details with the other motorists involved in the accident. Obtain their names, addresses and phone numbers, the name of their insurer as well as the licence plate number and VIN (vehicle identification number) if possible.
Contact Ken May Insurance Services as soon as possible, preferably from the scene of the accident while the police are still there .If this cannot be done, then do it as soon as possible afterwards.
Taking these steps you will help Ken May Insurance Services company to process your claim as quickly as possible.