Frequently Asked Questions
Below are some of the more commonly asked questions we get asked
Q: Why did my premium increase from the prior term, even if I didn't turn in a single claim?
A: This is an answer that could get very complex, but we'll try to keep it simple. Obviously, there are factors within your control that will affect what you pay for insurance: amount of coverage carried, claims, credit score, payment and cancellation history, how high (or low) of a deductible you carry, and so on and so forth.
And then there are those that aren't within your control. Sometimes premius still go up (or down) regardless of anything you may have done. Insurance companies make money in two ways - 1) underwriting profit (or loss), which is the premiums they take in, less losses paid out, and 2) returns from their reinvestment of past earnings into stocks and bonds.
It's important to remember that insurance is a global industry. Most companies are affected by losses and economies from around the world, either directly or indirectly (through their re-insurers). Even if your neck of the woods has avoided catastrophic weather and the local economy is strong, somewhere in the world, that's not the case. If those conditions are worse than forecast, expect rate increases in the future.
Q: If I cancel my policy, how much will I get back?
A: This question depends on a number of factors: your state, the line of business the policy covers, whether your policy contained a minimum-earned endorsement, any fully-earned endorsements, how far into the policy term you are, how current your payments are and the reason for cancellation. Typically, if the policy holder is requestiong the cancellation returns will be calculated on a short-rate basis. If the insurer is the authority having to cancel coverage, return premium will be calculated on a pro-rated basis. Your insurer will calculate the amount of unearned premium due back to you. We can only estimate it.
Q: What's the difference between standard and non-standard auto policies?
A: Standard insurance is for drivers with very few violations, claims or cancellations of previous policies. In most cases, these drivers have better insurance (or credit) scores. Based on these characteristics, standard insurance premiums are much less than non-standard insurance premiums. Non-standard insurance, on the other hand, is for those with major violations, prior cancellations, prior claims, no prior insurance coverage amongst other things. These insurance policies, most likely, are for minimum coverage.
However, the biggest difference is the forms the policies are written on. A standard auto policy is one that is regulated by the state and for the most part, there's very little difference in the language and coverage afforded from one standard policy to another.
Non-standard policies are also regulated by the state issued in, but vary greatly in price due to the wide range of customization (endorsements and exclusions) by the carriers issuing them in order to account for a wider range of risks. Non-standard coverage is for drivers who are unable to obtain insurance through the typical methods and companies. It's typically higher risk drivers, inexperienced drivers, high risk vehicles, as well as drivers with high claim frequency, major violations, prior cancellations, no prior coverage or very poor insurance and/or credit scores.
Many large carriers, particularly those that sell directly to the consumer, offer both standard and non-standard policy forms. If you're shopping your coverage on your own, be very careful with what you buy. If something seems too good to be true, it usually is.
Q: Do I have to have Workers Compensation coverage for my business?
A: With just a few exceptions, if you have even one, part-time employee, then yes. And there can be big fines for going without Workers Compensation insurance, including possible felony charges (which would make you ineligible to hold a liquor license, and can be a huge hurdle if you're involved in a business that needs a liquor license). Actual requirements vary by state.