The problem is most people who cancel their insurance on a recreational vehicle or motorcycle during the winter months do not surrender the tag to PennDot and de-register the vehicle. Thus, they have a registered vehicle without insurance. This situation may result in fines, suspending your vehicle’s registration and suspending your driver’s license. In addition, it may also deny you benefits on your auto insurance!

According to Section 1714 of the PA Motor Vehicle Code, keeping a registered vehicle without insurance prevents the owner from being able to claim first party benefits (ex. medical bills, loss wages), even if they are injured in a vehicle that carriers insurance. This provision is meant to ensure that “one may not receive medical and wage loss benefits unless you have the ability to provide them to another.”

While the law’s intent is commendable, its application raises huge concerns for individuals who have innocently kept the tag on a motorcycle or ATV during the winter months. Also note that this same rule applies for a vehicle that is inoperable or being repaired.

How Can Prevent This Major Problem?

You have 3 options if you want to cancel coverage on a vehicle because:

• it is inoperable or under restoration, OR
• it is used on a seasonal basis, OR
• it is used occasionally (such as a classic, collectible or antique car),

Option 1- You must send the tag back to PennDOT immediately. This will suspend the registration and ensure that the owner is compliant with Title 75. To return the license plate, fill out form MV-141 and send it to the Bureau of Motor Vehicles, Return Tag Unit, P.O. Box 68597, Harrisburg, PA 17106-8597. Form MV-141will be stamped by PennDOT upon receipt and returned to the sender, thus evidencing receipt. As an alternative, you may return the tag directly to any PennDOT agent. 

Option 2 – You can choose to maintain insurance on the vehicle. It is, after all, a very simple solution. If it is possible, you may be able to save money just by reducing liability limits to the minimum legal requirement on that vehicle only.

Option 3- If, and only if, you qualify, you may apply to PennDOT for seasonal registration. If properly handled, you will be able to drop Financial Responsibility (Insurance) during the off-season of a seasonal vehicle. However, due care and diligence in choosing the new expiration date for the registration is of utmost importance. The individual should be clear as to when the registration ceases and make sure the Financial Responsibility matches that date. The vehicle must never be operated during the off-season.

Again, bear in mind that the majority of seasonal registration applications are incorrectly filed. Seasonal registration is more likely to be applicable when you are dealing with recreational vehicles, motorcycles, or trucks or farm vehicles with a gross weight not exceeding 9,000 pounds. It is not applicable to antique, classic and collectible vehicles, or vehicles that are inoperable or under repair/restoration.

To read PennDOT’s Fact Sheet about seasonal registration, click here.

To apply for seasonal registration, click here.

The bottom line is that if you do not have insurance on all registered vehicles, your medical bills and loss wages as a result of an auto accident may not be covered. If you are thinking about cancelling insurance on a vehicle make sure to contact your agent and have them verify your first party benefits will not be compromised.

On October 25^th Gov. Tom Corbett signed a new bill to help young drivers, like myself, from making a call to dad about an accident with a car load of friends. The bill creates new training requirements and rules for junior drivers and mandates the following

Passenger Restrictions: According to statistics from Pennsylvania AAA, the chances a 16-year-old will die in a crash increase 39 percent with one teen passenger; 86 percent with two teen passengers; and 182 percent with three or more teen passengers. The new law allows no more than one passenger under the age of 18, except for immediate family members, for the first six months and no more than three passengers under the age of 18 after the first six months.

More Driver Training: The new law increases the behind-the-wheel training from 50 to 65 hours, including 10 hours at night and five hours of during inclement weather to give junior drivers more experience.

Seat Belt Enforcement: More than half of teen driver and passenger deaths are the direct result of failure to buckle up. Now, drivers and passengers under age 18 must wear seat belts at all times in a moving vehicle and are subject to a $75 ticket for violating the law. The bill also allows a police officer, for the first time, to pull over a teen driver if the officer sees or suspects any driver or passenger under 18 is not buckled up.

The bill is also known as “Lacey’s Law” was named after Lacey Gallagher, 18, from Philadelphia, who was killed in car crash on April 28, 2007. She was a passenger in an SUV with six other teenagers. All of the other teens were injured; none wore seat belts.

This is where your auto policy’s First Party Benefits coverages come into play, often baffling you and making you feel that you are somehow to blame and are being held responsible for an accident you may or may not have caused.

The common misconception is that if an accident is caused by someone else, their insurance should pay for everything.  That isn’t always the case in Pennsylvania, and keep in mind that there are drivers out there who have no insurance at all or are “staying legal for less.” Yikes!

PA First Party coverages step in to financially protect you and your family, regardless of who is at fault in an accident and what kind of insurance they have.

So who is a First Party on your insurance policy.  You are, of course, as a Named Insured and any driver listed on your auto policy.  Also included as First Party are your minor children and any older children and relatives residing in your household who don’t have their own insurance policy.

Now, what is PA First Party coverage?  It includes Medical coverage of at least $5,000.  This is the first insurance to pay your medical expenses if you are injured in an auto accident, regardless of fault and regardless of what auto you are occupying, with some exceptions. Pennsylvania state law requires a minimum of $5,000 in First Party Medical on every auto policy, but you can choose to increase that limit up to $100,000, and even add First Party Extraordinary Medical for an extra $1,000,000 in medical coverage. 

Other optional (not required by law) PA First Party coverages include Income Loss, which replaces your income if you are injured in an auto accident and are unable to work as a result.  There is also Funeral coverage and Accidental Death coverage.  These both act as life insurance if you pass away as a result of an auto accident.  Since many people don’t have life insurance policies for their children and motor vehicle accidents are the leading cause of death for children in the USA, this is an important (and inexpensive) coverage to add to your auto policy.

It’s important to mention that there are exceptions to the First Party coverages, including when you are injured in an auto accident in the course of employment or if you are driving a company car, and each coverage has optional limits, so you can tailor your First Party coverage to suit your specific needs. 

Turning in a claim on your auto insurance for First Party coverages doesn’t cause your premium to increase or count against you as an at fault claim on your policy.  They are usually inexpensive and can provide valuable financial protection for you and your family.

So, don’t count on the other guy’s policy to cover all of your losses in an accident.  You are your own best advocate when it comes to protecting yourself and your family, so review your First Party Benefits coverages with your insurance provider today.

The owner of the car expects the garage to exercise caution while they are in possession of the car.  But sometimes things happen we don’t expect or cannot anticipate.

There are three common ways a Garage Insurance Policy can insure Customer’s Cars; Legal Liability, Direct Primary and Direct Excess.

I’ll start with the easier one to explain, Direct Primary.  Under this form the customer’s car is protected by the garage policy regardless of negligence on behalf of the garage or its employees.  If the garage finishes work and test drives the car, only to have an accident, the garage policy will respond.  If the car is parked in the lot and a tree falls on it, it is protected.  If a flood damages the car, it is protected.  If it is stolen from the lot, or from the inside of the garage, it is protected.  There is no need to prove negligence on the part of the garage or its employees.  If their policy indicates that Customer’s Cars are insured on a Direct Primary basis, the customer’s car is protected regardless, unless the loss is excluded. 

Legal Liability – Under this form, negligence must exist, either on the part of the garage or its employees.  Typically, if an accident is caused by a garage employee there is negligence.  But what about floods, or falling trees, or hail, or even theft?  There would have to be negligence on the part of the garage or its employees for the garage policy to respond. If no negligence can be found, the car owner’s insurance policy will respond to the damage.  Is the garage negligent if a tree falls on a car?  Maybe if the garage parked the car under a tree that was known to be rotten.  Otherwise, it’s possible there is no negligence.  Is the garage negligent if the car is stolen?  Maybe, maybe not.  It might depend on whether the keys were left in the car or locked in the garage.  What about flood?  Can a garage be found negligent if a flash flood destroys your car?  Can a garage be found negligent if a hail storm puts hundreds of dents in your car’s hood?  It’s quite possible the garage policy will not respond to some of these scenarios because no negligence exists on the part of the garage. 

Direct Primary coverage is typically more expensive because it responds more readily. 

A third type of coverage would be Direct Excess.  This is similar to Direct Primary in that it responds regardless of negligence, but only after the car owner’s auto insurance policy responds. 

This blog is not intended to determine which type of coverage is right for your business.  It’s simply to make you aware of your options.  However, it would be a good idea to know which option you are providing your customers.

If I Choose Limited Tort What Am I Giving Up?

Simply put, Limited Tort limits your right to sue. Full Tort does not limit your right to sue, however, Limited Tort prevents you from recovering non-economic losses, such as pain and suffering unless one of the following situations apply…

1. You are seriously injured. “Serious Injury” means an injury resulting in death, serious impairment of body function or permanent disfigurement

2. The person at fault is convicted or accepts Accelerated Rehabilitative Disposition (ARD) for driving under the influence of alcohol or a controlled substance

3. The person at fault is operating a vehicle registered in another state

4. The person at fault has not maintained insurance required by law

5. The person injured as an occupant of a commercial vehicle

6. The person at fault intended to injure themselves or another person

7. The claim for a vehicle defect is against a person in the motor vehicle industry

However, under both Limited and Full Tort, you can collect for economic losses such as unpaid medical bills, unreimbursed lost wages or other out-of-pocket expenses with no restrictions.

What is an Example of the Tort Options?

While sitting at a stop light someone negligently rear-ends your car and you are taken to the hospital for a knee injury. After several knee surgeries you still have knee pain and discomfort caused by the accident and you would like to recover $10,000 for the lifetime pain and suffering.

Since the pain and suffering of the knee injury would be considered a non-economical loss, your tort selection may impact your ability to recover for damages. If you have Full Tort you have no limitation and the right to sue for the $10,000. However, if you have Limited Tort, you may or may not have the right to recover the $10,000. Your ability to recover these non-economical damages would only apply if the situation meets one of the previously mentioned Limited Tort exceptions.

The point of this example is not to demonstrate when Limited Tort does and does not give you the right to sue for non-economic losses. The courts will ultimately decide that. The point is that Limited Tort may be limiting, and Full Tort is not.  

What is the benefit of Limited Tort?

Since you are giving up some of your rights, choosing Limited Tort should reduce your auto insurance premium. Reports show, you could receive up to a 40% reduction in premium for bodily injury, first party benefits and uninsured and underinsured motorist coverage. Note Limited Tort will not reduce comprehensive and collision coverages.

Which Tort Option Should I Choose?

Overall, Limited Tort = limited rights = limited price and Full Tort = full rights = full price. Selecting a Tort option on your auto policy is an important decision that impacts your entire family. The decision is something you need to make yourself after considering all the facts and implications of each option. An agent is a great resource to help provide you with information on these choices so that you can make an informed decision.

This article is intended to help consumers understand Tort choices under PA Motor Vehicle Financial Responsibility Law and is not a substitute for your responsibility to make your own choices under law.

The Forgotten College Student Auto Discount

It is no myth that adding a young driver to an auto insurance policy can be expensive. According to MSN Money adding a teen driver will increase your auto insurance by an average of 156%! One of the factors driving this shocking auto insurance increase for young drivers is, not only who is driving the car but how they are using it.

This fall many families will be sending “young drivers” away to school and many of the students will not be taking cars that are insured on their parent’s auto insurance policy. For these families, the young drivers will not have regular access to that car and many insurance companies may offer a significant discount for the reduced car use by your young driver.

One thing to keep in mind is this discount usually has a distance requirement. The insurance company assumes if your child is attending college within a few miles from home, they will most likely still have regular use of that vehicle and the discount may not apply. However, other discounts like “good student” may still be available for college students that live close to home.

Are My College Student’s Belongings Covered?

The short answer is it depends. To have any coverage for liability or their belongings at school they must first qualify as an “insured” on your homeowner or renter insurance policy. According to the PA Insurance Service Office’s (ISO) homeowner insurance policy, an “insured” on a homeowner insurance policy includes a student enrolled in school who meet all the following:

1. Enrolled as a “full time” student defined by the school

2. Who was a resident of your household before moving out to attend school

3. Under the age of 24 and your relative

Thus, if a student is not enrolled full time or is over the age of 23 attending school, they may not have homeowner insurance coverage from your policy. The good news for families in this situation is that endorsement HO 05 27 “Student Living Away From the Residence Premises” may be used to extend coverage from the parent’s homeowner insurance for a student who is 24 or older.

If a student is an “insured” on the parent’s homeowner insurance policy they should have coverage for their “stuff” at school – laptops, books, TVs, ipods, ect. However, the standard ISO homeowner policy has a limitation of 10% for personal property located off the insured’s “residence premises”. This means if your homeowner insurance policy has $100,000 of personal property coverage, student(s) at college would only have $10,000 of coverage for their “stuff”.

This may sound like more than enough coverage but $10,000 can go quickly depending whether you have multiple college students or just one student with some really nice “stuff”. Again there is an ISO endorsement to provide extra coverage beyond the 10% if needed. It is HO 04 50 “Personal Property at Other Residences” endorsement and it allows you to purchase additional coverage above the 10 percent limitation found on most policies.

I always use the phrase “you don’t know what you don’t know” and for many families sending students off to college this fall they don’t know how their insurance works for this major life event. Take five minutes to ask your agent if any additional auto insurance discounts apply and how your homeowner insurance covers or doesn’t cover your college student. The answer could be a very big surprise!

Caution: Many insurance companies have their homeowner policy forms and their provision may be different than the standard ISO form I outlined above. Always consult your insurance company to verify their specific requirements for definitions of “insured” and coverages.

You also know that.

There is no question that the ownership and use of our autos present us with the greatest personal liability exposure. But our normal daily activities can expose us to the potential of a large liability claim that could threaten our personal assets.

One of the best ways to understand the need for a Personal Umbrella policy is to review actual claim examples. Listed below are actual personal liability claims that illustrate the need for higher personal liability limits.

Loss #1:
A babysitter left a 5-month-old infant unattended in a walker. The infant toppled the walker, struck her head on the floor and suffered brain damage. The parents of the infant sued the teenage babysitter and her parents. The court awarded the parents $11,000,000.

Loss #2:
A 28-year-old engineer dove into a friend’s above-ground swimming pool, struck his head on the bottom and, as a result, became a quadriplegic. He sued both the homeowner and the pool manufacturer. The court found the homeowner to be 60 percent responsible and the pool manufacturer to be 40 percent responsible, and awarded $10,000,000.

Loss #3:
An 18-year-old college student was struck by fraternity paddle during initiation. He sustained facial fractures and blindness in his left eye. The fellow fraternity members and their families were sued. The court awarded $1,300,000.

Loss #4:
The insured’s 18-year-old son was driving his parents’ car to the store with his 19-year-old girl friend. He left the roadway and hit a tree. The son told the police that another car cut him off, but there were no witnesses, and the girlfriend had no recollection of the accident. She was hospitalized for over a month with multiple fractures and internal injuries and received extensive physical therapy. The Personal Umbrella insurer settled with the girlfriend for the policy limit.

Loss #5:
The insured hosted a party at his home. Among the guests was a family friend, who was also the insured’s financial advisor. The friend brought his wife, their 2-year-old child and their baby to the party. The insured gave them a jug of spring water to mix formula for the baby. The 2-year-old child also had a drink of the water. Shortly thereafter, both children became ill. The family left the party and took the children to the hospital. The hospital confiscated the water jug which was found to contain arsenic. An old label was found wrapped around the handle with the words “weed killer” printed on it. The insured had mistakenly given the jug, which was similar to the ones containing spring water, to the family. The baby died and the 2 year old survived after being in critical condition several days. The Personal Umbrella liability limit was paid.

Loss #6:
A couple hosted a pool party for their teenage children. They did not provide any alcohol, but it was brought by some of the guests and was available. After leaving the party, one of the guests was severely injured in an auto accident, and the injury was attributed to his consumption of alcohol. This case went to the Wisconsin Supreme Court which decided that anyone who sells or furnishes alcohol to a minor is responsible for the minor’s injuries as well as any injuries caused by the minor. The opinion of the court was that the homeowners should have prevented the consumption of alcohol by minors on their premises. Both the Homeowners’ and Personal Umbrella policies responded to this claim.

The above losses show the consequences of situations that can quickly exhaust the liability limits of the underlying policies.

For less than the cost of a cup of coffee a day, most folks can purchase a Personal Umbrella policy with a limit of $1,000,000, possibly $2,000,000 or even $5,000,000.

Reprinted with permission with Insurance Agents and Brokers

The standard business auto policy provides coverage on vehicles that are owned by the business.  This is why it’s a good idea to title the vehicle to the business if it’s going to be used for business and if it’s going to be insured on the business policy. 

What about vehicles that might be used for business that aren’t actually owned by the business? 

Hired Auto Liability – Protects the business against claims arising out of the use of a vehicle that is not owned by the business, but that you have rented or borrowed for business purposes

Non-owned Auto Liability – Protects the business against claims arising out of an employee’s use of their vehicle for business purposes. 

Put simply, if the business rents or borrows someone else’s vehicle to use for business, you need this coverage.  If your employee(s) use their vehicle for business, you need this coverage. 

These coverages can typically be added to a business liability policy.  More appropriately, they can be included on your business auto policy.  The cost for both can usually be under $150 per year. 

An important thing to note is that these coverages protect the business, not the owner of the vehicle. 

 Let’s look at some examples:

- You (the business) rent a limousine to take a client to lunch, or a show.

- You ask a friend or an employee to pick up office supplies and they use their own vehicle.

- You need to borrow or rent a larger vehicle to do a job that your current fleet of vehicles cannot do.

- And, my personal favorite, an employee uses their vehicle to go out for pizza to bring back to the office.

Any of these scenarios sound familiar?  You probably don’t think twice about it.  If any of these happen in your business you need Hired & Non-owned Auto Liability. 

Think about this in more detail.  Your employee is driving their car to the local pizza shop because your office is celebrating a good sales month.  They’ll be bringing back several pizzas for your business to share.  On the way back to the office the smell of pizza starts to get to the driver making them very hungry.  So, they decide to grab a slice while behind the wheel.  (I’m just making this up, people.  I wouldn’t recommend chowing and driving!)  Well, the pizza is hot and gooey and the driver burns their lip and cheese drips on their pants…  I’m guessing you see what’s coming before the driver does, an Accident!  The driver runs a red light and plows into another vehicle.  Ok, so as to not get overly dramatic, let’s keep damage and injuries to a minimum.  The point is, your business could very easily get sued for one of your employees causing an accident, whether the accident is severe or not.  Without Non-owned Auto Liability your business will not be protected.

Another common scenario:  You’re a contractor.  While on the jobsite you realize you need more materials.  You send an employee in their own vehicle to pick them up.  Or, you get in another contractor’s truck because it’s bigger than yours.  You or your employee cause an accident.  Without Hired & Non-owned Auto Liability your business will not be protected.

Or, before leaving home to go to work you remember you need to pick up a generator (or other piece of equipment) for the project you’re doing today.  Your neighbor has a nice, new Ford F250 (or Chevy, GMC, whatever…)  You ask if you can borrow the truck since the generator won’t fit in your little sports coupe, or on the back of your motorcycle.  While on the way to work you cause an accident in your neighbor’s new truck.  Maybe you were having too much fun finding out how many satellite stations you could listen to and your attention was off the road for just a short period of time.  Not only will your neighbor be a bit upset with you, but unless you have Hired Auto Liability your business will not be protected against a claim. 

What about a business that doesn’t have a business auto policy?  Maybe you’re a sole proprietor who makes flower arrangements and your vehicles are insured on a personal policy.  You use the family minivan to deliver flowers.  Without Hired & Non-owned Auto Liability attached to the business liability policy, the business might not be protected against a claim.

In summary, don’t stop having those office pizza parties.  Just add Hired & Non-owned Auto Liability to your insurance portfolio.  The sooner the better.

What is this New Product?

The new product is called “Erie Rate Lock” which is offered by Erie Insurance for PA residents starting July 6^th. Erie Rate Lock is an optional endorsement that offers pricing stability by locking your current auto insurance rate beyond the normal policy period of 12 months. Once the rate is locked, it does not change even if you have an accident or violation.

How Much Does It Cost?                     

The cost is based on individual characteristics so pricing will vary for each policy. Thus, you may see no change in price to lock your rate, you may see an increase or you may see a decrease. It is not a flat charge or fee.

How Does Your Rate Unlock

Only you can remove the Erie Rate Lock feature, which can be done at any time. The endorsement cannot be removed by Erie Insurance or lost. In addition, if you make three basic policy changes the Rate Lock will also be removed

- Change in vehicles

- Change in drivers or

- Change in location where the vehicle is principally garaged

When the Lock Rate feature is removed the policy will be re-rated using Erie’s current pricing and any accidents, claims or violations that did not impact the “old rate” will be calculated into the “new rate”. You will have the option to re-lock the “new rate” but your driving record will be subject to Erie’s underwriting guidelines.

Who is It Available To?

Erie Insurance is the only auto insurance company that has the Rate Lock feature. It is available to new customers and to existing Erie Insurance customers only. However, existing Erie customers can only lock their rate when either their policy renews or if they make any of the 3 qualifying changes listed in “How Does Your Rate Unlock”.

After getting the basic information about this new product, what do you think about the concept of locking your auto insurance rate?

As we enter the summer vacation months, many families will be renting cars and unexpectedly dealing with the same rental car insurance question as I did a few years ago. Faced with a number of choices, families will either purchase all the coverage or they will decline the insurance without knowing if they are covered by other policies. This can lead to either wasting money by purchasing coverage you already have or leave you dangerously uninsured or underinsured.

Homework Before the Rental Car Counter

The first thing you should do if are planning to rent a car is call your insurance agent before getting to the rental counter. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car, assuming you are renting car for pleasure and not for business. This means if have comprehensive and collision coverage on your vehicle, the rental car will likely also be covered if it is stolen or damaged in an accident.

Another potential source of existing insurance coverage for rental cars is your credit card. To find out what type and how much coverage a credit card company offers call the 800 number on the back of the card. The Insurance Information Institute (III) recommends, “If you are depending on a credit card for insurance protection, ask the card company or bank to send you their coverage information in writing. In most instances, credit card benefits are secondary to either your personal insurance protection or the insurance offered by the rental car company.”

At the Rental Car Counter

Contacting your agent prior to getting to the counter is going to make reviewing these common rental car insurance coverages much easier and avoid the panic and uniformed decision I made when trying to get that convertible.

1. Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW): This is the rental company’s version of comprehensive and collision coverage insurance. If you do not have comprehensive or collision on your own vehicle this coverage is recommended in case the car is vandalized, stolen or damaged.  But be careful. According to III, your coverage may become void if the accident was caused because you were speeding, driving under the influence or some other reckless error on your part.

However, you may still want to buy this coverage even if you have comprehensive and collision on your own vehicle. Yes, there is some double coverage by doing this but a rental car company may charge for something called “loss of use”. Let’s say you get into an accident with your rental car and it causes $5000 of damage to the rental car. Since you have collision coverage on your own car your insurance pays the $5000 damage minus your deductible. Then the rental car company sends you a bill because they cannot rent the car to someone else (loss or use) for 2 weeks. Your car insurance company may not pay this expense and you could be left picking up this expense unless you purchased this waiver. If you have comprehensive and collision on your vehicle ask your agent if your policy covers “loss of use” and find out from the rental company if they would charge for “loss of use” to determine if buying this option makes sense.

2. Liability Insurance: Rental companies are required by law to make sure all rented cars have at least the state required amount of liability insurance. If you do not have any auto insurance you will be required to buy this coverage. Remember that state minimums do not offer much protection and it is recommended to buy additional liability insurance above the state minimums. 

If you already have auto insurance rental car company will ask you to purchase additional liability insurance. According to III, “You should probably only forgo the additional liability protection if you have adequate amounts of liability protection on your own car.” If you are interested in additional liability insurance it may be a better option to talk to your agent about an umbrella liability policy versus getting through the rental car company. 

3. Personal Accident Insurance: This offers you and your passengers coverage for medical and ambulance bills for injuries caused in a car crash. According to III, “If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance.”

4. Personal Effects Coverage: This provides coverage for stolen items in your car while on vacation. If you have a home or renters insurance policy, you are already covered for theft of your belongings away from home, minus the deductible. However, the amount of coverage away from home could be limited so tell your insurance agent if you are planning to take valuable items on the road.

In hind sight, the coverage I had on my own auto and renter insurance for our Everglades trip probably would have been adequate even if something did happen after I declined the car rental insurance coverage.  However, I would not of known it was adequate after it was too late and that is never the time to hope you have the right insurance. Take 5 minutes call your agent, be prepared and happy renting!