Losing Credit for Time Served

Posted on February 23, 2012. Filed under: Individual Life & Health | Tags: , , , , , |

My parents taught me a lot of wonderful things. Things like the importance of being kind, respectful, and hard-working. I’m very thankful for those lessons. But, I’m also thankful they took the time to educate me about the importance of practical things, like how to balance my checkbook and to never let my health insurance lapse.

My very first “real” job after college was in a bank. I was always shocked when parents would bring their kids in, just before heading off to college, to open up their FIRST bank account. We would take as much time as possible to explain how to balance a checkbook, to never rely on a balance pulled at the ATM (especially if you might have written checks that haven’t cleared), etc. But we knew the vast majority of these kids would show up on our insufficient funds list within a month or so. And the parents never understood why. Or, they simply refused to admit they had not properly prepared their child for one of the basic realities of adulthood.

The same is often true for health insurance. It tends to be one of the things people take for granted, especially when they are healthy. And many parents simply don’t educate their kids on the importance of maintaining coverage. It should be one of the things that is always worked into a budget. But often ends up being cancelled because it’s considered unaffordable.

The problem with not maintaining health coverage is that once you’re sick, you may not be eligible for it. Like car insurance, you can’t buy it after the accident happens. And even if you are eligible, if you have not maintained your creditable coverage status, you may have to satisfy waiting periods (for up to 12 months) for pre-existing medical conditions.

So, how do you ensure you don’t lose your continuous coverage status?

  • Avoid breaks in coverage of more than 63 days. Even if you’ve had continuous coverage for years, a break in coverage of more than 63 days can negate all of it and put you right back to square one.
  • It’s also good, if you change insurance providers, to make a point of providing the new insurance company with the certificate of coverage your previous provider(s) issues (confirming your last 12 months of coverage, at a minimum).
For more information, visit the Department of Labor’s FAQ.

Contact us for quotes.

Image: Stuart Miles / FreeDigitalPhotos.net

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Claims-Made Insurance Policies

Posted on January 5, 2012. Filed under: Commercial | Tags: , , , , , |

What is a claims-made insurance policy?

This is a great question, and one that our customers ask from time to time.

A claims-made insurance policy is most often used to provide professional liability coverage, such as the coverage needed by lawyers and doctors to protect them from malpractice claims. But it is also used frequently for other types of liability insurance, such as employment practices liability, directors and officers liability, and products liability. It is sometimes used for the general liability insurance that all businesses purchase.

Most general liability insurance policies are written in a coverage format known as an “occurrence form.” This type of policy covers accidents that occur during the policy period, no matter when the accident becomes known to the insured or is reported to the insurer. This may result in the insurer providing coverage for accidents reported long after the policy has expired.

For example, a person could take a new drug today and not know for years that the drug has caused some type of injury. If the injury is later discovered and that person sues the drug manufacturer, the suit will be defended and any resulting judgment will be paid by the policy that was in effect when the injury occurred, not by the policy that was in effect when the injury was discovered or the lawsuit was filed.

The period of time between the occurrence of injury and the actual reporting of the claim is often referred to as the long “tail” of liability insurance.

This time delay causes several problems for insurance companies. They are often forced to pay claims with inflated dollars since the premium charged for the coverage was based on the loss experience data available at the time the policy was written, not at the time of the claim. In addition, insurance companies may end up paying claims based on awards by a court system that is more liberal today than it was in previous years.

Finally, a covered accident or occurrence is not always a well-defined term. Some occurrences take place over a period of years. As a result, insurance companies may end up paying for a single claim using the limits of several policies over a number of years.

These problems with the occurrence form led to the development of the “claims-made” policy form. The typical claims-made policy provides coverage for injury or damage no matter when it occurred as long as the claim against the insured is presented during the policy period.

Some claims-made policies contain a “retroactive date” that precedes the effective date of the policy and allow coverage for acts that occurred prior to the policy period. This is called “prior acts coverage.”
Some policies also allow an extended time period for the reporting of claims after the expiration date of the policy. There could be a “basic extended reporting period” for a short amount of time, usually provided for no additional cost. There could also be a longer “supplemental extended reporting period” made available for additional premium.

There are two potential coverage gaps when using a claims-made policy form:

  • The insured may be without coverage for a claim filed after the policy expires if it is not replaced with a similar policy that provides prior acts coverage. Since the claims-made policy responds only to claims that are made during the policy period, there would be no coverage for a claim arising out of an occurrence during the policy period but not reported until after the expiration of the policy or the extended reporting period.

  • The policy will not respond to a claim arising out of an occurrence prior to the effective date or the retroactive date, even if the claim is reported during the policy period.

These coverage gaps can be avoided by careful attention of the insured and the agent. Close attention to the retroactive date and the use of extended reporting period provisions will alleviate these problems.

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This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,800 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.

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Questions to Ask: Choosing an Insurance Agent

Posted on December 8, 2011. Filed under: Commercial | Tags: , , , , , , , , , |

Have you ever used the “eenie, meenie, miney, mo” method to locate an insurance agent? Or, maybe you look for the agent with the biggest ad in the yellow pages? With all the quoting sites available online, it’s easy to find low rates. But, how can you be sure those rates are attached to adequate coverage and superior service?

Insurance protects your most important assets, which makes it worth the effort it takes to find an experienced, independent agent. Here are some things you should know:


  • The insurance companies to which the company has access. Independent agents, who have access to multiple insurance companies, have the ability to look for the best policies to meet your unique needs at the best value.
  • How much time the agent will spend helping you assess your insurance needs. Insurance is a complex matter. It is not a “one size fits all” product. It takes time to fully assess your unique coverage needs.
  • Whether the agent reads AND understands the policies they offer.
  • If the agency specializes in insuring a particular type of business or line of insurance. For example: businesses that require insurance including professional liability insurance such as real estate agents, accountants, doctors, contractors, or computer programmers or technology related operations, etc.
  • If this was a referral, did it come from someone you trust and respect? Find out what their experience with the agent was like. The things other people desire and want may not be the same things that you want in a professional service provider.
  • Whether the agency can address all of your insurance needs, from home and auto, to life, health, disability, and commercial.
  • Ask who will handle your account on a daily basis. Is it someone who is licensed in insurance, and can provide advice as you communicate with that office, or an order taker?
  • What the agency’s hours of operation are, including their availability after hours, as well as the average time it takes to respond to client requests.
  • What involvement the agent has in the claims process. Understand how claims are tracked and the role the agent takes in the resolution of disputes.
  • Whether the agent is proactive in periodically reviewing your policies and shopping coverages for you.
  • If the agent is involved in their community. An agent’s active involvement in their community may translate into a greater commitment to his or her customers.

Choosing the best independent insurance agent for your needs takes an investment of time on your part. But the interests they will be helping you protect are certainly worth it, don’t you think?

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