Courtesy of iii.org

Anticipation that a COVID-19 vaccine – combined with social distancing, mask wearing, and other protective measures – may soon lead to increased travel revives our need to think about travel insurance.

Even before COVID-19, travel insurance purchases were on the rise, but primarily for trip cancellation coverage – the very product that wound up disappointing many who had their holiday plans disrupted by the virus. Most policies exclude pandemics or fear of travel, which made them practically useless after the outbreak.

Pandemic risk wasn’t on many travelers’ radar screens before the coronavirus struck – any more than the many common illness, injuries, or causes of death that ought to have prompted them to add medical and medical evacuation to their travel coverage. A report by the U.S. Travel Insurance Association (USTIA) last year found Americans spent nearly 41 percent more on travel insurance in 2018 than in 2016. However, trip cancellation/interruption coverage accounted for nearly 90 percent of the benefits purchased. Medical and medical evacuation accounted for just over 6 percent.

People don’t want to think about illness, injury, or death when planning a pleasure trip – still less pay for an improbable (at the time) threat like a global pandemic.

Travelers who wanted to cover all their bases could have purchased cancel for any reason (CFAR) coverage, which provides some reimbursement (usually 50 to 75 percent) if you cancel, no matter what reason. Before the pandemic, CFAR would have cost 40 to 60 percent more than a standard travel insurance policy. It may be even more expensive now.

Airlines offering COVID-19 coverage

Some airlines have begun offering COVID-19 coverage. This week, Cathay Pacific announced that it is providing free coverage to all passengers.

“Customers who fly with Cathay Pacific from Dec. 7 to Feb. 28, 2021 will be covered for medical expenses related to a COVID-19 diagnosis incurred while overseas,” Insurance Journal reports. “The free cover will be automatically applied when customers book their flights.”

Air Canada recently announced that members of its Aeroplan affinity program making eligible new bookings originating in Canada will receive COVID-19 emergency medical and quarantine insurance. Emirates introduced a similar program in July that it says is free of charge and covers all passengers flying to any destination in any aircraft. The airline recently announced that it has expanded the coverage, adding new features from December 1.

It’s not surprising to see airlines incorporating a COVID-19 “value add” to help boost bookings by an anxious public, and it will be interesting to watch this new business scheme play out. But, lest eager travelers forget, more routine risks that you probably weren’t insuring against before pandemic remain.

Falls, crashes, and drownings

“Globally, an estimated 37 million unintentional falls requiring medical treatment occur each year” write researchers in the journal Injury Epidemiology, citing 2018 World Health Organization (WHO) data. And falls aren’t the most common cause of injury and death on vacation. Research indicates the top two causes of death are automobile accidents and drownings.

Out of the one billion tourists traveling globally each year, it is estimated that 30 to 50 percent are either injured or become ill while traveling abroad.

Don’t let yourself be blindsided by hazards that can be easily avoided or mitigated. Understand the risks your travel plans may entail and insure against them appropriately.

Courtesy of iii.org

Alcohol is a major factor in traffic accidents. Based on data from the U.S. Department of Transportation, National Highway Traffic Safety Administration (NHTSA), there was an alcohol-impaired traffic fatality every 51 minutes in 2015.

Alcohol-impaired crashes are those that involve at least one driver or a motorcycle operator with a blood alcohol concentration (BAC) of 0.08 percent or above, the legal definition of drunk driving. According to NHTSA 10,265 people died in alcohol-impaired crashes in 2015, up 3.2 percent from 9,943 in 2014. In 2015 alcohol-impaired crash fatalities accounted for 29 percent of all crash fatalities.

The definition of drunk driving had been consistent throughout the United States until March 2017. All states and the District of Columbia defined impairment as driving with a BAC (blood alcohol concentration) at or above 0.08 percent. In addition, they all have zero tolerance laws prohibiting drivers under the age of 21 from drinking and driving. Generally the BAC limit in these cases is 0.02 percent. In March 2017, the governor of Utah signed a bill, effective December 30, 2018, that lowered the limit defining impaired driving for most drivers to 0.05 percent BAC, the lowest in the nation.

Anti-drunk-driving campaigns especially target drivers under the age of 21, repeat offenders and 21-to 34-year-olds, the age group that is responsible for more alcohol-related fatal crashes than any other. Young drivers are those least responsive to arguments against drunk driving, according to NHTSA.

To make sellers and servers of liquor more careful about to whom and how they serve drinks, 42 states and the District of Columbia have enacted laws or have case law holding commercial liquor servers legally liable for the damage, injuries and deaths a drunk driver causes. Thirty-nine states have enacted laws or have case law that permit social hosts who serve liquor to people who subsequently are involved in crashes to be held liable for any injury or death. (See chart below and Background.)

Recent developments

• Latest data from the National Highway Traffic Safety Administration (NHTSA) indicates that the 10,265 alcohol-impaired fatalities in 2015 accounted for about one out of three highway deaths (29 percent) on U.S. roads. There were 9,943 such fatalities in 2014.
• Ignition interlock systems require drivers to blow into a breathalyzer-like device to ensure the individual is sober before allowing the vehicle to start. According to a report released in January 2017 by the Johns Hopkins Bloomberg School of Public Health, traffic fatalities have declined by 7 percent in states that mandate ignition interlocks for first-time drunken-driving offenders. The researchers studied traffic fatalities for about five years before states began passing interlock laws in the late 1980s through 2013, when all states required them under some circumstances. See Background, Repeat Offenders.
• Drunk Driving by Gender: Latest NHTSA data show that 14 percent of women drivers involved in fatal crashes in 2015 (1,761 drivers) were alcohol-impaired, only 1 percentage point lower than in 2006. In comparison, 21 percent of male drivers involved in fatal crashed were alcohol impaired in 2015, down from 24 percent in 2006.
• Drunk Driving by Age: According to data from NHTSA, in 2015 the percentage of drivers in fatal crashes who were alcohol impaired was highest for 21 to 24 year old drivers, at 28 percent, followed by 25 to 34 year old drivers, at 27 percent, and 35 to 44 year old drivers, at 23 percent. The percentage of alcohol-impaired drivers in fatal crashes was 19 percent for 45 to 54 year olds, 16 percent of 16 to 20 year olds, 14 percent for 55 to 64 year olds, 9 percent for 65 to 74 year olds and 6 percent for drivers over the age of 74.
• Drunk Driving by Vehicle Type: NHTSA data for 2015 show that 27 percent of motorcycle drivers involved in fatal crashes were alcohol impaired, compared with 21 percent of passenger car drivers and 20 percent of light truck drivers. Only 2 percent of large-truck drivers involved in fatal crashes in 2015 were alcohol impaired.
• Social Host Liability: The Massachusetts Supreme Court ruled in February 2012 that social hosts could be held liable for off-premise injury to people caused by the drunk driving of a guest only if the host served alcohol or made it available. People who host “bring your own” parties are free from liability, even if the guest is underage. The court rejected an attempt by the parents of an injured 16-year-old to sue a party’s 18-year old host. The younger person suffered injuries in a crash in a car driven by someone who brought his own alcohol to the party. At issue was the fact that the driver, not the party host, supplied the liquor. Although the lawsuit contended that the host should be found negligent for allowing the driver to drink at her home, the court said that earlier rulings showed that hosts can’t be responsible for their guests’ drinking if they don’t control the supply of alcohol. Massachusetts law and court cases have held social hosts liable if they supply alcohol (See chart: STATUTES OR COURT CASES HOLDING ALCOHOLIC BEVERAGE SERVERS LIABLE).
• Also in February 2012 the New Mexico Supreme Court said that circumstantial evidence of a driver’s intoxication was sufficient to support a jury finding that the driver was intoxicated, overruling a decision in a 2004 case. Evidence presented in the earlier trial showed that a driver who struck and killed a motorcyclist had a 0.09 percent blood alcohol content five hours after the crash. The owners of the gas station where the driver worked and consumed a number of beers bought at the gas station pleaded ignorance of the driver’s condition. The court ruled that the blood test results were enough to prove that the driver was intoxicated. The ruling holds liquor sellers responsible for liability where evidence is available under the existing dram shop law.

Courtesy of iii.org

Natural disasters (such as a flood, earthquake, hurricane or tornado) sometimes invite another type of disaster: “Storm Chasers” who try to profit from others’ unfortunate circumstances. These profiteers take many forms – from workers posing as qualified contractors to “volunteers” trying to help only themselves to lawyers and public adjusters offering to take over your claim. If you start having second thoughts about anyone who has offered assistance after disaster strikes, here are some tips to get you back on course:

• Never feel pressured to make a decision.
  While the need to recover quickly is understandable, do not succumb to a high-pressure sales pitch. If you’ve signed an agreement or contract, remember the Federal Trade Commission has rules protecting consumers that allow you to cancel a contract up until midnight of the third business day after entering into it. This applies to door-to-door sales contracts for more than $25, as well as sale contracts for more than $25 made at any place other than a seller’s usual place of business. Additionally, states have similar rules to help consumers having second thoughts on the contracts they’ve signed.
• Think carefully about signing over your claim to an outsider.
  This may sound like a good idea, since it appears to free you from handling the details of disaster recovery. However, what often happens when a third-party (which can be a contractor or public adjuster) takes over your claim is that you lose control of it and repair costs may be greatly inflated, delayed or not in compliance with building codes. The desire to get the job done right the first time makes a good case for the homeowner to stay involved in the process.
• Always deal with a licensed, insured contractor for both temporary and permanent repairs.
  Be certain to have a pro handle your job. Unlicensed individuals may actually cause more damage to your property. And, if they are injured on your property, they may hold you liable if they do not have their own insurance. You can request to see their license and verify it with state or county officials. Unlicensed contractors can be reported to your state’s licensing board. Keep receipts for temporary repairs, as your insurer will reimburse you for these expenses.
• Know that your insurer is an on-call advisor to help you through every step of the claims process.
  Home and business insurance policies comes with claims services, so consult your insurer as soon as possible after disaster strikes. Disaster claims are handled based on the severity of damage, so those most impacted get priority. That is why it is important to provide an accurate preliminary account of the damage when you make the initial call to your insurer. Also, be sure to mention any circumstances that may necessitate expedited claims handling, such as special needs situations. Contact the department of insurance in your state if you have complaints.
• Report the scam to local police and your state insurance department.
  These scams can happen to anyone, so don’t hesitate to contact authorities. Many states also have consumer affairs departments to assist you in answering questions, protecting your interests and filing charges, if necessary.

Additional Resources

• Federal Trade Commission – Scam Alerts consumer.ftc.gov/scam-alerts
• Federal Bureau of Investigation – Common Fraud Schemes fbi.gov/scams-safety/fraud
• gov – Consumer Frauds and Scams www.usa.gov/topics/consumer/scams-fraud.shtml
• Better Business Bureau – Scam Stopper bbb.org/council/bbb-scam-stopper/

Courtesy of iii.org

Avoid these pitfalls when buying auto, home, flood and renters insurance.

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Saving money feels good. And shopping around when you’re looking for insurance coverage is a great way to do it. However, simply reducing your coverage or dropping important coverages altogether is like diet without exercise—focused only on numbers, not on results. Don’t risk ending up dangerously underinsured and on the hook for much bigger bills in the event of a disaster.

Following are the five most common auto, home, flood and renters insurance mistakes people make, along with suggestions to avert those pitfalls while still saving money (we call them, “better ways to save”):

1. Insuring a home for its real estate value rather than for the cost of rebuilding.

When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings—no matter what the real estate market is doing.

A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your premium payments.

2. Selecting an insurance company by price alone.

It is important to choose a company with competitive prices. But be sure the insurer you choose is financially sound and provides good customer service.

A better way to save: Check the financial health of a company with independent rating agencies (some well-known ones: A.M. Best, Moody’s), and ask friends and family members about their experiences with insurers. Select an insurance company that will respond to your needs and handle claims fairly and efficiently.

3. Dropping flood insurance.

Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. You may not be aware you’re at risk for flooding, but keep in mind that 25 percent of all flood losses occur in low risk areas. Furthermore, yearly weather patterns—spring runoff from melting winter snows, for example—can cause flooding.

A better way to save: Before purchasing a home, check with the NFIP to determine whether a property is situated in a flood zone; if so, you may want to consider a less risky area. If you are already living in a designated flood zone, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance. Additional information on flood insurance can be found at www.FloodSmart.gov.

4. Only purchasing the legally required amount of liability for your car.

The minimum is just that—the least you can get away with by law. So buying only the minimum amount of liability means you are likely to pay more out-of-pocket later. And if you are sued, those costs can jeopardize your financial well-being.

A better way to save: Consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

5. Neglecting to buy renters insurance.

A renters insurance policy covers your possessions and additional living expenses if you have to move out due to an insured disaster, such as a fire or hurricane. Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.

A better way to save: Look into multi-policy discounts. Buying several policies with the same insurer, such as renters, auto, and life will generally provide savings.

Courtesy of iii.org

The vehicle you own, your personal priorities and your budget all factor into your unique auto insurance needs. Before comparing policies and insurers, evaluate how you use your car and what risks you face to figure out what options make the best sense for you.

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1. How much do you drive?

Do you absolutely need your car every day—for instance, to commute to work or drive the kids to school and activities? Do you drive 100 miles a month or closer to 1,000 or more? Make sure your policy reflects how much you use your car. If you don’t drive a lot, you may want to opt for mileage-based insurance.

2. Will you be using your car for work?

If you use your car not just to get to work, but to perform tasks for which you get paid, commercial auto insurance is a necessity. A personal auto policy will not provide coverage if you transport paying passengers through a ride-share service, deliver pizzas, drive as a courier or use your car for other commercial activities.

3. What type of car do you drive?

Insurers have mountains of data, and they know in precise detail what types of cars, makes and models are more—or less—likely to incur claims. A flashy sports car with a powerful engine may be more likely to be stolen and its bodywork costs will be more than on a mid-sized sedan—and your insurance will be priced accordingly. Some types of cars—such as modified or classic cars—require special insurance. By the same token, you may receive discounts if you have a “safe” car—one with the latest safety features and a good safety record.

4. How much do you love your car?

If you love the way your vehicle looks and take pride in its appearance, you’ll likely want it fixed perfectly—or replaced with the same model—if it gets damaged. That means you’ll probably to consider the fullest range of insurance—including collision, comprehensive and glass coverage. On the other hand, if you drive a beater, see cars merely as transportation and want to save on premiums, you might prefer to limit your policy to liability.

5. Where do you live—and park your car?

Where you live will impact your insurance rates—and it may be a factor in what coverage you purchase. For example, cars parked on the street in urban areas face a greater risk for theft or vandalism, so comprehensive coverage might be a good option. You may discover that your premium rates are lower if you move from a city to a suburb.

6. Who else will be driving the car?

Generally, your car insurance will cover other occasional drivers. However, if other drivers live with you and use your car—whether a spouse, a teen driver or a housemate—they should be listed on your policy.

7. What are your legal obligations?

Nearly every state requires that you carry minimum liability coverage for your car. At the very least, you need to make sure your policy complies with state mandates. However, the levels of required coverage are generally pretty low. Keep in mind that, if you are involved in a serious accident, you may be sued for a large sum of money. Depending on your assets and financial risk tolerance, to be safe, you’ll probably want to purchase a higher level of liability coverage.

8. Is your car financed or leased?

If you still owe money on your car or have to return it in good condition when a lease expires, you’ll likely be required to insure the car for its full value—and even for any gap between what you owe and the car’s market value. Collision and comprehensive will cover damage to your car—and supplemental gap insurance will cover the rest.

Keep in mind that your insurance options and costs will also be affected by your age, gender and driving record. Be aware too that your credit score can also impact your insurance rates. Once you’ve looked at your needs and priorities, and understood how insurance options will match them, you’ll be better prepared to make an informed decision about the types and levels of coverage to buy.

Now that you know your needs, here’s how to choose an insurance company.