Personal Injury Protection – Setnor Byer Insurance & Risk

Is Jameis Winston’s Arm Worth $10 Million?

Jameis Winston purchased a $10 million disability and loss of value insurance policy, and Florida State is helping him pay for it.

While the exact cost for this insurance coverage is not certain, there is speculation that the university will be paying a $55,000 to $60,000 in annual premium.

The $10 million policy is split equally between a permanent disability and loss of value component. The permanent disability policy will allow Winston to collect if he is injured on the field and unable to play football again. The loss of value policy will allow him to collect a percentage if he should fall in the draft. Winston is projected to be selected in the first round in the 2015 draft: possibly No. 1 if he declares following his redshirt sophomore season.

Florida State will be paying the premium from its Student Assistance Fund which “shall be used to assist student-athletes in meeting financial needs that arise in conjunction with participation in intercollegiate athletics, enrollment in an academic curriculum or that recognize academic achievement.”

Universities have rarely used the fund to help pay loss of value insurance policy, but this unorthodox use of the fund may help Florida State keep their star quarterback for the 2015 season.

While your arm might not be worth $10 million, feel free to contact us for disability insurance.

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Why You Should Control Your Road Rage

Though many have heard about road rage, few truly grasp the problem. Many people don’t know that:

More than 1,000 deaths have been attributed to road rage since 2007
Over a 5 year period, reports of extremely angered drivers have doubled, increasing by 170%
A review of more than 10,000 incidents by the AAA Foundation for Traffic Safety found that road rage resulted in at least 218 murders and 12,610 injuries

Another thing many people don’t know is that their auto insurance will not cover bodily injury or property damage caused by their road rage. In fact, insurance companies will routinely deny these claims, not because of a specific ‘road rage’ policy exclusion, but because of the nature of road rage itself.

The National Highway Traffic Safety Administration defines road rage as an assault with a motor vehicle by the operator of one motor vehicle on the occupants of another motor vehicle. In other words, road rage is viewed as an intentional act. As far as insurance companies are concerned, this makes all the difference.

Auto insurance typically covers ‘accidents’ that result in bodily injury or property damage. So the question becomes whether road rage can be considered an accident. One court recently said no, an accident is never present when a deliberate act is performed. Since road rage does not qualify as an accident, the court ruled in favor of the insurance company. Given their intentional nature, insurance companies can also deny road rage claims under a policy’s intentional act exclusion.

Since the lack of insurance coverage affects perpetrators and their victims, it is important to avoid road rage incidents whenever possible. The AAA Foundation for Traffic Safety suggests the following:

Don’t Offend: avoid cutting other drivers off, driving slow in the left lane, tailgating or making gestures
Don’t Engage: steer clear of aggressive drivers, avoid eye contact and get help if necessary
Adjust Your Attitude: forget winning, put yourself in the other driver’s shoes and control your own anger

If you would like more information about auto insurance or would like help getting the coverage you need, please contact us.

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Shopping for Insurance: Quality versus Cost

People typically purchase insurance because they have to, not because they want to. For the most part, consumers are happy to obtain the minimum required insurance coverage at the lowest price they can find. That is, until a claim comes along. Only then do they discover that buying the cheapest insurance available wasn’t such a bargain after all.

The quality versus cost argument is nothing new especially when it comes to insurance. Consumers who pay less tend to get less, whether in the form of coverages, limits or financial security. And, when people choose cost over quality, it usually means they are uninformed about what they really need.

As a full-service independent insurance agency, it is our job to help our clients understand their insurance needs. We evaluate, compare and quote various options from multiple insurance companies so that our clients have the right information before making a decision. Though many still choose cost over quality, it is important that they understand what they may be sacrificing.

Low Premiums

Would you rather have automobile insurance that protects you from damage caused by someone who is uninsured or underinsured? Uninsured Motorist Coverage is commonly excluded from a policy to reduce the premium. Rejecting GAP coverage or electing non-stacked coverage are other ways to save money. But these choices come with a risk. When shopping for insurance it’s better to determine what coverage is desired, see how much that coverage would cost, and work with an independent insurance agent to help get the coverage you need at a cost you can afford.

Financial Stability

Although cost is important, the financial strength of an insurance company may be more important. Financially weak insurance companies are more likely to become insolvent or go bankrupt, which means that their policyholders are less likely to get their claims paid. Though purchasing insurance from a financially weak company may be cheaper, how valuable is the money saved on premium if there is no money to pay a claim? An independent insurance agent can help you evaluate the financial stability of the insurance companies you are considering.

Customer Service

Insurance companies don’t typically assign an agent to their customers. Each time you call you speak to a different person which means you have to explain your situation over and over. Look for an agent that offers personalized service. Those are the agents who are willing to go the extra mile to get you what you need. For example, at Setnor Byer Insurance & Risk, our commercial clients enjoy complimentary access to our risk management services to help them manage the risks associated with owning a business.

A solid understanding of your insurance needs is the key to overcoming the quality versus cost argument. An experienced and reputable independent insurance agent can help you purchase insurance that is both economical and effective.

If you would like more information about our insurance products, please contact us.

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Understanding Auto Insurance

Whether purchasing a new policy or determining if a loss is covered under an existing policy, it helps to have a basic understanding of how auto insurance works. Here is a brief explanation of some common auto insurance concepts and coverages that you can use to determine if you have the protection you need.

Collision coverage pays for car damage caused by a collision with another car or an object. This type of coverage is typically required by finance companies.

Comprehensive coverage pays for losses caused by something other than a collision, such as theft, vandalism, falling objects, fire and weather (wind, hail, etc.). This type of insurance coverage is also known as Comp or Other-Than-Collision coverage.

Liability insurance covers damage to others for which the insured is responsible. There are two main types of auto liability coverage, both of which are generally required by state law. Bodily Injury (BI) Liability insurance covers damages resulting from injury or death, such as medical and funeral expenses, loss of income, pain and suffering. Property Damage (PD) Liability insurance covers damage to the property of others, such as cars, mailboxes, trees and fences. Liability coverage does not pay for the insured’s own bodily injury or property damage.

Personal Injury Protection (PIP or No-Fault) insurance pays for injuries sustained in an auto accident. In addition to the insured, PIP may also cover family members, passengers and household residents. PIP insurance generally provides benefits for medical expenses, loss of income, funeral expenses and other similar expenses, regardless of who is at fault. The requirement to carry PIP insurance and the benefits that must be paid by an insurance company vary by state.

Uninsured Motorist (UM) coverage pays for an insured’s bodily injury and/or property damage that is caused by an uninsured motorist. UM insurance allows an insured to collect from his or her own insurance company. Underinsured Motorist (UIM) coverage is a similar type of coverage that pays for an insured’s bodily injury and/or property damage caused by a motorist with insufficient insurance.

Stacking is a way to increase a policy’s uninsured or underinsured motorist coverage limits. If UM or UIM coverage is stacked, then the policy’s limits will be multiplied by the number of vehicles covered under the policy. For example, an insured with UM limits of 50/100 ($50,000 per person/$100,000 per accident) and three covered vehicles can essentially increase her UM limits to 150/300 by electing to stack her coverage. The manner in which an insured must accept or reject the stacking of limits is often governed by state law.

Guaranteed Auto Protection (GAP) insurance pays the difference between the current outstanding balance on a car loan or lease and the actual cash value of the car. This coverage can prove valuable when the amount owed on the car is more than the value of the car when it rendered a total loss after an accident. This would be the case, for example, when a new car is totaled the day after it was purchased and driven off the dealer’s lot.

Deductible is the amount an insurance company will deduct from the loss before paying up to the policy’s limits. Though insureds typically have options when choosing a deductible, state laws and finance agreements often have specific deductible requirements.

Coverage Limit is the amount an insurance company will pay in the event of a claim. Those who purchase only the minimum coverage limit required by their state’s law are probably underinsured. Coverage limits of $100,000/$300,000 are generally recommended.

If you would like more information about comparing and obtaining personal and commercial auto insurance coverage, please contact us.

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Changes to Florida’s Personal Injury Protection (PIP) Coverage Requirements Become Effective on July 1, 2012

Florida’s Motor Vehicle No-Fault Law requires motorists to carry at least $10,000 of no-fault insurance. This insurance requirement, known as personal injury protection (PIP) coverage, has existed in Florida since 1972. To make sure that those injured in an auto accident quickly get money to treat their injuries, the law requires a driver’s insurance company pay up to $10,000 for medical bills and lost wages, no matter who is at fault.

Despite its intent, many believe the PIP law was doing more harm than good. A 2011 report prepared by Florida’s Office of Insurance Regulation noted that over the past several years the frequency and severity of PIP claims has increased significantly, even though the number of Florida drivers has remained stable and the number of accidents has decreased.

According to the report:

The number of PIP claims opened or recorded in 2010 increased by 28 percent since 2006.
From 2006-2010, the number of PIP lawsuits against insurers pending at year end increased by 387 percent.
From 2008 to 2010, PIP benefits paid by insurers increased by 70 percent ($1.43 billion to $2.37 billion).
Based on current trends, a 19 percent increase in PIP claims paid, a nine percent increase in claim severity, and a 29 percent increase in pure premium can be expected this year.

Touted as a measure to reduce insurance premiums and combat fraud (Florida ranks first nationally in staged accidents), House Bill 119 was passed by the Florida legislature on March 9, 2012. The bill’s new measures take effect on July 1, 2012.

House Bill 119 includes many significant changes to the current law, including:

Requiring those injured in motor vehicle accidents who are seeking no-fault medical benefits to receive initial treatment and care within 14 days from specified providers;
Making up to $10,000 in medical benefits available for emergency medical conditions and up to $2,500 for non-emergency medical conditions;
Requiring insurers to make rate filings by October 1, 2012, and January 1, 2014, decreasing premium rates by at least 10 percent and 25 percent, respectively;
Providing that the PIP funeral benefit of $5,000 is in addition to medical and disability benefits;
Excluding massage and acupuncture from covered medical benefits;
Requiring health care clinics that seek PIP reimbursement to be licensed, with specified exceptions;
Authorizing a direct-support organization to combat motor vehicle insurance fraud;
Amending the PIP schedule of maximum charges, requiring insurers to include the schedule in their forms, and permitting the use of Medicare coding policies;
Providing that an insurer’s failure to timely pay PIP claims as a general business practice is an unfair and deceptive trade practice;
Tolling the PIP payment period when fraud is reasonably suspected;
Requiring insureds to comply with all policy terms, including requests for examination under oath;
Creating a rebuttable presumption that the failure to appear for two mental or physical examinations constitutes an “unreasonable refusal” to submit to examination;
Prohibiting the use of contingency risk multipliers; providing guidelines for judges to consider in determining whether the amount of an attorney fee award is appropriate;
Revoking the license of health care practitioners found guilty of insurance fraud for five years;
Amending crash report forms;
Specifying certain actions that constitute fraud; and
Appropriating $200,000 from the Insurance Regulatory Trust Fund to retain an independent consultant to determine the expected savings from this legislation.

Proponents of the bill state that it adequately targets those items driving PIP costs, and, consequently, that consumers should realize savings on their no-fault premiums. However, it is uncertain whether House Bill 119 will achieve such a result.

Though insurers are required to submit rate filings reflecting decreased premiums over the next few years, the bill requires those failing to sufficiently reduce their premiums to submit a detailed explanation of the insurer’s failure to achieve the required rate reduction. The extent to which these explanations will be scrutinized by regulators remains to be seen.

As is often the case with new laws, time is needed to determine whether actual reform will follow the legal reform.

If you would like more information about PIP reform, or if you would like to discuss any other insurance or risk management matters, please contact us.

Personal Injury Protection (PIP) Expenses: Is Your Insurance Company Paying the Correct Amount?

One purpose of the personal injury protection, or PIP, requirement in Florida’s Motor Vehicle No-Fault Law is to provide medical, surgical, funeral, and disability insurance benefits without regard to fault. Although the amount an insurance company is required to pay is set by law, recent court decisions may force insurance companies to adjust either their insurance policies or their reimbursement practices.

Under the PIP statute, insurers are generally required to pay 80 percent of all reasonable expenses for medically necessary medical services (Actual Amount). The statute, however, gives insurers the option of paying 80 percent of “200 percent of the allowable amount” under applicable Medicare Part B fee schedules (Medicare Amount). Thus, insurers can pay 80 percent of actual expenses or 80 percent of two times the amount authorized under Medicare.

If an insurance policy does not clarify which amount will be paid, can the insurance company limit its reimbursement to the Medicare Amount? Two Florida appellate courts faced with this question have said no.

The policies at issue stipulate that the insurance company “will pay in accordance with the Florida Motor Vehicle No Fault Law, as amended, to or for the benefit of the injured person…80% of medical expenses.” Despite this language, the insurance company paid the Medicare Amount, which turned out to be lower than the Actual Amount.

In both cases, the court held that the insurance company breached the insurance policy by paying the Medicare Amount rather than the Actual Amount. The courts noted that since the PIP statute gives insurance companies the option of paying the Actual Amount or the Medicare Amount, “it is important for the PIP insurer to clearly and unambiguously choose and identify its selected payment methodology” in the policy.

According to the courts, the policies clearly chose the Actual Amount option, failing to even mention the Medicare Amount option. Additionally, one court noted that a policy indicating that an insurer may distribute reimbursements according to one method without clarifying alternative methods or selection criteria is ambiguous. Since ambiguities in insurance contracts are resolved in favor of the insured, the court found another reason to rule against the insurance company.

Insurance companies are no doubt aware of these cases, and have adjusted their reimbursement practices or policy language accordingly. However, those insureds with similar language in their own policies who are currently dealing with a PIP claim may want to confirm the sufficiency of their medical reimbursement payments.

If you would like more information about PIP insurance, or if you would like to explore your insurance options, please contact us.