Click here to go to JV page

Insurance benefits

All sorts of communicative tools need to be mobilized to disseminate insurance policy related information to the general public
 

Nobody can predict future. Today’s billionaires may become beggars tomorrow. Today’s healthy body may fall sick next moment. Newly bought bungalow and car may crack down very next day due to natural calamities and other types of vulnerabilities. We can’t predict the next moment. 
But insurance is predictable and it will provide financial compensation to those who suffer misfortune. It gives security to human beings and property from such kind of unpredictable risks. Insurance plays an important role in individuals’ and families’ lives because it is a hedge against the loss of income following the death of an earner or loss of property. Loss of property or premature death of a family head can bring serious financial consequences because it leaves unfulfilled financial obligations for the dependents to support children’s education and to pay back the loan. Insurance is the cushion of security at such moments.

Insurance policy is an agreement between two parties—the insured and insuring company—which contains details, conditions, rights and duties and liabilities. Agreement document contains the name and address of the insured, objective of the insurance, insured amount, type of policy, term of the insurance, payments, risks to be covered if misfortune occurs and so on. Insurance companies are regarded as the non-banking financial institutions. Their major source of income comes from premium of policy holders. 

How it started
Marine Insurance was the first and Fire Insurance the second in the history of insurance. Non-life insurance companies evolved later. Life insurance covers the premature death of family members and other treatment expenses which occurred during the life time while non-life insurance covers motor insurance, household insurance, engineering insurance, aviation insurance, livestock insurance etc. Conventionally insurance was considered as a cooperative form of distributing a certain risk to persons who are exposed to it. Later on it was taken as a contract or agreement in which it is agreed that a certain amount of money will be paid as compensation in case the loss or destruction occurs due to unpredictable dangers or risks. In return the insured agrees to pay certain amount as premium. 

In Nepal, Nepal Life Insurance Company Ltd, established in 1947, was the first insurance company. Rashtriya Beema Sansthan was established in 1967, which is the only one insurance company comprising both life and non-life insurance business under government ownership. 
After promulgation of Insurance Act (1992), number of insurance companies came into the scene.  The 1990s is considered as golden period in the insurance business in Nepal. At present, there are altogether 27 insurance companies—eight of them provide life insurance, 17 provide non-life insurance and two offer both life insurance as well as non-life insurance. Most of them are private, few are foreign and joint venture companies. 

Private sector insurance comprise 72 percent share in Nepali insurance business while foreign and joint venture insurance companies occupy 12 percent.  The number is increasing day by day with more than 500 branch offices across Nepal.

Insurance business is creating capital fund and promoting development, growth and prosperity. They are collecting scattered saving of people in the form of premium and then investing it in the form of capital on a long term basis in development projects like housing, new plants, factories, shopping complex while also providing protection from various types of risks. They have stopped capital flow outside the country. 

Insurance Board has been established as an apex regulatory body to ensure transparency and proper functioning of these companies. In line with the provision of Insurance Act and Regulation, Insurance Board has adopted policy of facilitating insurance companies to invest in priority sectors.

Yet to grow
Insurance culture is yet to grow in Nepal, compared to western developed countries, where insurance business has substantially increased as a financial intermediary over the last 30 years and become one of the leading sources of investment in capital market. 

In the recent times, the government has brought Health Insurance Act which covers free access to Yoga, immunization, family planning, safe motherhood, out-patient care, in-patient care, surgery, medicines, emergency care, curative service, rehabilitation service among others. Individual, family, civil servants, migrant workers and private sector employees can enroll for this scheme. A four-member family has to pay Rs 25, 00 per year and the service provider provides for health treatment up to Rs 50,000 per year. Ministry of Health will collect Rs 425 from each additional member if the family members exceed four. The insurance act also provides security to the poor and marginalized. The federal government and local governments will be liable to bear insurance premium for them under the new set up. This is a good progress in Nepal’s insurance landscape. 
Nepal is yet to work on non-life insurance sector. Very few people are aware of these insurance policies because of poor collaboration with bank and financial institution. More awareness programs and more researches are needed. Social media, radio, television and all sorts of communicative tools need to be mobilized to disseminate insurance policy related information to the general public. We don’t have skillful and competent officials in insurance sector and we lack good provision on company insurance. This shortcoming needs to be addressed. We have small market for insurance companies. Capital or income generation problems are other challenges. Government of Nepal and insurance companies

should work together to empower the insurance companies because they are contributing to GDP growth through collection of premium and have provided employment opportunities to growing number of educated youths.

Insurance companies are important part of institutional investment as they invest in corporate securities as well as other collective investment schemes. 

The world of digital insurance

COVERONTRIP digital insurance, the first Spanish digital-only distributor of travel insurance, was presented on 4 April in Madrid, Spain, along with its community SHERPNYA, an app that will soon be available to download.

At a press conference held by Rafael Senén, CEO, and Asunción Carrasco, COO, the origin of COVERONTRIP and its differentiating factors were discussed. They said that COVERONTRIP has come to fill in a space where ‘millennials can find where to plan, share, be collaborative, play, have fun and have the best protection for their travels’.

COVERONTRIP said that it seeks to address challenges facing the insurance industry by approaching new technologies from scratch. The company also said that it has built a ‘different, digital and collaborative’ proposal around its customers that ‘expands itself throughout social media in a very special way’.

SHERPNYA, meanwhile, is said by the company to provide a space for customer s to share their travelling experiences in real time and ‘play in a world map’ while they discover new places.

Game $ dance

Do You Have Sufficient Auto Insurance Coverage?

Imagine getting ready to leave your house and you open your door and the rain is pouring down. Now you start to frantically look for your umbrella…. ah, there it is! You step outside, open your umbrella, and you are now protected from that pouring rain. If it were a bright sunny day with no rain in sight you probably would not even care about where your umbrella is or if you even had one! The same is true about insurance. Until you need it, do you really care about it? Unfortunately, too many people realize that they have insufficient coverage only when an unexpected incident occurs and they have to place a claim with their insurance company.

So, a logical starting point to determine if you have proper insurance coverage is to understand the basics. To ensure that you do have the proper coverage, you first need to acquire a good understanding of the basics of auto, home, personal umbrella, and life insurance coverage. For this article, we will focus on auto insurance coverage.

Auto Insurance basically covers you for liability and property damage as it relates to your motor vehicle. There are other optional areas of coverage as well, but for our discussion let’s stay focused on the basics, which are the most important anyway. Your auto insurance policy’s first and/or second pages are the declaration pages of your auto insurance policy. The declarations pages describe your auto coverage limits in numeric dollar values.

Here is a sample of what you may see on your auto insurance policy’s declaration pages:

-Bodily Injury/Property (BIPD) 250/500/100

-Limited or Unlimited

-Medical (Med) $5,000

-Personal Injury Protection (PIP) 250 w/250 Ded

-Uninsured/Underinsured (UM/UIM) 250/500/100

-Collision $500 (Coll) Deductible

-Comprehensive (Comp) $500 Deductible

-Rental Insurance (RI) 80%/1500

Let’s take a look at each of these coverage definitions and amounts in more detail.

The BIPD represents Bodily Injury (BI) / Property Damage (PD). Basically, in the example above, this individual policyholder has liability protection for $250,000 per individual or $500,000 maximum per incident, plus $100,000 in property damage to the other party’s vehicle in a collision. Liability coverage is protection for times when you have been deemed and proven negligent in an auto accident and you therefore become legally liable for the resulting compensatory and/or punitive damages to the other party or parties. The BI, of the BIPD, will cover you for negligence on your part that resulted in bodily injury to the other party or parties. BI also covers the cost of attorney fees associated with any litigation brought against you by the other party. In the above example, this person has $250,000 in coverage for all inclusive liability and attorney fees per individual injured or $500,000 for the entire incident.

The PD, of the BIPD, covers the damage to the other party’s vehicle as a result of your negligence; thus, in the above example, up to $100,000 in property damage to the other party’s vehicle or property. Now, being cognizant of the litigious society that we live in, we ask if $250,000 per person or $500,000 per incident is enough BI coverage? This is a personal decision for every individual to make depending upon their current assets and net worth, and their knowledge of recent jury decisions and awards on BI cases. A major factor affecting this decision is an understanding that you are self-insured for any amounts awarded in excess of your BI coverage amount, should the jury award compensatory and punitive damages greater than your BI coverage amount. So, in this example, should the jury award $750,000 to the individual driving the other vehicle who suffered bodily injury because you collided with them as a result of your negligence, then you are self-insured for the amount in excess of $250,000 which in this case would be $500,000. If you do not have the $500,000 to settle the award, then the judge has many other options to ensure restitution to the injured party such as: garnishing your wages, selling off some of your assets, placing a lien on your property, etc. Now, you can get an umbrella policy to cover you up to a certain amount in excess of your underlying auto BI coverage. We will look at how an umbrella policy works in more detail in an upcoming article.

Next, we have “limited right to sue” versus “unlimited right to sue” coverage. Basically, under the “limited” right to sue lawsuit option, you agree not to sue the person who caused the auto accident for your pain and suffering unless you sustain one of the permanent injuries listed below:

-Loss of body part

-Significant disfigurement or scarring

-A displaced fracture

-Loss of a fetus

-Permanent injury

-Death

Please note that choosing this option does not waive your right to sue for economic damages such as medical expenses and lost wages.

Under the “Unlimited” right to sue lawsuit option, you retain the right to sue the person who caused an auto accident for pain and suffering for any injury. Most people will choose the “limited” option because it is far less costly and it provides the ability to sue the negligent party for most major and permanent injuries. However, many attorneys will usually choose the “unlimited option” for their own personal coverage and pay the significant extra cost because they want the right to sue for any injury.

PIP coverage stands for Personal Injury Protection coverage. PIP is paid from your own policy. PIP covers medical expenses, and possibly lost wages and other damages. PIP is sometimes referred to as “no-fault” coverage, because the statutes that enacted it are generally known as no-fault laws. PIP is designed to be paid without regard to “fault,” or more properly, without regard to legal liability. PIP is also called “no-fault” because, by definition, a claimant’s, or insured’s, insurance premium should not increase due to a PIP claim. A PIP claim may be subrogated by your insurance against the other party’s insurance company if the other party was determined to be the neglligent party in the accident. PIP is a mandatory coverage in some states.

Uninsured/Underinsured (UM/UIM) is coverage from your policy that may pay for injuries to you and your passengers, and possibly damage to your property, when as a result of an auto accident the other driver is both legally responsible for the accident and determined to be “uninsured” or “underinsured.”

An uninsured driver is a person who has no auto insurance coverage, or had insurance that did not meet state-mandated minimum liability requirements, or whose insurance company denied their claim or was not financially able to pay it. In most states, a hit-and-run driver is also considered an uninsured driver as it pertains to paying for injuries to you or your passengers.

An underinsured driver is a person who had insurance that met minimum legal requirements, but did not have high enough coverage limits to pay for the damage caused by the accident. In these situations, UIM coverage can pay you for your damages. It is important to note that uninsured and underinsured is separate coverage, although in many states they can or must be purchased together. Some states mandate purchase of UM/UIM, but many do not.

Collision coverage insures you for damage to your vehicle. No matter if it is a collision between your car and another car, or your car and a stone wall. You are covered if your car sustains damage as a result of colliding into something or something colliding into it, whether you are at fault or not. Your deductible will usually apply. If you collide with another vehicle and the other party is at fault, then your insurance company may subrogate the claim against the at fault party’s insurance company to recover the claim amount.

Comprehensive (Comp) basically covers what collision coverage does not. When your car sustains damage that did not result from colliding with another motor vehicle or object, the comprehensive portion of your policy will pay for the damages. If you do not have comprehensive coverage then you would have to pay out of your own pocket for any damage to your vehicle not related to a collision. Here are the perils typically covered by comprehensive auto insurance coverage: fire, theft, vandalism, broken or damaged glass, animal inflicted damage, falling objects, storms (hail, wind, etc.), and water damage. Your deductible will usually apply.

Rental Insurance (RI) is coverage for you to rent a car while your vehicle is being repaired because of a covered incident. In the above example of declaration page values, the 80%/1500 means that you have coverage for $80 per day and $1,500 maximum total cost to rent a car while your vehicle is being repaired. This is an optional coverage that many people take, but some do not.

Well, that is it! That is the basics of understanding your auto insurance coverage. Not so bad, right? Now that you understand the basics of auto insurance coverage you can review and analyze your personal auto insurance policy’s declaration page coverage information while taking into consideration your personal financials to determine whether or not you have sufficient coverage.

Stay tuned for future articles that will explain the basics of understanding homeowner’s, personal umbrella, and life insurance coverage. You never know when it is going to rain!

Joseph Rubino, Agent

NJ Licensed Property & Casualty, Health, and Life