Car Insurance

Assume nothing. When your client falls on your front walk while delivering materials for a project, don’t assume that your homeowner’s or apartment dweller’s insurance policy will automatically pick up his doctor bills.

Don’t assume that when fire guts your desk and all your customer records go up in floppy disk smoke, you’ll receive a penny for your troubles from the aforementioned insurer.

Don’t assume said company will give you anything more than the value of said floppy disk (about $1.50), should it decide to cover your business property at all.

Don’t assume that if a prospect trips over your laptop’s power cord while you’re visiting her office, she won’t sue you for pain and suffering, as well as her chronic back pain, and don’t assume that you won’t be held liable.

Don’t assume your auto accident will be covered if you were delivering a business report when the brakes failed, taking out the trunk of the car in front of you as well as the report.

In other words, until you read this, assume you know less than you’d like to about equipment and business-related insurance. Using expert advice, we ‘ll investigate the ins and outs of buying the best policies for liability, office equipment, data loss, malpractice, disability, and auto insurance.

Can You Even Insure Your Business? The devil is in the details– and the details of most homeowner’s policies specifically exclude business property and related losses from their otherwise broad coverage. For a long time, homebased business coverage existed in limbo: too small to entice commercial carriers and too unpredictable to win rubber-stamp approval from the major homeowner’s insurance companies.

“In general, the industry has not been fond of home-based businesses,” concedes Dave Tiedgen, an insurance agent in Ann Arbor, Michigan, who specializes in business policies. “We have had trouble finding insurance companies that will accept homebased businesses for commercial liability policies .”

The good news is, that’s all changing. “Everything we have read and heard says there is one tremendous market where home-based businesses are involved,” says Jim Witt, an administrator at Hartford-based Aetna Life and Casualty, which

is getting ready to roll out a special package for home-based businesses. Companies such as Continental Insurance in New York have already acted to include home-based businesses under their homeowner’s policy umbrella.

As might be expected, all this attention brings a lot of noise. Property casualty brokers-some of whom may be less familiar with the particulars of home-based businesses than others–are being handed a slew of new products to sell that gap, overlap, and are sometimes impossible to compare directly. For instance, some homeowner’s policies include computer coverage, making a separate rider unnecessary. In other situations, both the homeowner’s policy and the separate business rider will exclude computer data.

Equipment Insurance Computers, fax machines, and the like fall in a gray area. If you use your business equipment for family fun as well as work, your homeowner’s insurance may cover it in case of fire, theft. or other destruction…but then that home office isn’t really the exclusive place of business you’ve been telling the IRS about, right?

More to the point, most homeowner’s policies cap their coverage of such equipment at $2,500. And even in today’s pricep lunging market that won’t cover much in the way of new equipment.

Fortunately, a rider (termed an endorsement in industry parlance) that extends your personal property coverage to your business property is one of the easiest and least expensive forms of insurance to obtain. State Farm will sell it to you for $1.50 a year per $100 worth of coverage, and it’ll throw in added hazards. like mechanical breakdowns, spills, and so forth, says company spokesperson Jerry Parsons. That’s $150 a year for $10,000 worth of computer coverage.

Note that these policies—often called EDP (for electronic data processing) policies–do not cover the value of what’s on your hard drive if your computer gets wiped out. For that you need a business data policy, which we ‘ll get to in a minute.

A minor car accident turned deadly when a 62-year-old South Shore man was run over after the crash Tuesday, officials said.

Leslie Arjun, a former building superintendent in the 2400 block of East 75th Street, was dead when emergency workers arrived at the scene about 3:30 p.m., a Cook County medical examiner’s office spokesman said.

Arjun was driving a 1999 Oldsmobile Bravada on 98th Place along the Halsted Street exit of the Dan Ryan Expy. when his vehicle was sideswiped by a 1993 trailer truck attempting to move to the far left lane, Chicago Police spokeswoman Laura West said.

Arjun and the truck driver, Michael Campbell, 29, pulled into a currency exchange lot at 103rd and Halsted streets to exchange insurance information, police said.

The drivers than got into a fight. Arjun tried to prevent Campbell from leaving. Campbell shove Arjun, who fell and landed beneath the truck tires, police said.

Campbell then pulled away, running over and killing Arjun, police said.

Campbell’s truck stalled at 104th and Green streets, where off- duty cook County sheriff’s officer detained him until police arrived, police said.

Campbell, of the 1000 black of North Pulaski Road, was charged with fleeing the scene of an accident, negligent driving and driving without insurance, police aid.

From innocent fudging to outright lies, cheating on insurance claims is widespread, costing insurers–and, ultimately, policyholders such as small companies–large sums in higher premiums. There are no figures on insurance fraud overall, but there are estimates for some industry segments. In the property/casualty field, for example, Sean Mooney, chief economist at the Insurance Information Institute, says it has been conservatively figured that one of every 10 claims is fraudulent in some respect.

In workers’ compensation, phony claims have driven up premiums nationally an estimated 10 percent, says Chris Campos, senior partner of the Campos & Stratis accounting firm, in Teaneck, N.J. The firm evaluates large insurance claims on behalf of insurers.

Another type of cheating on workers’ comp occurs when employers misclassify themselves to understate the riskiness of their work-calling themselves general contractors when they’re really roofers, for example–to avoid paying higher workers’ comp premiums.

Such fraud only adds to the upward pressure on premiums and, in its way, is almost as damaging as the destructive storms that caused $23 billion in claims in 1992 alone. Insurers are now restricting some coastal coverage, and premiums may start heading up. (See “Business Insurance Will Cost You More,” June.)

While insurance executives resist labeling ordinary insurance buyers as common criminals, insurance professionals say millions do inflate, exaggerate, and even lie to get money from their insurance companies or to get lower rates.

It can be as “innocent” as what is called “soft fraud,” which occurs when a parent, for example, lies about the garaging address of a daughter’s car to avoid paying the higher premium for coverage in a riskier location. Or it can be the “hard stuff,” such as arson or staged accidents.

To catch cheaters, the New Jersey Insurance Department parked empty buses on busy roads, arranged to have cars bump into them, then videotaped “passengers” who appeared from nowhere to board the buses and then claim they had been hurt in the “accidents.”

Why is fraud happening?

Adrian Tocklin, executive vice president of Continental Insurance, in New York, says it’s partly the nature of the insurance product. She says: “If I go out and I spend $1,000 on a new television set, I’ve got it. But when I spend $1,000 on traditional liability insurance and nothing happens–there’s no accident–well, I’ve spent that money, and I didn’t get anything back … and they’re going to want something back.”

Ken Resendez grew up in a house where special-needs children were the norm.

His mom took care of them and now his wife does as well.

When he heard about the accident that took the life of Albert Rodriguez, he said his heart went out to the teenager’s family. So he helped organize a fund-raiser beginning at noon Saturday at the Tracy Safeway shopping center, 1801 11th St.

He asks people to come by and give cash, but anything will help.

“I called the family to see if they wanted help and the mother came by and talked to me,” he said. “The first thing I did was make sure this was legit.”

Rodriguez, 19, who was born with a learning disability, was killed on April 17 when he was struck by a car driven by Marcus Tyner.

Tyner was driving eastbound on Fabian Road that evening at about 30 mph, but his attention was distracted, according to police reports.

Tyner told police he felt something hit his car and when he looked in his rear view mirror, he saw someone lying in the road behind him.

Rodriguez was taken to John Muir Medical Center in Walnut Creek with a skull fracture and severe brain injury. He remained on life support so five other people could benefit from transplants of his lungs, kidneys and heart, said his mother, Paula Rodriguez.

Last week, Tyner pleaded no contest to a misdemeanor count of vehicular manslaughter. A no-contest plea results in a conviction, but the plea cannot be used against him in a civil suit, according to court documents.

In exchange for his plea, he was sentenced to three years probation; 180 days in county jail, with 90 days suspended; a $750 fine; $110 in restitution and a $20 court fee, the court documents show.

Rodriguez said she was shocked to learn the charge of driving without auto insurance was dropped.

“I just don’t think justice has been served at all,” Rodriguez said. “I was totally disappointed with the decision. What can we do? We have to fight and fight until we get heard.”

Kevin Hyatt, Tyner’s attorney, said his client was enrolled in an alternative work program, where he’ll spend his jail time out of custody but working everyday for the county.

With 180 plumbing, heating, and air-conditioning service vans scurrying about the Washing. ton, D.C., metropolitan area, Warner Corp. has more than a casual interest in getting the best auto-insurance coverage for its money.

To help it toward that end, the company puts its 220 driver-mechanics through monthly auto-safety courses at its 16 service branches. It also checks on job applicants’ driving records and requires them to submit to drug testing.

These steps, says Liz Trotter, manager of Warner’s human-resources department and daughter of CEO Tom Warner, played a big role in holding the company’s commercial auto-insurance premium to about $15,000 a month for both 1992 and 1993, slightly less than it was at the beginning of the 1990s. The company buys its coverage from Aetna Life & Casualty, of Hartford, Conn.

Prevention–taking vigorous measures to reduce auto-insurance claims before they happen–is the first lesson any business can learn about holding autoinsurance rates at bay. Says Trotter: “The insurance companies look at what you do to prevent losses, so we’re always building on our safety program.”

The company’s employees appreciate the safety program, too. According to Trotter, “the drivers like to brush up. They don’t want to have an accident.”

The second lesson is knowing what your business auto policy covers and what it doesn’t cover. This can be tricky, says John A. “Chappy” Chapman Jr. Of the Heffron, Ingle, McDowell & Cooper agency in Charleston, S.C. What a policy covers is designated on the policy declaration page by numerical Symbols 1 through 9. Symbol 1 coverage applies to cars that the business owns, rents, or leases, and any other cars that could be cited in a claim. Covered, for example, would be an employee using a personal car on company business who got into an accident that led to a claim against the employer.

Symbol 1 extends protection to nearly all liability exposures a small-business owner could face. As the symbol numbers get higher, coverage narrows. Symbol 2, for example, covers only those cars owned by the policyholder, not those rented, leased, or owned by employees.

Symbol 3 is similar, but it covers only private passenger cars; if a business owner adds a truck, for instance, it won’t be covered unless an endorsement for it is made part of the policy.

Bill Groves, a senior vice president of the CIMA Cos., in Alexandria, Va., put together a package of coverages for Warner that gives the company what it needs but doesn’t force it to pay for coverage it doesn’t need or that is not cost-effective.

When it comes to auto-accident medical coverage, Symbol 2 protection would cover all trucks and any other vehicles in Warner’s fleet, but it’s probably not necessary. The reason, Groves says, is that workers’ comp would cover a worker’s medical costs and that the employees behind the wheels of those trucks would be on company business almost all the time.

If a Warner vehicle hits another vehicle, Warner’s insurance would pay for the damage to the other vehicle. But Warner pays out of pocket for damage to its truck. By arranging coverage so Warnet selfinsures in such instances, Groves estimates, the company’s insurance premium is reduced by $47,000 annually.

Most of the coverage-level provisions used in the industry are set by the Insurance Services Office, an industry group in New York City, in consultation with major insurers. They’re poured into a “simplified-language” form called the business auto policy, or BAP,, which has been available since 1978 and was last revised in June 1992.

Most insurers use the BAP form as a basis for coverage. Some stick to it literally; others elaborate on it.

As to what coverage you should have, this is what agents recommend for smallbusiness buyers of auto insurance:

* Buy insurance to cover the risks you face in your business every day. Do not buy insurance just to cover state-mandated minimums at the lowest price.

* Buy Symbol 1 liability coverage at all times. If for some reason your carrier won’t sell it to you, shop for another carrier. Although rates vary widely throughout the country–from about $1,000 per vehicle in Washington, D.C., to as much as $3,200 per vehicle in Philadelphia-in the long run the more comprehensive coverage will wind up costing less than a cheaper policy that falls short when you need it.