Eric P. Evans: Well, I want to talk today about; because everybody here has some form of insurance, or you’re breaking the law. Because unless you walked here or took the bus, you drove. So I’m going to talk about what everybody’s going to face at some point in time in their lives as a driver, homeowner or business owner is a claim. Talking about the claim. So here’s some questions I want to just to throw out. These are rhetorical, so please don’t answer them. That’s what rhetorical means, for those of you who don’t know. I know. R-H-E-T-O-R-I-C-A-L. Quinn.
Business Growth Innovators Member: Spellcheck.
Eric P. Evans: OK. That’s good. Claims, when should I file them? I should file anything, any time, for any amount. Correct?
Business Growth Innovators Member: No.
Eric P. Evans: Do claims impact you the same, depending on the line of business? You know, home, auto, or business? And that’s why we have insurance, right? OK. I want to throw this because we’re going to talk about the home first; because that’s usually the biggest area of impact. Because, regardless of the claim, the risk is an act of God. So, and that is loosely defined, depending on the carrier, the company, and the policy you have, but, in general, any claim you file with your home. Regardless of how it happened, who did it to you, whatever Barbie was flushed down the toilet, you will be charged for that claim, regardless of the amount. The exception is, I’m sorry, anything over, generally over $1000 you will be charged for.
So, for example, I was quoting friends of mine. They had a $1600 claim. I looked at them, said what idiot agent said, “Go ahead and file that claim”? because they paid 30% on that claim over the span of three years. Not only that, because of today with all the crazy billion plus dollar claims that have been happening all over the country, all over the world, that insurance companies have their hands in, it’s impacting each one of us in this room here in Orange County, California. Yes, the Indonesia tsunami, etc.; does impact us here locally because insurance carriers are no longer just insuring Orange County, they’re insuring the world, and it all falls down to each one of us and the rates we pay, and how they underwrite. Because it’s all about profitability, and when they’re unprofitable, they got to get profitable.
If they can’t make it on earning, if they can’t make it on keeping the losses low, guess what the third thing is. Premiums, you got it. So the point is when someone calls me and says, “Hey, something happened in my house. What should I do?” I usually ask them, “Well, what happened, how much is it, and what can you personally do to impact fixing it yourself?” And they kind of go, “Whoa, isn’t that what I have insurance for?” I am like, “Sure. You can file a claim. I’m not going to tell you not to, it’s illegal for me to do so.
But if you can impact that and just take care of it yourself; and I’m not saying a $10,000 claim. I’m not implying that, but if you have a $1000 deductible and a $1200 claim, I’d say, “All right. Can you suck the water up yourself. Is this carpet in your closet really that valuable to you? Can you pull it up and throw it away and put new carpet down?” And I try to say, “Let’s work through this. Is this something you really want to file?” And usually I don’t hear back from them because they take care of it themselves, and say, “Eric, thank you for that suggestion. That’s going to save us” because 30% for three years generally costs more than that claim. If you don’t get non-renewed, then you’re good.
If you do get non-renewed, suddenly you are black-balled in the market, and a lot of carriers are not taking people with prior claims, so home claims, make sure that they are good, and they’re going to sting. That’s usually my thing. If it’s going to sting, file the claim. If it’s not, just see what you can do to take care of it yourself. On the auto side it’s a little bit different. Everyone always says, “Hey, I have full coverage.” Most people don’t know what that means. Comprehensive and Collision. Comprehensive is anything but collision. What the heck’s that mean? Collision, you collide into something, something collides into you. The exception is a moving object.
You’re driving to the mountains, going to your ski thing, and a deer out of the blue. Ah! You hit the deer. That’s a moving object. You couldn’t avoid it. That’s not going to be a chargeable collision. Generally, that falls under collision. A dog, etc. Anything that’s moving. A rolling rock grows no moss. Rolling stone.
But anyhow, so everything else is comprehensive because comprehensive means anything and everything. So comprehensive is theft, vandalism, fire tree falls down and hits your car, etc., etc. Those are all comprehensive. OK? So comprehensive claims, doesn’t matter what happens, to what extent, how much the money is, it is not chargeable at all to you. OK. So that’s the thing. Collision, you hit something. Those pesky yellow poles that are just below your fender, and if you don’t have a sweet 360-degree camera in your car that most people don’t have, and you hit them, that will be chargeable. So, depending on your deductible, that’s what I tell people, how much is it going to cost you. And what’s your deductible? Oh, $1000 deductible, with a $1200 claim, you don’t want to file that claim. DMV says you have to file anything over $1000 with the DMV, SR-1.
Most of us are 100% honest with our taxes, right? So you be as honest with the DMV about those $1000 plus claims. You don’t have to file. I mean, you do legally. It’s the law. But there’s some grace there, depending on your favorite body mechanic, who will generally make sure that you’re good. Just FYI, when you’re filing claims, think about “how this is going to impact me?” Because if you do hit those pesky yellow poles, $1001, and then you get that nice little red light camera, and he goes, “Oh, those jerks in Santa Anna. I’m just going to pay for that. I’m not going to traffic school.” And little do you realize, one accident that follows a point.
Guess what, when that ticket comes around, that second point, and your insurance rates go up by $600 a year, and you’re going, “What? Whoa, these jerks raised my rates,” well, you lost your good driving discount, because you have two points on your record. Oh, wonderful. Now you are in a bind because you just got non- renewed by your carrier. So now you’re going to the non- standard world. Most carriers won’t carry you if you have two points. So, big picture. You guys have the big picture in talking about claim stuff.
All right, so moving on to business stuff. Business stuff. So I’m dealing with this a lot lately. Especially in the worker’s compensation world, is when someone gets a little cut in their finger and they say, “Oh, just go to Urgent Care, file the claim.” “Oh, I think I sprained my ankle.” “Just go to Urgent Care.” Oh, my back hurts.” “Just go to Urgent Care.” What happens is there’s a frequency and severity in the world of worker’s compensation. Frequency: it’s all those little $1200 claims that add up, and they just add up, and they stack up. And they may not add up to a lot, especially for a business that, say, may have a five- figure plus premium on worker’s compensation. But, what happens is the carrier says, “There’s a problem in this business. They are not taking care of things. They’re not giving oversight. They are not offering adequate safety training, or management, or supervision, etc.
That will ding a business and cause them to be non-renewed. No, I have 2 1/2 minutes. It will cause them to be non- renewed, and what happens is if you do have a high enough worker’s compensation premium, you get on what’s called the experience modification. I know I’m getting technical for some of you going “Whoa.” But anyhow, that’s a factor. That’s a factor that’s either a discount or it’s a multiplier up. It’s up or down. Alright. So frequency, you get a 1.2% experience mod. It means you’re paying 120% of the normal premium.
But there’s a way you can pay for the smaller claims, with the Urgent Care people, there’s a way you can pay those.
They are still on your record, but they’re paid for, and the insurance companies look on you favorably. And if you’re on the little X-mod zone, you know if you are or not, then, that’s something to be aware of. And the severity is just really the shock losses. The shock loss when somebody falls from that ladder because they’re getting that box up on the shelf, and now they have a broken leg. It’s surgery. It’s pins. They’re limping for the rest of their life. You’ve got problems on your hands.
So, most importantly, when it comes to claims like that in the work comp land, make sure you’re doing exit interviews when the worker’s leave, so that they aren’t trying to file something frivolous. And also make sure you have cameras in your business. If you’re a high-manufacturing kind of business, where a lot of people can be injured, a lot of cameras can help you in a bad claim. Like, Monday morning I really blew my knee out playing soccer, but I’m going to say I slipped and fell on this floor. So that’s the scoop on that. I’ve got basically a minute, so I’m going to see if there are any questions anybody has. Stunned into silence. Yes, sir. Mister Lively.
Business Growth Innovators Member: I believe it was when you were talking about the homeowner’s policy claim.
Eric P. Evans: Yes.
Business Growth Innovators Member: And then for the next three years it was 30%. Is that 10% per year?
Eric P. Evans: No.
Business Growth Innovators Member: It was 30. It is 30% each year?
Eric P. Evans: 30% each year.
Business Growth Innovators Member: It would cover 90% of your loss.
Eric P. Evans: No, no, no. 30% of your premium.
Business Growth Innovators Member: I got you.
Eric P. Evans: So it’s a surcharge. It’s a surcharge. And companies are tightening that up. Some companies are saying “no losses at all.” My former Farmer’s place, it used to take someone four claims. Now they narrowed it down to two claims. Anyway, it’s an interesting insurance world out there, and it’s getting interesting for me because I’m having to rewrite a lot of people, because rates are up, there down. There just all over the place, so if you see your renewals, you’ll see what I’m talking about. Yes, sir.
Business Growth Innovators Member: Because of that issue with claiming one file. If [SS] insure elsewhere when they bought their homeowner’s policy, would that be better?
Eric P. Evans: I’m sorry. What?
Business Growth Innovators Member: Take for example, not insuring jewelry with your homeowner’s policy, but separately.
Eric P. Evans: Oh. That . . .
Business Growth Innovators Member: Or any other property, like valuables, artwork?
Eric P. Evans: Yeah, you can do that. And that’s, yeah, you can do that. There are floaters out there that are independent of your homeowner’s floaters. Yes.
Business Growth Innovators Member: And you can buy those separately.
Eric P. Evans: Yeah. They’re a little more expensive, because it’s outside the package, but yes. But generally, you got to have a certain dollar amount too, so they don’t take your $8000 wedding ring. It’s usually that they want to six-figure ring or $50,000 ring, you know. So I’m done. I’m out of time.
Eric donates a lot of his time to AYSO – refereeing soccer, Boy Scouts of America – Assistant Scoutmaster, and his church – playing guitar, bass, singing, and just making noise in general.