The Basics of Flood Insurance

Flooding is the most common and costly natural disaster in the United States, causing an average of $50 billion in economic losses each year. Most U.S. natural disasters declared by the President involve flooding.

There is no coverage for flooding in standard homeowners or renters policies or in most commercial property insurance policies. Coverage is available in a separate policy from the National Flood Insurance Program (NFIP) and from a few private insurers. Despite efforts to publicize this, many people exposed to the risk of floods still fail to purchase flood insurance.

And, in light of the recent devastating floods experienced in the South, we thought it would be extremely important to shed some light on what flood insurance covers, how it is purchased, and provide an idea on the associated premiums.

WHAT’S COVERED

Building

  • The insured building and its foundation
  • Electrical and plumbing systems
  • Central air conditioning equipment, furnaces and water heaters
  • Refrigerators, cooking stoves and built-in appliances such as dishwashers
  • Permanently installed carpeting over unfinished flooring

Personal Property

  • Personal belongings, such as clothing, furniture and electronic equipment

WHAT’S NOT COVERED

  • Damage caused by moisture, mildew or mold that could have been avoided by the property owner
  • Currency, precious metals and valuable papers such as stock certificates
  • Property and belongings outside of an insured building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools
  • Living expenses such as temporary housing

FLOOD INSURANCE FOR BASEMENTS AND AREAS BELOW THE LOWEST ELEVATED FLOOR

Coverage is limited in basements regardless of zone or date of construction. It’s also limited in areas below the lowest elevated floor, depending on the flood zone and date of construction. These areas include:

  • Basements
  • Crawl spaces under an elevated building
  • Enclosed areas beneath buildings elevated on full-story foundation walls that are sometimes referred to as “walkout basements”
  • Enclosed areas under other types of elevated buildings

MANDATORY REQUIREMENTS

Homes and businesses with mortgages from federally regulated or insured lenders in high-risk flood areas are required to have flood insurance. While flood insurance is not federally required if you live in a moderate-to-low risk flood area, it is still available and strongly recommended.

RATES

The NFIP, a federal program, offers flood insurance, which can be purchased through most leading insurance companies. Rates are set and do not differ from company to company. These rates depend on several factors, including the date and type of construction of your home, along with your area’s level of risk. Most premiums include a Federal Policy Fee and ICC Premium. If your community participates in the Community Rating System (CRS), you may qualify for an insurance premium discount in some communities of up to 45% if you live in a high-risk area and up to 10% in moderate-to-low risk areas.

30-DAY WAITING PERIOD

Typically, there’s a 30-day waiting period from date of purchase before your policy goes into effect. Here are the only exceptions:

  • If flood insurance is being purchased in connection with the making, increasing, extending or renewing of your loan.
  • If a building has been newly designated in the SFHA and flood insurance is being purchased within the 13-month period following a map revision.
  • If flood insurance is required as a result of a lender determining that a loan that does not have flood insurance coverage should be protected by flood insurance.
  • If an additional amount of insurance is selected as an option on the renewal bill.
  • If a property is affected by flooding on burned Federal land that is a result of, or is exacerbated by, post-wildfire conditions when the policy is purchased within 60 days of the fire containment date.

Top 5 Strangest Auto Claims

Most of the time, car insurance claims are fairly routine affairs involving fender benders or storm damage. Truly bizarre claims, however, are rare and elusive. If you Google “weird auto insurance claim,” you’ll find multiple improbable rumors involving wrecks caused by drivers ogling naked pedestrians, windshields damaged in squirrel nut attacks, and even one report by a driver who claimed his windscreen melted when a plane crash-landed nearby and burst into flames.

Actually verifiable claims are much harder to come by; however, we’ve been able to track down 5 truly off-the-wall auto insurance claims that are just as strange as they are improbable. Below are the associated stories for each of the claims.

Also, please remember that you can always contact our office for any auto insurance accident or claim you encounter—no matter how strange it may be. Our office will be glad to assist.

Claim 1: In December 2011, Seattle news outlets reported a bizarre story involving a mattress and a three-car pile-up. A couple had failed to tie their mattress securely to the top of their SUV. As they were driving, the mattress loosed itself from its moorings and landed in the middle of the highway, causing a three-way crash.

As two good Samaritans stopped to help, the female driver hopped back into her vehicle and fled the scene, leaving her male passenger to deal with the aftermath. Shortly thereafter, one of the good Samaritans also left. A few miles down the road, however, he spied a man’s head “bobbing around in the backseat.” It turned out to be the male passenger had stowed away, hoping to escape the accident scene undetected.

Claim 2: A driver was involved in a minor rear-end collision in which he smashed the taillight of a car ahead. He then reversed slightly so that he could survey the damage, but in a stroke of ill luck, he hit the front bumper of the driver behind him. Then, when he opened his door to exit his vehicle, he knocked down a passing cyclist, resulting in three insurance claims!

Claim 3: An insurance agent received a rather suspicious claim for heavy hail damage to a car. When the adjuster inspected the damage, he was skeptical that hail could have caused the perfectly symmetrical, round divots that peppered the entire surface of the damaged car.

The insurance company rejected the claim as the vehicle had been purposefully damaged, not by hail, but by a ball-peen hammer. The company figured the client would be so embarrassed at being caught in an obvious attempt at insurance fraud that he would simply drop the entire matter. Instead, the man filed a police report claiming that an unknown assailant had beaten his car with a ball-peen hammer! The client then filed a new insurance claim, and this time, because they couldn’t prove that the client had inflicted the damage himself, the insurance company was forced to pay the claim.

Claim 4: A farmer was driving around in his pickup truck and had his shotgun riding, well, shotgun. Arriving at his destination, the man grabbed his gun and hopped out of the cab. Unfortunately, he lost his grip and the gun discharged. He wasn’t sure if he’d fired the gun while grabbing for it or if it went off by itself as it hit the ground.

The gun was loaded with buckshot and while thankfully, the man was uninjured, the truck’s interior wasn’t as fortunate. The entire cab of the truck — headliner, seat covers and dashboard — had suffered extensive damage. Luckily, the client had comprehensive insurance and the claim was paid.

Claim 5: In 1974, a young woman drove her beloved “hippie van” to an upholstery shop to have a fold-down bed installed in the back. The van then disappeared from the shop’s lot and a claim was filed with her insurance company. The woman was reimbursed roughly $600 for the vehicle, which was about what she’d paid for it.

Fast-forward 35 years when U.S. Customs and Border Protection officials in Los Angeles recovered a perfectly restored, still-running VW minibus from a shipping container bound for the Netherlands. They ran the VIN (vehicle identification) number and discovered it was the same vehicle that had been stolen from back in 1974.

Now owned by here insurance company, the minibus is worth about $25,000. The individual is hopeful that she can come to terms with her insurer and get her minibus back. One can only imagine the stories it would tell if it could talk!

How Uber Affects Car Insurance

With more than 8 million U.S. users and 160,000 drivers, Uber is disrupting the transportation industry in an unprecedented manner. By leveraging technology, they (along with other ride-sharing companies) are transforming the way we travel, especially in crowded, urban areas.

As the ride-sharing industry continues to exponentially grow, auto insurance companies are trying to figure out how and where to properly provide coverage for drivers that participate in these services.

Most personal insurance policies exclude all livery services and commercial insurance policies are expensive. Many ride-sharing companies do provide insurance for their drivers while paying passengers are in the car; however, there are still gaps in insurance coverage that each driver needs to properly address.

Q: Why are companies like Uber and Lyft getting so much attention from auto insurance companies?

A: These companies are attracting significant attention from auto insurance companies due to their operations — providing ride sharing services by contracting with drivers who use their personal vehicles to transport passengers. These drivers do not typically have a livery driver’s license nor are their cars registered or insured as commercial vehicles.

The issue at hand is that personal auto insurance is not designed, underwritten or priced to handle livery-type services. They are written for personal use vehicles that may include the transportation of family and friends. Therefore, most personal auto insurance policies exclude all livery services as those are typically handled on a commercial auto insurance policy. In fact, most policies actually stop providing coverage from the moment a driver logs onto his ride-sharing app until the app is shut off.

Commercial auto insurance policies generally carry higher limits, are underwritten with the recognition that commercial vehicles travel more miles, and cover exposures not included in private-passenger policies due to the increased risk of accidents and subsequent claims.
Q: Why don’t insurance companies cover ride-sharing?

A: The short answer: Auto insurers have not yet determined how to underwrite the risks of personal-line policyholders using their private-passenger vehicles on a for-hire basis.

Given the proliferation of companies like Uber and Lyft, however, it is likely that auto insurers will at some point start to offer policies that provide motorists with coverage for both traditional private use of a vehicle and commercial vehicle use.
Q: What is government doing as far as insurance is concerned? Do any laws govern ride-sharing and insurance?

A: For city and state governments the two key insurance regulation questions are:

  1. Must ride-share drivers be licensed in the same way that taxi and other for-hire drivers are?
  2. If private-passenger policies do not cover ride-share drivers when they are working, how do they become properly insured?

Though many municipalities have yet to properly address the concerns above, some governments have already started passing bills that insurance requirements and regulations for ride-share drivers.

For example, California recently passed a bill with the following requirements:

  1. Requires all ride-sharing companies to disclose to drivers upfront that the driver’s personal insurance policy will not apply while using their private-passenger vehicle for work activities.
  2. Requires commercial insurance from the moment the driver logs onto the app, until the driver logs off.
  3. Clarifies that their commercial insurance is primary coverage.
  4. Requires the ride-sharing liability insurer to defend and indemnify drivers when they have a claim, or accident, while on assignment.
  5. Ensures coverage is not dependent on a private-passenger auto insurer first declining coverage.

Q: How can prospective drivers learn if they have sufficient coverage?

A: Prospective drivers should ask the their ride-sharing company what level of coverage it provides. Most ride-sharing companies provide insurance coverage for their drivers, but only when they have a paying passenger in the vehicle.

Drivers should also contact their own auto insurer to address gaps, if any, in their liability protection. It is also recommended that ride-sharing drivers review a copy of their company’s insurance contracts so they know the exact terms and conditions of the coverage.

Tips for Fire Claims

Recently there have been a number of wildfires throughout the country, many of them engulfing homes and destroying other property.   While we certainly hope you never have to deal with heartache and stress with losing your home or business to a fire, we would like to share some tips from the Insurance  Commissioner’s office on how to property deal with a fire claim.

According to the commissioner’s office you should do the following immediately after a fire claim:

  • Once you gain access to your property take pictures of the damage if it looks like the adjuster will be delayed.
  • Make sure your address is visible. You may have to spray paint the address onto a sheet of plywood and put it in view of the road so the adjuster can find it.
  • If you are not going to be at the property, let the adjuster know how to contact you.
  • Do not dispose of property until an insurance adjuster has reviewed it.
  • Save all receipts.
  • Avoid insurance adjusters and contractors that do not have a valid license or use high pressure tactics and require large deposits.

The commissioner’s office recommends you do the following to prepare for any future potential claims:

  • Review your property insurance coverage to make sure you have adequate limits.
  • Record an inventory of your possessions.
  • Make sure you store a copy of your inventory at a separate location.
  • Save all receipts.

If you have any additional questions or would like us to help prepare your company against any future claims, please feel free to contact our office.

Employee Dishonesty Insurance

As the economy continues to sputter, we are constantly hearing stories about employees committing desperate acts against their employer and even customers.

Here are some scenarios that we have seen happen to some of our clients in the past year:

• An employee stole inventory from the company and disappeared.
• An employee used the company credit card for personal purchases like a television, gas, clothes, etc.
• An employee skimmed money from the till for over 12 months amounting to a total loss of about $20,000.

The question we often get is on the possibility of purchasing insurance to cover these types of acts. You can certainly purchase coverage for this, but it must be done by adding Employee Dishonesty coverage to a Crime Policy.

Employee dishonesty insurance is coverage for just that: dishonest or criminal acts committed by employees. It covers losses where an employee steals money, securities or even tangible property. Some policies will even cover theft of clients’ belongings.

What is the typical limit? Like always this depends. Some companies are much more cash heavy than others, and the risk is greater for this type of loss. However, the typical limit we will see is anywhere from $50,000 to $100,000 in coverage.

How much does the coverage cost? Depending upon the limit and type of business, premium starts at a couple hundred dollars a year. Premium is almost always based upon the number of employees within the company.

Any policy exclusions?

• Acts committed by an owner, officer, or director within the company.
• Inventory shortages where the sole proof of loss is an inventory computation.
• Any employee that is discovered to have a history of prior dishonest acts either before or after being employed by the insured.

Why Identity Theft Insurance is so Important

According to a report by Internet security firm Kaspersky Lab, in what could be one of the largest bank heists in history, more than 100 banks and ATMs have been rigged so that thieves could steal up to $1 billion in cash.

Hackers from Russia, Ukraine, China and Europe were involved in the organized crime ring that was just recently exposed. The hackers installed spying software on bank computers, studied bank employee workflows so they could learn how to mimic their actions and used their knowledge to transfer money into bank accounts set up in other countries.

While the report did not name specific bank institutions, it stated that financial institutions in at least 30 countries were affected, including the United States.

We all know that identity theft is the act of taking someone’s personal information and using it to impersonate a victim, steal from bank accounts, establish phony insurance policies, open unauthorized credit cards or obtain unauthorized bank loans.

What many people don’t realize, though, is that 7% of all U.S. citizens will be victims of identity theft over the next 12 month resulting in over $50 billion in costs. Identity theft is also a long, arduous process for victims as they try to repair their credit, erase erroneous collection accounts, and restore their lives.

Did you know that many homeowners insurance policies actually offer some form of identity theft as part of the policy? You can find out more about this coverage, its cost, and provisions within the rest of the of article below.

If you would like to see if your policy includes identity theft coverage or would like to receive quotes on this coverage, please feel free to give our office a call.

Identity Theft Insurance

What is it?

Some insurance companies now include coverage for identity theft as part of their homeowners insurance policy. Others sell it as either a stand-alone policy or as an endorsement to a homeowners or renters insurance policy.

What does it cover?

Identity theft insurance provides reimbursement to crime victims for the cost of restoring their identity and repairing credit reports. It generally covers expenses such as phone bills, lost wages, notary and certified mailing costs, and sometimes attorney fees (with the prior consent of the insurer). Some companies also offer restoration or resolution services that will guide you through the process of recovering your identity.

What does it cost?

Some insurance companies will include identity theft coverage for no additional cost. However, most will charge anywhere from $25 to $100 annually for the additional insurance coverage.

Tips for Avoid Identity Theft

  • Keep the amount of personal information in your purse or wallet to the bare minimum. Avoid carrying additional credit cards, your social security card or passport unless absolutely necessary.
  • Always take credit card or ATM receipts. Don’t throw them into public trash containers, leave them on the counter or put them in your shopping bag where they can easily fall out or get stolen.
  • Do not give out personal information. Whether on the phone, through the mail or over the Internet, don’t give out any personal information unless you have initiated the contact or are sure you know who you are dealing with and that they have a secure line.
  • Proceed with caution when shopping online. Use only authenticated websites to conduct business online. Before submitting personal or financial information through a website, confirm the site is secure.
  • Make sure you have firewall, anti-spyware and anti-virus programs installed on your computer. These programs should always be up to date.
  • Monitor your accounts. Don’t rely on your credit card company or bank to alert you of suspicious activity.
  • Order a copy of your credit report from each of the three major credit bureaus. Make sure it’s accurate and includes only those activities you’ve authorized.
  • Shred any documents containing personal information such as credit card numbers, bank statements, charge receipts or credit card applications, before disposing of them.

Does Auto Insurance Cover Stolen Items?

One of the questions we often receive is in regards to how auto insurance policies respond to personal items that are stolen from your car.  We want to spend this post providing some insight into this question.

Please keep in mind that every insurance policy is different and the information below may or may not address how your policy would specifically respond. 

What If My Laptop or Other Personal Items are Stolen from My Car?

Auto insurance does a good job of protecting, repairing, or replacing your vehicle if there is a claim.   It does a very poor job, though, of providing any type of coverage for personal items inside the vehicle.   In fact, most auto policies actually exclude coverage for personal items.

So then where do you get coverage? Your homeowners or renters policy will typically pick up the claim for stolen or damaged personal items located in your vehicle.  Keep in mind, though, the claim will be subject to the policy deductible, which will typically be either $500 or $1,000.

Our best recommendation is to avoid leaving items in your vehicle as best you can.   If you do have to leave items in your car, be sure to keep them out of plain view. Thieves will typically target those items that are easiest for them to get to.

Are My CDs Covered by Insurance if They’re Stolen from My Vehicle?

While CDs are quickly going the way of cassette tapes and being replaced by iPods or other portable electronic devices, this is still a common question we receive.

Unfortunately, the answer is your auto insurance most likely does NOT provide any coverage for CDs if they are stolen from the vehicle.   Some companies, though, will now allow you to purchase an endorsement on your policy that will provide limited coverage for the CDs.

Your best chance of finding coverage for this type of claim is to submit a claim through your homeowners or renters policy.   Many policies will provide $1,000 in coverage for “electronic apparatus, while in or upon a motor vehicle.”  However, before you rest easy thinking you are protected in the event of a claim, many insurance companies have interpreted “electronic apparatus” to not include CDs and will deny the claim.

Due to the ambiguity in regards to coverage for your CDs, we have a couple of suggestions:

  1. Check with your agent to see how your auto and homeowners policies will respond if your CDs are stolen.  It is so much better to know ahead of time how the policy will likely respond rather than waiting for the actual claim.
  2. Ask about the possibility of purchasing a coverage extension through your auto insurance company.
  3. Keep a digital copy stored on your home computer or an external storage device as a backup.

Personal Articles Insurance

If any of the following incidents were to happen, do you know if your homeowners insurance would pay the full claim, part of the claim, or deny it completely?

  • Your golf clubs are taken out of your car.
  • Your expensive digital camera is dropped and broken.
  • Your home-office computer is ripped off.

Unfortunately, with just a standard homeowners insurance policy, the likelihood of your full claim being paid is not great.

While your homeowners insurance policy does provide some coverage for valuable items, it is usually limited in the types of covered claims and payment amounts.

In order to have full coverage for the incidents above you would need to purchase a Personal Articles Floater. A personal articles floater provides coverage for possessions with higher monetary values like:

  • Cameras (video or still) and related equipment
  • China and crystal
  • Firearms
  • Golfer’s equipment
  • Jewelry
  • Musical instruments
  • Personal computers
  • Silverware
  • Works of fine art

It will also provide some additional coverage for things like mysterious disappearance and breakage. And the best part is that this type of policy isn’t very expensive at all.

Why should I consider a Personal Articles Floater?

Benefit 1: A personal articles floater will provide higher limits on your valuables.

Standard insurance policies limit coverage for the items listed above at anywhere from $500 to $1,500 depending upon the item. In many cases that may be sufficient; however, if the item is rare or valuable, the regular might not be enough.

One of the benefits of a personal article floater is the freedom you have in selecting your limits. Rather than predetermined limits, insurance companies are more willing to provide higher limits (as long as you can provide proof of said value).

Benefit 2: Claim payments are facilitated in a more proficient manner.

Claims for a personal articles floater usually paid one of two ways:

  1. Replacement Cost: Your insurance will pay the necessary amount to repair or replace your item with another one of like kind and quality.
  2. Agreed Value: The insurance company will use an “Agreed Value” limit for the item. This means that, in the event of a covered claim, your insurance company will simply just pay you the amount listed on the policy.

An agreed value limit is great when you’re insuring items like jewelry, fine art, antiques, and other unique items because it means if you suffer a loss on a covered item, you will not have to negotiate a settlement price with the insurance company.

Benefit 3: A personal articles floater provides expanded coverages.

A standard homeowners policy does not include some vital coverages for rare or valuable items. For example, a personal articles floater can provide coverage for “mysterious disappearance” or “breakage.” So if you were to lose a valuable piece of jewelry or accidentally break some fine china, your policy would pay the associated claim.

Benefit 4: Coverage can be expanded worldwide.

While most homeowners policies will typically only cover items located on the premises listed within the policy, personal articles floaters will provide coverage anywhere in the world.

For example if you lost your expensive camera while on vacation, your policy would pay for a replacement.

Benefit 5: Most personal articles floaters do not have a deductible.

A standard homeowners insurance policy will usually include a $500 to $1,000 deductible. A personal articles floater is different; many of them actually remove the deductible removing any out-of-pocket expenses as the policy owner.

Some Tips when Adding this Coverage

  1. Make sure to keep a detailed list of the items listed on the policy, including copies of the appraisals.
  2. Photograph each piece of your collection and store the photos in a safe place. This will make it easy to list each item on you claim report if your entire collection is stolen or damaged.
  3. If you have a number of high value items, it may be in your best interest to store them in a safe deposit box or install a security system in your home. Doing so will help discount the premiums on your policy as well.

How Much Does the Coverage Cost?

Now the big question, right? How much does a policy of this type cost?

Personal article floaters are actually much cheaper than you think given the coverage they provide. The increased cost can be anywhere from $20 to $2,000 annually, depending upon the type of items insured and their associated value.

*The above information is to be used as guidance only, and should not be considered as definite in any particular case. Every policy is different and you need to read through your policy and consult with your agent to best determine how your coverage will respond. Within this article we simply cannot analyze every possible loss exposure and exception to the general guidelines above.

 

Trampoline Safety

Did you know that if you own a trampoline that your homeowners insurance will either surcharge you for the increased risk or exclude the claim from coverage? In fact, many insurance companies will refuse to write policies for homeowners with trampolines altogether.

Why are insurance companies so adverse to covering trampoline-related claims? They seem harmless enough, right? In reality, trampolines are actually very dangerous and can put you and your personal assets at risk if someone were to injure themselves on your premises.

According to the Consumer Product Safety Commission and American Academy of Orthopedic Surgeons, trampolines account for over 100,000 emergency room visits every single year at a cost of over $100 million.

Of those injuries 92.7% involve children under the age of 16 and 59.5% resulted in a broken bone. Even worse, an AAP study from 2012 pointed out that current data on netting and other safety equipment indicates no reduction in injury rates.

If you do own a trampoline, please follow the safety items below to help prevent injuries.

Trampoline Safety Measures

The first safety measure with trampolines as recommended by the American Academy of Orthopedic Surgeons, the Canadian Pediatric Society, and the Academy of Sports Medicine is to avoid them altogether.

As one E.R. Doctor recently lamented to the parent of a child injured on a trampoline, “Trampolines are our worst nightmare in terms of the number of accidents they cause.”

If you do own a trampoline, we highly recommend taking these steps to help prevent tragic deaths and serious trampoline injuries, especially paralysis, fractures, sprains and bruises:

  • Allow only one person on the trampoline at a time.
  • Do not attempt or allow somersaults, because landing on the head or neck can cause paralysis.
  • Do not use the trampoline without a full net enclosure and shock-absorbing pads that completely cover its springs, hooks and frame.
  • Place the trampoline away from structures, trees and other play areas.
  • No child under 6 years of age should use a full-size trampoline as they are the most susceptible to bone injuries.
  • Do not use a ladder with the trampoline, because it provides unsupervised access by small children.
  • Always supervise children who use a trampoline. (Though, it is worth noting that over half of all trampoline injuries occur with parental supervision nearby.)

How Will Driverless Cars Affect Premiums

Self-driving cars are definitely on the way. In fact, one transport scholar at the University of Minnesota estimates that by 2030 every car on the road will be driverless.
From a safety standpoint this could be great news as most accidents are caused by human error. If this factor can be minimized by taking control of the moving vehicle away from the driver, accident rates should tumble.

The risk of an accident is unlikely to be completely removed, though, since events are not totally predictable and automated systems can fail. In addition, the transition from hands-off driving to hands-on promises to be tricky.

Additionally, driverless cars are still fraught with a number of safety questions:

  1. What kind of training will people need to safely handle these types of vehicles?
  2. How well prepared will drivers be to handle emergencies when the technology returns control to the driver?
  3. What are the insurance implications of autonomous vehicles?
  4. Who is ultimately liable in an accident – the manufacturer or the driver?

Many of the questions above will be appropriately answered by the time the first driverless cars actually hit the road. But in the meantime we have gathered some research data and insight on how insurance companies are starting to view this new risk.

Insurance Implications

Except that the number of crashes will be greatly reduced, the insurance aspects of this gradual transformation to driverless carts are still unclear. It will also be interesting to see if the accidents that do occur lead to a higher percentage of product liability claims, as claimants blame the manufacturer or suppliers for what went wrong rather than their own behavior. Liability laws will also have to evolve to ensure autonomous vehicle technology advances are not brought to a halt.

Auto Insurance: Some aspects of insurance will be impacted as autonomous cars become the norm. There will still be a need for liability coverage, but over time the coverage could change, as suggested by the 2014 RAND study on autonomous vehicles, as manufacturers and suppliers and possibly even municipalities are called upon to take responsibility for what went wrong.

Coverage for physical damage due to a crash and for losses not caused by crashes but by wind, floods, fire and theft (comprehensive coverage) is less likely to change but may become cheaper if the potentially higher costs to repair or replace damaged vehicles is more than offset by the lower accident frequency rate.

Underwriting: Initially, many of the traditional underwriting criteria, such as the number and kind of accidents an applicant has had, the miles he or she expects to drive and where the car is garaged, will still apply, but the make, model and style of car may assume a greater importance. The implications of where a car is garaged and driven might be different if there are areas set aside, such as dedicated lanes, for automated driving.

During the transition to wholly autonomous driving, insurers may try to rely more on telematics devices, known as “black boxes,” that monitor driver activity. According to the National Association of Insurance Commissioners, use of telematics is forecast to grow to up to 20 percent within the next five years.

Liability: As cars are become increasingly automated the onus might be on the manufacturer to prove it was not responsible for what happened in the event of a crash. The liability issue may evolve so that lawsuit concerns do not drive manufacturers and their suppliers out of business

Repair Costs: While the number of accidents is expected to drop significantly as more crash avoidance features are incorporated into vehicles, the cost of replacing damaged parts is likely to increase because of the complexity of the components. It is not yet clear whether the reduction in the frequency of crashes will lead to a reduction in the cost of crashes overall.