Author Archives: txassocblog

L&H: Employers Entertain Paying Individual Premiums 

Misty Baker, Life & Health Insurance Information

Employer groups are asking agents why they can’t pay for their employees’ individual premiums either on or off the exchange. Agents can easily find answers to protect their clients from making this costly mistake in several recent IRS publications.

Under IRS notice 2013-54 an employer that reimburses employees for their individual health insurance, inside or outside the Marketplace, has created an employer payment plan. An employer payment plan, according to this notice is considered to be a group health plan subject to market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing.

On May 13, 2014, the IRS issued FAQs addressing the consequences for employers that do not establish a health insurance plan for their own employees, but instead reimburse those employees for premiums they pay for health insurance. Because these employer payment plans do not comply with the ACA’s market reforms, the IRS indicated in the FAQs that these arrangements may be subject to an excise tax of $100 per day for each applicable employee ($36,500 per year, per employee) under Code section 4980D.

The notice does not reference an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. The IRS implies that the arrangement could still be subject to the $100 per day per employee excise tax penalty.

For more information on employee benefits, contact Misty Baker.

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Agencies Release Exchange-Related COBRA Guidance

Agencies Release Exchange-Related COBRA Guidance

by Christine Roberts

http://eforerisa.wordpress.com/2014/05/05/agencies-release-exchange-related-cobra-guidance/ 

Recent weeks have seen the publication of several pieces of agency guidance that reflect the increasing prominence of individual coverage on the health exchanges as an alternative to continuation of group coverage under COBRA. The new guidance consists of:

  • updated model COBRA notices from the Department of Labor that describe exchange coverage as a COBRA alternative;
  • DOL proposed regulations that streamline issuance of future model COBRA notices;
  • an announcement of, and links to, the new model COBRA notices and proposed regulations, in Affordable Care Act FAQ XIX, together with guidance on other ACA issues; and
  • announcement, in a Department of Health and Human Services bulletin, of a limited special enrollment period permitting those who elected COBRA coverage under outdated election forms to drop it, between now and July 1, 2014, and enroll in coverage on a federally facilitated exchange (FFE); and
  • an FAQ published by the Centers for Medicare and Medicaid Services (CMS) Centers clarifying the circumstances under which COBRA qualified beneficiaries may switch to exchange coverage.

Each development is discussed in turn, below.

Updated COBRA Notices

On May 2, 2014, the Department of Labor, the agency responsible for COBRA notice and disclosure duties, published online updated versions of both the “general” notice (given upon initial plan eligibility), and the “election” notice (triggered by a qualifying event). The notices now expressly identify the availability of exchange coverage, including access to premium tax credits for those eligible, as an alternative to COBRA coverage. The model notices currently are posted online at the DOL website in English, and Spanish language versions will soon follow.

Proposed DOL Regulations re: COBRA Notices 

Also on May 2, 2014, the Department of Labor issued an advance copy of proposed regulations (technically, a “Notice of Proposed Rulemaking”) pursuant to which future model COBRA notices may appear in written agency guidance, including through online posting, rather than as “appendices” to proposed and final regulations published in the Federal Register. One of the stated reasons for this approach is to “eliminate confusion that may result from multiple versions of the model notices being available at different locations.” And in fact, if view the online version of DOL Technical Release 2013-02, which in May of last year announced earlier exchange-related revisions to the model COBRA election notice, the link to the model notice link now clicks through to the most recent update posted last week, rather than to the version that originally was issued with the Technical Release.

 Summary of COBRA Developments in ACA FAQ Part XIX

May 2, 2014 also saw publication online of Affordable Care Act FAQs Part XIX, of which Q&A 1 summarizes the above developments and directs readers to the new model COBRA notices and the proposed regulation.

FAQ Part XIX contains additional guidance on a number of ACA issues including cost-sharing limitations, coverage of preventive services, and Summaries of Benefits and Coverage. I will cover this new guidance soon in a separate post.

Special Enrollment Period to Transfer from COBRA to FFE Coverage

Generally, an individual may enroll him or herself in exchange coverage upon first becoming eligible for COBRA, during an exchange open enrollment period, or upon exhausting COBRA coverage. However, persons currently enrolled in COBRA may have elected to do on the basis of COBRA notices that did not identify exchange coverage as a COBRA alternative in these situations. Accordingly, on May 2, 2014 the Department of Health and Human Services issued a bulletin announcing a limited special enrollment period, lasting until July 1, 2014, during which COBRA qualified beneficiaries in states that use the Federally Facilitated Exchange or Marketplace may drop COBRA coverage and enroll on the FFE. The guidance does not mandate that state-run exchanges extend the same special enrollment period.

CMS FAQ re: Transition from COBRA to Exchange Coverage

Lastly, on April 21, 2014 the Centers for Medicare and Medicaid Services (CMS) posted an online FAQ https://www.regtap.info/faq_printe.php?id=1496 asking whether someone who voluntarily drops COBRA coverage during an exchange open enrollment period may enroll in the exchange (and, if eligible, qualify for premium tax credits). CMS made clear that this transition is possible even for someone whose COBRA has not expired, and that enrollment on the exchange is permitted any time during the year for someone whose COBRA coverage has expired. The FAQ made it clear that a qualified beneficiary whose COBRA coverage had not yet expired could not enroll in exchange coverage outside the annual exchange open enrollment period. (The next exchange open enrollment period is from November 14, 2014 to February 15, 2015.)

 Speculation as to COBRA’s Future

Against that background, some speculation as to COBRA’s future is warranted. COBRA continuation coverage, enacted in 1985, was in essence a legislative response to pricing and underwriting barriers to individual coverage that the Affordable Care Act has either eliminated (for instance, by banning pre-existing condition exclusions) or made less burdensome (for instance, through access to premium tax credits and cost sharing on the exchanges).   Without question, the health exchanges are a “disruptive technology” to the COBRA model, but COBRA continuation coverage likely will remain in some demand until such time as individual exchange coverage is comparable, in terms of provider networks and in other respects, to current group coverage.  That tipping point may not occur for some years, or even at all.      What is likely in the short term is that COBRA’s already steep adverse selection rate will continue to climb, as continuation of group coverage becomes more and more about retaining access to a broad network of healthcare providers.

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The Biggest Reason People Didn’t Sign Up For Obamacare

The top reason uninsured people didn’t enroll in coverage under Obamacare this year is they still don’t feel like they can afford health insurance, according to a new survey.

The findings in a report published by the Henry J. Kaiser Family Foundation Tuesday highlight the affordability gap facing some U.S. households, especially those with incomes near or above the income cutoff for tax credits that reduce premiums, or those who simply don’t believe health insurance is a good value.

Thirty-six percent of people without health coverage reported they looked for health insurance during the enrollment period that nominally ended March 31, but found the available plans too expensive, according to the Kaiser Family Foundation survey. Just 7 percent said they preferred to pay a tax penalty under the law’s individual mandate, rather than purchase an insurance policy. Others said they believed the mandate doesn’t apply to them, didn’t know about the mandate, or tried and failed to enroll.

obamacare affordable

Health insurance remains a costly product and the Affordable Care Act targets its financial assistance to low-income families. Tax credits to defray the cost of coveragearen’t available to households that earn more than 400 percent of the federal poverty level, which is $45,960 for a single person. The law also provides subsidies to reduce out-of-pocket costs for those who earn up to 250 percent of poverty, or $28,725 for an individual.

The tax credits provided under the Affordable Care Act are pegged to the price of the second-cheapest “silver” level plan in a person’s geographical area, and to household income. The subsidy gets smaller as income increases, so people who earn near 400 percent of poverty receive relatively little help paying for their coverage, and those who make just a little more pay full price.

The average national price for one of these benchmark silver plans is $808 a month for a household of two 40-year-olds with two minor children that earns over 400 percent of poverty, which is $94,200 for a family of four, according to a calculator on the Kaiser Family Foundation website. The same family making exactly 400 percent of poverty would be eligible for a tax credit worth $63 a month.

The vast majority of those enrolling in private insurance under Obamacare are getting help paying for their coverage. As of March 1, 83 percent of enrollees received tax credits for premiums, according to the Department of Health and Human Services.

The Kaiser Family Foundation report includes quotations from some of those surveyed that illustrate the point of view that health insurance is too costly. “What’s out there now is just unaffordable,” one respondent said. “Because I think food on the table is more important,” wrote another. Coloring those views may be a general lack of awareness about the availability of the tax credits, previous surveys have shown.

Although not addressed in the Kaiser Family Foundation poll, the largest affordability gap in health coverage is found in 24 states that didn’t adopt the Affordable Care Act’s expansion of Medicaid to more poor people after the Supreme Court made it optional for states. Those earning up to 133 percent of poverty, or $15,282 for a single person, were supposed to have access to Medicaid, while tax credits are reserved for those who earn at least poverty wages, which amounts to $11,490 for an individual. That meansthe poorest residents of those 24 states aren’t eligible for any help, so millions are expected to remain uninsured.

The Kaiser Foundation Family poll also shows a majority of Americans continue to disapprove of the Affordable Care Act, with 46 percent having an unfavorable view, compared with 38 percent holding a favorable opinion. These attitudes are closely tied to partisan affiliation, with Republicans being much more likely to disapprove and Democrats more likely to approve. A majority, however, wants Congress to improve the law, compared with more than one-third who would prefer it to be repealed and replaced with an alternative.

obamacare affordable

Despite President Barack Obama trumpeting the news this month that private insurance enrollments via the Obamacare exchanges have exceeded 8 million — or 1 million more than the highest projection from the Congressional Budget Office — the public doesn’t see it that way. Even though more than 40 percent were aware that signups had topped 8 million, nearly six out of 10 said enrollment came in below the federal government’s expectation.

obamacare affordable

Story by Jeffrey Young  at Huffington Post

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HSA Limits Will Increase for 2015

HSA Limits Will Increase for 2015

 

On April 23, 2014, the Internal Revenue Service (IRS) issued Revenue Procedure 2014-30, which increases limits for health savings accounts (HSAs) effective for calendar year 2015. The following HSA limits will increase for 2015:

  • Annual contribution limits for single and family coverage;
  • Maximum out-of-pocket expense limits for coverage under a high deductible health plan (HDHP); and
  • Minimum annual deductibles for coverage under an HDHP.

hsA contribution limits

For 2015, the annual HSA contribution limit for an individual with self-only coverage under an HDHP is $3,350 (up from $3,300 for 2014).

For 2015, the annual HSA contribution limit for an individual with family coverage under an HDHP is $6,650 (up from $6,550 for 2014).

hdhp Out-of-pocket expense limits

The maximum out-of-pocket expense (deductibles, copayments and other amounts, but not premiums) limit for self-only HDHP coverage for 2015 is $6,450, which is up from $6,350 for 2014.

For family HDHP coverage, the maximum out-of-pocket expense limit for 2015 is $12,900, which is up from $12,700 for 2014.

hdhp MINIMUM deductibles

For 2015, the deductibles under an HDHP must be at least $1,300 for self-only coverage (up from $1,250 for 2014) and $2,600 for family coverage (up from $2,500 for 2014).

effective date

These new limits are effective for calendar year 2015.

more information

For a copy of IRS Revenue Procedure 2014-30, see www.irs.gov/pub/irs-drop/rp-14-30.pdf.

Planning a Foreign Trip This Holiday? Look into K&R Insurance

Kidnapping is defined as the unlawful act of stealing, carrying off or abducting someone by force or fraud, especially for use as a hostage to extract a ransom payment. What were once canstock13916519crimes perpetrated exclusively against the affluent and influential, kidnappings, abductions, unlawful detainments, illegal arrests and ransoms are happening more and more to people from all socioeconomic levels and walks of life.

Kidnapping statistics are alarming. In the U.S., for instance, there has been a significant rise in child abductions due to parental custody disputes. Internationally, surges in human trafficking and tourist hijackings have also been reported – especially in remote and unsafe parts of the world. In 2012, the following top 10 global kidnapping hot spots were identified, prompting state and federal agencies to issue travel warnings and alerts in these zones:

  • Afghanistan
  • Somalia
  • Iraq
  • Nigeria
  • Pakistan
  • Yemen
  • Venezuela
  • Mexico
  • Haiti
  • Colombia

The problems are not just isolated to the above-mentioned Nations, but are quickly spreading to more locations worldwide. Kidnapping today is big business: Extortion and ransom payments total in the multi-millions of dollars each year.

What Is Kidnap And Ransom Insurance?

Kidnap and ransom insurance provides comprehensive coverage and protection for those traveling in high-risk parts of the world. It’s designed to minimize the financial impact of these incidents on both individuals and multinational corporations.

Who’s At Risk?

Traditionally, high-profile families (famous celebrities and powerful company executives), non-government organizations and employees of corporations operating abroad are the most vulnerable, however, potentially anyone can fall victim to such crimes.

What Does Kidnap And Ransom Insurance Cover?

Kidnap and ransom insurance policies typically cover losses from monies paid for ransom, as well as reimburse the insured for other expenses related to kidnapping or extortion, such as:

  • Transit and delivery costs
  • Investigation, negotiation and recovery services
  • Accidental death or injury
  • Legal fees
  • Medical care
  • Lost wages
  • Crisis management consulting

What You Can Do To Minimize The Danger

Kidnappings, hijackings, abductions, detainments and unlawful imprisonment can happen when you least expect it. The following are some things that you can do to help lower your chances of becoming a target:

  • Avoid traveling in dangerous regions and countries
  • Be hyper-vigilant of your surroundings, both at night and during daylight hours
  • If you are living or working in hazardous areas, participate in kidnapping prevention and preparedness training.

Peace Of Mind When Traveling

Many insurance companies offer coverage to traveling employees and their families, as well as to individuals as part of a personal insurance travel package. As mentioned earlier, anyone can be vulnerable to a kidnap, ransom or extortion crime while visiting a foreign land, so it’s prudent and recommended that one be adequately protected. Discuss your particular situation with an agent or broker experienced in the kidnap and ransom insurance area so you’ll be able to enjoy peace of mind knowing you and your family are safer and more secure when far away from home.

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Travel Insurance – Should I Buy It?

travel-insuranceThe question pops up every time you buy a plane ticket.

Would you like to add travel insurance?

It’s not free, of course. Credit cards may offer you coverage for free, but add-on travel insurance is another matter. Is it a complete waste of money? Or can it truly save your trip?

There’s no easy answer. There are factors, or rather situations, that call for travel insurance and there are cases when it’s unnecessary. Most importantly, it also depends on what the insurance policy covers. So it’s really not about whether or not you should get travel insurance. Instead, it’s about knowing which kind of insurance to choose.

Here are some situations when it makes sense to buy a travel insurance policy.

An Expensive Vacation or Cruise

You’re going to gift it this season. Or you’ve beensaving up for the trip of a lifetime, which is going to be an incredibly huge investment. That around-the-world cruise vacation or African Safari will cost you $15,000, but it will create memories that are truly priceless.

Should you buy a travel insurance policy? Definitely yes. The important factor here is the price. It’s a hefty amount and you ought to protect it with trip cancellation and interruption insurance. Let’s face it, the unexpected can happen no matter how thorough you are in planning your trip.

What if you suddenly get sick? Or what if an emergency such as a crisis in the family occurs? Or the cruise line or airline goes bankrupt? In these cases, travel insurance can safeguard your well-earned money so that you can simply move your travel date, book another ticket and go on the vacation of your dreams.

Additional tip: don’t buy this insurance from the cruise ship company. You won’t get your money back if that same company goes out of business.

Trip Not Covered by Health Insurance

Most people assume that their existing health insurance covers medical expenses abroad. In almost every case, it won’t. Traveling outside the country, including on foreign-flagged cruise ships, demands caution. And one of the most important areas you should safeguard while traveling is your health.

In this case, because your current health insurance policy most likely doesn’t cover medical expenses abroad, you should definitely get a travel medical insurance policy.

Most travel insurance policies of this type will fly you to the doctor of your choice but you should thoroughly read the fine print to understand what you’re getting. In case you get sick or require urgent medical attention abroad, the insurance should cover your initial treatment, free and quick transport to a hospital or medical facility of your choice and other adequate medical resources.

What about getting sick in a developing country? This is another situation where getting a good travel medical insurance policy makes sense. Not only will the policy pay for your care. The insurance company can also help to ensure you won’t get overcharged.

Extreme Sports Travel

Do you love mountaineering? Ice or rock climbing? White water rafting? Adventure racing? Frozen lake kite winging? The list goes on. What all of these activities share in common is this – they’re all extreme and put a traveler’s life at risk.

If you’re the adventurous type who loves taking part in extreme sports abroad, then you should definitely get insurance. A basic travel insurance policy may cover “some” specific adventure travel, but the company will usually ask you how high the mountain is or how deep will you scuba dive. If the basic package doesn’t cover your adventure and extreme sports, be sure to purchase additional coverage. It’s more expensive, of course, but it can save your life. In fact, most people buy it for the peace of mind it affords.

There are many other situations when travel insurance is necessary. Understand your travel needs and research your options so that you can spend your trip relaxing rather than worrying out insurance coverage.

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Traveling? Renting a Car? Should You Buy the Insurance? So Many Questions!

Car_Rental_Insurance_JusRenting a car can be a confusing process. The additional fees and services offered by car rental companies are often tacked on the bill followed by paragraphs of legalese. Supplemental liability insurance is one of these extra fees. While the name implies importance, it may be an unnecessary fee when renting a car. To determine whether you need supplemental liability insurance on your next car rental, start by assessing your current coverage.

What is Supplemental Liability Insurance (SLP)? 

Most states require that rental car companies provide drivers with minimum levels of liability insurance during the rental period. Supplemental insurance provides additional coverage above the state minimums, up to $1 million in liability protection.

For some drivers, this additional coverage is a great deal that can cover additional costs associated with an accident. For other drivers, this coverage is already included in other areas and duplicating this service through the rental company is a waste of money.

Using a Credit Card? 

Many credit card companies offer bonuses that customers are not using. Charge backs and reward points are often scrutinized and compared when searching for a new credit card but many cards also offer secondary rental insurance which consumers fail to use.

The best way to determine whether your credit cards offer rental insurance is to read the terms of use or speak to customer service. Determine how long after an accident you have to file the claim. Most credit card companies offer drivers a 45 day window. If your credit card offers SLP, buying coverage from the rental car company is unnecessary.

Did You Call Your Insurer? 

Most drivers do not need supplemental liability insurance for the simple reason that they already have coverage under their current auto insurance. In addition to covering the driver while driving other people’s cars, rental cars are covered by basic auto insurance for the same deductible.

Don’t Want to File a Claim?

Even drivers who have primary automobile insurance may opt to use SLP to prevent their insurance rates from rising in the event of a rental car accident. Rental cars are notorious for being driven recklessly and drivers with a lead foot or those that are particularly harsh on rentals may not want rising rates over a couple of scratches. In this case, SLP is a good way to prevent extravagant bills for car damage without effecting insurance rates.

Don’t Own a Car? 

While insured drivers may already carry supplemental liability insurance, drivers who do not own a car may find value in getting additional coverage during their rental period. Without the secondary coverage available from auto insurance, customers with expensive rental cars or valuable assets can protect their money by accepting the nominal daily charge for supplemental liability insurance.

If you’re a non-car owner that travels frequently, the fees associated with SLP can add up fast. Consider contacting an auto insurance company to ask about liability coverage for drivers who do not own a car. Most policies cost less than $300 a year and will provide adequate coverage in case of accident without the additional cost of supplemental liability insurance.

Supplemental liability insurance may not be a great deal, but for drivers with the right prerequisites, it can be a valuable addition to rental insurance. Being underinsured in an accident can have serious consequences. Make sure you understand your coverage before turning down supplemental insurance while renting a car.

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How Long Do I Have to Purchase Car Insurance After Buying a Car?

Car insurance can be complicated if a person does not have a good agent to help them through the process. How much do you need?  When do you need to buy it?   Can it be added to an existing policy? This article won’t answer all your questions.  It will, however, help answer the question of how soon you need to buy insurance after you purchase a car.  The answer can depend on where you purchase your car, your state laws and the existence of any other car insurance policies you may have.

Driving off the lot
Many car lots will not even allow you to drive off the lot with a car until you have insurance.  This is more to protect them than protect you. They want to make sure the car is covered until it is paid in full. There is also likely to be a requirement as to how much insurance you need.

From a private owner
A private owner will most likely not care whether you have insurance or not since you will be taking title of the car right away.  In this case, you may have two weeks or so, depending on when the temporary tags expire.  It is then likely that you will be required to show proof of insurance before you will be issued permanent tags. This is definitely the case in states that require all drivers be covered under some kind of car insurance.

Existing policies
Car owners who have existing insurance policies will need to talk to their insurance agent. Some policies have a grace period during which the new car is covered under the existing policy. These grace periods vary in terms of their duration, so it is important to carefully review your policy. Other policies do not allow this at all. Your insurance agent can help you determine whether you are covered or not and how long you have before you need to get the additional car covered.

State laws
Most states have some type of car insurance regulations in place and they may differ from the requirements of the dealer where you purchase your car. In all cases, it is better to check in advance with your state Department of Motor Vehicles to find out their requirements. Once you know the State’s requirements, you will be in a better position to comply with them. Unless the dealer requires insurance before allowing you to take possession, state law is the standard, and that will likely mean you need to secure car insurance before you can be issued permanent tags for your car.

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Teen Driving: How to Keep Your Teen Safe Behind the Wheel

Parenting teenagers has never been more challenging. In addition to raising your teen to become a good person and a responsible adult, parents today need to help their teens navigate a variety of risks including drinking and drugs, social media, and the complexities inherent in friendships and romantic relationships. With all of these factors to worry about, it can be easy to forget that the biggest risk facing your teen is parked right outside of your house. Incredibly, traffic crashes are the number one cause of death for teenagers in America. Teen Driving GraphicAccording to the National Highway Traffic Safety Administration (NHTSA), motor vehicle accidents are the cause of 35% of teen deaths every year, and mile for mile, teens are involved in three times as many fatal crashes as all other drivers.

There are a number of factors that contribute to teen driving fatalities:

  • Inexperience and immaturity
  • Excessive speed
  • Drinking and driving
  • Not wearing seat belts
  • Distracted driving (cell phone use, loud music, other teen passengers, etc.)
  • Drowsy driving
  • Nighttime driving
  • Drug use

Parent Involvement Is Critical

The good news is that many teen driving accidents are preventable, and parents have a key role to play in keeping their teens safe behind the wheel. A recent National Young Driver Survey found that teens with authoritative parents (defined as those who are highly supportive and involved, set rules, and monitor) engaged in fewer risky driving behaviors and had half the crash risk as compared to other teens. In addition teens with involved parents are:

  • Twice as likely to wear seat belts
  • 70% less likely to drink and drive
  • Half as likely to speed
  • 30% less likely to use a cell phone while driving

The takeaway? Make sure you are talking with your teen and setting expectations for their driving.

How You Can Help

There are a number of specific things parents can do to reduce the chances that their teens will be involved in auto accidents:

  1. Set Clear Rules: Make sure to let your teen know what your expectations are and explain the rationale behind them.
  2. Focus on Safety: Let them know that you are setting these rules to keep them safe and not simply to control them.
  3. Reward Good Behavior: If your teen follows your rules and maintains a good driving record, introduce new privileges (such as driving after dark).
  4. Be Supportive: Peer pressure is tough, and your teen may find themself getting pressured to engage in behavior that violates your rules. As a parent, you can make things easier by letting your teen’s friends know what the rules are and then acting as a scapegoat (“I can’t do that, my parents would ground me!”), or by establishing a code word with your teen (if they call and mention the word, come and pick them up right away and with no questions asked).
  5. Communicate: Communication is critical. Talk to your teen and make sure you know where they are going and why, how they plan to get there, and how they will get home. If you (or they) don’t feel confident that they have a plan in place to get safely there and back, offer a ride.
  6. Lead by Example: Even though teens might not admit it, parents really are important role models. Make sure that you practice safe driving. Don’t talk on your cell phone or text while driving, obey the speed limit, don’t drive if you’ve been drinking, and don’t drive aggressively.

One of the best ways to clearly establish and communicate expectations is through the use of a Parent-Teen Driving Agreement. Use this template provided by the Centers for Disease Control or create your own. Either way, make sure your expectations are set out in writing, and then both you and your teen should sign the agreement. Having a clear set of expectations and communicating often about them are the best ways to keep your teen safe on the road.

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A Casual Look at Property & Casualty Insurance

While shopping for insurance, whether for your home or business, you may have heard the term “property and casualty insurance” used by your agent or insurance representative. When looking at your quote or reviewing your issued policy, you will see lists of coverages such as “personal property” or “general liability”. These coverages fall under either Casualty or Property and make up the essential parts of your policy. Without these, there would be no coverage and no protection for your assets.

But, “what is property and casualty insurance and do I need it?”

Property Coverage

You may find Property coverage more straightforward than its counterpart, Casualty. If you carry any insurance for your building, equipment, furnishings, or your home, car, or personal belongings, then you already have property coverage built into your policy. This coverage protects you against direct damages to your property by covering causes like fire, lightening, and wind.

Property coverage can also apply to loss of income generating ability, as you would find in Business Income coverage. This applies specifically to your ability to generate income in the event of a covered accident or damage that prevents your business from operating. A few days or several weeks could cripple your business and result in closing without this type of property coverage.

Casualty Coverage

Casualty can be difficult to define but it typically refers to the liability coverage found in business and personal policies. The term casualty is not applied to Life, Health or Property policies where liability is not a factor. You will probably hear most often that casualty is insurance covering injury or property damage to others “for which you are legally liable”.  In simpler terms, it is coverage for damages caused by you due to your negligence.

Accidents happen both at home and on the job all the time which can result in injuries.  A friend visiting your house could be seriously hurt because the deck you built collapsed.  Or, a customer at your salon might slip-and-fall because of an unsecured mat and suffer serious fractures. These types of accidents are not anticipated but because of our potentially negligent acts, could result in thousands of dollars in medical bills and legal fees.

Why Do I Need It?

If you own anything of value that you could not replace out-of-pocket in the unfortunate event of disaster, then chances are that you need Property and Casualty insurance.

If you have ever been careless while driving, at home, or at your place of business, you need Property and Casualty insurance.

For all the savings you may have or for all the planning you’ve done, nothing can prepare you for an unexpected event like a fire. The cost to repair and replace your belongings and cleanup the damage in the aftermath could total in the thousands. The best and most effective plan for protecting yourself and your family from financial crisis is insurance.

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