A website resource, aboutemployeebenefits.com, encourages employers to offer their staff a benefits package. For one thing, a benefits plan can help enhance salaries that are uncompetitive without one. You will ease your cash flow, while providing a positive bargaining tool for keeping salaries at a reasonable level, especially during an economic downturn.

Does My Business Qualify?

It doesn’t matter if your firm is a large, thriving business, or if it’s a fledgling company testing the waters of the corporate pool. Both small and large businesses can offer benefits packages fitted to their own situation. A big plus is that a nice benefits package will help entice the most qualified people to apply for the job.

Employers are not required to offer benefits, but those who do must comply with state and federal laws that regulate wages and oversee hiring and termination practices. Some employee benefits are mandated by law. These include: minimum wage, overtime, family medical leave, unemployment, worker’s compensation and disability. Then there are optional benefits employers might want to offer.

Attract and retain quality employees with a solid employee benefits package. (Photo © iStockphoto)

Here are some of the most popular options:

• Vacation — The average employer gives about two weeks of paid vacation every year. For many positions, the vacation time increases with tenure.
• Sick Time — Most employers will grant sick time for the occasional flu, sick child and other short-lived health crisis. Many also provide short-term and long-term disability benefits.
• Medical/Dental/Vision — These can be offered in a package or individually. The national average cost for medical premiums paid by employers is approximately $500 per month.
• Employee Health — This is particularly important for healthcare workers who work in a hospital or clinic. The employer often covers the cost of some preventive health tests and annual vaccinations, such as a flu shot.
• Education — Many employers will assist their employees in keeping up with changes in their profession. This could include college classes, seminars, online study and reading materials.
• Holiday Pay — The average number of paid holidays is approximately six. Some employers also give a birthday holiday to employees.
• Retirement Plans — There are generally two types of retirement plans. One type falls entirely on the shoulders of the employer, who contributes to a pension plan every month. Another type, a 401K or 403B retirement savings plan, requires matching contributions by the employee and the company.
• Social Security — This also requires matching contributions by the employee and the company.

Sources: aboutemployeebenefits.com; Weblocator: Guide to Florida Law; healthcaresalaryonline.com; About.com.

Employee Benefits in Ocala or The Villages: Get a Quote

The McDonald Agency offers employee benefits and other financial services to small business in Ocala, the Villages and Summerfield. To schedule a consultation, please call (352) 622-2333.
_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call </em>(352) 622-2333<em> to receive advice that takes individual circumstances into account.

Basically, there are two types of life insurance; term and permanent.

One fact that illustrates the difference is this: “Ninety percent of all term policies never pay a death benefit,” according to Kevin McDonald, whose agency offers life insurance plans in Ocala and the Villages. “The reality is if you have an intention of providing a life insurance benefit to your family at the time of your passing, there’s always a reasonable conversation to be had for the need for permanent insurance.”

Which life insurance option is right for you? In Ocala, the McDonald Agency can help you make a wise decision. (Photo © iStockphoto)

What Is Term Life Insurance?

There are two types of term life insurance:

• Level Term Life insurance maintains the same premium throughout the term of the policy. The cost is calculated according to the client’s age and health and by the length of the term.
• Annual Renewal Term Life insurance can be, as the title says, renewed every year, for a limited number of years. The premium will probably increase with each renewal.

Thanks to money whiz Suze Orman, term life has increased in popularity over the last few years. Unlike their permanent counterparts, term life plans do not hold any cash value. Yet, Orman favors this type over permanent life insurance, as do many other financial resources. Let’s see why.

Myinsurance.com lists the following features:

• Term life generally carries lower premiums, especially for people under the age of 50 and in good health.
• Term life plans are available for terms of one to 30 years.
• Benefits are paid upon the passing of the policy holder, if the passing occurred during the active term.
• Term life policies offer death benefits only.
• Most term life policies come with a renewal clause.

What Is Permanent Life Insurance?

There are three types of permanent life insurance:

Whole life. Like term insurance, a whole life policy locks in the same monthly payment over the life of the policy. However, whole life is more expensive and generally includes high fees and commissions. Most whole life policies don’t start to build a decent a cash value until their 12th or 15th year.

Universal Life. This is a flexible type of insurance that offers low-cost protection and includes a savings element. You can review and change various aspects of the policy at any time, and you can use the interest from savings to help pay your premiums. Unlike whole life, universal allows the cash value of investments to grow at a variable rate that is adjusted monthly.

Variable Life. This is the most expensive type of permanent life insurance, but it allows you to allocate funds into a portfolio of stocks, bonds and money market accounts without being taxed on your earnings. Because they are considered investment risks, variable plans are regulated by federal securities laws. With variable plans, you can’t withdraw funds from the cash value during your lifetime.

Features of Permanent Life Plans:

• Premiums remain the same over the years.
• Premiums are higher than term life.
• Your agent will invest the money in stocks, bonds or a money market account.
• You can cash in the policy or borrow against it.
• Part of the money goes into a savings program.
• The longer the policy is in effect, the higher its cash value will be.
• The gain is tax-deferred.
• Permanent Life policies carry extra fees and commissions.

Life Insurance Rate Quotes for Ocala

What’s the right life insurance plan for your needs? Sorting through the options can be complicated, but the McDonald Agency, which has offices in Ocala, the Villages and Summerfield, can help you find the life insurance plan that is right for you. To request information or a rate quote, call (352) 622-2333.

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

Planning to retire in Ocala or The Villages? Find out if you will have enough to retire. (Photo © iStockPhoto)

OCALA, FL — “Only people who like dog food don’t save for retirement,” says Dave Ramsey, nationally known money guru and founder of Financial Peace University. Citing a recent Gallup Poll, Ramsey notes that only 44 percent of Americans prepare for retirement. “I guess that means the other 56 percent are counting on Social Insecurity,” Ramsey quips.

That is true of people planning to retire in Ocala and The Villages, according to Kevin McDonald, whose company provides retirement planning solutions. “Most people don’t adequately prepare for the number of years they’ll spend in retirement,” McDonald said. “Statistically speaking, we’re all living longer and the cost of inflation over a period of years can dramatically impact the necessary resources to maintain standard of living in retirement.”

Ramsey recommends investing 15 percent of your household income into pre-tax retirement plans like the following:

• Individual Retirement Arrangement (IRA)
• Simplified Employee Pension (SEP)
• 401(k), 403(b), or 457

Ramsey feels the Roth IRA has proven to be the best investment option for several reasons:

1. It promises a higher bracket at retirement.
2. You can invest more money.
3. It’s more flexible than other choices.
4. You can withdraw your money, tax-free and penalty-free, at any time.

While most companies have done away with traditional pension plans, like the once popular 401(k), many still offer an SEP, a Simplified Employee Pension, that is also available to self-employed individuals.

What is a Simplified Employee Pension Plan?

The IRS website lists these basic steps in setting up an SEP:

1. A formal written agreement must be executed.
2. An SEP can be set up for a year as late as the due date of the business’ income tax return for that year.
3. The SEP-IRA is owned and controlled by the employee.
4. Each eligible employee must be given certain information about the SEP.
5. SEP-IRAs can be set up with banks, insurance companies or other qualified financial institutions.

People should start saving for retirement as early in life as possible. While the above options offer the best possible savings plans, it’s wise to also look into a traditional savings account, stock purchases. mutual funds and bonds to grow your money.

Can I Afford to Retire in Ocala or The Villages?

There’s no telling how much money you will need at the time of retirement. However, CNN.com offers these considerations:

• One rule of thumb is that you’ll need 70 percent of your pre-retirement yearly salary to live comfortably.
• Make realistic estimates about what kind of expenses you will have in retirement. Be honest about how you want to live in retirement and how much it will cost.
• Take a close look at your current expenses in various categories, and then estimate how they will change.
• When you run the numbers, you should definitely factor in other sources of income, including Social Security, a traditional pension and personal savings.
• Many financial planners recommend that you save 10 percent to 15 percent of your income for retirement, starting in your 20s.
• Establish a savings target, one that tells you roughly how much you should set aside over time to meet your retirement goals.
• As a general rule, you’ll need at least $15 to $20 in savings to cover each dollar of the annual shortfall between your income and your expenses.

Questions about Retirement Planing?

The McDonald Agency, with local offices in Ocala, Summerfield and The Villages, can help you answer questions about retirement planning in central Florida. To schedule a consultation, call (352) 622-2333.
_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333<em> to receive advice that takes individual circumstances into account.

“Most folks recognize when a significant health event occurs the value of their health insurance is tremendous,” said Kevin McDonald, principal of the McDonald Agency, which offers supplemental insurance in Ocala and the Villages. “What many people don’t recognize is that while the doctor bills and hospital bills get paid, there are indirect costs associated with major illness. You may face loss of income. Perhaps your spouse will be out of work as well. You may need an overnight stay in a hotel. There are an enormous number of co-pays and deductibles and a lot of out-of-pocket expenses that supplemental insurance can help you address. This is true of many kinds of critical illness, and cancer is one of the most common situations.”

Supplemental health insurance can help alleviate those nagging bills that show up after your regular insurance has paid its share.

According to supplementalinsure.com, some people choose supplemental insurance as their primary coverage. It’s more affordable than a major medical policy and it does not penalize you for a pre-existing condition. Meanwhile, to supplement Medicare, millions of retired people have gone with a Medicare Advantage plan or a Medigap policy, both of which address those “gaps” not covered by Medicare.

Do you need supplemental insurance? Several options are available. (Photo © iStockphoto)

How Do Supplemental Insurance Policies Pay?

Some supplemental policies simply reimburse the health care provider. Others pay a lump sum to the patient or a certain amount of cash, over time, to cover such residual needs as lost wages, transportation to health care facilities, food, medication and other unexpected expenses due to the injury or illness.

5 Types of Supplemental Health Insurance

1. Medigap — Supplements health costs for retired people on Medicare.
2. Critical Illness Insurance – Provides a lump-sum cash benefit to help pay additional costs such as deductibles, out-of-network specialists, travel and lodging, experimental treatments, childcare and household help, and other living expenses incurred as a result of the injury or illness.

3. Accidental Death and Dismemberment Insurance — Pays a lump sum benefit to named beneficiaries of someone who died in an accident. These policies may also pay smaller amounts if the person did not die but lost a limb, eyesight, or suffered permanent paralysis as the result of an accident.

4. Accidental Health Insurance — Pays accident-related medical costs that are not covered by regular health insurance.

5. Hospital Indemnity Insurance — Provides a cash benefit if you are “confined” to a hospital due to an illness or serious injury.

Supplemental health policies generally are not overly expensive. However, not everyone needs it. Evaluate your current coverage and health needs before buying.

Questions to Consider Before Buying Supplemental Insurance:

• Are you and your family sufficiently protected through a regular health plan?
• Does your current health plan cover the cost of treatments?
• What might be your out-of-pocket costs in the event of an accident or illness?
• How likely is it that you or a family member will have an accident or serious illness?
• Does the extra cost make sense over time?
• What are the limitations and the benefits of the policy you are considering?
• Are there long waiting periods before payments start?
• Would supplemental medical insurance bring peace of mind about your health issues?

Supplemental Insurance: Get a Rate Quote in Ocala

If you have questions about supplemental insurance in Ocala or the Village, the McDonald agency can help. To get a rate quote, call (352) 622-2333.

_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

Which savings plan is right for you? It depends on your goals. Are you saving for retirement, college, or just a rainy day? (Photo © iStockPhoto)

OCALA, FL — After her mother moved into a nursing home, Cindy had the difficult task of going through her mom’s belongings. You can imagine her shock when she uncovered bundles of money stashed in a closet and under the bed. She estimates her parents had hoarded away more than $30,000! All this, even though a commercial bank stood on the next corner.

After living through the Great Depression, Cindy’s parents lived in fear of another bank failure. In their quest for security, they sacrificed years of earned interest that would have created a nice little nest egg for their waning years.

Unlike the Depression era, today’s financial system offers many options for saving money. With the creation of the Federal Deposit Insurance Corporation (FDIC), even the corner bank became a safe haven for your hard-earned cash. The FDIC backs funds in checking accounts, savings accounts, money market deposit accounts and certificates of deposit.

What savings plan is right for you? “It depends on the purpose of the savings and your desire for liquidity versus long-term gain,” said Kevin McDonald, whose agency offers retirement plans in Ocala and the Villages. ” Your needs will dramatically impact what could be the best direction for your savings. If you’re focused on retirement and have time to adequately plan, then longer term focus is important. If you’re saving up to replace something in the next 18 months, such as refrigerator or air conditioner, you want to keep those funds fairly liquid.”

Here are some of the primary options for saving and growing your money:

• Deposit Account — Money is deposited and withdrawn by the account holder. Some banks charge a fee, while others pay interest.
• Checking Account — Provides frequent access to funds on demand.
• Transactional account — Provides frequent access to funds through a variety of different channels convenient to the business or personal client.
• Savings Accounts — Although not as convenient as checking accounts, savings accounts let customers keep liquid assets while earning a monetary return.
• Money Market Account — A deposit account with a relatively high rate of interest, requiring short notice for withdrawals.
• Time Deposit – A money deposit at a banking institution that cannot be withdrawn for a preset, fixed period of time. The longer the term, the better the yield on the money.
• Certificate of Deposit — The rate of return is higher than savings accounts because it has to be held to term. However, it is lower than investing in riskier products like stocks or bonds.

Bankrate.com favors a CD savings account, because they don’t fluctuate with the ups and downs of the stock market. They also offer better interest rates than other types of investment. The down side is that CDs require an investment for a specific amount of time, usually up to five years. The longer you leave your money in a CD, the greater your rate of return. If you pull your money out early, you will incur a penalty.

According to Investopedia, you can also save by putting your money into short-term investments. Though they are not backed by the FDIC, they could pay off in a big way. They include:

1. Mutual Funds – A pool of funds collected from many investors. Money managers invest the funds to produce capital gains and income for the investors. One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios.
2. Stocks — Stocks are, in essence, partial ownership rights in a company. Some of the earnings may be paid out immediately in the form of dividends. Stocks have historically delivered higher returns than bonds but, if the company fails, all of the stockholders’ investment will be lost.
3. Bonds — Investors loan funds to companies or governments in exchange for a bond that guarantees a fixed return in the future.

Need Help in Ocala or the Villages?

The McDonald Agency, with offices in Ocala, the Villages and Summerfield, can help you understand the right savings plans for your needs, whether you’re saving for college, retirement or just a rainy day. For immediate insurance information, call (352) 622-2333.

_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

Central Florida – The Lightning Capital of the World

Lightning strike near Ocala, Florida. (Photo © Michael Warren.)

The National Severe Storms Laboratory attributes $4 billion to $5 billion in damages each year to lightning strikes. Here in Ocala and Marion County, lightning has left some costly devastation in its wake. Our oak trees have a very shallow root system and are easily toppled. A neighbor’s tree could crush your automobile or damage the roof of your house. Some lightning strikes have been strong enough to explode concrete. And, a direct hit on your house can cause a raging fire.

“The most common cause of loss for all insurance property in this part of Florida is lightning,” said Kevin McDonald, principal of the McDonald Agency, which has insurance agents in Ocala and the Villages. “We are the lightning capital of the world. You need to make sure you protect your property from lightning.”

How Can You Protect Yourself Against Acts of God?

Some insurance policies actually contain references to “Acts of God,” but not all do so. Damage from fires, lightning and hail may be covered, but damage due to earthquakes and flooding may not be. So, you need to know exactly what your policy covers.

McDonald cautions that even though a lightning claim is covered by your homeowners policy, you need to protect yourself from incurring a deductible cost. You can do that, he says, by making sure you have safely grounded your electronics, with the most susceptible items being sprinkler systems, garage door openers, and other electronics that don’t draw much power.

Ten Questions to Ask your Ocala Insurance Agent:

1. Which natural disasters are covered and which are not?
2. How much of my home or car and the contents are covered?
3. Does the policy contain guaranteed replacement cost?
4. Does the policy include flood insurance?
5. What are the specifics regarding lightning damage?
6. How much is my deductible?
7. What safety upgrades would reduce my premium?
8. What is the procedure for filing a claim? Is it 24-hour service?
9. Does my policy include hotels or car rentals, and for how long?
10. Does my policy specifically contain language referring to “Acts of God?”

Questions About Insurance in Ocala or The Villages?

If you live in Ocala or Marion County, contact an insurance agent at The McDonald Agency to review items you are considering and how it will benefit you on one of our policies. For immediate insurance information, call (352) 622-2333.

_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

“One reason for business life insurance is that most businesses incur some sort of business debt,” according to Kevin McDonald, whose agency provides business insurance in Ocala, Summerfield and the Villages. “The sustainability of a business is often determined by the owner or owners of that business if something happens to the key individual or owner. The question is, can the business sustain itself? Oftentimes businesses will use key man or business owner life insurance to protect the sustainability of the business should an owner or key employee meet an untimely death.”

Small business owners need to consider the importance of life insurance for their business. (Photo © Pixmac)

If a business owner dies, the business can use the policy proceeds to hire a replacement, pay off debts or buy time until the business can be liquidated. Insurance on a business owner falls under key man insurance. The business owns the policy, pays the premiums and also is the beneficiary.

Many private lenders require life insurance on the business owner as security for a loan. Often, an inexpensive term life policy for the duration of the loan is sufficient.

Business life insurance policies often carry binding documents. Through a collateral assignment, a bank would have first rights to the policy proceeds. With a buy sell agreement, the deceased’s interest in the company must be sold back to the remaining partners, alleviating their financial risk. Some life insurance policies also offer tax advantages on growth of assets.

Your choice of business life insurance depends on the needs of your type of business. Lifeinsurancehub.net lists these different company setups and the importance of insurance to each:

• Sole proprietorship: Since the owner of a sole proprietorship and the business are one and the same, there is a danger that the business will dissolve at the time of the owner’s death. A life insurance policy will ensure that the business will transfer to a member of the family.
• Partnership: The partners of a small business buy a life insurance policy on each member according to the value of their shares. A binding buy-sell agreement would allow them to use policy proceeds to buy the shares from the heirs of a deceased partner. The heirs cannot refuse to sell.
• Corporations: Three types of corporations — C corporations, S corporations and limited liability companies — use small business life insurance to protect the assets of each stockholder. Upon a stockholder’s death, the proceeds are paid to the company, which uses the money to buy the shares from the heirs of the deceased.
• Key employee: While key man insurance generally refers to the owner of a company, oftentimes, it also can be applied to key employees who are crucial to the success of the business. It’s recommended that a business purchase small business life insurance on a key employee equal to about five years of that employee’s income.

A smart business owner will look into the various life insurance options at the very beginning. Entrepreneur states that business life insurance is just as necessary as personal life insurance. By purchasing the right insurance, the surviving partners would have the capital needed to keep the business going. You can estimate the amount of insurance needed by evaluating your expected income, present and future debts, and projected needs of the company.

Just think what would happen to your business in the event of your death, or if you should lose a partner or key employee? Chances are, your business would fall apart soon after.

After spending years formulating a business and spending your hard-earned cash to set it up, doesn’t it make sense to also insure your investment?

Sources: termland.com; lifeinsurancehub.net; Entrepreneur

Questions About Life Insurance for Your Ocala Business?

The McDonald Agency has been serving Ocala and surrounding communities for more than a quarter of a century. To learn more about key man life insurance for your business, call (352) 622-2333.

_________________
ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

The birth of a child is one of the most common forms of short term disability, which can be covered by maternity insurance. (Photo © iStockPhoto)

OCALA, FL — Often referred to as “DI,” Disability Insurance covers a multitude of claims, from paid sick leave to accidents on the job, to maternity leave, to short-term and long-term illness. Quite simply, it pays a percentage of your salary while you’re off work.

“In America an adult is four times more likely to incur a disabling accident than they are to be killed prior to their life expectancy,” according to Kevin McDonald, whose agency offers disability and maternity insurance in Ocala.

“We often think to purchase life insurance but often neglect to protect our paycheck,” McDonald said. “Disability insurance is intended to provide protection for your paycheck. Perhaps the most common cause of short term disability is the birth of a child. Short term disability and maternity are closely related.”

Having disability insurance can help protect your investments and can prevent bankruptcy or foreclosure. It will ease your mind while you are recuperating. Benefits stop when you are well or when you reach retirement age, whichever comes first.

What Disability Plan Is Right for Me?

Group Plans: According to smartmoney.com, five states — Hawaii, New Jersey, New York, California and Rhode Island — require employers to provide short-term insurance. It’s been estimated that half of all medium-size to large-size firms actually provide some type of disability insurance. Some companies limit payment to two years, but many companies offer group plans with benefits that last at least five years. Generally, the benefits cap at around $5,000 a month or $60,000 a year.

Workers’ Compensation: Companies that employ four or more workers, are required to carry workers’ compensation in Florida. This insurance covers injuries that happen on the job. It covers medical treatments and lost wages. Normally, under Florida law, you are not paid for the first seven days off work, unless you are off more than 21 days. Your benefit check is usually paid bi-weekly, and, in most cases, it will be 66 2/3 percent of your salary. You do not have to pay taxes on this money.

Individual Plans: If your employer does not provide disability benefits, or if you’re self-employed, you can purchase your own policy. You also can buy supplemental insurance, if your company plan seems insufficient. A variety of programs are available, offering different premiums and coverage limits.

Short Term vs Long Term Disablity: Most employers provide short-term disability insurance, commonly known as sick leave. This could range from a few days off with the flu to a year recuperating from a serious injury or illness. Sometimes, your length of coverage depends on how long you have worked at that particular company.

Once your short-term benefits run out, long-term disability kicks in. Many programs don’t start paying benefits until you’ve been off work for one week. You may have to use up sick days or vacation time first.

Maternity Leave: Of more than 41 million uninsured Americans, approximately 13 percent are women who become pregnant, according to the American Pregnancy Association. This can result in inadequate prenatal care. Before you get pregnant, you should make sure you have short-term disability, which will cover a portion of your salary for four to six weeks.

When a baby is expected, many different scenarios can occur. You may have complications during the pregnancy, requiring you to stop working earlier. Your child may be born prematurely or have special needs. You may need to have a Caesarian-section delivery. Or other complications could leave you bed-ridden for a few days.

Having short-term disability can give you a sense of well being during those first few days at home with a newborn. You will have a steady income while taking the time to heal and to create a home for the new addition to your family.

Disability Insurance: Get a Rate Quote in Ocala

If you’re comparing rates for disability and maternity insurance in Ocala or the Villages, contact the McDonald Agency, which has local offices in Ocala, The Villages and Summerfield. For a consultation, call (352) 622-2333.

_________________
ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

But did you know there are two additional barometers that also can affect your rate? They are your credit report and your driving record. Here’s why:

Your driving and credit history affect your auto insurance rates. (Photo © Shutterstock)

Why Auto Insurers Look at Credit History

According to a report on Credit.com, more than 90% of auto insurers use a credit scoring system called an “insurance risk score” to determine how likely you are to file an insurance claim. Here’s what happens:

1. If your credit score is below 650, you may have trouble finding auto insurance or you may be forced to pay higher rates.
2. A trustworthy person uses accounts responsibly. This shows insurers you are a cautious driver and less likely to get in an accident.
3. However, having a low credit score could indicate that you are under financial stress which may increase risky behavior.

How You Can Lower Your Insurance Rates:

• When applying for insurance, ask if your credit score will be considered in determining your rate.
• If you have bad credit, look for an insurance company that does not check credit scores.
• Check your credit report regularly and correct any errors.
• Eliminate bad debt as quickly as possible.
• Don’t make late payments.
• Don’t take on more debt if you don’t really need it.
• Remember, negative records such as collections, judgments and bankruptcy filings will affect your credit score.
• Once your credit score is above 650, contact your insurance company and ask for a rate adjustment, or find a firm that offers a lower rate.

How Does Driving History Affect Insurance Rates?

According to DMV.com, your insurance company might check your driving record during these times:

• When you initially apply for coverage.
• When you request a change to your policy.
• When you add a vehicle or change the covered vehicle.
• When your policy comes up for renewal.
• Occasionally, they also will check to see how many points are on your license and what they are there for.

While non-moving violations have little impact on your premiums, serious violations alert your agent that you’re more likely to be involved in a claim. For speeding tickets, the faster you were driving over the speed limit, the greater the chances your rate will go up. For a serious moving violation or an at-fault accident, most carriers will increase your premiums for three years. A DWI or DUI conviction can cause your premiums to skyrocket, and make your carrier refuse to renew your policy.

How to Keep Your Auto Insurance Rates Low:

1. Know your driving record by contacting your local DMV, before you apply for insurance.
2. Take defensive driving to offset the cost of car insurance premiums.
3. Assume more risk by increasing your deductibles so you can lower your rate.
4. Find out how your job affects your rate. If your work mileage is low, you may qualify for a reduction.

Get an Ocala Auto Insurance Quote

If you live in Ocala or Marion County, contact the McDonald Agency to review your auto insurance needs. For immediate information, call (352) 622-2333.

_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.

So, what is PIP fraud and how does someone actually commit it? There are a couple ways.

Protect yourself from PIP fraud in Florida. Learn the facts. (Photo © iStockphoto)

Driver Staging

In one instance, an Ocala woman and her child had stopped at a red light. When the light turned green, she proceeded across the intersection. However, the driver of a red car on the other side suddenly decided to make a left turn right in front of her. The accident was unavoidable but minor.

The driver of the red car emerged from her vehicle holding her neck and complaining of injury. Fortunately, an off-duty Florida state trooper also was parked at the intersection and witnessed the whole thing. Upon realizing this, the woman with the neck injury suddenly was “just fine.” It turned out she was an uninsured driver and was depending on the other woman’s insurance to pay for her injury.

Clinic Falsification of Records

The more prevalent type of PIP fraud is committed by drivers working with medical clinics that falsify treatment records. Recently, the operator of a Tampa medical clinic and a massage therapist were both arrested for PIP fraud after it was learned they were paying people to lie about needing treatment following accidents. The treatments never took place, but bills were sent to the drivers’ respective insurance companies.

The medical personnel in that incident aren’t the only professionals who have crossed that line. According to a United Auto Insurance Courts report, the rate of PIP fraud has become widespread in Florida. Statewide, faked PIP claims increased 44 percent from 2009 to 2010. Though predominantly in South Florida, more recently, false PIP claims increased in Central Florida by 50 percent. In fact, the state has three of the top 10 cities for staged-accident PIP fraud in the nation — Tampa, Miami and Orlando.

The Cost of PIP Fraud

As a result of PIP fraud, Florida drivers now pay an extra $48.64 per year in PIP premiums. Last April, in an effort to stem the growth of PIP fraud incidents, the Florida Senate Banking and Insurance Committee passed SB 1930, which will require more detailed police reports and will give insurance companies more control over the resulting claims. This bill protects innocent drivers and their insurance companies from having to pay falsified claims.

How to Protect Yourself

In accordance with state law, make sure your auto policy carries PIP insurance. In the event of an accident, Florida drivers can further protect themselves simply by following the requirements of SB 1930. The first step is to call law enforcement to the scene and make sure all the necessary details are recorded, including the names and addresses of both drivers and all passengers.

Sources: United Auto Insurance Courts; Jacksonville Business Journal; Sun Sentinel

Questions About PIP Insurance and Fraud?

Contact an Ocala or Villages insurance agent at The McDonald Agency for more information about insurance claims and coverage. The McDonald Agency has offices in Ocala, Summerfield and The Villages. For immediate insurance information, call (352) 622-2333.

_________________

ABOUT THIS ARTICLE: This website (themcdonaldagency.com) is not intended to provide specific insurance advice for any individual or business entity and should not be relied on for such advice. Persons seeking insurance advice should contact an Ocala insurance agent by e-mail or call (352) 622-2333 to receive advice that takes individual circumstances into account.