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Pennsylvania Full vs. Limited Tort

Pennsylvania Full vs. Limited Tort

When you are setting up and reviewing your auto insurance in Pennsylvania, one of your important decisions to make will be choosing full versus limited tort.  This article is not fully exhaustive on the subject and is not meant to give legal advice. You can read the state law regarding tort here.

When you choose a tort option, you are choosing it for the members of your household, including your spouse and children. Your option is regarding your legal rights to sue the at-fault party in a car accident.  When you choose a tort option, you must sign the state document indicating which you would like.  If you do not sign the document within the given time period, your insurance policy will default to full tort regardless of your initial decision.

What is Full Tort?

Full tort is generally more expensive to have on your insurance policy. However, for the cost, it gives you the unlimited right to sue if you are involved in an accident.  You can sue for economic losses, such as medical expenses, lost wages, property damages, out-of-pocket costs along with non-economic losses, including pain and suffering regardless of the type or severity of injuries. Pain and suffering is generally a large part of accident lawsuits. Having the ability to sue for these does not guarantee that you will actually win a settlement, and even if you are awarded damages by the court, there is no guarantee the at-fault party will have the coverage or assets to pay. That is where we enter into the discussion of uninsured and underinsured motorists bodily injury coverage, which we will address in another article.

What is Limited Tort?

The first thing that people notice with limited tort is that their insurance cost is 15%-20% less than with full tort.  However, for those savings, you sign away the ability to sue for pain and suffering for “non-serious injuries” along with other non-economic losses. So what can you sue for? You can still be reimbursed for economic losses.  These include medical bills, lost wages, property damages, and other out-of-pocket costs. You can sue for “serious injuries” which are defined in your policy as personal injuries resulting in death, serious impairment of body function or permanent serious disfigurement.

Limited tort does have a number of exceptions that will revert your rights to full tort after an accident where:

  • You were hit by a driver convicted of a DUI (Driving Under Influence) or accepts ARD (Accelerated Rehabilitative Disposition) as a result of this accident. Keep in mind, the driver must live to be convicted.

  • The vehicle that hit you is registered in a state other than Pennsylvania.

  • You were injured by a driver purposefully trying to harm themselves or others. This could include a road rage scenario and possibly the act of avoiding such a risk.

  • You were hit by a driver without insurance. Keep in mind that drivers without insurance often don’t have great amounts of assets or income to recover either, which makes your uninsured motorist coverage important.

  • Your injuries were caused by an auto manufacturer’s defect or a mechanic’s defect in workmanship.

  • You were in a vehicle other than a private passenger vehicle. This could be a business vehicle, company vehicle, commercial vehicle, bus, other public transportation, motorcycle or bicycle.

Consider your rights, your family, the exceptions, and the price of your insurance coverage to make a decision of full or limited tort. If you have legal questions, consult a lawyer for further information. If you have insurance coverage or rate questions, ask your agent!

What is Insurable Interest?

What is Insurable Interest?

With so many different types of insurance policies existing, it is hard to think of something that you can’t insure. You can insure your home, car, motorcycle, boat, belongings, and even your life. But can you insure your neighbor’s car? Surprisingly the answer is no. You can only insure the items that you have an insurable interest in.

So what is insurable interest? Insurable interest means that the destruction of the property or the death of the person insured would cause you to take a direct financial loss. You can’t insure your neighbor’s car, because you would not suffer a financial loss over it being totaled. You also can’t insured your barely known distant relative with life insurance since their passing isn’t going to directly impact your personal finances. You can insure the home & car, and belongings in your name as if they are destroyed or damaged, you will be directly responsible for repairing or replacing them. There can also be life insurance on your spouse that you can benefit from as their untimely death would create financial hardship for your family.

Insurable interest is required so that you only benefit from insurance payouts for losses that would actually affect you financially. Insurance companies often require you to have insurable interest when you start the policy on the person or object and insurable interest at the time of the loss. For example:  you owned a car and added it to your auto insurance policy, but later you sold it to your cousin. Let’s say that cousin then had an accident. Your insurance would not cover this vehicle even if you still have it listed on your policy as now it belongs to your cousin. It is your cousin who would take the financial loss, not you.

Sometimes, with families, friends, and romantically involved parties, this can be complicated. Insurance policies have listed named insureds for the policy and these named insureds are the ones that receive the funds. Usually named insureds are an individual or an individual & spouse combo.

So can you insure your child’s vehicle? If a child owns a vehicle in their name, is paying the payments on the vehicle, would suffer the damage to their credit if they don’t pay, but insure it on their parent’s auto policy, the parents receive the funds for the totaling of the vehicle.  So it is better in this scenario for the child to insure their own vehicle on their own policy as they have the insurable interest and should receive the funds vehicle in a claim. Sometimes insurance companies will allow for a child/parent co-owned vehicle to be insured on a policy in either the parent’s or the child’s name. This makes it so that the loss funds can be put in both names.

 

In the case of romantic relationships and friendships, insurance companies sometimes do not want to insure something owned by two unrelated individuals. If they start a policy together, but part ways, how does an insurance company decide to whom the funds belong? Insuring married couples is safer as if they split, lawyers help decide to whom funds and property belong. This will vary from company to company following their rules about how they will insure co-owned items or items owned individually insured on a co-owned policy.

The best idea is to ask your insurance agent before you buy anything co-owned or buy something and expect to be able to insure it on someone else’s policy.  To make sure that you will receive the funds for the loss, make sure to insure everything correctly. Provide your agent with your proof of purchase for an item showing who has ownership and let them know if you transferred ownership to someone else. For life insurance policies, make sure all of the beneficiaries are kept up to date. This way you know in the case of a claim, the correct people (you including) receive the benefit of the insurance you are paying for!

Power Your Home with Solar! (& Get a $600 visa card!)

Have you ever wondered about solar panels and whether they would be a good investment for your home?

Right now in central and eastern Pennsylvania, homeowners have an opportunity to have solar panels installed on their home roof without having to pay any large upfront costs.  Legacy Power is offering homeowners the opportunity to install solar panels on their roof for free and then you purchase the energy they produce for a reduced cost. Typically homeowners have seen about 20% or more in reduction of the electricity bills by getting the energy from solar panels right on their home. (Any excess energy goes into the local electricity grid, giving your community a little more green energy.) After you have had the solar panels on your home for about 5 years, you can then purchase the panels for a reduced price if you wanted to own them yourself at that point.

There is little risk in having the panels on your roof as they are insured, monitored, and maintenanced by Legacy Power (the largest solar company in the state!). If you sell your home, they often add value to your home and Legacy Power will continue their services for the next homeowner.

Homeowners may have many questions about the solar panels & their installation.  These are best answered by a professional representative, but after speaking to one myself, I learned a few secrets.  They will make sure your roof is the correct type and in good shape prior to installing any panels, put the panels on the side of the roof where the sun is optimal for our area (typically the southern facing side & away from overhanging trees), and they use the amount of panels needed to power your specific home.  They really work to customize the experience to match your home.

If you would like a free no pressure consultation to see if solar panels and their reduced energy cost would work for your home, please contact our friend, James White.  Please let him know that you were referred by the Allstate Downey Agency and you can receive a $600 visa card upon installation of the solar panels on your home!

James White

Legacy Solar Area Sales Manager

717-329-4915

jameswhite@lgcypower.com

 

Benefits for Small Business

Being a small business owner can be difficult with handling a lot of the day to day aspects of keeping your customers and your employees happy.  Often happy employees can make for better products and happier customers. So what is a good way to attract and keep good employees?

There are many ways to attract and keep good employees, but one important part of that process is offering benefits. A recent LIMRA study found 7 in 10 employers offer voluntary benefits to improve morale and attract and retain new talent.  Even if you are unable to afford to pay for the benefits fully through your business, having them available offered through your business allows employees to have access to them at a lower group rate even if they have to pay for the whole or partial cost.  This group rate is usually less expensive cost for you or for your employees than they would be able to find individually in the marketplace. There is also minimal underwriting to get these benefits in a group versus if you were to do it individually so those who wouldn’t normally qualify can have benefits..

Since health insurance is highly sought after, many employees are looking towards their employer to make an affordable option available to them.  Typically health insurance policies with higher deductible have a lower policy cost, but this leaves the employee with higher out of pocket cost to use their health insurance. Having a health saving account option or other health rewards program can help your employees save up towards that higher deductible to pay for any of their out of pocket medical expenses.

Supplemental benefits can be offered with or without offering health insurance.  These plans can include accident, critical illness, disability, and term life insurance policies.

Offering a mixture of health insurance, supplemental benefits, and retirement saving options can help you attract the kind of employees you would like your business to have and keep your current employees satisfied with their employment packages.

If you are a business owner and would like to set up a free consultation to see the specific options that you could offer employees, please contact us. Our supplemental insurance options—such as accident, critical illness, disability and term life—are 100% employee-paid, but they’re group rates only you—the business owner—can make available.  We’d be happy to help you add supplemental insurance to your compensation packages. I’m here to answer any questions you have and we also offer business insurance, retirement plans, and business transition planning.

Do I Need A Will?

Do I Need A Will?

Well it depends, but it never hurts to have a will.  If you do not have a will, this means that the court will distribute your property according to the laws of intestacy.  These laws may actually follow your wishes if you die without a will, but they may not.

First, the court considers giving your physical and monetary possessions to your surviving spouse. If there is no spouse or they cannot take it, then it looks to your children. If there are no children, then it looks to your grandchildren. If there are no grandchildren, then it looks to your parents. If you don’t have surviving parents, then it will look to an established list of more remote family relationships. You can read the full list and details here. If you have no remaining family that the court can find, your monetary and physical property will become the property of the Commonwealth of Pennsylvania.

If you leave behind more than one person with the same degree of relationship to you, it will be equally divided among then. For example: if you leave behind no spouse, but four children, each child will each receive one-fourth of your estate.

If you leave behind minor children (and no spouse), the court will establish a trust and choose a trustee to handle the funds. They are then distributed to your children when the court-appointed trustee chooses. Another court will also help designate an appropriate guardian for your minor children.

So if the laws of intestacy result in a desirable division of your property, you are satisfied with a court-appointed administrator of your estate, and you believe the court will choose an effective trustee to serve your children, you don’t really need a Last Will and Testament.

You need a will, however, when any of the following apply:

  • You want to have more than one degree of relationship inherit anything. Example: you want to leave your child and your mother property.

  • You would like to specifically list who would get certain items (jewelry, china, cars, etc.) instead of them being equally divided.

  • You would like to give gifts to charity upon your passing.

  • You want to have a trusted person follow your wishes as an executor of your estate.

  • You want to set up a trust for your children with specific guidelines and choose a trustee to manage it. This trustee can release portions of the funds at designated ages or milestones that you choose.

  • You want to list your wishes for a guardian of your minor children. Your will cannot establish a guardianship as that is a separate process, but the court will consider your wishes. Without a will, you have no input.

If you would like assistance setting up a will, a local attorney can help you navigate the details of what you would like contained in your will and file it with the Register of Wills. Please contact:

James G. Strupe, Jr., Esquire

112 Market Street, Suite 429

Harrisburg, PA 17101

717-856-4648

jgsrla@comcast.net

The Biggest Threat To Your Wealth

The Biggest Threat To Your Wealth:

A Lawsuit

You take many precautions to get the best returns on your investments, minimize taxes, and protect your home & family from financial hardship.  However, most people don’t think about protecting their wealth from legal judgements.  Some people believe the risk is so small that it will never happen to them, but all it takes is one accident to completely overwhelm your current insurance limits leaving you with a pricy legal defense bill. Don’t think it can happen to you? Check out some local recent lawsuits here and here.

Often home insurance policies have about $100k-$300k in liability coverage & auto policies with good coverages may have between $300k-$500k in bodily injury liability along with $100k in property damage. However, a lawsuit can often quickly surpass these limits leaving you to pay for your legal defense and whatever settlement amount the court may decide on.  Your home, business or real-estate holdings, future income, and non-qualified retirement assets are left to foot the bill.  Although rare, the court can order up to a 25% wage garnishment until the settlement is paid off.

To cover claims in excess of either your auto or homeowners policy, you can purchase excess liability coverage through a Personal Umbrella Policy.  They are called umbrellas since they cover excess liability from any policy you have under it. These could be homeowners, auto, motorcycle, boat, renter’s, landlord, recreational vehicle, and others. Another area Personal Umbrella Policies help protect families is in personal injury lawsuits, such as in liable or slander cases; for example a family member posts a negative online review that results in an alleged defamation lawsuit.

You can usually purchase $1 million in liability coverage for around $150-$400 per year depending on your risk factors. Umbrella policies usually have $1 to $5 million in coverage, but also come in larger amounts for celebrities, business owners, executives, and politicians.

Everyone has the risk of being sued over an accident, but if you have any of these risk factors, you may need an umbrella more than the average person:

  1. You have a dog (or other large animals like horses).

  2. You have teenage or young drivers in your household (or you are accident-prone).

  3. You have a long commute to work or drive a lot.

  4. You volunteer for (or are on the board of) a non-profit, or coach youth sports.

  5. You have a pool or trampoline (or other fun structure at your home).

  6. You (or your children) play sports in public areas.

  7. You are a landlord or own multiple properties.

  8. You have a boat, motorcycle, ATV, or other recreational vehicle.

  9. You frequently entertain guests at your home.

  10. You own a business.

  11. You have a job that others associate with making good money.

  12. Your  income is higher than the average for your community or you live in a high income community.

Which of these risk factors do you have?

 

What Is “Full” Coverage?

What Is “Full” Coverage?

You are told by your dealership when you buy a car with a loan that you need “full” coverage, but what exactly what is being asked for when you want to include “full” coverage on a vehicle? There is no one specific coverage called “full” coverage.  Since what is in your mind probably isn’t the same as what is in your insurance agent’s mind, let’s clarify what falls under the umbrella of “full” coverage and the options you have. Let’s agree that “full” coverage includes all the coverages that are specific to a particular vehicle rather than the coverages that apply to the policy as a whole.  These can include:

  1. Collision coverage is a required coverage when you have a loan on the vehicle. However, the deductible can vary widely. You can choose many options between $100 to $2000. It is important to keep your deductible low enough that you can afford to pay the amount of pocket at any time if you have an accident and need your vehicle repaired.  However, the lower the deductible, the higher the cost. Many people choose a middle ground of around $500 for a collision deductible. Let your agent know what deductible amount do you want for your collision coverage.

  1. Comprehensive coverage is also a required coverage when you have a vehicle loan. There are also the wide varieties of deductibles between $0 to $2000.  For comprehensive coverage, usually the lower the deductible, the better. Comprehensive coverage is generally less expensive than collision coverage. So if it does not cost a lot more to have a $0 deductible than other amounts, it is convenient to have nothing out of pocket if you hit a deer or take a rock to the windshield. Let your agent know what deductible amount do you prefer for your comprehensive coverage

  2. Towing and labor coverages are vehicle specific as well. While this coverage is not required if you have a loan, this is a coverage available to help you out with a short tow or offer some simple roadside assistance.  Usually there are only a few per incident coverage amounts to choose.  Tell your agent whether you would like towing and labor coverage, and if so, for what amount per incident.

  3. If you have a collision or comprehensive claim, your vehicle has to go to a shop to be repaired leaving you without a vehicle. While not required by a vehicle loan either, rental reimbursement coverage can cover the cost of a rental car for a short period of time while your vehicle is being repaired due to a claim. You choose this coverage amount at a per day maximum. Keep in mind the type of rental vehicle you would like in exchange for your vehicle being in the shop as larger rented vehicles cost more per day. Let your agent know if you would need a rental car if you have a claim, and if so, how much coverage per day do you want.

  1. Lastly, some policies offer coverages specific to brand new vehicles. These are not required by vehicle loan lenders, but can help you of sticky situations if a brand new vehicle ends up totaled.  You would have to speak to your agent specifically about the coverages available to you. Some offer replacement cost on new vehicles instead of actual cash value. Some offer to replace your new vehicle with whatever the current year is of that same make and model for a set number of years. Some policies may offer a form of gap coverage. So if you buy a brand new vehicle, be sure to ask your agent if they have any special coverages available.

So next time if you ask for “full” coverage on a vehicle, try to clarify for your insurance agent what you really want and need on your vehicle.  The extent of coverages and costs can vary widely depending what amounts and deductibles you choose.  Feel free to ask for cost comparisons between taking a certain coverage amount versus another to find the right coverage and cost balance for you.

LOCAL AGENT

David Downey
Insurance Agency Owner
11 N US Hwy 15, Ste 7
Dillsburg, PA, 17019
717-432-1361
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