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The Story of Property and Casualty

Written by W. Lane Startin. Posted in Definitions, Research Last Updated: 08/18/2011

What property and casualty insurance is, the history of property and casualty insurance in general and auto insurance in particular, and how it all ties in to save you money.

Benjamin Franklin. Your Founding Father ... of insurance!

Your local auto insurance agent is probably what’s referred to in the insurance industry as a “property and casualty,” “P&C,” or “multi-line” agent. What does that mean, anyway?

Well, it means that he or she sells and services more than just auto insurance. While there’s plenty to write about auto insurance (and believe us, we’ve proven it), it’s just the tip of the iceberg when it comes to the larger insurance realm.

Auto insurance is part of a larger group of insurance types, or “lines” as they’re known in the industry, known as property and casualty or P&C. Other forms of property and casualty insurance include homeowners, renters and most commercial and general liability insurances.

Most states require a special type of insurance license to sell and service property and casualty insurance. Because most large auto insurance carriers are multi-line companies, they require their agents to be property and casualty generalists as opposed to auto insurance specialists.

A Short History of Property and Casualty

Crude forms of property and casualty insurance can be traced all the way back to Hammurabi’s Code in ancient Babylonia. Actuary tables developed by Blaise Pascal were in use in Europe in the 1600s. Property and casualty insurance in America can be traced back to 1752 Philadelphia, when a group of property owners banded together to form the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. The prime mover in this organization? None other than Benjamin Franklin, who later had a hand in forming the first life insurance company in America as well.

In addition to forming the precursor to homeowners insurance and therefore the beginnings of property and casualty insurance in America, the Philadelphia Contributionship also pioneered underwriting techniques by refusing to insure houses that were considered unacceptable fire risks (and in 18th Century Philadelphia, there were a lot of those) as well as ushered in some of the country’s first zoning ordinances and building codes.

The History of Auto Insurance

Auto insurance, of course, came a bit later in our history with the advent of the automobile itself. The first recorded auto insurance policy was written by Travelers in 1897 for Dayton, Ohio, resident Gilbert J. Loomis. Loomis paid a cool $1,000 – a fortune in 1897 – for a policy that covered only property damage, bodily injury or accidental death. In other words, a liability only policy.

Auto insurance began to assume its modern form in the 1920s with the formation of companies like State Farm in Illinois and Farmers in California, both founded on the premise that farmers were safer drivers than the general population. Although harder statistical data is used today, the same basic concept that some groups are cheaper to insure than others remains a central tenet of auto insurance marketing and pricing.

How It’s Related

Underwriting in all property and casualty lines is driven by statistics. What’s more, auto insurance discounts are often available by purchasing other property and casualty products from the same company. These “package discounts” are often a great way to get cheaper car insurance. Ask your agent for more details.

Insurance is Not a Bad Word

Written by Todd Clay. Posted in Definitions Last Updated: 08/13/2017

Insurance offers us financial protection and stability in the event of an accident; it is not the unnecessary evil that some people make it out to be.

A Broken Nest Egg Without Insurance

Without insurance, you would have to use the money in your nest egg to pay for accidents.

If the word insurance had fewer letters it would be classified as one of those bad four-letter words by most. People hate insurance, they don’t want to buy it and most feel it is a legal scam. But, the idea of insurance is not the evil entity that it is made out to be.

It is bad-intentioned people that give insurance its bad reputation. Just like the saying “Guns don’t kill people, people kill people”.

Few people understand what insurance really is, how it protects them and also that it has a long rich history of our ancestors voluntarily creating it. All they see is that they are required to have it and it is another bill that they have to pay.

What is Insurance?

Insurance is defined in technical terms as the transfer of risk from one party (you) to another party (insurance company) in exchange for money.

Okay here is that definition in plain English: You are paying the insurance company to accept the responsibility of paying for any damages that may be caused to your vehicle or by your vehicle. Of course, what the insurance company pays for depends on the insurance coverage that you buy.

What Are the Benefits of Insurance?

Insurance protects people from financial destruction. This is the only reason to have insurance and is the only reason that it was created.

You purchase insurance on your vehicle so that the insurance company will pay for the large bills that result from an accident. Bills for things like car repairs and seeking medical treatment.

These bills can get to be so big that you most likely can’t afford to pay them. If you had to pay for these bills out of your own pocket, you would lose everything that you owned and be in debt for the rest of your life.

On the other side, insurance also financially protects the people that you do damage to. Because your insurance company pays to repair the other person’s vehicle and their medical bills, they don’t have to try and come up with the money themselves or wait for you to pay it.

Without insurance protection you are putting not only yourself at risk of financial ruin, you are also risking the financial stability of others.

Where did Insurance Come From?

Insurance was first created to protect companies in the shipping business. Merchants got together and put up money to protect cargo while it was in transit to where it was to be sold. The first record we have of this is from China.

Insurance today is still used in the same way by businesses, but has become a business field of its own. Like any other field, companies expand and look for new products to sell to the public. This is why we now have so many different types of insurance available to us.

Does a Driver not living in the Home Have to Have Their Own Insurance?

Written by Michele Wilmonen. Posted in Ask An Insurance Question, Research Last Updated: 08/15/2011

To be able to drive each state requires that you carry liability insurance on your vehicle, but what if you don’t own a vehicle?

In insurance, each state has their own set of rules and regulations that insurance companies and drivers have to abide by. One rule that is the same in every state is that you have to carry at least liability insurance on your vehicle in order to be able to drive.

Not everyone that has a driver’s license owns a vehicle though and these drivers are handled differently state by state.

Specifically, in the state of Ohio you have to have insurance to drive, whether you own a vehicle or not. In addition, it is illegal to allow anyone that does not have insurance or is not listed on your insurance policy to operate your vehicle (Ohio Financial Responsibility Law).

If you are concerned about insurance coverage for a driver that does not own their own vehicle, contact a local insurance agent in your state.

How Long Does an Insurance Company Have to Refund Unearned Premium?

Written by Michele Wilmonen. Posted in Ask An Insurance Question, Research Last Updated: 08/15/2011

Premium that you have overpaid to an insurance company is not theirs and should be returned immediately.

When you pay for your insurance, the insurance company generally makes you pay for the coverage in advance. It doesn’t matter what payment plan you are on, they want to make sure that they get their money before they provide you with insurance coverage. This is to make sure that if you have a claim and cancel your policy that you have already paid for your coverage for the day of the accident.

On the consumer side, when you cancel your insurance policy and you have paid premium for coverage that you have not used yet; you are owed a refund immediately. There is no specific timeframe that an insurance premium has to be returned, but insurance companies are expected to process refunds in a “reasonable amount of time”.

If you have not received your refund, contact the insurance company to find out why you don’t have it yet. Second, if they claim that you are not owed a refund demand (nicely) to be sent a billing breakdown showing how much your pro-rated premium was each day and how many days you paid for.

If the breakdown shows that you are owed a refund and the insurance company still won’t pay, file a complaint with your state Insurance Commissioner. In the state of Washington the Insurance Commissioner has fined insurance companies and agents for not refunding unearned insurance premiums to former customers within a reasonable amount of time.

Are Broken Windshields Countable Losses?

Written by Michele Wilmonen. Posted in Ask An Insurance Question, Research Last Updated: 08/15/2011

Any damage that an insurance company pays out for you is considered a claim, but each type of claim can affect your policy differently.

Everyone that drives knows that you can lose your insurance coverage with a company if you have too many accidents or driving violations. Insurance companies are in business to turn a profit and if they are paying out one claim after another for you, they are losing money.

But what about claims that aren’t your fault, like broken windshields?

Glass claims are generally not counted by insurance companies as claims that stack up to a policy cancellation or non-renewal. But, like all things in the insurance industry it completely depends on your insurance company. Best thing to do is to contact your agent or insurance company and ask what their policy is in regards to this.

In the state of Massachusetts, an insurance company cannot cancel your policy in the middle of a term for too many claims. If they decide to not renew your policy they have to give you 45 days notice before they stop your coverage. In the case that you feel this is an unjust non-renewal, contact your own state’s Department of Insurance or Insurance Commissioner’s office.

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.