Lying on an auto insurance application.. the benefits vs consequences

Posted by Uni Aguilar on Tue, Oct 15, 2013 @ 13:10 PM

I am currently taking a class on becoming a tax preparer, and in that class I drew some comparisons to the insurance world. Today I will specifically be talking about some of the common "details" that customers fib or flat out lie about on the application. Much like the insurance world, there are certain misinformed individuals that believe that omitting or flat out lying on their tax return is beneficial to them. Although the "benefit" is immediate, the consequence can be far more costly in the end if you are discovered. The insurance purchasing process is a data entry process and interview at the same time. You inquire on the customer's specific information, such as address, telephone number, name, birthdate, marital status, and so on and so forth. The application of an insurance policy includes language that expressly states that lying on the application is grounds for a denial of coverage, or even in some cases, prosecution in the court of law. Here are a few examples of what people lie about when purchasing auto insurance:

  • Address/zip code: For those that know, for auto insurance, where you live has an effect on how much you pay for your premium. Ask anyone that has moved from Los Angeles County to Riverside County and they will tell you that the impact on the cost of insurance is significant (by the way, Riverside is cheaper than LA). Some people know that their rate is cheaper in certain zip codes, and they lie about where they live. This results in a decrease in premium, however, if you are caught doing this after a claim, you will most likely be denied coverage or in some cases prosecuted legally. Companies are now suffering through what is called a "hard market" - a cycle during which time coverage may be more costly, terms may be more restrictive, and policy conditions and requirements more stringent - so they are being more careful with business they write. Many companies are employeeing individuals that are tracking patterns in where there is a "discrepancy" in the zip code vs the area in which the policy was purchased.
  • Not diclosing household members of driving age on the application: Essentially, insurance premiums are relative to the risk. So more risk, more premium. Many companies want to know the names, birthdates and sometimes the license number of ALL members of the household who are of driving age. The "trick" that is pulled with this one is an individual will buy a policy under their name, having a good driving record, and getting a really good rate, BUT not disclosing that there are actually other drivers driving the vehicle other than himself. Companies base their rates on what is on the application, by not disclosing all members of the household, the company is not giving you that rate that you should be paying. The best commercial that I have ever seen that illustrates how rates work is the Progressive commercial "Rate Suckers". This is why rates go up.
  • Annual mileage: This is another rating factor in California, and I will admit that there is a lot of gray area with this one. A good example to compare: someone that is retired and drives to and from the store, the pharmacy or the park is going to be a lower risk than someone that has a commute of 100 miles a day to and from work. Unfortantely, this is something that many companies have a different policy on, so it is fairly inconsistent as far as the rules on how they are reported. However, if a company is expressly asking you to detail you annual mileage, do not underreport it, because again, you may be denied coverage.
  • Marital status: The discount rate on this one varies from company to company. A married person represents a lower risk to insurance carriers, and that is why a discount exists. Some people put themselves as married on an application when they really aren't. If you are separated but not divorced, most companies will want you to list yourself as single. There are some individuals that actually go beyond that and flat out lie and invent names of people who do not exist and give them the same last name as theirs. There are a lot of companies that you can get away with this with, however, many companies that are privy to this "trick" are asking for proof of marriage, proof of residence or in some cases plain and simply proof of existence (anything with their name on it with the same address as yours). I have seen cases where a brother & sister put themselves as married to each other (because they have the same last name) just so that they can get that married discount. The insurance carrier discovered this during the claim, and needless to say the claim was denied and they were prosecuted for fraud.
I have listed a few, but not all, of the common things that I have seen that people can lie on. Again, the consequences far outweigh the benefit. If it can be proven that you lied, your claim will be denied. Most accidents cost more than the premiums you pay, so saving a few dollars for a discount you don't qualify. Another thing that I strongly urge you to pay attention to and red flag is to NEVER allow an insurance sales person to ever "help" you. Lying on an application will not "help" you. The only person that will suffer consequences will be you, not the sales person, because most likely that sales person will not be there when you come back and need them to explain to you why you are being denied coverage. Someone that suggests to you that they can lower your rate by "helping" you lie on an application is not someone you want to do business with. Help insurance rates stay low, represent yourself accurately on all applications you submit. DON'T BE A RATE SUCKER!
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Topics: coverage, underinsured, rates, insurance, riverside, auto insurance, myth, debunked, liability, vehicle

What some homeowners insurance carriers consider too risky ....

Posted by Uni Aguilar on Tue, Jun 25, 2013 @ 18:06 PM

When I quote a homeowners insurance policy, aside from asking the address and other basic questions such as square footage, year built, and so on and so forth, I also inquire on some of the most common things that companies won't accept. The reason I do this is because knowing what the customer has that is not acceptable enables me to narrow down which insurance carriers will and will not insure that property. Some of the questions that I ask are if they own a dog, and if they do, which breed of dog; furthermore, I inquire on if their property has a pool; and, the other common question, which a lot of people are not educated on, is if they have a trampoline on the property. All of these things are tied in one way: liability. Remember, as I mentioned in my other articles, any time you own something, whether it be a car, a property, or an animal, you are legal liabile for whatever damages may arise from the ownership of it. Here are a few details and a video illustrating why some risks are not acceptable:

  • Of all of the questions I do ask customers about their homes, the first question that I almost always ask is whether or not they own animals. The most common animal on a property are dogs. The reason why this is important to know is that some dog breeds have a higher risk or tendency towards biting. The list of dog breeds is surprising and not surprising in some cases. The most common dog breed that has a bad reputation and has a long history of biting is the pitbull breed. Many shows have popped up showing us all that pitbulls are actually a nice, calm and friendly breed, however, due to the history of biting, many insurance companies simply will not insure any property that has this breed of animal on their property. The most suprising, at least in my opinion, are the innocent looking chow chows. The list of breeds also includes rottweilers, german shepherds, siberian huskies, doberman pinschers, boxers.describe the imagerottweilersf2 resized 600
  • The next question I ask about is if there is a pool on the property. Now owning a home with a pool is not a bad thing, but what is important is that the pool be fenced off from the general public, meaning, that there is a fence that is between the public and the pool itself, not necessarily that the pool itself within the property is fenced off. The reason for this is because the insurance carrier wants to see that you are fencing off your pool from the public that can just come in, drown, or be injured on your property, and file a claim or lawsuit. Although I personally believe having a fence around your pool is a great idea, this way you can prevent small children from going into the pool and accidentally drowning. Another question I do ask, and many carriers want to know, is if there is a diving board and or slide. The reason for this, again, has to do with safety. Because of the diving board's unpredictablity, such as, where the person lands, or if the diving board breaks, the risk for some carriers is too high and or unacceptable.
  • The next question I ask my customer, and which surprises them all, is whether or not they own a trampoline. I have embedded a video that I found on Youtube.com that will illustrate for you why many carriers do not want any trampolines on the property. First off, the risk of injury is very high due to the fact that it is unpredictable where a person will land. In addition, trampolines have a finite space, and sometimes, as you will see, that space is limited, so when trampoline space runs out, there's only two places to land: on the edge of the trampoline where it is all metal tubing or right on the floor next to it:
  • Here's a list of a few other things that companies want corrections on:
  • Unsecured waterheaters
  • Inoperable appliances outside the home
  • Inoperable vehicles
  • Air conditioners that are secured inproperly
  • Damaged and patched up rooftops
I hope that this article will help homeowners understand the "risk" that they "pose" as an insured. As a homeowner, simply having insurance is not enough to protect yourself. The insurance carrier wants you to demonstrate what is called due diligence and hazard reduction. If they see that you did not do your part in preventing a claim/loss the claim may be denied. Many customers have the false belief that just because you simply have insurance, the insurance carrier will cover the claim, but that is not the case. There have been many cases where a claim was denied due to an insured's inability or unwillingness to correct hazards that will pose a higher risk of a claim or loss. It is our responsiblity as property owners to make sure that things that may be dangerous be corrected, otherwise way hurt ourselves financially by not having the claim paid for, and even worse, possible injury someone by not preventing an accident from occurring. Although the video that I have embedded for you is humorous, we do not see the aftermath, many of these people could've been seriously injured. Please call us, e-mails us or post a comment below if you have any questions or comments on more risk reduction methods.

Topics: coverage, liability, homeowners

Protecting your business & personal assets - at the same time..

Posted by Uni Aguilar on Tue, Jun 25, 2013 @ 14:06 PM

Today we feature an article from a personal friend of mine, Jim Betinol, who is also a business associate of mine as well. He is a partner at the law firm Withrow & Betinol Law. I have asked him to write an article educating people on the importance of business insurance AND doing business under a corporation or LLC. Notice how I emphasize the word "AND" - because it is not simply enough to have one without the other. Jim can be reached @ 424-229-2560, [email protected] & visited @ www.wibelaw.com.

Why you should have both a limited liability entity (LLC, Corp) and business insurance.

Many business owners mistakenly believe that there is no reason to have both business insurance and a limited liability entity like an LLC or a Corporation -- that business insurance will provide enough protection so an LLC or a Corporation is unnecessary.  This misconception puts many business owners, their homes, savings, and financial security at risk. 

For example, if a customer  is injured at your place of business or due to your services, including unintended injuries (i.e. slipping on a wet floor, a driver accident, construction materials falling on customer, or a mistake made by one of your employees causing property damage, etc.) there is a strong chance that a lawsuit will be filed.  Most business owners have the foresight that these types of situations may occur, which makes obtaining strong business insurance with policies that provide coverage for the types of risks that are likely to happened a must.

However, as medical costs increase, business owners have to pay for higher and higher damages, which may be beyond what is covered by insurance.  When your insurance coverage runs out, this is where your lifesavings, home, and other personal property could be at risk -- and where having a limited liability entity steps in. 

The benefits of having a limited liability entity, such as an LLC or a Corporation, is that they shield your personal assets and keep them separate from your business assets.  This means, when a business liability arises you do not have to worry about the damages affecting your lifesavings or personal assets.  A limited liability entity generally limits personal liability to cases in which you personally cause the harm, guarantee a loan, intentionally act with recklessness, or fail to maintain the LLC or Corporation. 

A properly planned and operated limited liability business can provide:

  • Asset Protection by limiting liability to the assets of the business:
    • For business owners with multiple businesses, this can mean that losses in one higher risk business will not affect the other businesses;
    • For all owners, it will help protect your lifesavings, home, and other property.
  • Potential Tax Savings by reduction of self-employment taxes.
  • Flexibility when bringing in new investors or when selling your business. 

This article should not be taken as legal counsel and readers should not base any legal decisions solely on the article without consulting an attorney.  Legal decisions must be approached on case-by-case basis as your situation may require specific requirements.  For additional questions, feel free to contact the author at [email protected]

Topics: underinsured, insurance, liability, business insurance

You just sold your car.. Submit a release of liability

Posted by Uni Aguilar on Sun, Mar 24, 2013 @ 23:03 PM

Did you just sell your car, and you are wondering what do you do now.. and how do you do it? One of the most important things to do after you have signed off on the title of the vehicle is to report that the vehicle has been sold. Any time you own property, whatever liability arises from its use is YOUR responsibility. In the case of a vehicle, once you sell it, it no longer belongs to you physically, but on paper, it does, and that is why it is imperative that you report to the DMV that it has been sold. So what could happen to you if you don't submit the release of liability to the DMV?

  • If the person you sold your vehicle gets a parking ticket & that person has NOT regitered that vehicle into their name, that parking ticket is coming straight to you. Even though you no longer own that vehicle, because the new buyer did not register the vehicle, that ticket is coming to you. You cannot avoid this situation because for the most part it is out of your hands, however, by doing a release of liability at the DMV, it is much easier for you to prove to whoever is giving you that ticket, that you are not the responsible party.
  • If the person you sold your vehicle to gets involved in an accident and there is a lawsuit as a result of it, you as the registered owner could be the target of that lawsuit. Because you are the registered owner, some attorney could try to fish for anyone that will pay their client's bills, and that person could be you. Avoid this horrible scenario by simply submitting the release of liability to the DMV.
  • If the person you sold your vehicle to is involved in a crime sometimes you may be put in a scenario where the cops are looking for you! Although the police won't take the time to look up the history of your vehicle's registration, it does help in some cases to eliminate you as a possible suspect.
How easy is it to submit a "notice of release of liability"? Well, at Mey's Insurance Services, where you can get your auto tags, do ownership transfers, and many other things, we make it very easy for you. But outside of us, you can submit the REG 138 form that you can print off of the DMV's website here. OR, even better, you can submit the "notice of release of liability" electronically through the DMV's website here. It is that easy! Such an easy step can help you avoid major headaches later on! But if you just want us to take care of it, give us a call, shoot us an e-mail or click here for us to contact you.

Topics: sold, parking ticket, tickets, liability, release, notice of release of liability, vehicle

Shopping for auto insurance? Here's a few tips to help you be a better shopper..

Posted by Uni Aguilar on Wed, Aug 10, 2011 @ 00:08 AM

Are you shopping for auto insurance? Many customers are lured in by low prices offered by agents over the phone. Unfortunately, most of those prices are phony. Become a more sophisticated shopper by applying a few tips that I suggest for you:

  • Have a "baseline" - a set coverage that you want to be quoted at. You could get a quote with a company that is offering you one level of coverage, while another will give you a quote based on a different level of coverage. Essentially, make sure to compare "apples to apples". You will obviously get a lower price when you get quoted lower coverage.
  • Be wary of anyone that offers you a quote and does NOT ask you about your driving record. Your driving record is a major factor in determining the price. Usually agents that don't ask questions about your driving record are only interested in getting you in the office by offering you the lowest quote possible, and use a bait and switch tactic, by not offering you an "honest" quote. Other questions that should be asked is marital status, commute miles, & occupation.
  • Although the purpose of shopping around for your auto insurance is to get the most for your money, please always remember that you get what you pay for. There are various companies out there that you have never heard of that offer really low rates, excellent coverage, but extremely bad service, whether it be customer service or service during a claim. There are always exceptions, but "brand" companies tend to work harder to keep their brand's reputation as good and clean as possible.
  • When and where possible, give the salesperson your driver's license number, and the VIN (vehicle identification numbers) for your vehicles. This will ensure a more accurate quote, because a VIN will tell the agent exactly what vehicle they are dealing with, and also, your motor vehicle report will ensure that they know what is on your driving record.
Use these tips to narrow down the good brokers/agents from the bad. Also, these tips will give the person on the other side of the phone the impression that you know your stuff, and this will likely lead them to take you more seriously and not use their "tricks". Lastly, it helps you achieve your goal: to get the best rate possible based on the same information you provided. Give us a call, and let ME quote YOU :).

Topics: coverage, auto, rates, insurance, riverside, Full coverage, liability

Why did my auto insurance rates go up?

Posted by Uni Aguilar on Thu, Mar 24, 2011 @ 23:03 PM

Have you ever wondered why your auto insurance rates change? There could be various reasons that cause a change in your auto insurance rates: some of them are easier to understand and accept, and some are harder to understand and unacceptable reasons as a consumer. Here are a few of the reasons prices go up, or sometimes, down:

  • If you have incurred moving violations and additional points in your record this will cause your rate to go up. Remember, that insurance rates is calculated based on risk, and if you are a higher risk, you will pay a higher rate. The opposite also is true, when you have less points, you will get a lower rate, and in fact, California has a massive discount, the California Good Driver Discount, that drivers with 1 point or less qualify for.
  • Some companies offer what is called a "loyalty discount" - not all companies offer this discount, but a handful do. This discount is offered to customers who renew their policies with the same carrier. If you leave the company, you lose the discount, this is why it is sometimes NOT a good idea to be bouncing around from company to company.
  • If a company experiences many losses (accidents/claims) it has to adjust its rates to stay profitable, and as a result, many customers see increases in their rates. From an individual customers perspective, this is unfair, because you have not done anything to cause these increases, and it is understandable why many customers do not accept this reason. However, from an insurance company perspective, it is very necessary to adjust rates accordingly to profitability, otherwise, a company will become insolvent. From a consumer point of view, the best way to counter this particular event is to simply shop around and place your insurance with another carrier.

However, despite the aforementioned, most policies keep the same rate as the previos term. Many customers wonder why a company doesn't lower the price & reward customers. The best way I can answer this question is by giving you this example: if you buy a pencil, and you need to buy a new one, the price stays relatively the same. You may or may not see a price different, but generally speaking, it stays the same.

Topics: rates, change, auto insurance, liability

"Full Coverage" Auto Insurance Explained

Posted by Uni Aguilar on Tue, Nov 09, 2010 @ 17:11 PM

For my first blog on insurance I will write about THE most commonly used and most misleading term used in insurance: "full coverage" auto insurance. I have been wanting to write about this for so long because it is so widely used and misunderstood, it is important for me to educate my clients and whoever cares to learn about this widely used term. What is wrong with the term "full coverage" auto insurance? Why is it important that this term be debunked? Here's a few reasons:

  • "Full coverage" does not exist. You will not find "full coverage" listed on your declarations page, application or in any documentation you receive from your insurance carrier. As insurance agents, in our pre-licensing stages, there is no text that defines "full coverage" auto insurance.
  • "Full coverage" is a term used by car salesman who do not have a license to sell insurance, or a person selling you an insurance policy who is NOT licensed to sell insurance, or worse, by a person who is licensed but does not advise & educate you on the term. Explaining to a customer that "full coverage" does not exist adds 5 extra minutes to the sales cycle - there are some people who do not want to take that extra step.
  • "Full coverage" implies that everything is covered. "Full coverage" - those 2 words are very powerful as far as gaining a customer's trust and confidence, however, no policy in the world, even the most exotic and expensive, will cover everything. Be very wary of anyone that tells you "everything is covered".
  • "Full coverage" oversimplifies a not-so-complicated but not-so-simple to understand policy. By you not understanding that this term is in fact not a coverage at all, you put yourself at risk for being underinsured or not being covered at all! Learning that something is not covered when it was what you actually needed makes you feel sick! I can personally attest to this feeling. It is a feeling you want to avoid.

Your auto insurance policy has many options. Every person has different needs, so one policy can look very different than another, not just in terms of price, but in coverage as well. Remember, auto insurance is not a commodity, like a phone that Wal-Mart buys 100,000 units of and sales it to you at a discount, you cannot buy auto insurance in bulk, as many commercials who advertise "$17 a month insurance" would have you think. When shopping for auto insurance, and, when deciding to actually buy, don't skimp on coverage & definitely STAY AWAY FROM anyone that let's you walk away without explaining to you what "full coverage" really is.. or is not.

Topics: coverage, underinsured, Full coverage, auto insurance, myth, explained, defined, debunked, liability