Frequently Asked Questions

At some point, most of us live through the terrifying experience of adding a child to our auto policy. Many people don’t add their young driver to their policy until they are forced to. The reason they don’t add the child is the premium increase. Some feel that young drivers are unnecessarily singled out and over charged.

The truth is young drivers receive higher rates mainly because of lack of experience. They just haven’t been out on the road enough to learn how to deal with ever changing situations safely. Almost all young drivers will have a ticket or accident of some kind in the first year of driving. For those of you who went skiing you showed up at the hill, put on the equipment, and got on the hill. What happened to most on your first day of skiing? You crashed. You fell on the ski hill many times from lack of experience.

Since we have established the fact that the young driver will probably be involved in some type of traffic situation, don’t you want coverage? If the driver is involved in a major accident & the young driver was not listed on the policy, we may have some coverage problems. No one wants a major lawsuit to occur and you have no insurance coverage.

When the young driver gets their license, contact your customer service representative, discuss your options, add the driver & pay for your protection.

This question usually comes up with auto policies but it is also true for home policies. In the state of Michigan you are required to maintain automobile insurance. What frequently happens is an individual’s car becomes mechanically inoperable. They figure there is no sense in paying the insurance on a “dead horse”, no pun intended. So they do not make their next insurance payment, and the policy is canceled for non-payment of premium. A short while later they have the vehicle repaired and contact their agent to start a new policy. They find out that since their prior insurance policy cancelled for non-payment of premium the state requires that the policy be charged a higher rate. If, when the car broke down, the customer called his insurance agent and told him the situation would have ended differently. The agent would have sent the customers a form to cancel the policy and when he needed new insurance the state would not require a high premium.

The issue with homeowners policy and cancellation can also be very similar where companies can refuse to offer a coverage unless the entire premium is paid at the start of the policy. The long/short is, if you don’t want or need your policy, be sure to contact your agent to correctly end the contract.

Whether you carry auto, boat, or a home insurance policy, your premium is determined generally the same. Of course, each insurance company is different, but generally speaking, your premium is based on several factors, some of which we’ve listed below.

• Policy form- Is this a bare bones policy or one with all the bells and whistles?
• Business classification- Is your house wood or brick, a sports car or a station wagon, etc.?
• Territory- In what area of the state is the policy written. Detroit vs. Frankfort?
• Usage- Is this your home or business, work vehicle or pleasure, sailboat or rowboat?
• Deductibles- the higher the deductible, the lower the premium.
• Client Experience- Are you a good or bad driver? Have you had many prior claims?
• Company experiences- Have policies of your type & arena made or lost money in the past?
• Company expenses- Was last year profitable or not?
• Marked rates- What are the other companies charging for the same policy?
• Insurance Score – It’s similar to credit scoring, but for insurance.

When these factors are combined a quite complex formula is set and your insurance premium is then computed. The main purpose of this formula is to accurately gauge the correct amount to charge for a policy. In charging the correct premium the insurance company has three primary goals.

1. Bring in enough money to pay the insurance claims.
2. Price a policy so it is appealing to buyers.
3. Make a profit after the claims and company expenses are paid.

When you see an increase in your policy premium don’t feel that the insurance company is getting greedy and wanting to stick it to you. Remember that there are many components in insurance premiums and any changes in these components can affect insurance. Realize that this concerns the insurance company because they want to keep their customers, pay their claims, and continue to do business.

PLPD is an acronym for Public Liability and Property Damage. This term was common to Michigan insurance for many years up to 1971 when the Essential Insurance Act was passed. Believe it or not, their term PLPD has been out of date for over 30 years.

However the term still lives on. Commonly this term refers to having the bare essential coverages to legally drive in Michigan.  This refers to a set of insurance limits that all automobile drivers must meet or exceed by state law. To many Michiganders PLPD means: cheap insurance, bare bones coverage, what I need to not get a ticket from the police.

Minimum State limits will not adequately protect you in the event of a lawsuit. To be adequately protected you should at least carry enough coverage to protect the loss of all your assets. By carrying minimum limits you are paying as little as you can but are at a high risk of losing everything you have.

You should review your insurance on an annual basis. What we mean by review is you should read through the declaration page of the policy to confirm that the items you want to insure are listed on the policy. The declaration page is the page showing coverage amounts and premiums. When we tell our policyholders this, many of them reply that they wouldn’t know what they were looking at if they did review the page.

Here is where the value of an insurance agency shows. Sit down with your Customer Service Representative (CSR) and say “Teach me about my policy.” In 10-15 minutes you will have learned how to read your declarations page like a pro. Now you can pick a time each year that you come back to your policy to review it.

We recommend that our clients keep their declarations pages all together in one stack so you can easily flip back through each year. This also allows you to make notes on your pages to remind you year to year of your review. If you come to a section of the policy or declarations page that needs clarification, contact your CSR and jot down a note on your dec. page.

We recommend that you set up an appointment with your CSR at least every couple years, or whenever you make any major purchases for a full insurance review. Remember, you know more about your needs than anyone else. Your input is vital in the structuring of your insurance program.

Know that it takes time to gather all the details, get the information to the correct person, and settle the claim. Having a little patience will go a long way in speeding up your claim. Auto claims are usually settled in 3-10 business days.  Small Home claims can take 1-3 days, and large home claims can take 30-60 days.