Insurance Part One

(We hope to only do two blogs about insurance. The rest will be about our travels)

Insurance can be a very boring topic.

That is.. until you have a claim, and then it is too late. With this in mind we have promised to blog our thoughts from 45 years of experience owning an insurance agency. How to shop/buy the correct insurance for your RV. Hopefully you will not have to read the entire blog and you can skip down to the part that interest you and just read or reread that section. We will post about insurance in two separate blogs because one would be too long a blog.

Who wants to spend time with an insurance agent?

You know, maybe a couple of hours? Oh by the way, he/she will also talk to you about life insurance; and your home, boat, motorcycle, camper, Long term care insurance. Anything else? How about an exciting discussion about Obama Care? Did we say a couple of hours? It could be 3 or 4. Another problem that people worry about… is they think it will be like going to confession. The agent is going to find out about all of their problems, accidents, tickets, credit score… Who doesn’t have a skeleton or two hidden away in their closet? Do you really want to talk about them? Most agents will not nail you to a cross because you have one or two or three, etc… Believe me, they have seen everything. I sometimes felt like a psychologist or a bartender, LOL. What if you decided that you don’t want to talk with an agent and decide you are going online for quotes. Are you ready to go online? Do you know enough to shop without an agent? Do you really understand insurance and all the coverages? Liability is normally the first coverage they bring up. Do you understand liability enough to purchase it without some expert advice? What if they offer single limit coverage of 100,000, 250,000 or 500,000 or they offer split limit coverage of 100/300/100. Or 250/500/100 or 250/500/250. What is the difference between single and split? Which is better and how much do I need? Just maybe an agent would be worth their weight in gold. They can help advise you about the coverages. But, will an agent sell you what you need for your particular life situation? Because not everyone needs the same coverages, Or, will an agent steer you toward what makes the agent more commission? Who do you trust and how do you know whether you were talked into something you do not need?

When I was a teenager, I had the opportunity to work with a mechanic who had a thriving business and was a good friend of our family. I assisted him over a three year period and learned a lot about cars. This information has helped me through life. Every time I had to visit a garage, I had this basic knowledge about how engines work and could spot someone who was trying to sell me something I didn’t need. I also understood what is important to do now and what I could put off until I had the money.

We hope this blog about insurance for your RV will give you some basic knowledge that will help you understand insurance and give you the confidence to converse with an agent or a company representative about your RV insurance. Let’s get started…

Who is the Best Insurance Company for my motorhome?
What do you pay In premiums?

These are common question that pop up frequently on Facebook in different RV forums. People should mention what company they like and why. There are a lot of good companies out there. The problem is when they mention what they pay in premium. There are a lot of variables that come into play when comparing vehicle insurance with another RV owner. What other people pay in premiums normally does not help you in finding the best buy for your RV, in your State with your Life situation. Even then you cannot expect to pay the same premium that someone else is paying. I will explain why in the next few paragraphs. If you look at the top five Insurance companies in the US and then looked at how they compare with each other in ten different States. You will find they will rank from one to five completely different in each of the ten States. Also, each company offers different endorsements as an enticement to get you to buy. So, learning about their unique enhancements and asking questions about their claims experience might be a valuable thing to know. Also, knowing the A. M. Best rating of an Insurance Company would be helpful. This tells you the financial strength of the company. This can be found online or you can ask each company for their rating when you are getting a quote. The best rating is A++ and we would not consider any company with less than an A rating.

Insurance is regulated by the State government and not by our National government. So, insurance will be slightly different in each State. The policy requirements are different in each State and the coverages can be different and some of the endorsements are different. Each State has an Insurance Commissioner so there are 50 Insurance Commissioners in the USA. All 50 belong to the NAIC which is the National Association of Insurance Commissioners. The NAIC meets every now and then and they vote on what they call model legislation. Each commissioner takes that model legislation back to their State and they try to get it enacted into law. This is how our 50 States can regulate insurance and how they stay fairly close to the same. But, because it is regulated by the State, the regulation will be slightly different. A perfect example of differences would be the minimum amount of liability required in your State. Some have a minimum of 15/30/10, or 25/50/10 or 50/100/10. Some States will require certain endorsements that other States do not have. A good example would be… Arizona offers an endorsement called FGB which stands for Full Glass Breakage. If you have Comprehensive coverage on your vehicle and you have a deductible of 100 or 250 or 500, you can add FGB and then if you have a glass claim your company will pay the total cost without a deductible. In other words, FGB removes the deductible for any glass claims but leaves the Compressive deductible in effect for any other Comp loss, like theft, fire, vandalism, etc… This endorsement is available in very few States (I really do not know what States or how many States). If you are lucky enough to be in a State that offers FGB and if you add that endorsement to your policy then a windshield will cost you zero (no deductible) In case of a breakage.

Every Insurance company in each State that they are licensed to do business, normally break down the premium by the zip code where you live. They use Zip codes because if you give the wrong Zip Code with your address, then the mail will be returned back to the insurance company with a note from the post office saying the address was incorrect. The companies research what the claim frequency is in each zip? How much crime, how much vandalism, how many stolen vehicles. How bad is the congestion on the roads. That is why if you live near the middle of a large City your premiums will be higher than someone who lives in the suburbs. More congestion. What are the expenses to repair vehicles in your area, etc… Many different factors go into the computing of the basic rate each company will charge for a policy. If you live in a large City your premiums will be much higher than someone who lives in a small rural town. Someone in Chicago will pay much more than someone in Madison, Wisconsin. Phoenix will have much higher premiums than Omaha, Nebraska, etc…. Then info about each person and how that affects the premium and the difference in coverages that people pick will be discussed in a later paragraphs. These items have a major effect as to what the premium will be.

Not only can the State require different endorsements added to all policies in the State but also, insurance companies will offer unique endorsements that no other or few other insurance companies offer. Like Full Replacement Cost coverage. Some offer this in the first two years of the vehicle some offer this for the first five years of a vehicle. Many insurance companies do not offer this coverage. This endorsement (you have to read your policy to see exactly what it covers) normally will pay the cost of replacing your vehicle with a brand new model if your vehicle is totaled. So, if your vehicle is a 2014 and the vehicle is totaled in the year 2016, they will settle the claim giving you enough to buy a new 2016 instead of what a 2014 was worth. It’s impossible for us to explain this coverage since each company has a unique attitude toward this coverage and different wording in their policy. Also most companies have a different policy toward their vacation expense coverage. That is…. if they even offer it. If vacation expense is not offered then they might not be giving you an RV policy and instead just insuring your vehicle as a basic vehicle that it was before they made it into an RV. This is discussed at length in a few paragraphs under the title, “One of the most important”.

More reasons why people cannot compare their premium with another motorhome/RV owner is each person is uniquely different in age, driving experience, driving record, credit score, etc… Are you and the person you are comparing policies with the same age? Most insurance companies lower rates at age 30 and again at age 50 and start raising rates at age 70. Some go up every year after 70, some go up at 70, 75 and then 80. Some start raising at 60 or 65. Do you have the same driving record (tickets and/or accidents). Do you both have the same credit rating? Yes, insurance companies do look at your credit. It’s a proven fact that people with a better credit score have less claims than people with lower scores. The NAIC put out a White Paper over 30 years ago saying it was not fair to charge someone with superior credit the same premium as someone with poor credit. In fact good credit can be a huge difference in premium. How about your liability limits? How much liability do you carry and what limits does the person you want to compare with carry? What deductibles do you have on Comp and Collision. What is the value of your Roadtrek compared to the person you are comparing with? There are a lot of different coverages available. Which ones do you have and what did they buy? How much personal property do you have with your policy to cover your contents? Do you have vacation expense coverage to pay your expenses if your vehicle is unusable for a few days or weeks. Motel expenses eating in restaurants expenses, etc…?

So, who is the best insurance company for my motorhome??? It’s impossible to say. You need to get quotes and decide or just stay with that agency that you have a good relationship with and you love the way they treat you. That is very important. Having an agency that you know will not sell you more or less than what you need and has your back in case there is trouble. That will take the time to explain everything in simple layman terms.

I always recommend to first call your auto and home insurance company and give them the first chance. There are some good reasons to keep everything insured with the same company. First it is very convenient to call one number. Second, some claims are covered by two different policies. Let’s say you have a boat and someone steals your boat from the dock while you were inside paying for the gas you just filled. Some of the items in your boat will be covered by your homeowners policy and some will be covered by the boat policy. It just might be easier to have one company adjust the claim instead of two different companies. If you have two, your home policy might say your fishing gear is covered by your boat policy and the boat policy might say it is covered by your home policy as contents away from home. If you have both policies with the same company then they know they have to cover it with one policy or the other but cannot deny the coverage. We can give more examples but think you are getting the point we are making. Also, there are a lot of discounts offered by insurance companies to have all your coverage with just one company. Also, if you have an umbrella policy then it might be required to have all the underlying coverage with them or they might charge you more for the umbrella because you have coverages with another company. Or, they might cancel the Umbrella policy if some of the underlying coverages are insured with a different insurance company. Yes, we have seen this happen. The most important reason to call your home and auto agent is the trust you have with them as I mentioned earlier. If this is missing then you need another agency who you can trust.

But, if your company or your agency does not know what they are doing or their premiums are just too high, you might need to switch your motorhome to another company. We have seen agencies that absolutely do not know what they are doing when insuring a motorhome. So, be leery and study up about RV insurance so you can recognize someone who is incompetent. We frequently suggest Progressive or Good Sam (which is an independent Agency with many companies) or whoever has a great rate and gives you very good coverage for the State where you live. We do not know all the companies, it’s up to you to call around and get quotes. But, go with someone who convinces you they Are competent and they understand your type of RV and offers you the right coverages.

One of the most important things you need to think about when buying insurance for your RV is to make sure they are insuring it as an RV. A good example is, If you have a Class B motorhome make sure they insure it as a motorhome and not as a (Chevy, Mercedes, Dodge) panel van. The VIN number will show your RV to be just a van. To give you a good example. My 2014 Roadtrek Ranger was built on a 2013 Chevy Express Van. When we put the VIN in the insurance company computer it brought up a 2013 Chevy Express and not a 2014 Roadtrek. My own CSR said, “I thought you told me you bought a 2014 Roadtrek. The VIN says you bought a 2013 Chevrolet Express?” The VIN does not tell your Insurance Agency or Insurance Company that it is a motorhome. If you have trouble convincing whoever you are talking to, you might suggest they go to Roadtrek.com and look at the models. Or, if it is an agency in your town, you might consider taking it to their office. This is very important because the repair and value is much higher on a Class B motorhome than on the panel van that the VIN showed. If it is insured wrong and you have a claim you are going to have a real mess. Also, if you are not retired and only use your RV a few weekends a year and maybe one or two vacations, then most insurance companies will give you a 12 month policy for the premium of a six month policy. Because they understand it is parked most of the time and not exposed to the claims like someone who drives it daily or is a full-time RV’er.

What if I am a Full time RV’er?

If you are one of the lucky ones who are full-timing, then you have a different set of opportunities and/or problems. The big advantage is… you can use insurance as one of the factors to decide where to set up your permanent address. We suggest you look at small rural towns in a State that does not have catastrophic claims like hurricanes, tornadoes, hail, etc… Look at small rural towns because they have less congestion and less accidents per capita and the premiums will be much less. You want to stay away from States that have a lot of storm damage because those losses are spread through out the State by raising everyone’s premiums to cover the storm losses. One of the problems full timers face is insurance companies will charge a higher premium for RV coverage for full timers. Because, they are not the casual RV’er who only uses their unit a few weekends and a vacation or two each year. Their RV is used 12 months a year. Their insurance will cost more on their unit.

Our next blog will talk about the different coverages and what they mean? What is liability, UM, UIM, Comp, Coll, ERS coverages and what limits should we consider? Why isn’t insurance more cookie cutter and everyone just buy the same limits and coverages?

CYA down the road..