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Monthly Archives: January 2017

Insuring the Teenage Driver

Whether we like it or not, automobile accidents remain the leading cause of death among Americans ages 15 to 19 according to the Centers for Disease Control and Prevention. The reasons for this are twofold: inexperience behind the wheel and immaturity. Because of this tragic statistic, when it comes time to insure the newly-licensed teenage driver, parents must brace themselves for a significant jump in automobile insurance premiums. According to a report conducted for the website in San Francisco, CA, adding a teenage driver to a married couple’s automobile insurance policy can boost premiums by a whopping 79 percent.

The caveat to this is that teenage driver rates vary by gender. Insuring a 16 year old son can raise the insurance bill by a staggering 92 percent, while adding the same teenage daughter will result in a 67 percent increase.

What about the driver with the learner’s permit only?
Since a child with a learner’s permit only is generally a casual driver and also under the supervision of his parents and cannot legally drive alone, he is not required to carry his own insurance or be added to his parent’s policy.

Should I purchase a separate policy for my teenager or add him to my family policy?
It is most expensive to purchase a separate policy for a teenage driver and less expensive to add him or her to the family policy. The downside of keeping him on the family policy is that an accident or ticket can affect the parent’s insurance premium and/or potentially expose the parent to lawsuits resulting from damage beyond the policy limits. Either way, a perent is responsible until the child turns 18.

When do rates begin to fall for my teenage driver?
Fortunately, if your teenager remains claims-free, his rates will drop as the years move on. According to data, a teen driver’s premium surcharge will eventually fall to an average of 58 percent once he or she turns 19.

How can I reduce the cost of insurance for my teenage driver?
There are several ways you can mitigate the cost of your teenager’s automobile insurance:

  • Shop around for less expensive coverage. You will be amazed at the variety of premiums charged by companies.
  • Be sure you are receiving all available adult driver credits.
  • Raise the deductibles for collision and comprehensive coverage.
  • If your teenager (under age 25) qualifies for a good student discount (B average or better), present that certificate to your agent.
  • Enroll your teenager in a qualified driver safety course.
  • Consider an electronic monitor that plugs into the car’s onboard diagnostics.
  • Is your teenager away at school? It may be less expensive to insure him at that location, especially if he resides more than 100 miles from your home and only occasionally uses your vehicle.

Call the experts in automobile insurance at Gracey-Backer, Inc. for a competitive quote. We are happy to advise you about ways to insure your teenage driver. Because we represent a “stable” of “A” rated insurance companies, we have the flexibility and knowledge to design a custom policy to fit your needs.

David C. Backer

David C. Backer, of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance. He can be contacted at 800-272-6055 ext 114, or at

Why Is My Insurance Written Through an Excess and Surplus Lines Company?

Generally, a policy is written through the Excess and Surplus Lines company (E&S) because a standard carrier will not write the risk. The reasons for this are many, but usually include:

  • The risk does not meet underwriting guidelines of standard carriers, due to claims history, age of the property, location or the risk, or cancellation by another company;
  • Your risk is not familiar to the standard underwriters, so they are uncomfortable writing it;
  • Your risk is larger than the capability of standard carriers to insure it; or
  • Your liabiilty requirements are greater than those acceptable to the admitted market.

In Florida, a standard insurance company, also called an admitted carrier, is one licensed by the state of Florida, bound by rate and form regulations, and strictly regulated to prevent abuse and fraud.

Admitted carriers are bound by law to contribute to the Florida State Guaranty Fund, which is used to pay losses if an insurance carrier becomes insolvent or otherwise unable to pay its claims. In contrast, an Excess and Surplus Lines (E&S) insurance company is not required to be licensed by the State of Florida. It can, however, conduct business in the state through a wholesale broker or managing general agent. Surplus lines insurers may be subject to greater capitalization requirements than standard insurance companies.

Excess and Surplus Lines carriers are also referred to as non-admitted or unlicensed carriers. They are usually domiciled in another state, but allowed to operate in different states. While they are not regulated by the Florida Department of Insurance and are given more flexibility within the free market system, they are regulated in other ways. For instance, they must submit financial background statements, articles of incorporation, a list of officers, and other pertinent information. Surplus lines carriers may pay higher taxes to the state.

E&S carriers cannot write business that can be written by standard, admitted carriers. They do not come under the auspices of the Florida State Guaranty Association (FIGA) and may only write a policy if it has been rejected by three admitted carriers. The State keeps a list of registered E&S companies, and policies can only be written by carriers on this list.

Because Excess and Surplus Lines carriers are not regulated in the same way as the standard carriers, they have much more flexibility to tailor coverage, charge the appropriate rate regardless of the State filing, and modify the policy form to make the risk more acceptable. They can add additional exclusions or other conditions that might put restrictions or demands on the insured. This is good for the consumer as well as for the company. It allows the carrier to accept risks that standard insurers refuse.

John Gracey Backer, CPA

John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at 800-272-6055 ext 128, or at

Do you understand the coverage on your Homeowner’s Insurance Policy?

In a survey conducted by the Trusted Choice and the Independent Insurance Agents and Brokers of America, it was found that many homeowners lack adequate homeowner’s insurance coverage, do not understand their homeowner’s policies, and do not have adequate savings to support them if they are forced to vacate their homes in the event of a disaster.

According to the survey, at least 73 percent of respondents have not purchased flood insurance, to protect themselves against rising water or flooding, including the common problem of seepage of underground water into their homes. Many think a flood will be covered by their homeowner’s policy. According to FEMA, floods are the leading cause of loss in the United States. Most flood losses occur in areas outside the high-risk flood zones.

More than 40 percent of respondents did not know if they have coverage that will fully replace their furnishings and their home in the event of a covered loss (replacement cost coverage) or if they had actual cash value coverage, which takes depreciation of the building and personal property into consideration. Many agents sell actual cash value policies as a way to save the consumer premium dollars, much to the chagrin of the policyholder at the time of loss.

Most respondents to the survey were not able to fully support themselves for up to three months if they were out of their homes as the result of a covered loss. They didn’t realize that a standard homeowner’s policy provides only limited protection and a flood policy provides no coverage for these expenses, which, especially during the season, can be considerable.

The survey was conducted in August 2016, according to Insurance Journal, September 6, 2016, Vlume 94, no. 17, page 12.

Barbara Gracey Backer

Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at

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