What Is Liability Insurance

If you own a car in America your state requires you to carry Liability Insurance. What is liability? Let's begin by defining the term "liable" as by Websters New World Dictionary:

1. Legally bound or obligated, as to make good any loss or damage that occurs in a transaction; responsible
2. Likely to have, suffer from, etc.; exposed to or subject to [liable to heart attacks]
3. Subject to the possibility of; likely (to do, have, get, etc. something unwanted or unpleasant)

The definition of "liability" is:
1. The state of being liable
2. anything for which a person is liable

How does this apply to auto liability insurance?

You are driving your car and hit another car from behind causing both property damage (the other car's damage) and bodily injury to the other car's occupant(s). So, according to the first definition of "liable" you are legally obligated to make good the damages you incurred to the other person. You are liable for their sustained property damages, bodily damages, hospital bills, doctor bills, loss of income/wages and any other expenses incurred due to your negligence.

So let's look at how insurance comes into play involving an auto accident. Insurance is transferring risk from the individual - you - to a company. You agree to pay a premium in exchange for money (liability limits) you are legally obligated to pay in the event you are found negligent for someon else's loss. You hit someones car and were determined to be "at fault" (AZ is an at-fault state). By paying the agreed amount of premium, the insurance is now obligated, on your behalf, to settle the claim of loss by the other party. You then agree to hand over all claims handling to the the insurance company. The insurance company will settle to their liking. That is what you agreed to when you signed the insurance contract/policy and submitted the premium.

How do you determine what are adequate liability limits for you and your family? Let's keep on with the above example. After you were determined to be negligent in an auto accident and the insurance company exhausted all of the liability money you agreed to in the policy (we will look at limits next) paying to replace/repair the other car and all medical bills associated with the accident, it was discovered that your limits were insufficient to pay for all the damages sustained. Now the claimant has the right to take you to court and sue you for the remaining monies your insurance policy did cover. The other party has the right ask for full disclosure of your assets, including current and potential income, to determine your ability to repay their remaining bills and expenses.

Arizona law allows the claimant/plaintiff to request up to 15% of your GROSS income be garnished until your obligation is paid in full. If you have liquid assets (cash, savings, retirement account, real estate equity), the plaintiffs attorney will likely go after those amounts first. So, as a rule of thumb, your liability limits should be sufficient to cover your current net worth.

How are limits offered by insurance companies? Arizona offers "split limits" with the minimum amount being 15,000/30,000/10,000. The first number is the maximum amount the policy will pay for each person's bodily injury. The second number is the maximum amount the policy will pay per each accident. The third is applied to property damage.

To explain in layman's terms using minimum liability limits: you hit a car and send 3 people to the hospital. Your policy limit for all of their injuries is $30,000 with a maximum of $15,000 to a single person. If the actual injuries exceed the $30,000 limit then they can sue you for the excess.

Your policy limit for the damages to their car is $10,000. If the repair/replacement of the car is greater than $10,000 then they can sue you for the excess amount.

As you shop for auto insurance comparing rates, keep in mind as the agent on the other end asks questions of your employment, lifestyle, and activities, he/she is not to prying into your privacy but rather determining what recommendations to make for your family's financial protection.

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Car Maintenance Tips

We all have a car that we rely on to get us around town, back and forth to work and home, road trips to see family and friends, and the best of all uses...moving our stuff. When our car does not want to cooperate on a hot, sticky August afternoon, it can become a nightmare getting it back on the road. You do not have to be a certified mechanic to keep your car running well and performing great.

Here are a few things you can do to make sure your car keeps getting from point A to point B with little worry.

1. Tire pressure - this is the easiest of them all and if you have a rag in the trunk you won't get your hands dirty. Check your owner's manual for the proper pressure or if you do not have a manual, inside the driver side door jam will have your car's tire pressure and tire size information.

2.Oil Change - Arizona is extremely dusty and HOT. These two characteristics are the worst on engine oil break down. It is very important to change your engine oil AND filter every 3,000-5,000. Several shops around your area have weekly/monthly oil change specials for under $30.

3.Battery maintenance - All the auto parts stores (Auto Zone, Checkers, Pep Boys) will check your battery for FREE! No getting dirty or worrying about battery acid on your nice clothes. In our hot environment, batteries usually last 3 years. Auto Zone has a Gold level battery with a 3 year free replacement and a 7 year pro rated warranty. It works, I've used it and saved allot of money on a replacement battery.

4.Air Condition system pressure - I was at an auto part store last week and noticed a DIY A/C charging unit with R34 coolant for less than $35 complete with instructions. Otherwise, get into a shop and have the "top off" your A/C system if your car is over 5 years old.

5.Timing Belt/Water Pump - check your owner's manual, most manufactures recommend changing the timing belt every 60,000-100,000 miles. The timing belt and water pump are right there so most changes will take care of both. First hand experience with a timing belt breaking will cost several thousand dollars to have the engine replaced if you want to keep the car. Otherwise, the car is barely worth advertising for sale. Can you say...clunker? Make sure you get this done with a reputable shop so if they mess up you have recourse to get it fixed on the shop's dime.

6.Cooling System/Radiator - this is something you need to take to shop. Call around for pricing on this one. This a simple but environmentally unfriendly chore. Again, check your owner's manuel for recommended time when you need to replace your engines coolant/antifreeze. DIY - all you have to do is drain the old fluid and replace with new fluid while the engine is running so when the thermostat opens periodically, new fluid will flow into the engine block. It may take 30-45 minutes to refill depending on how hot/cold your engine is.

7.Brakes - When you hear your brakes squeaking, go to the shop and get the pads replaced and the rotors turned. The last you want is to have your brakes not work when you're traveling down the freeway at 70mph. Brake systems are easy to work with. If you get to a shop immediately after hearing the squeak, you should have no system problems. Brakes work from hydraulic pressure. As you press the brake pedal, pressure forces fluid through brake lines to the calipers. The calipers close together which closes the pads against the rotors. When the pads have worn down to the lowest possible level, a little piece of metal in the pad rubs against the rotor making the squeaking sound indicating time to replace the pads. Another way to check if it is time to replace your pads is look at the brake fluid reservoir. Remember, the brakes are a closed hydraulic system so as the pads get lower, so does the reservoir fluid.

8.Fuel injector cleaner - EASY! I like the Lucas oil cleaner. Auto Zone has a qt. size bottle for $10 and will last for 3-5 gas fill ups. It works and increases MPG!

Cars are great responsibility we tend to take for granted. A small of time and money can have great reward when it comes to keeping your car on the road and out of the shop. Most of us think of maintanence when it is too late and the repairs are for major part replacements which add up to high labor bills. When you figure the average shop charges $75 per hour, a 4 hour job cost you $300 PLUS the parts. If you take advantage of shop specials like oil/filter change, brake change, A/C charging before things break, it could save you and your car a lot of money and time NOT in the shop.

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How to Determine Insured Value for Your Vehicle

What is the difference between actual cash value and agreed value when it comes to your vehicle insurance?

When you place insurance on a vehicle (auto, boat, motorcycle,RV) the issuing insurance company is agreeing to replace the vehicle, in the event of a total loss, at the current value of the vehicle. Say you own a 2002 Honda Accord EX that you purchased new. You are the original owner and have taken good care of the vehicle through regular maintenance, proper tire rotations, kept the miles low, etc. and then you are in an accident that totals the vehicle. The responsible insurance company will offer you what the current value of the vehicle is based on Kelly Blue Book and NADA value, not what it cost to buy a new 2009 Honda Accord EX. You didn't own a 2009 vehicle so why should replace a 7 year old vehicle with a brand new one? You are buying an Actual Cash Value insurance policy.

What if you own a '32 Ford Roadster that you've spent the past 4 years restoring and rebuilding it into your dream car? It turns heads and wins trophies at the car shows. Your neighbors ask you about what it took to get it into such good condition. You take it out only on special occasions. Your wife is jealous. Do you want it insured for Actual Cash Vale? Of course not!

You want an insurance policy that will pay you today's value of your blood, sweat and tears poured into that car. You want an Agreed Value or Stated Value insurance policy. If the vehicle is totally damaged you want the current dollar amount of all that work.

How do you determine the dollar value? The insurance company will agree to give you the appraised value of your cherry 32' Ford Roadster. They will base the premium on the value you agree on (up to the appraised value), how many miles you place on the car annually, and where the car is garaged or kept on a regular basis. Some companies, like Grundy and Hagerty, specialize in these unique insurance policies.

Motorcycles are treated a bit different because of the various accessories bikers like to add to their rides. This includes saddle bags, exhaust pipes, rims, seats and backrests. Custom paint jobs are considered modifications which require receipts to justify the value paid by the insurance company.

If your vehicle is 0-5 years old, some companies offer a "new car" replacement option. This states that if the vehicle in purchased new and is totaled within the first five years of ownership, you can receive the dollar amount needed to purchase a new year model of the same vehicle. This options usually requires an additional premium that needs to weighed against the value of the car to determine it's true value. This feature is a common option on RV policies through Foremost, GMAC Insurance, and American Modern.

So, before you take that Hot Rod out for it's maiden trip to the car show, make sure you have the right insurance policy insuring the right value.

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How to Beat AZ Photo Ticket Enforcement

Have you received a photo ticket for speeding or running a red light? Wondering what to do? Nothing. That's right, do nothing. Do not respond to the mailed ticket, do not send money, do not call the court, do not schedule a court date, do not respond to any notices sent via mail.

Arizona Supreme Court states that we have to 'served' by an authorized process server. When the motorcycle cop pulls you over for speeding down Speedway at 45 MPH, he is your process server that you cannot fight. What you can fight is the validity of the circumstances for which he pulled you over. This is when you accept the scheduled court date and APPEAR! One idea is to reschedule the date in hopes the cop does not show up to defend his actions. The U.S. Postal Service does not qualify as an authorized process server.

Now, if a process server comes to your house to serve you your ticket, your caught. If you're home, answer the door. If you're not at home, oh well. He/she will have to come back to serve you at a later time. If you are caught, take the ticket and schedule your date in court. Worst case you'll have to pay the ticket plus a court fee. Be sure to ask the judge to expunge the ticket off your record if you agree to pay the fine and all court costs. You may be surprised what the judge will agree to.

I am not condoning speeding around town and running all the red lights you can. Eventually, the appropriate law enforcement agency will catch up with you as what happened to Francesca Cisneros in Scottsdale, AZ. She had collected over 60 tickets in 2006 for speeding and red lights. The police went looking for her at her place of employment. She was not there and called the number on the card left behind by the detective. She agreed to go to the police station and talk to the detective. That's when she got caught. Read the whole story 'Gotcha' by Ray Stevens.

Another method of beating the photo ticket game is if you have a vehicle registered to a company (corporation, LLC, PC) or a family trust.

Here's why: The police and courts may send process servers to visit the home of someone who blew off a mailed ticket. But they don't do the same thing for businesses. Lawyers say Arizona civil traffic violations can only be issued to a real, live person. Since the corporation can't be held liable, there's no reason to serve it the ticket.

Our local governments have found a means to collect more revenue to fill their empty coffers. Tax revenue at the lowest levels in decades, municipalities are scrambling to find ways to generate money without raising taxes. Photo enforcement is a nice way to supplement the loss in tax revenue. But, if the population decides that doing nothing until found is better than playing by the old rules, the municipalities that setup the photo radars may find that they are a waste of tax dollars they have tried to justify to to all of us tax payers.


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Is Auto Insurance the next Obamacare

With all the buzz and controversy about President Obama's health care overhaul, could auto insurance be on the horizon? Most states already mandate all registered auto owners maintain insurance on their vehicles. Health care has been a hot topic since ex-president Bill Clinton's wife, current Secretary of State Hillary Clinton, made it a public issue back in 1995. Now it is on the table to have the Federal government take full control and mandate to individuals and businesses what is acceptable and authorized.

If the current Obama Administration takes control of our health care industry, what's to stop them from extending that control to auto insurance? We have seen their grip on two of the largest industries in America, banking and automobile manufacturing. If Obama wants to take over the private auto insurance industry, he is poised to to do so with little Congressional opposition.

Health insurance carriers are arguing that if the Federal Government gets into private under 65 health insurance, competition will be destroyed. How can a private company compete against a government? I am not a college History Major, but I do remember in the '80's when our steel industry was suffering against he Japanese steel market. Japanese steel manufactures perfected a better smelting process that was cheaper than the American steel producers could match. Due to a huge investment by the Japanese government into Japanese steel plants, American steel producers lost their competitive advantage. After American firms figured out what was happening, it was too late. Japan subsidized the process to make their manufactures more competitive on the world market. How could U.S. steel manufactures compete against a Foreign government? The U.S. Government felt the best way to protect the American Steel industry was to subsidize it, as well. This was competition against a foreign government.

I use this example to illustrate that if we revere Capitalism in this country, then what our own government is doing is the complete opposite of free market capitalism. Federal government is not an equal player in the capitalist model. The health insurance industry will be reduced to one or two carriers that, before long, will require federal money to stay in existence. With government money comes government dictation (Fannie Mae and Freddie Mac sound familiar).

If the Federal government can conquer the health insurance market, it will give them a model to use for the auto and home insurance markets. Insurance is a way of transferring risk from the individual or business to a company, not a government. If that was the case, every government in the world would administer their country's insurance needs. We have allowed our federal government to administer and regulate our Medicare system. It was setup in conjunction with our Social Security Administration in order for our elderly and disabled to have access to adequate monetary funds and health care. If we allow the government to continue down this road, we will open the door the government to control all of our insurance needs regardless of need or want.

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Evidence, The Danger of Texting and Driving

According to the account described below by the Accosiated Press, texting while driving is dangerous to all on the road. The following was published on August 3, 2009, by The Associated Press only days after the Federal Government recomended a Federal ban on texting while driving. If we do not take responsibility for our own actions, the government will do it for us. If you think your driving actions are wrong, they are. Drivers need to be aware while behind the wheel. Take a few minutes out of your drive to pull over and text, read email, read Mapquest on your Smartphone. You may save a life, if not your own.



"Police say a tow truck driver was texting on one cell phone while talking on another when he slammed into a car and crashed into a swimming pool.
Niagara County sheriff's deputies say 25-year-old Nicholas Sparks admitted he was texting and talking when his flatbed truck hit the car Wednesday morning in Lockport, which is outside Buffalo.
The truck then crashed through a fence and sideswiped a house before rolling into an in-ground pool.
Police say the 68-year-old woman driving the car suffered head injuries and was in good condition. Her 8-year-old niece suffered minor injuries.
Sparks was charged with reckless driving, talking on a cell phone and following too closely."

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.