Shield Insurance Agency & Foremost Insurance Company present Insurance Terms
Every industry has its own unique language – and insurance is no exception. Here are some key insurance definitions and terms you might come across as you consider insuring yourself or your stuff.
How credit affects auto insurance: Rates could increase up to 72%
Kacie Goff /October 15, 2020
- Can credit scores be evaluated for auto insurance rates?
- How do insurers and credit agencies evaluate scores differently?
- Does credit score affect auto insurance rates?
- Does credit affect car insurance rates more in certain states?
- How other factors can affect your auto insurance rates
- The takeaway
Before offering you a policy, insurance providers analyze your risk profile by looking at things like your driving history, as well as personal details, such as age or marital status. This evaluation is used in determining your premium.
But there’s another somewhat surprising factor that affects your premiums in all but three states: your credit score. Unless you live in California, Massachusetts, or Hawaii, expect your credit score to affect how much you pay to insure your car, at least to some degree.
You may already be familiar with your credit score as determined by the three major credit bureaus, TransUnion, Experian, and Equifax, it’s important to know that insurers assign you an insurance credit score that varies from your traditional credit score. While your credit score plays a role in that insurance score, additional factors are also involved.
It’s important to understand why credit affects car insurance. Carriers’ proprietary credit-based insurance score provides a way to check two things: your likelihood of making insurance payments on time and your likelihood of filing a claim.
While insurance carriers use a more complex algorithm to calculate premiums based on your insurance credit score, for the sake of this study, Coverage simplified the ratings by classifying insurance scores into three general categories: “good,” “average” and “poor” credit. This is to give you a general idea of premium impact by credit tier.
Can credit scores be evaluated for auto insurance rates?
Short answer: yes, in most states. California, Massachusetts and Hawaii are the exceptions here.
Michigan is a bit of a gray area, too. In Michigan, you might be mostly off the hook. Insurers can’t use your credit score, but they can look at your credit information. That means a low score won’t necessarily increase your rates, but a history of missed payments might make an insurance provider wary, and could ultimately affect your rates.
Let’s look closer at why credit affects car insurance rates. Studies, including a Congress report by the Federal Trade Commission, have shown that a lower score means you’re a higher risk for your insurer. A poor score directly correlates to an increased risk of filing a claim.
Parents encouraged to talk to teen drivers about the importance of driving safely
How Parents Can Help Teen Drivers
Motor vehicle crashes are the leading cause of death for teens 15-18 years of age in the United States, ahead of all other types of injury, disease, and violence. Inexperience and risk-taking behavior are factors that increase the crash risk for teens.
“Parents can help protect their teens by talking with them about how to avoid risky driving behaviors,” said Michael L. Prince, OHSP director. “Because of their lack of experience, teen drivers are at a greater risk of being killed or injured in a crash. That is why it is so important to start a conversation with teens and encourage safe driving practices.”
In Michigan, teens and young adults age 15-20 years old, accounted for 7.6 percent of all traffic deaths in 2018, with 55.4 percent of those deaths being the driver. In addition, 9,637 teenagers and young adults were injured in motor vehicle crashes in 2018, representing 12.7 percent of all people injured in a crash.
Michigan, and other states, have adopted Graduated Driver Licensing (GDL) laws for teen drivers as a way to promote safety behind the wheel and reduce serious injury and death in a crash. Teens face the greatest risk of a crash during their first year of driving. GDL programs limit high-risk driving among teens and can reduce teen crash risk by as much as 50 percent. For more information on the GDL program in Michigan, visit: www.michigan.gov/teendriver.
A unique opportunity for teens to teach other teens about safe driving, is the Strive for a Safer Drive (S4SD) program. Students at every Michigan high school can participate in S4SD, with cash prizes awarded to the top five winning entries. Parents and teachers are urged to discuss the opportunity with teens and encourage participation in the program. Applications are due Nov. 14. Application information, including examples of winning campaigns, can be found at: https://www.michigan.gov
The National Highway Traffic Safety Administration also provides information parents can use to help keep teens safe including tips on seat belt safety, distracted driving, impaired driving, and speeding. For more details on Teen Driver Safety Week, including safe driving tips for parents and teens, visit: www.nhtsa.gov/road-safety/teen-driving.
Be sure to visit our informative insurance Blog for more great articles!
When you’re in the market for insurance, whether it’s home, auto or commercial insurance, you typically work with an agent who can help you find a policy that meets your needs. But most people don’t know that there are two different kinds of insurance agents—captive and independent agents.
So what is an independent insurance agent vs. a captive insurance agent? In short, captive insurance agents are contracted to work for one insurance company and can only sell that company’s policies. On the other hand, independent agents are contracted to work with a variety of insurance companies and can sell policies from multiple providers.
As a consumer, it’s important to understand the distinctions between captive and independent agents. Although they sound the same, some people may benefit from working with a captive agent and others with an independent agent. In this article, we’ll explain the key differences and help you decide which agent is best for you.
Most of the major insurance companies, like State Farm, Allstate and Farmers, use captive agents to sell their insurance products. Their agents are only selling policies from that one insurer, so the agents are experts at knowing the different policies available, discounts and coverage add-ons for their one carrier.
Because of that, they can be helpful for people who are buying insurance for the first time or for people who aren’t sure how much coverage to purchase.
Client satisfaction is crucial for captive agents because they get a commission for every earned sale. However, their commission rate tends to be lower than for independent agents because they are also paid a salary from the insurance company and get financial assistance with costs like advertising and hiring.
Independent agents partner with several insurance companies of their choosing to sell certain policies from each provider. For example, an independent agent might contract with Pioneer Insurance, Frankenmuth Insurance,and Citizens Insurance and sell any of their auto and home insurance policies.
Many consumers like working an independent insurance agent because an independent agent gives the customer more options. They aren’t locked into purchasing from a small number of plans that might be too expensive or not a great fit for their coverage needs. Those options help people shop around for plans before settling on one.
Which is better?
Generally speaking, there isn’t one better type of insurance agent. Whether you choose to work with a captive agent or an independent agent depends on you.
The main benefit of working with a captive agent is that they have extensive knowledge of their insurers products and policies, because they have one carrier. However, working with a captive agent tends to be more expensive, due to extra fees that the insurance company charges.
If you work with an independent agent, you’ll get more options, which also means a wider price range. But independent agents have in-depth knowledge about numerous carriers, where captives only need to learn one. Also, independent agents usually charge less because there isn’t one parent company to support.
If you’re concerned with keeping costs low, working with an independent agent will save you money. Keep in mind that you should already have a general idea of what you’re looking for before meeting with an agent.
Frequently asked questions
What type of insurance do independent and captive agents sell?
Both independent and captive agents can sell any kind of insurance they want. Some choose to sell every product that an insurer offers, while others specialize in a few areas, like home and life insurance.
Should I choose an independent or a captive agent?
There are a few main reasons why you would choose an independent vs. a captive agent. The first is cost—working with an independent agent will be cheaper than working with a captive agent. Secondly, independent agents can offer a wider variety of plans, so you have more choices and a wider price range to work from.
The email we sent the evening of 5.6.20 will walk you thru a short questionnaire that will kick-start this transition for auto insurance reform. Contact Us if you have any questions at all, we are here to help you.
Be sure to follow us on social media as we will be giving away prizes to our customers on a weekly, sometimes daily bases!
What is it? What should you expect?
Michigan’s Auto Insurance Reform, it’s finally coming around the corner on July 2, 2020. As many of you know, Michigan passed a bill that will hopefully save many drivers money each year on their auto insurance. This is partially due to the PIP Reform coverage on your auto insurance policies. There are other parts to this, but this blog focuses on just the PIP portion of it.
WHAT DOES PIP STAND FOR?
Personal Injury Protection
WHAT DOES PIP COVER?
PIP is the coverage on your auto insurance policy that pays for the medical costs for auto related injuries. This will cover not only the medical bills but for any long term care, wage loss and replacement services.
WHO DOES PIP COVER?
PIP will cover the named insured of the policy, also known as policyholder, and their resident relatives. Being a listed driver on the auto policy is NOT the same as being a named insured or a resident relative.
WHO IS A RESIDENT RELATIVE?
The definition of resident relative can be difficult to define as not everyone’s family and living situations are the same. The generalized response would be anyone who is legally a relative of the named insured that permanently resides in the same home as the named insured. This would include the named insured’s children and spouse. Please have a conversation with your insurance agent if your family/living situation does not fall into the “traditional” circumstances.
WHAT ARE THE PIP OPTIONS?
Drivers will now have different options to choose from other than the unlimited PIP coverage. Currently anyone with an auto policy in Michigan has an unlimited amount of PIP so there is no cap on how much an insurance company will pay out on a PIP claim. As of July 2, there will be options available, but it is important to know that not all options are available for everyone.
The options are:
- $250,000 (with opt-out options for those listed on the policy with Qualified Health Coverage)
- $50,000 (only for named insureds enrolled in medicaid AND any spouse and all resident relatives have either Qualified Health Coverage, medicaid enrolled or covered under another auto policy with PIP coverage)
- $0 – Opt Out (only allowed if named insured has Medicare A and B AND if everyone else in the household has Qualified Health Coverage.)
The first 3 options have no stipulations so anyone could choose them. The last three options have certain requirements. It is important to discuss your health insurance circumstances with both your health insurance carrier and your auto insurance agent to know which options are available for you. Such as, does your health insurance fall under the “Qualified Health Coverage” under this new law?
WHAT IS QUALIFIED HEALTH COVERAGE?
As defined under the new law, Qualified Health Coverage is: health and accident coverage that does NOT exclude or limit coverage for injuries related to auto accidents/injuries and has an annual individual deductible of $6,000 or less per person. Medicare recipients with BOTH parts A & B would also qualify.
Medicaid and health care sharing ministries are examples of coverages that are NOT considered Qualified Health Coverage.
WHO DO YOU CONTACT ABOUT QUALIFIED HEALTH COVERAGE?
Call your health insurance company using the number on the back of your ID card. If your current health insurance is through your employer, you may be able to also contact your HR department. You may have to provide proof to your auto insurance company that you have the right kind of health insurance.
WHO DO YOU CONTACT ABOUT YOUR PIP COVERAGE CHOICE?
Call your auto insurance agent to discuss what options are available for you.
WHEN SHOULD YOU MAKE YOUR CHOICE / TAKE ACTION?
The beginning of June will be an ideal time to reach out to both your health insurance company to verify your coverage and your auto insurance agent. By this time, all auto insurance companies will have the rates available for the different PIP options. It is ideal to contact your health insurance carrier and get that answer, and then your auto insurance agent.
HOW WILL MY AUTO INSURANCE COMPANY OFFER THESE CHANGES?
Two options that most auto insurance companies are offering if you wish to change your PIP coverage to anything other than unlimited are: 1)You will be able to just make an endorsement (change) to your policy the same as if you were to swap a vehicle on your policy. 2) Some companies are requiring that your policy be rewritten so you would have a new policy vs just making the changes on the current one.
WHAT IS SHIELD INSURANCE AGENCY’S PLAN OF ACTION?
Shield has a plan in place starting in May to try and make this change go as smoothly as possible. We will be emailing all our clients we have email addresses for a quick 2 question survey for how they would like to address their auto policy regarding the new law. There are options to select if you already know your decision or you can select to have someone call or email you to discuss. For those who do not have an email address on file or who don’t respond to the emailed survey, we will be reaching out to you by phone prior to July 2.
To learn more, please feel free to email us as firstname.lastname@example.org or call or text us at 616-896-4600.
You can also visit https://www.michigan.gov/autoinsurance for more information.
Submitted by Agent Melissa Hunt
FOR IMMEDIATE RELEASE
May 30, 2019
Gov. Whitmer Signs Historic Bipartisan Auto No-Fault Legislation
MACKINAC ISLAND, Mich. — Today Governor Gretchen Whitmer signed Senate Bill 1, auto-no-fault-legislation, which passed with overwhelming Senate Bill 1 , to reform Michigan’s auto insurance system to guarantee lower rates for every Michigan driver, protect insurance coverage options, and strengthen consumer protections.
“By signing this legislation, we are providing relief to millions of drivers across the state and guaranteeing a better auto insurance system for everyone,” Whitmer said. “This historic deal shows that, when we put party aside, we can find common ground on our state’s toughest issues to provide realistic and affordable coverage options for drivers across Michigan.”
Senate Bill 1 reforms a broken auto insurance system and offers historic protections for drivers across our state. The bill, negotiated by Governor Whitmer with legislative leaders, will save drivers money by:
- Guaranteeing lower rates for drivers for eight years;
- Protecting people’s choice to pick their own Personal Injury Protection (PIP) options with coinciding PIP rate reductions, offering unlimited coverage (10% PIP reduction), $500K coverage (20% PIP reduction), $250K coverage (35% PIP reduction), $50K coverage for Medicaid eligible recipients (45% PIP reduction), or a complete opt out for seniors or anyone with sufficient private insurance (100% PIP reduction).
- Increasing consumer protections by banning companies from using non-driving factors, such as ZIP code, FICO score, gender, marital status, occupation, education attainment, and homeownership, to set rates.
- Setting fee schedules for hospitals and providers to prevent overcharging for auto-related injuries.
“I am proud to have worked alongside Senate Majority Leader Shirkey, Senate Democratic Leader Ananich, Speaker of the House Chatfield, House Democratic Leader Greig, and all members of the legislature to solve a problem that has been hurting Michigan families for far too long. We still have more important work ahead of us, and I have no doubt that we can seize on this momentum to pass a strong, bipartisan budget that fixes the damn roads.”
Senate Bill 1, auto-no-fault-legislation, sponsored by Senator Aric Nesbitt (SD-26), will be filed next week with the Office of the Great Seal and take effect at that time.