ThomasGoodwin.com

I am happy to report that as of this past week I am now licensed for property/casualty insurance in all 50 states as well as the District of Columbia. My resident license is in Ohio, of course, since that is where I live. I now hold non-resident license status in the remaining states.

I have also posted the required bond to be a licensed Surplus Lines Insurance Agent in the state of Ohio.

I will continue to update this as often as possible. I apologize for my recent absence in blogging. I hope to get back into my routine soon!

As always, I appreciate your comments and feedback…

Recently, The Cincinnati Enquirer ran an article online about police billing motorists’ insurance companies for the cost to respond to accidents. (Adobe .pdf copy of the article). I don’t think the article did a good job of examining both sides of the issue so I have submitted my letter to the editor, although I doubt it will be printed.

So, what is the article about you ask?! Well it seems the Erlanger, KY police chief wants to charge a fee for officers’ time in order to respond to accidents. The article cites statistics that a majority of the wrecks in Erlanger’s jurisdiction involve people that are not residents of the municipality. I didn’t think it mattered where you were from, if you caused an accident you get a citation. If you get caught speeding, you get a citation. I know plenty of people that have received speeding tickets in their home town as well as other cities and states. If Erlanger does not want to help non-residents because of the cost involved, perhaps it should have the decals on the side of their police cruisers amended to read “To protect and serve our community only.”

The article also addresses (from one side) the notion that you can bill an insurance company for responding to an accident. I don’t see how you can levy fees on motorists that have insurance that will cover such a response but not your own community members as the article suggests that Erlanger will do. If you levy the fee on out of town motorists, you would also need to assess community members.

Here is my letter to the editor, just in case The Enquirer decides not to print it:

In response to the article about charging a response fee to drivers involved in a wreck, I want to clear up an inaccurate statement made by Cost Recovery Corp and also respond to the police chief’s comments.

First, for Cost Recovery Corp to assert that insurance companies cannot raise rates in certain areas and that companies will not increase rates if they’re required to pay first responder fees is simply not true. Any actuary that incorporates those added fees into the rate modeling will in fact use these costs to affect rates. Insurance companies will file with the state for higher rates and justify the rate increase by pointing to the evidence that higher claim dollars are being paid out. Insurance regulators want these companies to remain solvent just as much as they want the market to be competitive. First responder fees affect all of the insurance carriers competing in a given market so this will affect everyone, not just those who have accidents.

Police Chief Marc Fields questioned why his community should fund the cost of his officers responding to accidents. My response is quite simply, “isn’t that what fines and citations are for?” Sure fines are to punish someone for wrongdoing and to deter future behavior, but the fines also help fund the municipal government’s operations. Perhaps Chief Fields should have read the article entitled Don’t Speed Here on the front page of The Enquirer about Arlington Heights being a speed trap. That village also responds to a number of accidents on I-75 that don’t involve its own residents. But that village also actively patrols that stretch of I-75 to deter speeding and issue citations to generate revenue. Unlike adding first responder fees, which drives up insurance cost for everyone in a given area over time, issuing citations drives up insurance cost to those that committed the violation.

As always, I welcome your comments and feedback…

In a follow-up to my Sept. 11th blog entry regarding my real estate license renewal, I have met the continuing education requirements for my Ohio insurance license as well now. My insurance license requires 20 hours of continuing education every two years. I hold both the property/casualty (Series 11-35) license as well as the Life/health/variable annuities (Series 11-36) license. I have been an Ohio licensed insurance agent since 2002. You can read more about my licensing and professional designations on the About the Blogger page.

As always, I welcome your comments and feedback…

I don’t like to write about my accomplishments. It makes me feel like they are not as impressive when I have to broadcast them. But then I guess if I don’t tell people about them, how will they ever know when I have achieved something!?!

So it is with great reluctance that I post this to my blog. This week I completed my Accredited Advisor in Insurance (AAI) designation. While this may not exactly rival completing my MBA at Xavier University (which I am set to do within the next year… or so… as I only have 5 courses left), this is still an important designation that builds on my existing coursework in insurance. Not only does it satisfy my continuing education requirements for the state of Ohio, but it has also provided me with a much better understanding of how to manage an insurance agency should I ever choose to do so. As many of you know, right now I am not actively selling insurance as an agent, but it’s something I might do (again) in the future.

You can read more about the Accredited Advisor in Insurance designation by visiting the AICPCU.org website. The complete list of my academic accomplishments and professional experience can be found on the About the Blogger page of my website. I am continuing to make progress toward completing my MBA, obtaining the Chartered Property Casualty Underwriter (CPCU) designation, as well as various other designations. The next thing that I absolutely must complete though, is my required 30 hours of real estate continuing education that is due on my birthday this year. Once I complete that, my real estate license will be valid through 2010.

Oh, and I am also proud to be associated with the Xavier University School of Business and particularly the MBA program. Once again, and for the second year in a row, the part-time MBA program is ranked as one of the best in the nation by US News and World Report, 26th overall.

As always, I appreciate your comments and feedback…

A blog on entrepreneurship AND insurance all at the same time?! You probably never thought it would (or should) happen… but I am posting this in hopes that it helps those of you out there that are currently in the early phases of starting your own business.

Much like you would insure your home and your car, you need insurance if you are going to operate a business, too! If your business uses a car you will most likely need a commercial auto policy. If you are responsible for insuring the building that your business occupies you will need property coverage. Regardless whether you operate your business out of your garage or in the penthouse of a tall office tower you will need some form of general liability insurance.

There are many types of exposures that you will want to consider insuring your business against. Many of these are things that you might not have thought of prior to owning your own business; like various types of crime coverage for instance. Unlike auto or property insurance that you are already familiar with on your personal insurance policies, crime policies are unique to businesses. Same with workers compensation insurance. Some of these insurance coverages you will be required by statute to carry, such as workers compensation coverage if you have employees that are not in one of the five monopolistic states. Many of these various business insurance coverages are combined into packages.

Below is a link to a document that I wrote in 2006 for a group of entrepreneurs that I had the opportunity to give a presentation to in Cincinnati, Ohio. This document hits briefly on several types of insurance. If you have questions or need clarification about anything you read in the document, please don’t hesitate to contact me.

More importantly, discuss your business venture with a licensed insurance agent that you trust, and then get a second opinion from another agent just to make sure you’re not overlooking anything or that you’re not being taken advantage of in any way. I have yet to have someone come up to me and say, “man, I wish I never had that second opinion” but I have certainly heard people say just the opposite, “if only I had gotten a second opinion!”

Protecting Your Business: Commercial Insurance - A Brief Introduction

As always, I welcome your comments and feedback…

Odds are pretty good that you’ve been in an automobile accident, even if it was just a small fender bender, or that you probably will be in one at some point in your life if you drive or ride in a car on a regular basis (as most of us do).

When an accident occurs we rely on our auto insurance, or the insurance of the at-fault party if it’s not us, to make us whole again. This is quite simply to say that we rely on our insurance company to step in and make sure things get fixed properly so life continues just as it had before the accident occurred, or as close to normal as possible!

Auto insurance is a great tool for spreading the risk of financial loss due to an accident over several vehicles and drivers. But auto insurance has failed to make people whole in one respect that is getting more and more attention with the rise of the Internet and programs that let you track a vehicle’s history - such as CarFax reports.

When an insurance company agrees to repair your vehicle after an accident and pay your medical bills, etc. they fail to take into account that your repaired vehicle is no longer worth as much as it was before your auto accident. Yes, your 2002 Ford Explorer with 32,000 miles was in great shape before the accident - I mean, let’s face it, if this is 2007 and your car is a 2002, 32000 miles is well below the normal amount of 12,000 to 16,000 miles per year that most cars have on them. If your car had never been in an accident it would probably fetch a premium over similar year’s vehicles of the same model or comparable vehicles. But now that your vehicle has been in an accident, there is suddenly a paper trail attached to it that says this vehicle has been wrecked and repaired. Try taking the vehicle in to a dealership to trade it in on a new car. They will run a CarFax report most likely, and they will offer you less citing the accident. Why would they offer you less given the fact that your car has been repaired? Well, any savvy buyer who walks into the dealership to look at your used car will want to see a CarFax report as well, and other people won’t know about the quality of the repair job or what a great history the car has otherwise.

What we’re discussing here is referred to as diminished value. Quite simply, a vehicle can’t be worth the same amount after an accident as it was before because if your car was sitting in a used car lot next to an identical one that had never been in a wreck, your car would sell for less than the other one. Now, you don’t often see used car lots full of all the same type of car. But with the rise of the Internet, people are able to search a large radius to find a specific type, model, color, year, etc. of car that they want.

The law varies from state to state with regard to how insurance companies settle claims on diminished value. In Ohio, where I currently live, the insurance company is not required by law to pay you for the dimished value of your vehicle after an accident. We’re speaking only of partial losses by the way, if your car is totaled you have every right to try to negotiate with the insurance company to get the fair market value of your car before the accident. But in an accident where the car is repaired and returned to you, you still suffer a loss that you are not compensated for… the difference between your vehicle’s value BEFORE and AFTER the accident is your loss.

Now, we’ll probably never see states pass legislation requiring insurance companies to pay their insureds this diminished value because not everyone carries comprehensive and collision coverages (often referred to as comp & collision) on their policies. In fact, with insurance being a contract between you, the insured, and the insurance company, if they do not offer you the coverage you cannot force them to provide it. The only coverage they will be forced to offer you if you meet their criteria is the state minimum liability requirements to drive in your state.

Although it would be nearly impossible to REQUIRE insurance companies to offer diminished value coverage to their own policyholders, which would be similar to GAP coverage you can already buy to cover the difference between what you owe and what the vehicle is worth, perhaps the states can get their acts together and require the insurance companies to offer diminished value payments to third party claimants. These third parties do not have insurance coverage through the company that is paying them so they are not bound by a specific insurance policy’s covenants - rather, they should seek payment for as much of their loss as possible.

As I mentioned before, the law varies from state to state with regard to diminished value. And because there is nothing going through a legislature (that i know of anyway) it is up to the courts to decide whether diminished value has merit in settling an insurance/auto accident claim, at least it’s up to the court until the legislature gives us a framework or body of law to draw upon in this topic.

Here are some links to some interesting articles and companies that hope to prosper from diminished value claims:

Article from Bankrate.com giving a broad overview of the topic

I-Can This is a company that handles diminished value appraisals on behalf of claimants following an auto accident. This company also offers a nice review of the topic, with their own slant of course.

Sims vs. Allstate case. This case regarding diminished value follows similar court rulings in several states including Ohio, Mississippi, Delaware, Arizona, Texas and so on. This case was considered a setback to getting diminished value recognized by the various states.

Here’s a good article that counters the above Sims vs Allstate case. This article is from the AutoMuse website. This case is Allgood vs Meridian (insurance company). In a court decision that occurred a day before the decision was rendered in the Sims vs Allstate case, an Indiana court ruled that diminished value is of significance. This is a good read after the above article about Sims vs Allstate. The author of this article does a good job expressing concern over noting where a claim occurred and which state’s body of law is applied to the case in question.

Here’s an excellent link showing body of case law on a state by state basis for this topic. Kudos to Barry Zalma in compiling this information all in one place for everyone of us to easily search and review.

Editorial from the Akron (Ohio) Beacon Journal newspaper regarding auto insurance and hitting in parts on diminished value.

As always, your feedback is welcome…

If you died today, your family and friends would naturally be sad and devastated. So what could be worse than losing a loved one? Nothing. But when things are already so bad that they seem to not be able to get any worse the reality sinks in that there are still bills to pay. The surviving spouse probably still has a mortgage, car payments, credit card bills, not to mention if there are children then there will be billings for child care and so forth.

This is a deviation from my normal blog. Every so often I will post a random thought as the one above and we’ll call it a Financial Health Checkup for lack of a better term. I try not to get on my soapbox too often but it’s important for people to understand what role they play in supporting their family. That way, if you were not here to support your family you would know what it would take to make sure your loved ones were taken care of and able to maintain their livelihood - without losing the house to the bank or not be able to go to college, etc.

So how do you know if you’re adequately protecting your family? Well, there has traditionally been a rule of thumb that having a life insurance policy with a face value of some multiple over your salary is sufficient. I reject these multipliers as simple nonsense. They simply do not take into account the actual needs of the individual and his or her family; everyone’s situation is (at the very least slightly) different. One thing that the multiplier does not take into account is that with the more children under 18 that a surviving spouse is forced to raise on their own, the more the parent will face increased childcare expenses. The multiplier has historically been used to estimate the cost to pay off debt and free the surviving spouse’s income to tend to the day to day needs of providing for the family rather than paying the mortgage and car loan (which we will simply refer to as overhead - not to purposefully make a pun with the housing reference).

But beyond paying off the mortgage, car, and credit cards that so many of us have come to rely on, there is also the goals and future plans of the family that are interrupted when a family member unexpectedly dies. What about children that were planning on going to college (the ever so dreaded words “law school” or “med school” etc)! What about those annual vacations to Disney or the Grand Canyon. Ok, so the family doesn’t need to go on a trip EVERY year… but they also shouldn’t feel like they can’t do something just because the financial picture is tighter after losing a loved one. It’s bad enough that they had to endure the loss of a loved one, now you want to force them to eat microwave dinners and give up simple luxuries that they had before the unfortunate loss?! Life insurance is meant to keep a family able to enjoy life with one another and continue to pursue the dreams that they have. You can’t get a financial equation to devise a way to calculate that number, it’s unique to each family and situation.

What I’m NOT suggesting is being over insured. Let’s keep in mind that the unexpected and untimely death of a loved one is still a remote possibility in most of our lives. Over insuring only impairs the family’s finances by paying too much in insurance premium, money that could be used to pay down debt, save for college or retirement, and other goals of the family.

When the family knows what goals it wants to achieve and how much resources it will take to reach those goals, from there it becomes a matter of adequately protecting the family from the unlikely event of a death that could derail the goals from being achieved financially. 1. Set realistic goals, 2. determine what costs you would need to cover and if any of those costs would go up because you would not have the support of a lost wage earner. Do the kids spend more time in daycare because the one parent who got off work early is no longer there to pick them up from school? And so on. 3. Keep in mind inflation and the possibility that the lost family member may have received pay increases in future years (through promotions and cost of living adjustments in salary). You might only make $50,000 per year now, but 10 years from now would you be earning that same $50,000? Probably not. You might be making $60, 70, or even more. You owe it to your family to build in that increase over time to beat inflation.

Talk to a licensed agent. Gather the facts on what it would take to sustain your quality of life and provide for your family’s future. Then put a plan into action to solve those future goals and hurdles that the family would face if you weren’t there to help them. They will do the same for you. And while you will miss them if they die unexpectedly, you will be able to maintain your family’s existence and ultimately your sanity as you won’t feel defeated and crushed financially.

I will add more posts in the future about the various types of life insurance, for now, this was just a financial health check up. Enough of the soap box, as always I welcome your comments and feedback…

Your home is probably one of your most expensive assets to own and maintain, and it houses not only you but many of your other assets as well. So here’s a question for you, if your home burned down or somehow was destroyed, how much would your insurance company pay?

Most people don’t know the answer off the top of their head. But this is an important thing to know because the insurance value of your home is far different than the market value of your home. You might’ve purchased your home a year ago for $150,000 and then this year your neighbor has transfered out of state and is selling his home for $160,000. Even though you just paid $150,000 for your home and your neighbor (who of course owns an identical house) has his for sale for $10,000 more than you paid, you can’t be caught up in the misconception that $150,000 or $160,000 is your home’s insurable value. Those numbers previously mentioned are the home’s market value, what a buyer would be willing to pay given the current real estate market conditions.

It’s rather easy to figure out your home’s market value if there are a lot of comparable homes in the area that are either for sale or recently sold. In fact, you can call any licensed Realtor or Appraiser and request an estimate of the value any time you want. If you want a less precise estimate, there are websites like Zillow that will help you estimate a value. When you look at these market values though you are looking at the cost of the land and everything built on it (known as the improvements). Everything from the house, the landscaping, driveway, swimming pools, fences, and so forth.

When we say the insurance value of your home we have a slightly different value in mind. If your home burns down, the insurance company does not have to buy the land (as you did when you bought the house). Instead, the insurance company is concerned with the cost to repair the damaged property - everything from site cleanup and debris removal to the actual construction cost to rebuild. In some rural areas that are not serviced by a city fire department, a volunteer fire department may even have a fee that they charge residents to come put out the fire (this is in lieu of those area residents paying taxes for the fire department’s services - or it may help subsidize the cost of those services).

In the wake of numerous hurricanes in the southern states in recent years, such as Hurricane Katrina, building materials cost have increased significantly. The cost of concrete, plywood, PVC piping, and so on are all concerns that the insurance company has to consider when pricing your homeowners insurance policy as well as when they settle claims. Therefore it is also a concern for you, as any increase in these building material costs directly corresponds with the cost to rebuild any damaged portion of your home and therefore a higher insurance value on your house. You may have purchased the house for $150,000 but if it’s a 2,000 square foot house and building materials average $100 per square foot to rebuild, your home’s insurable value is $200,000 and not the $150,000 that you paid for it.

Not to mention if you purchased an older home, it may cost more to rebuild if the home has to be brought up to current building codes.

We will revisit this issue of insurance value in future blog postings. For now, just know that the value of your home is quite different when you have to rebuild it after you suffer a loss compared to when you go to resell it. And the older your home gets, the more work it may require to bring it up to code should you ever have to rebuild it. The insurable value and the cost to bring your home up to current building codes are important things to discuss with your insurance agent - not just because the difference in value affects your insurance premiums - but also because not having enough insurance coverage in force could impair your property once a loss occurs (insurance companies often penalize you for not carrying adequate limits in the event of a loss - these are known as coinsurance penalties, we will touch on those in future blog posts!)

As always, your comments are welcome…