5 Insurance Myths Busted

Misinformation and myths plague the insurance industry. Many times consumers aren’t sure how much insurance to purchase or if they have purchased the right kind to begin with. If you’re one of the thousands of Americans that don’t understand insurance and what it offers read this list of the top 5 insurance myths and the facts behind them."

1.) Auto insurance covers personal property left inside your car.

Nope. You’ll need renters insurance to cover the stuff in your car. “Renters insurance will cover any of your items, anywhere in the world,” says Etti Baranoff, associate professor of insurance and finance at Virginia Commonwealth University in Richmond, Va.

2.) My landlord’s apartment building insurance covers my belongings.

As a renter, you’re responsible for covering your items; your landlord isn’t. That’s why you need renters insurance. One of the first things to do after you get a policy is to either buy or borrow a digital camera to photograph everything you own. Store the photos on a portable drive that you can keep in a safe place. These photos will make it easier for you to remember what you own and report what you lost. To further help you document your belongings, The USAA Educational Foundation offers an inventory worksheet at www.usaaedfoundation.org/house/home_inventory_worksheet.asp.

3.) You’re covered by your auto insurance when you rent a car.

You’re probably covered. Most auto insurance policies — and even the credit card you use to pay for the rental — protect against theft and damages to a rental car. But there’s also a loss-of-use fee that usually isn’t covered. “This fee covers lost income to the rental car company when the car is out of service for repairs,” says Carolyn Gorman, a vice president at the Insurance Information Institute. “It can add hundreds of dollars in costs if the damaged car is out of service for a long time.” Be sure to check your coverage with your insurance and credit card companies before you rent.

4.) You’re young and healthy and have no assets. You don’t need life insurance.

Here are a couple of reasons it’s the right time.

-Since you’re younger, you may lock in a lower premium rate. As you age, the rates get more expensive.
-As you get older, there’s a chance you could develop health problems, which will make it hard for you to get life insurance.
-If you have credit card debt or college loans, the policy can help pay them off if you die unexpectedly.
-The final expenses, such as a funeral or hospital bills, won’t fall to your parents to pay.
5.) Red cars are more expensive to insure.

The color doesn’t matter. Things that do affect the price are the cost of the car, your driving record, and where you live.

About USAA USAA, a diversified financial services company, is the leading provider of competitively priced financial planning, insurance, investments, and banking products to members of the U.S. military and their families. Named by BusinessWeek as 2007’s Customer Service Champion and ranked highest among financial services companies for customer advocacy in a Forrester Research survey, USAA provides convenient and accessible financial products to its more than 6 million members. For more information about USAA, or to learn more about membership, visit usaa.com.

How to insure your Christmas drone

Chances are, you or someone you know will be proudly piloting a brand new aerial drone into the new year.

In what it calls a "defining year" for unmanned, remote-controlled flying machines, the Consumer Technology Association projects that U.S. sales of hobby drones will top 700,000 this holiday season, a 63% increase over 2014.

Unfortunately, some new drone owners may have unwrapped more risk than they bargained for when they popped the lid on their airborne plaything.

"Almost no one is thinking about insurance coverage when they’re opening the box," Chicago attorney Jeff Antonelli, who specializes in federal regulations for unmanned aerial systems, tells Bloomberg.

The exception: home insurance companies, one of which received federal approval for conditional drone use for underwriting, surveys, inspections and post-catastrophe damage assessment.

Is your policy drone-friendly?
While home insurance policies may cover the damage of a wayward drone crashing into a neighbor's child, pet, home or vehicle, some policies do exactly the opposite by specifically excluding coverage for aviation-related claims, be they human or drone related. The Federal Aviation Administration currently classifies drones large and small as aircraft.

There's equal uncertainty over where newbie drone pilots would stand as far as invasion of privacy liability claims in the 'hood, with or without onboard cameras.

Talk about a buzz kill, right?

As you might guess, where there's a risk, there's an insurer. For just $75 per year, the 185,000 adult members of the Academy of Model Aeronautics hobbyist group enjoy $2.5 million in personal liability coverage and $25,000 in medical under a group plan from Westchester Surplus Lines Insurance, part of the ACE Group.

But depending on your home insurance to cover all things drone-related could be risky.

Where the insurers stand
Allstate, for instance, will cover the damage your drone causes to a neighbor's home or auto, but not the "first party" toll a drone might take on your own home or vehicle, spokesman Justin Herndon told Bloomberg.

State Farm, however, vows to cover drone damage or injuries just like any other insured mishap. "Damages from drones pose nothing new in this regard," says spokesman Chris Pilcic.

Boston attorney Matthew Henshon, who specializes in emerging technologies, predicts that city and state regulators will likely intervene in what he calls the current "balancing act between insurance and regulation" as drone use grows.

"If bad things are happening, someone is going to figure it out and step in from a regulatory standpoint," he tells Bloomberg. "If enough damage is being done, someone is going to call their congressman."

Or perhaps deliver a written complaint by drone.