Auto Settlement or Insurance Claim? How to Decide


Bet you that the German mastermind and inventor of the first working car, Karl Benz, never imagined the full extent of where his life-transforming brainchild would take those involved in accidents.

While there are various opinions about who actually thought of auto insurance, there is evidence that it was Herbert Stanley Morrison who was responsible for the federal government to require every driver to have an insurance policy that would protect them from associated liability risk exposure.

Despite the obvious great benefits to owning auto insurance, every driver is aware of the pitfalls to filing too many related accident claims: a subsequent peak in coverage rates!

It is for that very reason that many consider settling on a private arrangement between the drivers involved in a collision. If you are the one at fault in an accident and you have a history of insurance claims that name you as the guilty party, it may be wise to opt for this type of settlement. Before making any decision about it, though, it is wise to review a few particulars.

Disclaimer: Prior to agreeing to any form of private settlement, always exchange insurance information so that if you decide to opt out of the plan, you have the necessary info to share with insurance companies.

When a Settlement Makes Sense

If you are the one who caused the accident:

• Make sure to get a mechanic's honest estimate for the repair. Will the auto repair cost less or a little more than your insurance deductible? If so, it's sensible to pay out of the pocket for damages.

• Is the other driver a complete stranger? Can you trust him to be honest in regard to true damage and price evaluation? Only agree to a settlement if you understand you are not being 'taken for a ride'; that damages on the car are the ones your accident caused and that you are not being asked to pay for extraneous fees.

• Make sure no one has been injured. Remember that medical costs can and often do exceed your cost expectations. In addition, if the other party is unscrupulous, he or she can bill you for a phony health problem, adding thousands of unnecessary dollars to your bill.

If you are the victim of the accident:

• Is the at-fault driver someone you know? If he is stranger, you may be taking a risk in trusting him to make payments on your losses.

• If you have been injured, your medical bills could very well exceed any amount the other driver is willing or can afford to pay.

• Establish that you will be the one selecting the mechanic to do repairs. Do not trust any agreement based on the other driver's offer to do self-fixing or his repair shop preference.

• Refuse any cash deal settlement before getting a thorough evaluation of true damage.

• Refuse any settlement if the at-fault driver does not respond immediately to your attempts to contact him.


Source by M Wyzanski

Difference Between Employers' Liability Insurance (ELI) and Workers Compensation Insurance (WCI)


Employers' Liability Insurance (ELI) and Workers Compensation Insurance (WCI) are two important insurance covers to protect the interests of employees, as well as employers. There are, however, certain differences between the two. Due to these differences, it may result in wrongful litigation and consequently anxiety to parties involved. The differences between ELI and WCI are relating to where they apply and what they cover. We will discuss about them here briefly.

Where they apply
Employers' liability insurance
As an employer, it is mandatory for you in UK to purchase employers' liability insurance. Not purchasing attracts penalty under law. In certain situations your employees may feel that you are liable for job related illness / injury which they may sustain and they sue for this. If it is really a case, it may bring in expenses such as hospitalization, financial compensation and the like. ELI helps you under such circumstances.

While it is mandatory for you as an employer to have ELI, your employees need to prove that the job related injury / illness is because of your negligence. Imagine yours is a lumber business. While working, your employees should have the necessary equipment, training and skills to operate them. If you employ them without teaching the safety norms, imparting the training and checking the fitness, and they sustain injuries, it will amount to your negligence as per rules framed under Employers' Liability Insurance Act and employees are likely to feel appropriate to sue you, because you are liable.

Workers compensation insurance
On the other hand, workers compensation insurance is a cover for the welfare of the employees. It depends on the circumstances that are the tone of relation between employer and employees. Thus, if you are more concerned about employees' health and safety, you need to purchase this insurance. It does not matter whether it was your fault or your employees' fault that resulted illness, accident or death, this insurance comes to your help.

Employers' liability insurance
As an employer, you have to go to court of law if the affected employee sues you. You need to pay financial compensation and bear the hospitalization and medication. ELI covers all these expenses.

Likewise, for employees ELI covers the permanent and temporary disability, injury and wrongful death at workplace. It covers the cost of litigation as well.

Workers compensation insurance
For employers, WCI is a Good Samaritan. In most cases, it ensures that your employees do not resort to litigation. However, in such unfortunate event, WCI covers the expenses because of litigation. It covers the financial expenses to be given to the affected employee for work-related injury, illness or even death.

Employees when inured at workplace, under WCI, are guaranteed to get compensation from the employer to cover medical and hospitalization expenses and certain portion of wages. In most cases, it is two-thirds or more. WCI covers the expenses on litigation, by the employee. In general, WCI takes care of the situation and makes sure that litigation on the part of employees is avoided.

WCI covers compensation (wages) in case of a temporary disability for the period of absence. If the individual got permanent disability, and not fit for employment in current occupation, WCI covers the expenses of vocational training and rehabilitation and cost of searching a job, if he wants.

Despite both ELI and WCI are meant to protect the interests of employees and employers, there are differences in the way they apply. You need to understand them and purchase a cover according to the need of your business.


Source by Nate Rodnay

Mobile Oil Change Business and General Liability Insurance Considered


Not long ago, I got an email from a gentleman wishing to set up a mobile oil change business in Florida. He was concerned about what sort of insurance he might need and was under the impression that a 1 million dollar commercial liability policy was needed up and beyond his work truck vehicle commercial auto policy. Okay so, let's talk about this; is he correct?

It turns out that he most definitely is, you see commercial auto is not the same as completed operations or the potential liability while working. For instance, if a car catches on fire that you are working on, your commercial auto policy is not going to cover it. Do you see that point? So, this is the advice I explained to him;

You will need most likely want to get a commercial insurance policy; $ 1 million aggregate, 300K per occurrence general liability, with a "garage keeper's liability" notation, and there will be some customer who may demand more, and also demand to be additionally insured, not just a certificate of insurance on file.

Commercial Auto Insurance is another need, but most commercial business policies will write them together as one. Find a good "commercial insurance broker" and have them scout out their sources, usually the broker-agent knows the underwriters very well (as in speed-dial) and can get you a good rate and the underwriter will understand the difference between mobile and fixed costs. Generally the commercial liability insurance is partly based on your estimated gross income.

Do not over estimate or you will pay too much, and do not underestimate or you may get audited by the insurance company or they might simple decide you are not a viable risk. Believe it or not most commercial insurance policies do have a clause in their insurance contracts that they may audit you and by signing the policy you pre-agree to those audits. Thus, it's unwise to falsify information or underestimate. If you find that you may have underestimated you need to call your agent-broker and explain that, sometimes they will add to the premium, sometimes up the next year's estimates for gross sales.

Now then, Florida is a great market for mobile oil changes, however, let's not forget there is some competition there, some long-standing 25+ years in fact and so, insurance is only one aspect or piece of information which one needs to consider before starting a business of this type. Please consider all this and think on it, and develop a strong business plan.


Source by Lance Winslow

Do Childcare Facilities Need Employment Practices Liability Insurance?


Protection for You

You've got a state-of-the-art child daycare built around a warm, clean and safe atmosphere. The teachers are handpicked professionals that give kids undivided attention, stimulation and fun learning. Children are happy. Staff is fulfilled. Parents are proud. What could go wrong?

Unfortunately, a lot of things – that your general business liability insurance does not cover.

Childcare Claim Examples that Really Occurred!

• Third Party Liability: After a Montessori School stated they could not admit a child due to licensed limited capacity, the parents sued for racial discrimination. The parents insisted that the school had a non-admission policy for African American children and mentioned the fact that the student body did not contain even one African American. Defense and Settlement costs totaled: $ 67,000.

• Internet / Email Liability: An administrative assistant for a childcare facility sent an email to all employees instead of her intended single recipient. The email contained an embarrassing inappropriate joke. The center's director instructed the employee to send a subsequent apology email to everyone. Just 2 months later, an employee that was laid off due to company downsizing, sued because of a hostile work environment and cited the inappropriate email as proof of an atmosphere that did not respect her religious principles. The facility was discomfited and uninterested in having this lawsuit revealed to the parents.

• Retaliation: An Indian childcare employee objected to the racial insults directed at him by some of his fellow workers. As a result, the owner assigned him to another room where there was less of a staff presence. The new situation warranted less work-time and therefore his hours were reduced. The slighted employee sued the childcare center for discrimination and retaliation for relating the discrimination. Defense and Settlement costs totaled: $ 125,000.

• Wage and Hour: A Non-Exempt head teacher was covertly tracking hours as she worked the overtime that was requested of her. As a salaried worker, this teacher never mentioned any grievance about the additional workload. When the owner was served a wage-and-hour lawsuit by the teacher, he was caught by surprise. Although there was no way to discern if the teacher's calculations regarding her work hours were precise, the center was guided by their lawyer to settle for the presented amount rather than take the risk of other present and past employees joining the lawsuit.

Employment Practices Liability Insurance

Employee-related claims come at a steep price. Protect your childcare center from a lawsuit with an EPLI plan that's tailored to you.


An EPLI policy protects you against lawsuit claims made by current, past and possible employers, as well as visitors. It's coverage for a wide range of suits that stem from:

1. Wrongful termination

2. Discrimination

3. Sexual harassment

4. Service refusal

5. Other employee claims


Source by M Wyzanski

Insurance For What !? The Oddest Things Ever Covered


At some point in everyone's life, insurance becomes a necessity. Whether coverage is required by law, like an auto policy, or by prudence, it is a virtual certainty that you will need to hedge against loss. The run of the mill policies (life, home, auto) are understandable. If you lose your home in a flood, you're going to be glad you had coverage. But then there are others that make you scratch your head. The fact of the matter is, if you're willing to pay the premiums, no matter how strange or even impossible the scenario, someone will cover it. Here are some examples of the odd, outlandish, and otherworldly things people have insured.

Alien Abduction

Yes, this exists. And it's not just a one-off occurrence; there are companies in parts of the Southwest that make their revenue almost exclusively off of covering people in the event that they are taken into a spaceship by extraterrestrial beings. In most cases, it operates as a special form of life insurance. If someone is abducted by aliens and never seen again, the family they leave behind will be compensated, assuming they can prove the abduction happened. Other companies offer a more specialized version of this to cover survivors of space-napping for their psychological and medical costs. Again, it seems that it would be very difficult to prove the particulars and collect on one of these policies. No evidence exists that anyone has collected but (much like the truth) the policies are out there.


People have purchased coverage for all manner of valuable body parts over the years. Betty Grable, a popular film actress and pin-up girl in the 1940s, took out a policy on her legs for a cool million bucks. Jennifer Lopez is rumored to have her famous posterior covered for ten times that much, should disaster befall her. But the oddest body part is the infamous tongue of legendary Kiss frontman, Gene Simmons. After rumors had surfaced that he had surgery on it, Simmons got a policy to make sure that he was compensated in case some over-zealous fan bit it off. A tale that's hard to swallow, but true.

Lottery Winners

This policy might even be less likely to pay out than alien abduction insurance. In the United Kingdom, an employer can purchase a policy to cover the incidentals arising out of two employees quitting because they won the lottery. It has to be at least two people, and they can not be sharing a single ticket. The odds of a single employee winning the lotto are slim; the chance that two winning tickets will be bought by people working for any single company is virtually none. One wonders if the Camelot Group, the organization that runs the UK lottery, has purchased such an insurance policy. If two of their employees won, that would certainly raise some eyebrows!

Next time you're speaking with your insurance salesman about covering your car, see what else they offer, just for fun!


Source by Aaliyah Arthur

7 Ways To Spend Less On Your Home Insurance Policy


Property is a prized possession, and to safeguard it from unexpected damages in the event of fire, flood, earthquake, etc. getting a home insurance is always necessary. However, if your existing health policy is exhausting your monthly income, listed below are a few sure shot ways with which you can control your home insurance costs:

1. Shop around: The decision of buying a home insurance policy should not be taken in haste. Instead, you must explore and make a list of insurance policies that are being offered by various insurance providers. You may also get insurance quotes online to estimate the costs of different policies. Choose a reliable company from which you can buy the comprehensive home insurance plan that suits your needs, and of course, your budget.

2. Increase your deductibles: Deductibles is the fraction of the claim that you have to pay before your insurer pays the claim as per the terms of the policy. The higher the deductibles you set, the lower premiums you will have to pay every month. However, you must set the deductibles as high you can afford.

3. Locate intelligently: Purchase the property in a strategic location but make sure that it is based away from the damage-prone areas. Reason being, if you live in a disaster-prone areas where flood, storm or earthquakes are a common occurrence, there are chances that your home insurance policy may have a separate deductible for such kind of damages.

4. Avoid making small claims: This is the most common mistake that many people make. You exhaust your policy in small claims thus leaving no room for bigger loss protection. Rather it is advised to deal with smaller issues on your own and keep this policy to protect your home from bigger catastrophic losses.

5. Improve home security: To avoid getting your home damaged from little mishaps, it is suggested to increase the security in your home by installing devices like smoke detectors, burglar alarm, etc.

6. Merge Policies with one Insurer: Just like you pool your internet, phone, and TV package, you can also merge your insurance policies with one insurer. Buy your health insurance, homeowners, life, and auto insurance plan from one insurance company and come out cheaper by bundling these insurance products together. You may also buy policies in a package that is less expensive as compared to single policies. It also liberates you from the trouble of policy renewal.

7. Eliminate Unnecessary Coverage: Do not buy the coverage you do not need. Like earthquake coverage is often unnecessary in most zones, do not include jewelry if it is at a catchpenny price etc. Also exclude a land value from your policy. Covering land on which your house is constructed is simply of no use as it is unlikely that your land will be stolen or burnt is fire. So to save big, insure the value of your home only.

There are many insurance providers who offer age and profession discounts as well. Some times there certain discounts for retirees and people with good credit rating. Never eliminate the coverage that is important just to save your money as spending extra on important services will benefit you in the long run.


Source by Sahil Doshi

Understanding Health Insurance Policy abolished


The provisions related to limitations and exceptions may seem complicated at first but it is important to understand this before you sign up. There could be some exceptions and limitations that may not affect you or your family at all while some may be important for the history of health and hereditary family. So while it is impossible for one person may not make a difference, it could make a huge impact for others. That is why it is important to understand what these are and how they affect and relate to you as an individual and your family as a whole.

Exceptions are those conditions or charges not covered by insurance. In such cases, the creditor must share a predefined part of the cost of the claim if it should ever arise. Some insurance companies will also set the limits within the sum insured as a whole. Exceptions are the fees that the insurance company will not pay for. IrDA has standardized this list of costs. There are also different break for different situations.

One of the most common exemptions for health insurance are available diseases. This is because the entire premise of insurance is based on uncertainty so if there is a disease that you are already suffering from, it will not come under the insurance. Usually you can get insurance to cover you for a pre-condition following the specified waiting time has passed.

Another is excluded from the pregnancy and expenses related to childbirth and after vaccination. It could be a waiting period after pregnancy as well, but after that there are some benefits that can be availed. Other items that are excluded from health insurance policies are cosmetic surgeries, dental operations, other treatments such as Ayurveda and homeopathy, etc.

Sub-limits are another factor that should be examined carefully in the beginning before investing in the insurance policy. A sub-limit is related to exemptions that are associated with the commission of doctors, ambulance costs, rent for hospital rooms, etc. Knowing the limits keeps you prepared for emergencies so you know exactly what will be covered and what you have to pay from their own pockets.

There are trends that seem to have a whole list of exclusions and sub-limits and there are those who have a moderate amount of them. Knowing what is so excluded and what is not will help you make a better decision concerning health insurance to select. This can be done easily by making systematic and meticulous comparison of health insurance policies taken from different websites or products directly. Knowledge is power and knowing this beforehand will help you to better plan future family.


Source by Amar N Tyagi

Use Independent Life Insurance Broker to buy final expense whole life insurance


Are you worried about leaving the family with a large bill at the end of your life? Do you want to take off of the loved ones by purchasing life insurance as a senior citizen? Are you worried that you will not be able to afford the monthly payments? You might be surprised at how affordable final expense life insurance plan can be for seniors today! You can have peace of mind that your family will not have to beg, borrow, or incur debt to cover the final costs.

When buying a final expense or burial insurance type of strategy that older, there are a lot of things to take into consideration. Final expense policies are whole life policy that pays your family to cover the costs of the funeral or cremation and the final debt you owe many. The average death benefit is between $ 2,000 to $ 30,000. Rules are issued up to the age of 85.

Do not buy anything through the mail! I hear complaints from older all the time took it upon himself to buy a product that was not appropriate for them or for the best! Use an independent agent who has negotiated with many airlines so you can be worry free! The independent agent is your friend!

There are many carriers that can and will take your specific conditions. Not all carriers have the same requirements, so one company can not offer you the same day coverage if you take blood thinner, while another performer will! One carrier has a higher price for smokers and another carrier will consider you a non-smoker if you only use a pipe, cigars, or chewing tobacco. You have options, so it is best to work with an experienced independent agent who is up to date on all the different airlines and can find you the best policy for your needs and your budget!

not working with an agent that only one carrier. It is the biggest mistake you can make and can cost you big time in terms of monthly premiums and how long it takes for the policy pays out in full.

Working with an independent agent is the way to go. Independent agents have your best interests at heart. To protect your family is what life insurance is all about. If you want to get the best policy that you qualify for based on your needs and your budget, consider using an independent agent!


Source by Amy M Pulver

A Brief Introduction to captive portals Insurance


Over the past 20 years, many small businesses have begun to secure their own risk with a product called “Captive Insurance.” Small occupied (also known as the capture of single parents) are insurance companies formed by the owners of closely held companies looking to ensure risks are either too expensive or too difficult to guarantee with traditional insurance market. Brad Barros, expert in the field of captive insurance, explains how “all souls are treated as a business and must be controlled in the method in accordance with the rules set by both the IRS and the appropriate insurance regulator.”

According to Barros, often single-parent captives held by the trust, partnership or other structure established by the premium payer or his family. When properly designed and administered, companies can make tax-deductible contributions to related parties insurance company. Depending on the situation, insurance claims gains, if any, can be paid out to the owners as dividends, and profits from liquidation of the company may be taxed at capital gains.

High payers and occupied them can collect tax benefits only when prisoners works as a real insurance company. Also, consultants, and business owners who use prisoners as estate planning tools, asset protection vehicles, tax deferral or other benefits not related to the true business purpose insurance company may face serious regulatory and tax consequences.

Many people think insurance companies are often formed by US companies in jurisdictions outside the United States. The reason for this is that the foreign department offer lower costs and greater flexibility than their US counterparts. As a rule, US companies can use foreign-based insurance companies, as long as the jurisdiction meets the insurance regulatory standards required by the Internal Revenue Service (IRS).

There are several notable abroad who have insurance regulations are recognized as safe and effective. These are Bermuda and St. Lucia. Bermuda, but more expensive than other countries, is home to many of the largest insurance companies in the world. St. Lucia, more reasonable price positioning small fortunes, is worth noting that the laws that are both progressive and compliant. St Lucia is also acclaimed for recently passing “Incorporated Cell” legislation, modeled after a similar law in Washington, DC.

Common Captive Insurance abuse; While occupied remain very beneficial to many companies, some industry analysts have begun to inappropriate market and abusing these institutions for purposes other than intended purpose by Congress. Abuse are the following:

1. Improper risk shifting and risk distribution, aka “Bogus Risk Pools”

2. The high deductibles held-combined arrangements; Re insuring prisoners through private placement variable life insurance scheme

3. Improper marketing

4. Abnormal assurance of integration

Meeting the high standards imposed by the IRS and local insurance regulators can be complicated and expensive proposition and should only be done with the assistance of competent and experienced counsel. The consequences of not being insurance can be devastating and can include the following sanctions:

1. Loss of all deductions on premiums received by the insurance company

2. Loss of all deductions from the premium payer

3. Power distribution or liquidation of all assets of the insurance company effectuating the additional tax for capital gains or dividends

4. possible adverse tax treatment as Controlled Foreign Corporation

5. the potential adverse tax treatment Foreign private Holding Company (PFHC)

6. the potential regulatory penalties for insuring jurisdiction

7. the potential tax penalties and interest the IRS.

All in all, tax consequences may be greater than 100% of the premiums to the captive. In addition, lawyers, wealth advisory CPA’s and their clients may be treated as a tax shelter promoters of IRS, resulting in fines as much as $ 100,000 or more per transaction.

Clearly establish captive insurance company is not something that should be taken lightly. It is important for companies trying to establish a captive work with competent attorneys and accountants who have the requisite knowledge and experience needed to avoid the pitfalls associated with abusive or badly designed structures insurance. A general rule of thumb is that a prisoner of insurance products should be legal inspection covers main aspects of the program. It is well known that the opinion given by an independent, regional or national law firm.

Risk change and the risk of abuse; Two key elements of insurance they are shifting risk from the insured to the other (risk of change), and the allocation of risk among a large pool of (risk distribution) insured. After years of litigation, in 2005 the IRS released Revenue ruling (2005-40) describes in principle required to meet the changing risk and distribution requirements.

For those who are self-insured, the use of captive structure adopted in 2005-40 Rev. ruling has two advantages. First, parents need to share risks with other parties. In Ruling 2005-40, the IRS announced that the risks can be shared within the same economic family as long as separate subsidiaries (the minimum required 7) are formed outside the tax business reasons, and the separation of these subsidiaries are also business reasons. Furthermore, “risk distribution” is provided as long as no secured subsidiary has provided more than 15% or less than 5% of premiums held captive. Second, specific provisions of insurance allow prisoners to take a deduction for the current assessment of future losses, and in some cases shelter income earned on the investment of the reserves, reduced cash flow necessary to fund future requirements from 25% to almost 50%. In other words, well-designed captive meeting the requirements of 2005-40 can bring cost savings of 25% or more.

Although some companies can meet 2005-40 within their own pool related parties, most privately held companies can not. Therefore, it is common for captors to buy a “third party risk” from other insurance companies often spend 4% to 8% per annum on the amount of coverage needed to meet IRS requirements.

One of the key components acquired risk is that there is a reasonable probability of loss. Because of this exposure, some promoters tried to circumvent the intent of Revenue ruling 2005-40 by directing customers to the “bogus risk pools.” In this fairly common scenario, lawyer or other promoters will have 10 or more captives of their clients into the collective risk-sharing arrangement. Included in the contract is written or unwritten agreement not to make claims on the pool. Customers like this arrangement because they get all the tax benefits of owning a captive insurance company without the risks associated with the insurance. Unfortunately for these companies, the IRS looks at these kinds of arrangements and something other than insurance.

Risk Agreements such as these are considered without merit and should be avoided at all costs. They study nothing but glorified pretax savings. If it can be demonstrated that the risk pool is bogus, protective tax status of the prisoner may be rejected and the serious consequences of tax described above will be enforced.

It is well known that the IRS looks at the arrangements between the owners of the prisoners with great suspicion. Gold standard in the industry is to buy risk third party insurance company. Anything less opens the door to potentially catastrophic consequences.

abusively High deductibles; Some promoters sell prisoners and the captives of them are involved in a large risk pool with a high deductible. Most losses fall within the deductible and are paid by the captive, not risk pool.

These promoters can advise their clients where the deductible is so high, that there is no real likelihood of third-party claims. The problem with this type of arrangement is that the deductible is so high that the prisoner fails to meet the standards set forth by the IRS. Prisoner looks more like a sophisticated pre-tax savings account, not the insurance company.

Of particular concern is that customers can be advised that they can pull all their premiums paid in the risk pool. In the case where the risk pool has few or no requirements (compared to a loss withhold participation exiles with a high deductible), premiums assigned to pool risks are simply too high. If the requirements are not, the premiums should be reduced. In this scenario, if challenged, the IRS will prohibit deductions made by the captive unnecessary premiums ceded risk pool. The IRS can also treat prisoners as something other than an insurance company because it did not meet the standards set out in the 2005-40 and previous related rulings.

Private placement Variable Life reinsurers Schemes; Over the years, promoters have tried to create a capture solutions designed to provide abusive tax benefits or “exit” from the capture. One of the more popular system in which companies create or work with captive insurance company, and the competence to Reinsurance Company the portion of the premium in proportion to the part of the risk insured again.

Usually Reinsurance Company is a wholly owned foreign life insurance company. Legal owner reinsurance cell is a foreign property and casualty insurance company that is not subject to taxation US income. Practically, ownership Reinsurance company attributable to the cash value of life insurance policies of foreign life insurance to the majority owner, or related parties, and ensuring the principle owner or related parties.

1. The IRS can apply Sham-trade theory.

2. IRS may challenge the use of reinsurance contract as inappropriate attempt to direct income from taxable to tax-exempt entities and will reallocate income.

3. Life insurance issued to the Company may not be considered life insurance for US Federal income tax because it violates the investor control restrictions.

Investor Control; The IRS has repeatedly in published revenue rulings his private letters its ruling, and other administrative order of filed, the owner of a life insurance policy will be considered tax owner of property legally owned life insurance policy if the policy owner lives “incidents of ownership” of these assets. Generally, in order for a life insurance company to be considered the owner of the assets in a separate account, control of individual investment decisions should not be left to the policy owner.

The IRS prohibits the policy owner or person related to the policyholder have no right, either directly or indirectly, to require the insurance company, or a special account, to acquire an asset with the money in a separate account. In fact, the policy owner can not say líftryggingafélagid any specific assets to invest in. And, the IRS has announced that it can not be predetermined schedule or oral understanding of what specific assets may be invested in a separate account (commonly referred to as “indirect control investing”). And, in a continuing series of private letter rulings, the IRS applies a constant look through approach to investment separate accounts of life insurance to find indirect control investors. Recently, the IRS issued guidelines for any investor control restriction is violated. This guide discusses reasonable and unreasonable levels of participation policy owner, so come harbor and impermissible levels of control investors.

The final factual decision is straight-forward. All court will ask if it was understood that it verbally communicated or tacitly understood that special consideration policy life insurance will invest his money in a reinsurance company issuing reinsurance for property and casualty policy that insured the risk of a company in which life insurance policy owner and the insured under life insurance policies are related or are the same person and the owner of the company minus the payment of property and casualty insurance premiums?

If you can answer yes, then the IRS should be able to successfully convince the Tax Court to manage investor restriction is violated. It says that income earned by a life insurance policy is subject to tax on life insurance policy owner as it is conducted.

The controlling investor restriction is violated in the structure described above, these systems generally provide for Reinsurance Company will be owned by a separate account life insurance policy insuring the life of the owner of the business persons related to the owner of the company. If one draws a circle, all the money paid as premiums of companies can not be available to unrelated third parties. Therefore, any court looking at this structure could easily conclude that every step in the development was predetermined, and to command investor restriction is violated.

Suffice it to say that the IRS announced in a notice 2002-70, 2002-2 CB 765, it would apply both the sham transaction doctrine and §§ 482 or 845 to reallocate income from a non-taxable to taxable to conditions that include property and casualty reinsurance arrangements similar to that described reinsurers.

Although property and casualty insurance premiums are reasonable and meet the risk-sharing and the distribution of exposures so that the payment of these premiums is deductible in full purpose US income tax, their ability to now reduce their contributions on their US tax returns physically separate from the question of whether life insurance policy just like life insurance for US income tax purposes.

Improper Marketing; One of the ways that captives are sold through aggressive marketing designed to highlight the benefits other than real business purpose. Are captive companies. As such, they can offer valuable opportunities to organize shareholders. However, the potential benefits, including the protection of assets, estate planning, tax advantaged investing, etc., will be the second in a real business purpose insurance company.

Recently, a large regional bank began to offer “Business and estate planning prisoner” customer trust department. Again, the rule of thumb in captivity is that they must operate as real insurance. Real insurance companies sell insurance, not “estate planning” benefits. The IRS can use abusive sales promotion materials from promoters refuse compliance and subsequent deductions related to prisoners. In light of the significant risks associated with inappropriate presentation, a safe bet is to work only with promoters sales materials focus on captive insurance company ownership control; no estate, asset protection and investment planning benefits. Better still would be for the Project to have a large and independent national or regional law firm review their content is consistent and confirm in writing that the material meets the standards set forth by the IRS.

The IRS can look back a few years to offensive material, and then to believe that the Project is marketing abusive tax shelters, start costly and potentially devastating examination of the insured market.

Abusive Life Insurance arrangements; A recent concern is the integration of small captives with life insurance. Small occupied treated under section 831 (b) do not have the legal authority to reduce insurance premiums. Also, if a small captive uses life insurance as an investment, cash value life policies may be taxable to capture, and then be taxed again when distributed to the ultimate beneficial owner. The consequence of this double taxation is to destroy the activity of life insurance and it reaches serious levels of responsibility to any accountant recommended plan or even signs the tax return of the company that pays premiums to the captive.

The IRS is aware of several large insurance companies are promoting life insurance policies and investment by small capture. The result looks eerily like that of thousands of 419 and 412 (i) plans are now under review.

All in all captive insurance arrangements can be tremendously helpful. Unlike in the past, there are now clear rules and case histories define what constitutes a properly designed, marketed and regulated insurance company. Unfortunately, some promoters abuse, bend and twist the rules in order to sell more prisoners. Often, a business owner who is buying captives are unaware of the enormous risks he or she faces the promoter acted improperly. Unfortunately, it is the insured and the beneficial owner of the captive that face painful consequences when their insurance company is considered to be offensive or non-compliant. Capture industry has skilled professionals who provide compatible services. Better use of experts supported by major law firm and slick promoters who sells something that sounds too good to be true.


Source by L Lance Wallach

Automobile accidents involving drivers with the same Insurance


You are driving down the road when another driver runs stop sign, hitting the side of the car. You check if the people in the car right, then call the police. While exchanging information with the other driver, you find out that they have the same car insurance carrier as you do, which leads you to wonder: How do I submit a claim if the other driver has the same company? Is the process any different than normal? If so, how?

Read below to find out the answers to these questions and advice on how to make sure you get fairly compensated.

How Insurance Companies handle accident Both drivers are Customers

In an ideal situation, the insurance company would handle an accident between two “customers in the same way and they should see another car accident : unbiased and responsible. However, this is not a perfect world, and insurance companies have been caught failing to provide adequate compensation to customers in the sake of the bottom line profit.

When a car accident occurs and both drivers have the same company , the insurance company must handle it carefully in order to avoid running into a “conflict of interest.” to do that, most insurance companies will give each driver’s own adjustor them. the idea is to both adjustors assessing the claim and responsibility for the accident independent, and present their results to each other when they have a certain fault.

If both adjustors agree that one of the driving forces is to blame, the adjustor monitors -kenna driver will win the claim fairly and provide benefits to other drivers based on their insurance policy.

However, if there is a complication of responsibility, and both adjustors not agree on who was at fault, then they will act as if they work in two separate companies to deal with the claim. Two adjustors from the same company will not take legal action to determine guilt, but agreed with each other.

Oftentimes insurance companies waive the deductible client if they are involved in an accident with other customers in order to avoid the hassle of dealing with liability disputes and customer accusing them of acting in “bad faith” by making a decision that is not the best for each driver.

When an insurance company issues only one adjustor to handle the requirements of both the driver, there is a high risk of conflicts of interest. If this happens to you, contact car accident attorney immediately to ensure that you receive fair compensation.

Benefits of the same Insurance

As unfortunate as to get into an accident in the first place, there are some advantages when the driver is the same company as you .

For one, talk to a representative of your insurance company is always much easier and less of a hassle than in contact adjustor from another company. Since you are paying customer, adjustors will tend to provide faster service than if you had another insurance company.

Second, the insurance money motivation to satisfy the requirement and provide reasonable compensation to you if you are a customer. In most cases, insurance companies would end up losing more money in the long run if you stop using them as car insurance provider because you were unhappy with the coverage, but if they just paid the claim outright. So rather than risk losing you (the paying customer), they are often in their best interests to make you happy by paying a claim.

Finally, when the two drivers with the same insurer get into an accident, the requirement may be faster than if the accident involved two different insurance companies. Two adjustors who work for the same insurer, and work in the same office, can solve issues simply by walking to the table is the adjustor.

cons Having the same insurer

Getting involved in a car accident with a driver who has the same insurance company can also deductible. For example, an insurer may try to seize the opportunity and protect the bottom line abnormal delay or deny your claim or even failing to return calls. Or, two adjustors can come to an unfair agreement behind closed doors that allows the company to get out of paying the full claim that they would be forced to another.

Also, insurance can be confusing, and insurance companies may try to use it to their advantage by persuading the customer uncertainty about the loophole dismisses the responsibility of providing benefits.

When to Call a lawyer

If your car accident caused only minor property damage and / or injury, you will probably be able to continue through the normal process- filing claims with the company and let them appoint adjustors. However, if you got serious damage or injury, you should not contact car accident attorney to keep your insurance company responsible for fair and reasonable compensation, color, plus color: as answer any questions you may have.


Source by Patrick T Langley