Auto policy pamphlets typically brim with unfamiliar terms and numbers that start with a dollar sign followed by far too many zeroes (which is always a scary sight). Many average pedestrians walk the streets without some of the biggest insurance necessities and that’s because of a lack of education on insurance. Because of this, we brought in Jennifer McKasson, an insurance broker extraordinaire for Horace Mann insurance. In this interview, Jennifer explains that insurance really isn’t that complicated and she breaks down common insurance language into layman’s terms so you can know how to better protect yourself and your future. Now, without further adieu, the wonderful Jennifer McKasson.
Seattle Car Accident Law Firm®™: Can you explain in layman’s terms what auto coverage is, why it’s important and how it protects you?
J: Auto coverage has a broad range of things it covers from the REALLY big to the really small, and the protect other people, you, and your car. Some of these policy provisions are laid out by state laws, and some of them are specific to your insurance company and their contract with you as an insured, so I always recommend keeping a copy of your actual car policy handy, and asking your agent if you have questions about it. None of what is laid out here is intended to be a promise of coverage or interpretation of any specific contract. Only your agent or insurance company can do that.
The biggest thing it does is protect you from having to give up accumulated wealth (home equity, bank accounts, wages) because you have caused others a large amount of damage or loss in an auto or home accident. An auto policy protects your assets from liability exposure by placing a large amount of money, and the insurance company’s legal team between your assets and the cost of the damages you did. If that money is exhausted, then your assets are on the line. This is why I get very uncomfortable writing low limits and will do everything in my power to help my clients understand how counterproductive they can be. They are exceptionally easy to exceed and leave my clients woefully underprotected. There is also coverage for property damage that is caused to others’ cars.
We can’t stop others from suing us if we are at fault in an accident. We can stop that lawsuit from touching the things we hold nearest and dearest by carrying enough auto insurance.
S: Very well said. So I have a game to play, it’s just flash cards essentially. I’m going to rattle off some insurance terms and please give your best definition.
J: Sounds good!
S: Underinsured/Uninsured Motorist coverage.
Underinsured/Uninsured Motorist coverage can take care of losses you sustain because someone hit you was carrying no insurance or insufficient limits for the damage they caused. It can cover a wide range of real losses, like medical bills and lost wages. It can also step in to defend you if you are in an accident with a driver carrying insufficient limits and you have people in your car who have injuries that you are being sued for. Adding Underinsured/Uninsured property damage can help repair or replace your car in the same sort of instance. Both coverages must be added individually, so make sure you have both.
S: Comprehensive and Collision coverage:
J: These both cover damages to the car from different causes. Comprehensive is sometimes called “Other than Collision” because it is things like fires, vandalism, flying and falling objects, and theft. Collision is the coverage that comes into play to fix your car if YOU are the one at fault in an accident.
S: What is an umbrella policy and why would you recommend it?
J: An umbrella policy is an excess liability policy. It usually comes in increments of $1 Million, and is exceptionally inexpensive for what it does. I recommend them for EVERY homeowner, and many renters. The umbrella extends over the top of your auto and home policies (and your second home, and boat, and RV policies if you have those), so when the limit in those policies is expended ($250,000 per person or $500,000 per accident for auto or 300,000 for home with Horace Mann) the umbrella steps in to continue coverage with excess liability. It continues to protect even with the main policies are exhausted. Just like in Seattle, umbrellas are only for painfully rainy days when we all think “What the heck happened here?”
S: PIP/Med Pay.
J: PIP and MedPay are two versions of coverage that is known as “first pay” coverage for injuries and losses due to car accident. PIP is a 4 part coverage, and you have to take all four. MedPay is just the medical payments portion of PIP, and is often more limited than PIP. In WA, we offer PIP. It’s required by law to present a quote with PIP, and recent case law has introduced a requirement to get a signed form declining coverage if the client elects not to take it.
The four parts of PIP are:
1. Medical Payments: 10,000-35,000 dollars of coverage to pay medical bills arising from an accident. There are some limitations around it, but this is generally considered to be a very patient-centric coverage. It is usually available immediately after an accident, which is great because the aches and pains don’t wait until the insurance companies have figured out who is paying the bill.
2. Income Replacement: 10,000-35,000 dollars of coverage to replace wages at a certain percentage of income or a weekly cap. There is often a waiting period, but it is usually only 2 weeks.
3. Funeral Expenses: Just what it says it is, and this will be a flat amount listed in the policy.
4. Loss of Services: This portion pays for someone to clean your house or go to the store for you because you are laid up from a car accident.
PIP pays the bills when a car is involved. This could be if you were on a bicycle, or in a crosswalk, or in someone else’s car, or in your own. If a car is involved, PIP can come into play.
S: Why is PIP so important? Is it helpful even if I have health insurance coverage?
J: It is very useful for things like chiropractic care, massage therapy, physical therapy, occupational therapy, any remaining medical bills outstanding after your health insurance has done all they are willing to do, etc. Where I see it the most useful is where health insurance has what is known as a stop-loss provision, limiting access to a chiropractor, LMT, OT, and PT to 12 visits per year or some other low number. for all of those specialists combined. I have never personally experienced an issue that required any one of them, or all of them, in which 12 visits was sufficient and I didn’t end up paying out of pocket. Car accidents that require attention often require it for far longer than medical insurance will cover.
Thanks to our new FMLA law, we’ll have more protections for wage loss, but it still is not sufficient for most professional salaries and definitely not for our lowest income individuals with no safety net. Making sure that you have enough disability insurance of all types to cover your income needs while you’re unable to earn a living is important, and PIP is a part of that equation.
S: What kind of auto policy would you recommend for the average person?
J: Average person is a tough one – For a renter with low salary, 100/300/100 might be sufficient, but it takes a conversation to make that determination. Future wages are a concern that I address because they can be garnished by court order if they cause more damage, until the bill is paid. For a homeowner, 250/500/100 or higher, with an umbrella over the top for at least $1 Million is what I consider minimum. My agency was third in the country for umbrella last year in my company. We write a LOT of umbrella because our property values are so high. Last week we wrote five, I think.
S: What is the worst that can happen if you are under-insured?
J: SO MANY OPTIONS!!!! (and none of them good) I always tell my clients to imagine everything they own and will own in the future, and all their future paychecks, are in the trunk of their car. Their insurance policy is in the front, and their umbrella is in the back seat. If they get into an accident that they caused, the first thing that will happen is that the main insurance policy will get pulled from. This is fine. It’s what it’s there for. The next place they go is the back seat, where that wonderful umbrella policy sits. This is also what it is there for, and fine. If it’s that big an accident, they are glad to have it. An extra million dollars of coverage goes a long way to keeping the parties who were injured out of the trunk, where all our most important assets and future paychecks are. If the injured parties run out of coverage in the front and back seats of the car, then they pop the trunk and start rummaging. They can attach liens to homes so they get money before the owner does when it sells. They can garnish wages, and they can go after the contents of bank accounts. It’s not pretty. Being underinsured is a risk I would never advise anyone take. The difference in cost of coverage is SO SMALL that it’s ridiculous to take that chance.
Seattle Car Accident Law Firm®™: Why did you decide to get into the insurance
business?
Jennifer: I was approached by my agent, when I was teaching school because I bought insurance differently – my family worked in insurance, specifically life. I am now an agent with Horace Mann, serving educators across the Puget Sound area, and even in Colville, up in NE WA. I love educating educators about how to secure their finances even better. Every day, I protect families.
S: What do like most about your job? What is the most rewarding aspect of it?
J: When I started in insurance, I did not understand what it truly meant to be a good agent. I thought it was closer to used car sales than being a trusted adviser to families. I could not have been more wrong. Every single day I get to help families down the path to a secure retirement by making sure that there aren’t any financial surprises along the way. Everything is planned for and adjusted ahead of time, so that auto accident doesn’t derail retirement, or their home burning down doesn’t derail retirement. Believe it or not, auto and home insurance are important basic building blocks to a secure, safe, on-time retirement, and that’s what I get to do, every day.
S: What makes Horace Mann stand out?
J: Horace Mann has a particular focus on educators. Everything we do and provide is geared to the educator market and the particular challenges they face, every day. While I can and do work with members of the general public, working with educators to help them retire better is my mission.
S: What is a typical weekend for you?
J: I like to spend time with friends and family, as much outside as possible. My husband and I spend a lot of time on the weekends relaxing. Sometimes that’s video games or reading a book. I’m also working on my Chartered Life Underwriter professional designation along with my Chartered Financial Consultant, which will make me a fiduciary, legally required to work in the best interest of my clients. Studying for that is some of what I do. I go to Vancouver every few weeks to take care of family and drop off meals for my mother. We might go camping in the summer, or cross country skiing or snowshoeing in the winter. We really like home improvement projects and last summer laid new hardwood floors through our entire home.
S: So if there’s one big takeaway from this conversation having insurance is a must but having all the right components that make up a good insurance package is incredibly important and really will pay off when you need it to! Jennifer – thank you so much for taking the time out of your busy day to talk insurance with me, it was a pleasure!
Jennifer McKasson is an insurance broker with Horace Mann insurance and she makes a living from helping to protect people and their futures. She is truly exceptional and if you are an educator or have the ability to get your insurance through Horace Mann, I highly recommend them and Jennifer.
