I'm self employed.., how do I get paid for lost wages?

Question: Matthew, I was in an auto accident and have been unable to work. How can I get reimbursed for my lost wages?

Answer: One would hope that this would be easy - but unfortunately this is one area of liability insurance that is not. It is clear if you are an employee - I can't come to work for a week - this is how much I made during that time - so the liability settlement needs to match the lost wages.

However, for the self employed it is all about record keeping. You will need to pull out tax returns, monthly or weekly records of how much was made "historically" during the same period in past years, and calendars showing canceled sales calls. The bottom line is that you are eligible for this compensation if you were injured in an accident by someone else - but there needs to be hard evidence of the amount lost by not being able to work. The insurance adjuster is the one who makes the final decision. And even this is not hard and fast. If you don't think the offer is enough, talk to your agent (if you don't have one - call me). Most insurance companies have an an appeal processes. You may have to fight to get what is due to you. Yes - you may even need to bring in a lawyer. Sorry for the bad news - but it goes with being your own boss.

But you do not have to "just take" what is offered. Talk to the adjuster and your agent. You may be able to work it out before it gets to that point.

Uninsured Motorist Insurance

Many agents will offer you lower Uninsured Motorist limits to save you a few dollars on your monthly premium. They are not doing you any favors.

Even with insurance mandatory in California, the numbers have remained fairly consistent. Approximately 25% of drivers are either uninsured or under insured. Because of this, it is even more important that you have this coverage set to it's maximum -which is equal to your liability coverage.

If you are in an accident caused by one of these uninsured or under-insured drivers, it is this coverage that will not only fix your car, but also pay for any hospitalization, lost wages, etc.

Say you are hit by a young driver with minimum liability insurance (15/30/10 - split limit) - your car can get fixed with their 10k property damage coverage, but now you have neck pain, and severe head aches that prevent you from working while you recover. Their 15k of liability coverage, will not go very far in replacing your medical bills and lost wages. But if you had 100k or more of Uninsured Motorist coverage - your insurance could pick up were theirs let off.

Don't let your agent talk you out of this important coverage.

Combined Single Limit vs. Split Limits

Here is some technical trivia. Most of us have "split limit" insurance. For example these numbers may look familiar - 100/300/50 or 15/30/10. These numbers refer to your liability coverage for personal injury and property damage. They are familiar, because that is how it is sold to us. 100/300/50 means that if I cause an accident that causes bodily injury, I have $100,000 of liability coverage per person and a total of $300,000 per incident. The third number means I have $50,000 for property damage liability coverage. These numbers are fairly standard, and considered by most to be OK coverage. But lets take a closer look.

Just say: you cause an accident that hurts two people and two cars. Injured person "A" claims $120,000 for injury and lost salary during recovery. Injured person "B" claims $130,000 for injury and lost salary. The first car is a total lost at $20,000 but the second car has $35,000 worth of damage. Total damage for this serious accident were $305,00. However, because of the split limits, you are now on the hook for $50,000 for bodily injury and $5,000 for property damage. Do you have an extra $55,000 laying around somewhere?

With combined single limit coverage - of $300,00 would cost you $5,000. And the combined single limit for $500,000 or even $1,000,000 is not all that more expensive - considering what a serious accident could really cost you.

Talk to your agent about Combined Single Limit Insurance, or give me a call.

Bicycle Ticket Increases Youth Driver's Insurance

Bicycle Safety courses used to be offer throughout the county. I am not sure if they still have them, but parents - teach your children the rules of the road.

A client's child was riding his bike, and rode it right through a 4 way stop without stopping. He was immediately pulled over by the police and given a ticket. He went to traffic court and his parents paid the fee. That, they thought, was the end of it. Their son had learned his lesson.

The following year he got his drivers permit and needed to be added to his parents auto insurance policy. When we ran the Motor Vehicle Report, there it was - his first moving violation, a year before he received his license to drive. Yes, the bicycle ticket was treated the same an auto ticket.

After some fancy legwork on our part, we where able to get him approved for the youth driver discount, but was unable to get it removed from the MVR. So, if he gets one more mark on his record, he will lose the California Good Driver Discount, even before you could call him an experienced driver. The bicycle ticket cost him about $200.00 more a year.

Moral of the story. Parents, teach your children the bicycle "Rules of the Road."

Do you have old 401k's just sitting somewhere?

Stats tell us that the average American changes jobs ever 6 years or so. Regardless of the reasons, there are many people out there with 2 and 3 or more 401k's with a few thousand dollars sitting in them that they have absolutely no control over. They may or may not be earning any money, and they are set at the risk factor of the company that set them up.

If you are one of these people, isn't it time for you to take control of your own money and invest it at a level that you choose? It is a very simple process to roll you old 401k into a personal IRA. And if you have 2 or three of these sitting out there, you might be surprised how much they add up to if put together.

If this is your story, give me a call... I can help.

Personal Umbrella

Most people purchase the "personal umbrella policy" for a Million Dollars or more in case they are sued. Absolutely a wise decision! However, those same people often do not include the option for the Un-Insured or Under-Insured driver because of the added cost.

This option is just as important. Consider this... My cousin was in an automobile accident. It was not his fault, but his foot was crushed in the accident. The at fault driver had insurance, but at minimum levels. He paid to have the car repaired, but his level of liability insurance was no where adequate to cover my cousin's physical injury. Likewise, my cousin now had to undergo long-term rehabilitation and was unable to work, which meant loss of wages. It is his own Un-Isured / Under-Insured coverage replacing those lost wages.

Now consider what would happen if he had become permanently disabled and was never able to work again. Even the maximum coverage may not have been enough to see him through the medical expenses and lost wages. However, if he had a person umbrella for a Million or more, that money would have been available for him and his family.

Many will say that you are just giving money to the insurance companies and will never make a claim against that money. I would love to have their crystal ball, because the numbers just don't match with that prediction.

State statistic still show that one in four drivers are still driving without insurance or are seriously "Under-Insured." Every forth car you pass while driving to work, (we won't even talk about how they may be driving or what else the may be doing.) could potentially take you out of the picture and leave nothing for your family. You might even be included in that 25%. It is simply just not worth the risk.

Make sure that you are adequately insured and consider the "Personal Umbrella." Umbrellas are for more than just rainy days.

Life Insurance 101