High Risk Car Insurance: What it Means and Your Options

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By: Niki Saavedra, Director of Operations

Executive Summary:

High-risk car insurance is coverage for drivers who insurance companies consider more likely to have a claim or present a higher underwriting risk. Multiple at-fault accidents, a DUI, lapses in coverage, an SR-22 requirement, or other factors can make it harder to find affordable coverage.

Being considered high-risk does not mean you cannot get car insurance. It means your options may be narrower, some carriers may decline to insure you, and the price you are offered can vary significantly from one carrier to another.

Have you been told you are a high-risk driver, or do you suspect your driving history is quietly working against your insurance premium?

And do you know what being labeled high-risk actually means for your coverage options and what you can do about it?

Being a high-risk driver not only raises your rates, but can also disqualify you from certain coverages. And when you’re already dealing with a difficult driving or insurance history, finding out that some carriers won’t insure you can make an already stressful situation even more frustrating.

At Grimes Insurance Agency, we regularly work with West Texas drivers who are dealing with high-risk insurance situations. Because we represent multiple carriers, we can compare coverage options from different insurance companies rather than relying on a single carrier’s underwriting guidelines. 

By the end of this article, you’ll learn:

  • What high-risk car insurance means
  • Factors that insurers consider high risk
  • Options available for high-risk drivers

What Does High-Risk Car Insurance Mean?

High-risk car insurance is coverage written for drivers that carriers consider more likely than average to file a claim or otherwise present a higher insurance risk. Being considered high-risk can affect which carriers will insure you, how much you pay, and which coverage options are available to you. 

When a carrier classifies you as high-risk, they either decline to write your policy, price it significantly higher, or offer coverage with more restrictive terms.

There is not one universal “high-risk” label that every insurance company applies in exactly the same way. Each carrier has its own underwriting guidelines and may weigh factors differently.

Let’s review the factors most insurers consider when determining whether you’re a high-risk driver.

What Makes a Driver High-Risk?

Several factors can affect how an insurance company evaluates your risk. Some relate directly to your driving history, while others involve your insurance history or personal rating factors.

Can a DUI or DWI Make You a High-Risk Driver?

A DUI or DWI can have a significant impact on your car insurance. A serious driving conviction may lead to higher premiums, fewer available carriers, or non-renewal depending on the insurer and your circumstances. 

In Texas, a driver with a DUI conviction pays up to 92% more for auto insurance! Multiple at-fault accidents and serious traffic violations within a short period also push drivers into high-risk territory, which can affect your car insurance rates for up to 3-5 years.

Have you been in an accident and have questions about how it might be affecting your insurance coverage? Watch this video to learn more about how long an accident stays on your record in Texas:

Can a Lapse in Car Insurance Make You High-Risk?

Allowing your auto insurance to lapse, even briefly, can affect how carriers evaluate your risk… especially if you were driving uninsured. 

Texas requires continuous coverage, and gaps in your history produce serious pricing consequences that can multiply if the lapse is extended. 

Maintaining continuous coverage can help you avoid additional complications and gives future carriers a continuous insurance history to evaluate. 

To learn more about insurance lapses, read Insurance Policy Lapses Explained to understand how they happen and what you can do to prevent one.

Can Poor Credit Make You a High-Risk Driver?

Unfortunately, yes. Texas insurance carriers are permitted to use credit-based insurance scores as a rating factor for determining your auto insurance premium. These scores help calculate the likelihood of future losses, giving insurers a clearer idea of your risk profile when determining your premiums. 

While there is no universal method of scaling insurance scores, the LexisNexis Attract model provides a helpful foundation. LexisNexis scores are scaled from 200 to 997. A score of 770 or higher is considered favorable, whereas a score of 500 or lower is considered poor and negatively affects premium rates.

Scale showing scores related to the LexisNexis Attract Insurance Scores. From left to right, scale reads: 200, 500, 770, 977. A bracket is drawn in between 200 and 500 on the scale, explaining those are poor scores. Another bracket with the word "good" is drawn between 770 and 977 to depict they are good scores.

A poor credit-based insurance profile can affect your rate even when your driving record is relatively clean. 

Curious about insurance scores and want to learn more? Watch this video for a quick deep dive on how your credit-based insurance score can affect your coverage:

Are Young Drivers Considered High-Risk?

Young and inexperienced drivers generally have higher insurance rates because insurers use historical loss data to evaluate risk. 

Drivers under 25 are statistically classified as higher risk regardless of their individual record. For instance, in 2023, young drivers accounted for 8.9 percent of drivers involved in fatal auto accidents. Adding teen drivers to a household policy can trigger steep surcharges, with some adding $3,211 a year on average.

Being a young driver does not necessarily mean you have been formally labeled “high-risk,” but age and driving experience can significantly affect your premium.

If you’re a young driver, or adding a teenager to your family’s policy, read about The Best Car Insurance Options for Teen Drivers in West Texas to learn what to keep in mind when talking with your agent.

Does an SR-22 Requirement Mean You’re a High-Risk Driver?

An SR-22 is a form of financial responsibility certification that may be required after certain driving-related violations or license-related circumstances. Drivers required to file an SR-22 is classified in the high-risk category by definition.

An SR-22 itself is not a separate insurance policy, but a document that proves your need for minimum insurance. If you are required to have one, you’ll generally need an insurance company that can file the appropriate form on your behalf.

To know if you require one, your state or court will notify you to file one with your insurance agency. However, not all carriers write SR-22 policies, which can immediately narrow your options. 

If you need an SR-22, tell your agent when requesting a quote so they can determine which coverage options are available to you. 

What High-Risk Car Insurance Options Are Available?

If any of the previous scenarios reflect your situation, you might now be wondering, “What are my options?!” 

Bottom line, your options depend on why you’re considered high-risk and which insurers are willing to accept your particular risk. Your next step boils down to three options: 

Let’s review the logistics to help you determine the option right for you.

Standard Carriers With High-Risk Appetite

Not all standard carriers treat high-risk drivers the same way, and most make it difficult for high-risk drivers to find adequate coverage. 

However, some are more willing to write policies for drivers with a DUI or recent at-fault accident, particularly when other factors, such as credit, vehicle type, and years of prior coverage, are favorable.

Two carriers we’ve written high-risk clients with in the past include:

However, securing coverage, even through a carrier with a higher risk appetite, is not always guaranteed. 

While shopping, remember, one carrier’s decision does not necessarily represent every other carrier’s decision.

If you’re curious about a specific carrier’s risk appetite, contact your agent to help you find an option that fits your needs well. 

Non-Standard or Specialty Carriers

Non-standard carriers specialize in high-risk coverage and underwrite risks that standard carriers decline. 

Some specialty carriers we recommend exploring include:

Keep in mind that rates are higher than standard but competitive within the high-risk market. It’s best to have coverage that fits your needs and situation, rather than not having coverage at all.

The Texas Automobile Insurance Plan Association (TAIPA)

In some cases, you might find yourself unable to secure coverage within the standard or non-standard market. If so, the Texas Automobile Insurance Plan Association (TAIPA) can provide an option for eligible drivers. 

TAIPA offers only minimum liability coverage amounts, which Texas currently writes as 30/60/25, which includes:

  • $30,000 per person for bodily injury
  • $60,000 per accident for bodily injury
  • $25,000 per accident for property damage

Definitions of Texas' Minimum Liability Limits (30/60/25). Information is listed in written section above.

If TAIPA seems to be your necessary choice, do not wait to apply for coverage. Before applying, TAIPA states that you must have been rejected for insurance by two different companies within the last 60 days to be considered.

If no carrier in the standard or non-standard market will write your policy, the Texas Automobile Insurance Plan Association (TAIPA) provides coverage of last resort. TAIPA meets Texas minimum liability requirements but is typically more expensive than voluntary market options.

How to Lower Your High-Risk Car Insurance Rates Over Time 

If you’re in the middle of hunting for insurance as a high-risk driver, don’t worry, because there’s light at the end of the tunnel. 

While it can be incredibly stressful, a high-risk situation does not necessarily last forever. As violations become older and your insurance and driving history improve, additional options may become available.

Four factors can help you work toward lower premiums over time:

  • Maintain a clean driving record
  • Maintain continuous insurance coverage
  • Work on your credit
  • Ask about available discounts

How to Stop Overpaying as a High-Risk Driver 

Being considered a high-risk driver doesn’t mean you can’t get car insurance. It means your options may be more limited, and finding the right coverage may require looking beyond the first insurance company you contact.

Your driving record, insurance history, and factors such as DUI, accidents, a lapse in coverage, or an SR-22 requirement can all affect how insurers evaluate your risk. Different insurance companies may also have different guidelines for the drivers they are willing to insure.

At Grimes Insurance Agency, we help drivers understand their options and compare coverages from multiple insurance companies based on their individual circumstances.

If you’re having trouble finding coverage, the next step is to understand what’s affecting your insurance situation and compare the options available to you. Read 7 Ways to Lower Your Car Insurance (Without Losing Coverage) to see the specific actions that reduce your premium over time. Or, if you still have questions about your insurance risk, read How is Insurance Risk Calculated to learn how to keep your insurance score in check.

Frequently Asked Questions

What is considered high-risk for car insurance? 

Drivers are typically classified as high-risk after a DUI, multiple at-fault accidents, serious violations, a lapse in coverage, or a significantly poor credit score. Drivers under 25 are also statistically classified as higher risk.

Can I get car insurance if I have a DUI in Texas? 

Yes. Standard carriers may not renew or price prohibitively, but non-standard carriers write DUI coverage. 

What is an SR-22, and do I need one? 

An SR-22 is a certificate of financial responsibility that Texas requires certain high-risk drivers to file with the state. You will be notified by the court or Texas DPS if required. 

How long does a DUI affect my car insurance in Texas? 

Most carriers surcharge DUI convictions for five to seven years, depending on the carrier. The surcharge typically decreases as the incident ages on your record.

Will my high-risk classification go away? 

Yes. Most violations age off your driving record for insurance purposes after three to five years. Continuous coverage, improved credit, and no new violations all accelerate the return to standard rates.

 

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal, financial, or insurance advice. Coverage options, terms, and availability may vary. Please consult with a licensed professional for advice specific to your situation.

What Raises Your Car Insurance Rates the Most?

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By: Niki Saavedra, Director of Operations

Executive Summary:

Where you live, the vehicle you drive, how much you use your car, your age, your credit-based insurance, and your driving and claims history are the biggest factors that can raise your car insurance rates. Your rate can also increase when nothing about your personal situation changes because insurers may adjust rates when claim costs, weather losses, or other market conditions change.

If your car insurance premium suddenly jumped at renewal, you are probably frustrated, wondering… what changed? You may not have had an accident, gotten a ticket, or changed vehicles, yet the number on your renewal notice is higher. 

So, what actually raises car insurance rates the most?

At Grimes Insurance Agency, we regularly help West Texas drivers compare coverage after unexpected premium increases. As an independent agency, we work with multiple carriers, giving us a firsthand view of how various companies can price the same driver, vehicle, and coverage differently.

By the end of this article, you’ll know: 

  • The biggest factors that can increase your car insurance rates
  • Which factors you can influence
  • Which factors are outside of your control
  • What to do when your premium increases

What Causes Car Insurance Rates to Increase?

Insurance companies use a process called underwriting to determine how much to charge for coverage. Each carrier uses its own rating formula based on something we like to call their “risk appetite”. This means different companies may look at the same driver, vehicle, or situation and reach different conclusions. Some common factors insurers review during underwriting include:

  • Your age
  • Your driving history
  • Your credit information
  • Your claims history
  • Where you live
  • The vehicle you drive

What if none of my information or situation changed?

Your premium can also change when the cost of paying claims changes across the broader insurance market. Inflation, vehicle repair costs, severe weather, and other factors outside of your control can affect what insurers need to charge to cover future claims.

Image includes examples of factors contributing to rising auto insurance rates. Three circles are placed from left to right of the image. The left circle include an image of car parts, reading "Expensive car parts) underneath. Center circle includes image of rising graph with an arrow, and underneath text reads "inflation". Right circle includes and image of rain clouds with a risk road sign, and text underneath reads "severe weather".

A higher renewal premium doesn’t necessarily mean you did something wrong. Sometimes your personal risk changes, and sometimes the cost of insurance changes as a whole.

The most useful way to understand a rate increase is to separate the factors you can influence from the ones you can’t. Let’s break them apart together.

What Car Insurance Rate Factors Can You Control? 

Some of the factors affecting your premium are within your control, or at least within your ability to influence over time.

Your Driving Record

Your driving record is one of the clearest factors affecting how an insurance company evaluates your risk.

Accidents, speeding tickets, and other violations can affect your premium. A single at-fault accident can raise your rate by 30 to 40 percent and follow you for three to seven years, depending on the carrier. In Texas, a driver with a DUI conviction pays up to 92% more for auto insurance and can trigger a carrier non-renewal in some cases.

Text box reading: Drivers with DUI convictions pay up to 92" more for auto insurance., source: US News. Image includes faded graphic of a car and alcohol drinks sign faded into the background.

A clean driving record is the most effective way to avoid raising your car insurance rates.

Curious about what you can do about an accident on your record? Watch this video to learn more about options that may be available to you and your situation:

Your Claims History

Not only do accidents affect your rates, but so can making multiple claims after they happen. 

While insurance is meant to protect you and your belongings when an incident happens, frequent or recent claims can affect your premium rates and eligibility. 

This is because once you make an insurance claim, it’s later included in your Comprehensive Loss Underwriting Exchange (CLUE) report for up to seven years. In order to evaluate your risk, insurers use this report to review your claims history, considering both the number and type of claims you’ve filed.

For a more complete understanding of how your CLUE report can affect your policy rates, watch this video:

Your Credit-Based Insurance Score

Your CLUE report can also affect something called your insurance score. A credit-based insurance score is different from the credit score a lender may use when deciding to approve a loan.

In Texas, carriers are permitted to use credit-based insurance scores as a rating factor. These scores are different from your regular credit score and are used to help calculate the likelihood of future losses. Such scores give insurers a clearer idea of your risk profile when determining your premiums. 

There is no universal method of scaling insurance scores; however, the LexisNexis Attract model provides a helpful foundation. LexisNexis scores are scaled from 200 to 997. A score of 770 or higher is considered favorable, whereas a score of 500 or lower is considered poor and negatively affects premium rates.

Scale showing scores related to the LexisNexis Attract Insurance Scores. From left to right, scale reads: 200, 500, 770, 977. A bracket is drawn in between 200 and 500 on the scale, explaining those are poor scores. Another bracket with the word "good" is drawn between 770 and 977 to depict they are good scores.

Drivers with poor credit can pay significantly more than drivers with strong credit for identical coverage.

Thankfully, your insurance credit score can change over time. If you find your credit situation improves significantly, ask your agent whether your current carrier can reconsider your insurance rating in time for renewal.

Car Insurance Rate Factors You Cannot Control 

Other factors can affect your premium even when you haven’t had an accident, filed a claim, or changed your driving habits.

Your Age

Age is a large factor insurance companies consider when determining your premium. 

Young drivers generally pay more because insurers have found that inexperienced drivers present greater statistical risk. 

A 20-year-old female driver, for instance, pays on average $4,455 for full coverage car insurance, while a 40-year-old female pays $2,266 for identical coverage. Rates typically stabilize in the mid-twenties and continue improving with a clean record. 

You can’t control your age, but you can control the driving record you build over time.

If you’re adding a young driver to your household policy, ask your agent how the change will affect your premium. To learn more about insuring young drivers, whether it’s yourself or a teenage driver, watch this video to know which 4 coverages to be on the lookout for:

Your Location

Where you live can also have a significant effect on what you pay for auto insurance.

Insurance companies consider multiple factors for different geographic areas, such as:

  • Accident frequency
  • Theft
  • Uninsured drivers
  • Claim patterns

Rates can even vary between ZIP codes within the same city!

For drivers in Lubbock and the surrounding Texas Panhandle, severe weather is another consideration. Hail and other storms can contribute to higher claim costs, ultimately affecting insurance pricing. For example, we’ve seen a single storm run clients $3,000 to $8,000 worth of damage.

Moving, even within the same city, can change your premium because your new location may have a different insurance risk profile.

If you’ve recently moved, don’t assume your new premium is the result of your own. It may be worth asking your agent whether your new location is affecting your rate.

Your Vehicle

What do you drive? While you can often control which car you purchase, you can’t necessarily control its parts and price. 

Vehicles differ in their:

  • Purchase price
  • Repair costs
  • Replacement costs
  • Theft risk
  • Safety features
  • Likelihood of being involved in certain types of claims

A newer vehicle with expensive parts may cost more to insure than an older vehicle with lower repair costs. High-performance and luxury vehicles can also carry higher insurance costs. 

Because of your vehicle’s role in your monthly premiums, here’s our advice: the cost of insurance should be part of the decision when you’re shopping for a vehicle, not something you discover after you buy it. 

Before purchasing a new vehicle, we recommend asking your insurance agent for a quote. Two vehicles with similar purchase prices can have very different insurance costs. 

Carrier Repricing and Market Shifts

This is one of the biggest reasons a driver can see an increase without anything changing personally. 

Your insurance company doesn’t only price your individual risk. It also has to account for the cost of claims across its entire book of business.

If repair costs rise, vehicle replacement becomes more expensive, severe weather produces more claims, or other market conditions increase the cost of insurance, a carrier may adjust its rates. 

Even if nothing changes in your personal risk profile, your premium can still increase. It may not be fair, but it’s how the insurance system works. 

While increased carrier rates aren’t something you can control, you can control where you shop. If your insurance company’s rates have risen, consider comparing how other companies are charging for similar coverage. 

What to Do When Your Car Insurance Rate Goes Up 

If your premium increased, don’t immediately assume you need less coverage or that you’ve done something wrong.

Start by asking your agent this simple question: What specifically caused my rate to increase?

Once you know why your rate increased, you can determine whether the solution is to change something within your control or shop the market for a different price. Some common ways we’ve seen drivers lower their premiums include:

  • Asking about discounts
  • Consider adjusting your coverage
  • Improve your credit score
  • Raise your deductible
  • Shop around for other rates

Grimes Insurance Agency Can Help You Shop for a Solution

A higher car insurance premium doesn’t always mean you made a mistake. Some increases come from factors you can influence, such as your driving, claims history, insurance score, or vehicle use. Others come from factors outside of your control, such as your age, location, vehicle costs, or changes in the insurance market. 

The first step is to understand what changed. Then decide whether you can address the factor yourself, or whether it’s time to compare other insurance options. 

At Grimes Insurance Agency, we’ve been helping West Texas drivers understand their insurance options since 1948. As an independent insurance agency representing multiple carriers, we can help you understand what’s driving your premium and compare options from different insurers in real-time.

Now that you understand why your rates might have increased, you might be ready to learn how to get your premiums back on track. Read 7 Ways to Lower Your Car Insurance (Without Losing Coverage) to learn which changes may help reduce your premium while keeping the coverage you need. Or, if you’re ready to discuss your coverage options, call our office to be connected with an agent.

Frequently Asked Questions

Why did my car insurance go up when I did not have any accidents? 

Rates increase for reasons beyond your personal driving record, including carrier repricing, local claim trends, changes to your credit score, and market-wide adjustments. 

How long does an at-fault accident affect my insurance rate? 

Most carriers surcharge at-fault accidents for three to seven years. The exact period depends on the carrier and the severity of the accident.

Does my car insurance rate go up if someone else hits me? 

Not-at-fault accidents can affect your rate with some carriers, particularly if you have multiple claims in a short period. Not-at-fault accidents can also remove an accident-free discount if your carrier offers one. Check your policy’s not-at-fault accident provisions and ask your agent how your specific carrier handles this.

Can I dispute a rate increase? 

You cannot negotiate your rate directly with the carrier, but you can shop the market. If a carrier has repriced you based on factors that other carriers weigh differently, a better rate may be available elsewhere.

Does moving to a different part of Lubbock affect my rate? 

Yes. Zip code is a rating factor, and rates can vary within the same city based on local accident, theft, and claim history. A move across town can affect your premium at your next renewal.

 

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal, financial, or insurance advice. Coverage options, terms, and availability may vary. Please consult with a licensed professional for advice specific to your situation.

How Much Does Term Life Insurance Cost?

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By: Michelle Wolfe, Personal Lines – Sales Executive

Executive Summary:

Term life insurance costs depend primarily on your age, health, tobacco or nicotine use, coverage amount, and policy term. For example, third-party rate data for a $500,000, 20-year term policy shows annual premiums ranging from hundreds of dollars for younger nonsmokers to thousands of dollars for older applicants. Your actual premium can be higher or lower depending on your individual underwriting profile, carrier, state, and coverage needs.

If you’ve been shopping for insurance for any length of time, you know that it’s a difficult thing to put an exact price on. Purchasing life insurance is no different. 

You’ve probably seen plenty of estimates online; however, you still don’t understand how much your policy will cost or what actually affects it.

The reason is simple: there isn’t one universal price for term life insurance. Your premium is based on the specific risk factors and coverage choices associated with your policy.

At Grimes Insurance Agency, we help people evaluate life insurance options based on their individual circumstances rather than relying on a generic online estimate. We compare policy and pricing options across a broad network of insurance carriers and consider factors such as your age, health, tobacco use, coverage needs, and desired policy term.

In this article, we’ll explain:

  • The factors that affect your term life insurance premium
  • Show example rates by age and gender
  • Compare nonsmoker and smoker rates
  • Explain why an online estimate may differ from the quote you ultimately receive

Is there a universal cost for term life insurance?

Unfortunately, no. Life insurance costs are heavily dependent on the individual the policy is insuring. When determining policy costs, insurers review a combination of factors. 

What factors affect the cost of term life insurance?

Factors insurers look at when determining your life insurance premium include:

  • Age
  • Health
  • Gender
  • Tobacco use

These details are crucial because they help insurers price risk. In other words, insurers are evaluating factors that help them determine how likely your policy is to result in them paying out a death claim. Sounds morbid… we know. However, determining risk is also the best way to find a policy that fits your situation.

Graphic depicting image of "Insurance risk formula". Reads "Insurance risk = likelihood of claim x potential cost of claim"

 

That also means that an online estimate can give you a starting point, but it shouldn’t be treated as a guarantee of what you’ll pay. 

Your term life policy premium is also determined by your coverage amount and term length. How much you want to be insured for, and for how long, helps insurers structure your policy uniquely for you.

So, with all of these factors in mind, how much could a term life policy actually cost? Let’s look at some average premiums.

How Much Does Term Life Insurance Cost by Age and Gender?

Age is one of the factors that can have a significant effect on term life insurance premiums. In general, younger applicants tend to pay less than older applicants for comparable coverage, although the actual premium depends on the complete underwriting picture. 

Annual Premium Breakdown by Age and Gender

To illustrate how premiums can vary, the following examples use third-party rate data for a $500,000, 20-year term life insurance policy for nonsmoking applicants. 

Age Women Men
20-years-old $175 $210
30-years-old $182 $213
40-years-old $278 $321
50-years-old $636 $810
60-years-old $1,640 $2,331
70-years-old $7,953 $9,702

These figures are third-party averages based on example rates available in the broader insurance market (Nerdwallet). Actual premiums vary by carrier, state, term coverage length, and amount. 

The biggest takeaway from these examples is that age can make a substantial difference in the cost of comparable term life insurance coverage. 

These numbers should be viewed as illustrations rather than personalized quotes. Also, keep in mind that these premiums are based on a specific coverage amount, term length, and an individual’s health. Changing any of those variables can change the premium.

Ready for a number that reflects your life? Read about Grimes’ Approach to Personalized Insurance and how we can help personalize your policy based on your needs. 

How Does Your Health Affect Term Life Insurance Rates?

Your health history can affect both your eligibility for coverage and the premium you’re offered. 

Most life insurance applications involve some form of medical underwriting. During underwriting, the insurer evaluates information about your health and medical history to determine the appropriate risk classification and premium. 

Do you smoke? Does heart disease run in your family? Have you been diagnosed with any chronic illnesses? If so, you may be considered a higher risk. And the riskier you appear, the higher your premiums might be. 

Other factors insurers and underwriters often consider include:

  • Existing medical conditions
  • Height and weight
  • Lifestyle factors
  • Family medical history
  • Medications

For example, a history of certain chronic conditions may affect the rate an applicant is offered. However, having a medical condition does not automatically mean you cannot qualify for life insurance.

At Grimes Insurance Agency, we’ve seen firsthand why timing can matter when someone needs to purchase new coverage.

One client spent their entire career with a solid life insurance policy already in place. After retiring, however, they found themselves needing new coverage and had developed an underlying health condition. In their state, no carrier was willing to offer them a policy at any price.

That experience illustrates an important consideration: your age and health can change over time, and waiting to purchase coverage can affect the options available to you later.

How Does Tobacco or Nicotine Use Affect Term Life Insurance Costs?

Tobacco and nicotine use can significantly increase the cost of term life insurance. 

Applicants who use tobacco or nicotine products will often receive a higher premium than applicants who do not. On average, smokers pay 2-3x more on a life insurance policy than a nonsmoker.

If you smoke, vape, chew tobacco, or use another nicotine product, it’s important to provide accurate information when applying for coverage. 

Graphic with an outline of a vaping device and cigarette to the left of the image. Text on the image reads "tobacco and nicotine users pay 2-3x more on life insurance premiums (Source: Aflac)."

Premium Comparison: Nonsmoker vs. Smoker

The following examples use third-party rate data for a $500,000, 20-year term life insurance policy for male applicants. 

Male Nonsmoker Applicant Annual Rate Male Smoker Applicant Annual Rate
20-years-old $210 $744
30-years-old $213 $795
40-years-old $321 $1,455
50-years-old $810 $3,495
60-years-old $2,331 $8,435
70-years-old $9,702 $13,160

These figures are third-party averages based on example rates available in the broader insurance market (Nerdwallet). Actual premiums vary by carrier, state, term coverage length, and amount. 

The examples show why tobacco or nicotine use should be considered when estimating what you may pay for term life insurance. 

How Much Does Term Life Insurance Cost by Coverage Amount?

The amount of coverage you purchase is another major factor in your premium.

For example, someone purchasing $250,000 in coverage is buying a substantially different death benefit from someone purchasing $500,000 or $1 million.

$250,000 vs. $500,000 vs. $1 Million in Coverage

Coverage amount What it generally means
$250,000 Lower death benefit and lower premium
$500,000 More coverage and higher premium
$1 million Significantly more coverage and generally a higher premium

Increasing your death benefit generally increases your premium, but the price does not necessarily increase in a perfectly proportional way. 

Instead of choosing a coverage amount based only on what you think you can afford each month, consider what you want the policy to accomplish.

Ask yourself:

  • Would this amount provide enough financial support for my family?
  • Would it replace some or all of my or my partner’s income?
  • Would it help cover current or future financial obligations?
  • Would it provide funds for expenses such as tuition, medical costs, or funeral expenses?

If you’re unsure about how much coverage you need, read How Much Life Insurance Do You Actually Need? to learn about four approaches for calculating an appropriate coverage amount.

How Much Does Term Life Insurance Cost by Term Length?

The length of your policy is another factor that affects what you pay. 

Common term lengths include:

  • 10 years
  • 20 years
  • 30 years

For the same applicant and coverage amount, a longer term generally costs more than a shorter term because the insurer is providing coverage for a longer period. 

However, that doesn’t necessarily mean you should automatically choose the shortest term. The right term depends on how long you expect to need financial protection. 

For example, someone may want coverage long enough to protect their family while their children are dependent, replace income during their working years, or cover a mortgage or other financial obligation. 

A shorter policy might be sufficient for some people. However, if your term life policy expires while you still need coverage, obtaining a new policy later may be more expensive

Let’s say you’re a 40-year-old female who has taken out a $250,000 policy for a 10-year term. You start out paying $52 a month for coverage. However, you’ll be 50-years-old by the end of your term, raising your premium to $132 a month if you decide to renew. 

When choosing a term length, consider not only what the policy costs today but also how long you actually need the protection. 

How Can You Get an Accurate Term Life Insurance Quote?

Online rate estimates can be useful for getting a general idea of what term life insurance might cost. However, an online estimate is not the same as a personalized quote based on your complete underwriting profile.

Insurers may consider information such as:

  • Age
  • Medical history
  • Current health
  • Tobacco or nicotine use
  • Gender
  • Coverage amount
  • Policy term

That means two people looking for the same $500,000 policy could receive different premiums.

The most accurate way to understand what you may pay is to have your individual circumstances evaluated by an insurance professional and compare available policy options.

At Grimes Insurance Agency, our team helps clients evaluate life insurance options based on their individual needs and circumstances. If you’re ready to discuss your coverage needs, call our office to connect with an agent. Or, if you’re still weighing your options, read How to Compare Life Insurance Companies to learn what to look for as you search. 

Wherever you’re at in the search, we can help you understand your coverage options, compare policies and pricing, and determine what may make sense for your situation.

What Does Full Coverage Car Insurance Actually Include?

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By: Cole Chapman, Sales Leader

Executive Summary: 

Full coverage generally combines liability, collision, and comprehensive insurance.

  • Liability covers injuries and property damage you cause to others.
  • Collision covers damage to your vehicle from a covered collision.
  • Comprehensive covers covered non-collision damage, such as hail, theft, fire, and animal strikes.

Full coverage does not automatically include rental reimbursement, gap coverage, roadside assistance, or every type of injury-related coverage. Your limits, deductibles, exclusions, and vehicle use all affect what your policy actually covers.

If a hailstorm damages your vehicle next week, would your insurance cover the repairs? What if your car is totaled and you still owe more on your loan than it’s worth?

Many drivers hear “full coverage” and assume it covers anything that happens to their vehicle. In reality, “full coverage” is an informal term for a combination of coverages, and important gaps can still exist.

At Grimes Insurance Agency, we have been helping West Texas drivers understand their auto coverage since 1948. We write policies across multiple insurance providers, helping drivers compare available options and make educated decisions about their coverage.

By the end of this article, you will learn:

  • What full coverage actually includes
  • What full coverage doesn’t cover
  • How liability, collision, and comprehensive coverage work together
  • What West Texas drivers should review before their next claim

What is Full Coverage Car Insurance?

Full coverage is a term used for a combination of three separate coverages bundled together: liability, collision, and comprehensive.

Each coverage addresses a different risk. Understanding what each piece does and does not do is what full coverage actually means in practice.

Graphic depicting Collision and Comprehensive Coverage plus Liability Insurance equals Full Coverage.

Does Full Coverage Include Liability Insurance?

Liability coverage pays for injuries and property damage you cause to other people in an accident, up to your policy limits.

For example, if you cause an accident and damage another vehicle, your liability coverage can help pay for the other driver’s injuries. 

Liability coverage protects you from claims for damage you cause to others; it does not pay to repair your own vehicle. 

In Texas, minimum liability limits of 30/60/25 are required. This includes:

  • $30,000 per person for bodily injury
  • $60,000 per accident for bodily injury
  • $25,000 per accident for property damage

However, a single serious accident involving a newer vehicle or a significant injury can exceed those limits, leaving you personally responsible for the difference.

For this very reason, Grimes Insurance’s recommended liability standard for clients is 50/100/50. That means:

  • $50,000 per person for bodily injury
  • $100,000 per accident for bodily injury
  • $50,000 for property damage

Definitions of Texas Liability Limits and Grimes' Liability Limit Standards (50/100/50). Information is included in written section above.

Does Full Coverage Include Collision Insurance?

Collision coverage pays to repair or replace your vehicle after a covered collision, minus your deductible. 

That can include:

  • Crashing into another vehicle
  • Hitting a pothole
  • Running into stationary objects (guardrails, mailboxes, poles, etc.)

For instance, let’s say you accidentally reversed into a pole. Repairing the damage to your vehicle costs $1,000, and you have a deductible of $500. 

If the loss is covered, your insurance would only pay for the remaining $500 cost, leaving you responsible for the deductible amount.

Graphic depicting an example formula of how deductibles work: Repair Costs ($1,000) minus Your Deductible (What You Pay, $500) equals the insurance payout(What Insurance Pays, $500).

Does Full Coverage Include Comprehensive Insurance?

Comprehensive coverage protects your vehicle from covered damage that isn’t caused by a collision. This coverage pays for damage from things like:

  • Hail
  • Theft
  • Fire
  • Flooding
  • Falling objects (trees, debris, etc.)
  • Hitting an animal 

In West Texas, comprehensive coverage is highly recommended. Lubbock and the Texas Panhandle face some of the most severe hail activity in the country. In our experience, we’ve seen how a single hail storm can cause $3,000 to $8,000 in damage to a vehicle. 

For West Texas drivers, comprehensive coverage is the single most practically valuable component of full coverage and the one most likely to pay out in any given year.

However, comprehensive doesn’t cover everything. Normal wear and tear, mechanical breakdown, and personal belongings left in the vehicle generally aren’t covered.

To learn more about the differences between collision and comprehensive insurance, watch this video to understand what they cover:

 

What Does Full Coverage Not Include?

While having liability, collision, and comprehensive coverage helps you cover the major bases, they don’t mean that every expense associated with an accident is covered.

For example, a driver with “full coverage” might assume a cracked windshield, a rental car after an accident, and a break-in are all automatically handled. In reality, each of those depends on which specific coverages and endorsements are on the policy.

Comprehensive may cover the windshield, but rental reimbursement and personal property inside the vehicle often are not included unless added separately.

Several of these important coverages are separate and optional. Let’s review a few we recommend worth considering.

GAP Insurance

GAP (Guaranteed Asset Protection) insurance is an additional coverage that covers the difference between what you owe on your vehicle and what it’s worth. 

For instance, if your vehicle is totaled, your insurer generally pays its covered actual cash value, subject to your policy and deductible. However, if you owe more on your loan than the vehicle is worth, you could still owe money after the insurance settlement. 

GAP coverage helps fill that difference and is most often important on newer vehicles with significant depreciation. 

What makes GAP coverage so important for newer vehicles? Watch this video to learn more:

Medical Payments Coverage and Personal Injury Protection

If you are injured in an accident, full coverage does not automatically pay your medical bills. Medical payments coverage and personal injury protection are separate add-ons that cover occupant injuries regardless of fault.

Medical payments coverage can help pay certain medical or funeral expenses resulting from an auto accident. PIP can also provide benefits for medical expenses and, depending on the policy, lost income.

Medical Payments

Personal Injury Protection

Medical expenses for you or your passengers

Medical expenses for you or your passengers, lost wages, and lost household services (childcare, home cleaning, etc.)

Rental Car Reimbursement Coverage

If your vehicle is damaged in a covered accident and can’t be driven, rental car reimbursement coverage helps cover the cost of a rental car. Without it, you may have to pay the rental cost yourself. 

Watch this video to learn if adding rental car reimbursement to your policy is right for you:

Roadside Assistance

Roadside assistance is an endorsement meant to help you when your vehicle breaks down. While it’s not offered by all insurance providers, this coverage generally offers a variety of services to get your vehicle back up and running. Some of these services include:

  • Towing
  • Lockout service
  • Tire changes
  • Car battery jumping
  • Delivery of gas, oil, or other vehicle fluids
  • Extrication

Uninsured/Underinsured Motorist Coverage

Did you know that 1 in 8 Texas drivers are uninsured? We know… yikes.

If someone with minimum car insurance, or no insurance at all, were to hit you, uninsured/underinsured motorist coverage could help protect you. This type of coverage is designed to help cover any injuries caused to you during the accident, rather than leaving you to pay out of pocket for someone else’s lack of coverage.

Learn more about uninsured motorist coverage:

 

What Should You Check on Your Full Coverage Policy?

Rather than simply asking whether you have “full coverage,” review whether your coverage still fits your situation. To self-evaluate your coverage, we recommend you:

Check Your Deductibles

A higher deductible can reduce your premium, but it also increases your out-of-pocket cost when you file a covered claim.

Choose deductibles you could realistically afford after a loss. A $2,000 deductible might lower your monthly premium, but a $500 deductible might be the most feasible for your budget during an unexpected accident. The best way to decide on your deductible amount is to consider what you can realistically afford out of pocket.

Check Your Loan Balance

If you’re financing a newer vehicle, compare what you owe with the vehicle’s current value.

If you owe more than the vehicle is worth, ask whether gap coverage makes sense for your situation. 

Check Whether Your Coverage Still Matches Your Vehicle’s Value

Once a car loan is paid off, some drivers drop collision and comprehensive coverage to save money on premiums… often without weighing what it would actually cost to repair or replace the vehicle out of pocket. 

Dropping to liability-only can be the right call for an older vehicle worth relatively little. But for a vehicle that’s only a few years old and still holds significant value, that same decision could mean paying thousands out of pocket after an accident that isn’t your fault. 

It’s worth pricing out what keeping collision and comprehensive would cost before dropping them by default.

If you’re considering dropping coverages from your policy, read 7 Ways to Lower Your Car Payment (Without Losing Coverage) first to ensure it makes sense for your situation.

How Grimes Insurance Agency Helps West Texas Drivers Review Coverage

Your insurance needs can change long after your auto policy is first written. The drivers who discover coverage gaps are not always the ones who made poor decisions. Sometimes their situation changes after the policy was written.

The vehicle got older. A loan was paid off. A new truck was purchased. A deductible that once made sense no longer fits the household budget.

Your coverage should change when your situation changes.

Because the goal isn’t simply to have “full coverage.” It’s to have coverage that matches your vehicle, your finances, and the risks you actually face.

Before your next renewal, ask whether your current policy still reflects your vehicle’s value, your loan status, your deductible, and how the vehicle is actually being used.

Grimes Insurance Agency has helped West Texas drivers understand their auto coverage since 1948. We work with multiple insurance providers so you can compare available options and make an informed decision.

Knowing what “full coverage” means is the first step. Knowing whether your current policy actually matches your situation is the next. Read Liability vs Full Coverage Car Insurance Explained to see how the two options compare and which one makes sense for your vehicle.

Frequently Asked Questions

Does full coverage cover everything? 

No. Full coverage refers to liability, collision, and comprehensive combined. It does not cover medical bills, rental cars, the gap between your loan and vehicle value, or mechanical breakdowns.

Is full coverage required in Texas? 

Texas only requires liability coverage. Lenders require full coverage if you are financing or leasing a vehicle. If you own your vehicle outright, full coverage is optional.

What is the difference between collision and comprehensive? 

Collision coverage covers damage from accidents, such as hitting another vehicle or object. Comprehensive covers damage from everything else: hail, theft, fire, flooding, and animal strikes.

Do I need full coverage on an older vehicle? 

Not necessarily. If your vehicle’s value is low relative to your deductible and annual premium, liability-only may make more financial sense. 

Does full coverage apply to commercial vehicles? 

Not if they are on a personal auto policy. Vehicles used regularly for business require a commercial auto policy. A personal full coverage policy may deny a claim if the vehicle was being used for business purposes at the time of the loss.

 

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal, financial, or insurance advice. Coverage options, terms, and availability may vary. Please consult with a licensed professional for advice specific to your situation.

How to Compare Life Insurance Companies

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By: Michelle Wolfe, Personal Lines – Sales Executive

You’ve decided you need life insurance. You’ve even got a rough idea of term vs. whole life. But now, you’re staring at a list of companies, and every website promises the same thing: affordable coverage, fast quotes, and peace of mind.

So, how do you actually tell life insurance companies apart?

Working with a network of 20 different insurance carriers, Grimes Insurance Agency helps clients actively compare life insurance policies. Since 1948, we’ve been in the business of educating, guiding, and helping clients find the right coverage for families and individuals. 

By the end of this article, you’ll understand which questions you should ask when comparing life insurance companies.

What Should You Compare When Choosing a Life Insurance Policy?

When comparing life insurance companies, the easiest thing to focus on is the number with the dollar sign. However, two policies with similar monthly premium prices can have very different features, restrictions, and options. 

At a minimum, you should consider factors such as:

  • The company’s history
  • The policy terms
  • Their offered conversion options and features

Let’s break it down into questions you can ask to narrow down your options.

How long has the life insurance company been in business?

A life insurance policy is designed to protect your loved ones years into the future. That makes the company behind the policy an important part of your decision.

Longevity can provide useful context. A company that has been writing policies for decades has a longer track record of serving customers and operating through different market conditions.

Let’s think hypothetically for a second. Imagine you’re looking for life insurance, and you come across two companies: Raider Life Insurers and Matador Life (disclaimer: these companies are purely fictional and for demonstration only!)

On paper, the policies they offer look the same. But the two biggest differences:

  • Raider Life Insurers is newer, starting in 2018.
  • Matador Life has been a well-established company since 1920

Which option would make you the most confident to insure your life? 

Raider Life Insurers seems to have great reviews and feedback. But Matador Life’s client and market experience seem to surpass Raider Life Insurers’ by ninety-eight years! In this example, they’ve had a longer opportunity to build and prove their trust compared to a younger company.

However, keep in mind that a company’s age alone doesn’t tell you whether it’s financially strong or the right fit for you.

How is the life insurance company being reviewed?

It’s tempting to Google a company and let star ratings decide for you. However, life insurance isn’t a product most people write reviews about. It’s a tailored purchase that’s meant to protect you and your loved ones–  it’s not like reviewing a restaurant or a pair of shoes. 

How do you review a life insurance company’s ratings?

Reviewing a life insurance company involves different standards. The National Association of Insurance Commissioners (NAIC) recommends reviewing an insurance company’s financial stability, complaint history, and licensing details. 

You can specifically do so using its on-site Consumer Insurance Search tool. 

Screenshot of the NAIC Consumer Insurance Search Tool page.

 

According to the Insurance Information Institute, other rating agencies and tools worth looking into include:

Let’s bring back our hypothetical company examples. 

While reviewing both companies’ complaint histories, you notice Matador Life has had a large number of payout complaints in the previous year. Raider Life Insurers, however, has had no recent client complaints. 

Even though Matador Life has been longer established, longevity doesn’t always equate to company health and success.

When comparing companies, look at financial-strength information and complaint history alongside the policy itself—not instead of it. 

How does life insurance underwriting affect your policy?

Another important difference between life insurance companies is how they evaluate applicants.

Underwriting is the process insurers use to evaluate your health and other risk factors when determining whether to offer coverage and how much you may pay.

Personal factors considered during underwriting include:

  • Your age
  • Your gender
  • Your health history

The underwriting process can affect both your eligibility for coverage and the premium you’re offered. 

Graphic with elements depicting which factors affect life insurance premiums. Factors read: age (depicted by a calendar icon), gender (depicted by the outline of a male and female stick figure), occupation (depicted by a briefcase), and health (depicted by a heart)

Why does your medical history matter for life insurance?

Contrary to belief, these factors aren’t random. These details help insurance companies determine the perceived risk of insuring you.

Do you smoke? Does heart disease run in your family? Have you been diagnosed with any chronic illnesses? 

If so, you may be considered a higher risk. And the riskier you appear, the higher your premiums might be. 

Is a medical exam required?

Whether you’re purchasing a term or whole life policy, medical exams have been a standard requirement for most life insurance companies. However, other forms of medical underwriting are becoming more popular.

Some insurers offer alternatives to a traditional medical exam, including:

These options can reduce or eliminate the need for a traditional exam, but they may also have different eligibility requirements, coverage amounts, costs, or policy features.

The important question isn’t simply whether a company requires an exam; it’s how the company’s underwriting process affects the coverage you can receive and what you’ll pay.

If you’re unsure how a particular carrier handles medical underwriting, give us a call if you need help. Ask your insurance agent to explain what information the company uses to evaluate your application.

What options and features are included with the policy?

Two companies can quote similar monthly premiums while offering different policy features. 

That’s why the lowest quote isn’t automatically the best value. 

Look at what’s actually included in each policy. Depending on the type of coverage, you may need to compare features such as:

Cash value features are specifically a good example of how much these can vary. 

We recently worked with a client paying around $60-70 a month on a policy that was building cash value over time. A few years in, she’s already built up enough value that she could cash the policy in and recover what she’s paid. While this isn’t an option that’s available for every policy, it’s one to easily overlook if you’re only comparing the monthly premium.

That’s the kind of feature that doesn’t show up in a quick side-by-side of prices, but can make a real difference depending on what you’re looking for in a policy. 

Raider Life Insurers Matador Life
Coverage Amount $500K $500K
Monthly Premium $65/mo. $70/mo.
Available Riders 2 available 4 available
Cash Value None Builds cash value
Premium Structure Fixed during term May change after initial period
Exclusions/Limitations High-risk activity exclusions No additional exclusions listed

The goal isn’t to find the cheapest policy on paper. It’s to understand what you’re getting for the premium you’re paying.

What are your policy’s conversion options? 

If you’re buying a term policy, one of the most overlooked questions is whether it can convert to a permanent policy later. 

Not all term life policies are convertible, and among companies that do offer conversion, the terms can vary. Some policies may allow you to convert your full coverage amount, while some may only allow you to convert a portion. 

This is important to understand because a term conversion option can matter if your health changes during your policy’s term.

Curious about when converting a term life policy makes sense? Read  What Happens if You Outlive a Term Life Insurance Policy? to learn about your available options.

How can Grimes Insurance Help You Compare Life Insurance Companies?

Comparing life insurance companies is about more than finding the lowest monthly premium. You also need to understand the company behind the policy, how it evaluates your application, what the policy includes, and what options you may have in the future. 

Before choosing a policy, compare financial strength, underwriting, policy features, limitations, premiums, and conversion options side by side.

That’s where an independent insurance agency can help.

Grimes Insurance Agency works with multiple carriers, allowing us to compare available options and help you understand what you’re getting, not just what you’re paying. 

To prepare for requesting your life insurance quote, read about The Insurance Quote Process at Grimes Insurance Agency. Or, if you want to get started on comparing your options, call our office today. You’ll be connected with a certified life insurance specialist, prepared to help you find the coverage you need.

5 Common Life Insurance Mistakes Families Make

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By: Michelle Wolfe, Personal Lines – Sales Executive

The infamous kitchen junk drawer. It’s where all of the bits, bobs, and things that don’t quite have a place end up. You plan to come back, sort through the items, and put them where they belong. But it always ends up at the bottom of your to-do list. 

Life insurance tends to be like that. You bought a policy, or maybe planned to when you got married, had a child, bought a home, or started a new job… and life gets busy.

But your family’s financial situation doesn’t stay the same. The coverage that made sense to get five years ago may not be enough for your family today. 

At Grimes Insurance Agency, our agents see this when families revisit their policies. After a major life change, they discover their coverage, beneficiaries, or policy details no longer match their circumstances. However, with 78 years of insurance experience, our team doesn’t let it stay that way.

By the end of this article, you’ll understand five common life insurance mistakes families make and what you can do to avoid them. 

Life Insurance Mistake #1: Waiting to Update Your Policy

A new baby, mortgage, job, or health diagnosis can all affect how much life insurance you need. 

The problem is that most families don’t think about reviewing their coverage when these things happen. They keep the same policy because nothing is inherently wrong with it, until they realize it no longer fits their situation… and it’s too late. 

We’ve had clients come to us after developing a serious health condition (or sometimes more than one) looking for coverage they wish they’d secured years earlier. By that point, it’s not a matter of a higher premium; it can mean no carrier is willing to offer a policy at all. 

Health and age are the two biggest factors in what you’ll pay, and both only move in one direction over time. The best time to get covered is before you need to. 

How often should you review your life insurance policy?

Whether you’ve purchased a term or whole life policy, you should aim to regularly review your policy with your agent once a year. You should especially consider updating your policy when:

  • You get married or divorced
  • You have a child
  • You buy or refinance your home
  • Your income changes significantly
  • You take on substantial new debt
  • Your children become financially independent
  • Your business or financial responsibilities change
  • Your term life insurance policy is approaching its expiration date

You don’t necessarily need to change your policy every time something in your life changes. However, you should at least routinely check to ensure the coverage still matches your situation. 

If you’re specifically watching a term policy approach its expiration date, read What Happens When You Outlive a Term Policy? to learn what to consider before the deadline.

Life Insurance Mistake #2: Underestimating How Much Life Insurance Your Family Needs

$250,000 sounds like enough… but $500,000 feels more comfortable… Is there a “right” number?

We get it. Deciding on a reasonable amount for life insurance coverage feels like throwing spaghetti at the wall and seeing what sticks. 

But choosing a round number doesn’t tell you whether your family would actually have enough money to maintain their life without major financial disruption. 

How do you calculate your life insurance policy coverage?

The right amount of life insurance depends on what your family would actually need if your income disappeared. 

Consider expenses and responsibilities such as: 

  • Mortgage or rent payments
  • Other outstanding debts
  • Lost income
  • Childcare
  • Education expenses
  • Everyday living expenses
  • Final or end-of-life expenses (funerals, medical bills, burials, etc.)

For example, a family with a large mortgage, young children, and one primary income may have very different coverage needs compared to an empty-nest couple with a nearly paid-off home. 

Comparison of two families looking for life insurance. Image shows Family A as a family of four with young children, a large mortgage, and one primary income. Family B is shown as empty nesters with adult children, a paid off house, and dual income. The image is meant to depict the example previously mentioned above.

For more help calculating an accurate coverage amount for your family, read How Much Life Insurance Do You Actually Need? You’ll learn how to use your family’s financial obligations and a handful of formulas to estimate your coverage.

Life Insurance Mistake #3: Not Understanding Who Owns Your Life Insurance Policy

One of the most common details we’ve seen clients overlook is the difference between the policy owner, insured person, and beneficiary. Keep in mind that the person who owns the policy may not always be the person who is insured. 

For reference:

  • Policy owner: The only party with rights to the policy (can make policy changes, terminate the policy, borrow against cash values, etc.)
  • Insured person: The person whom the life insurance policy covers.
  • Beneficiary: The person(s) who receive the death benefit amount when the insured person dies.

Image depicts a text example of life insurance roles. Text reads: (Policy Owner) Richard takes out a life insurance policy on his wife, Emily. (Insured) Emily is the person the life insurance policy insures. If she dies, the policy is paid out. (Beneficiary) Lorelai, their daughter, is the beneficiary. She will receive the cash payout when Emily dies.

We’ve seen this scenario play out directly: someone takes out a policy on a spouse, both people contribute to the premium for years, and then the relationship ends. The person who isn’t the owner assumes they can update the beneficiary since they’ve been paying into it too. However, insurance companies look at ownership, rather than payment history. Without being the owner, there’s no way to make that change. 

Knowing who owns your policy and who is listed as the beneficiary becomes especially important when your family circumstances change. 

Life Insurance Mistake #4: Not Planning for a Minor Beneficiary

On the topic of policy roles, parents often assign their children as beneficiaries of their life insurance proceeds. The issue, however, is that most states do not allow insurance companies to issue payouts to minors. 

So, naming a child as your beneficiary creates an important question:

Who will manage the money if the child isn’t legally able to receive and control it directly?

Instead of naming a minor and assuming the details will work out, there are measures you can take to ease the payout process. If you plan to list your young children as beneficiaries, ask your insurance agent and legal/financial professionals about your options. A few common methods worth discussing include:

Image shows the relationship between trusted custodian and beneficiary. Text box reads below: Child beneficiary will receive the insurance payout from Trusted Custodian when child is of age (18 or older)

We recently worked with a single mother who wanted coverage not just on herself, but on each of her children. Her priority was making sure that if something happened to her, there would be someone in place — both to receive the funds and to actually use them for her kids, not just hold the title of beneficiary.

That’s the conversation every parent with minor children needs to have: not just how much coverage, but who’s responsible for it if you’re not there. 

Life Insurance Mistake #5: Leaving Information Off Your Life Insurance Application

There’s a lot that goes into purchasing life insurance– especially when it comes to your application and medical underwriting. Factors like your age, gender, occupation, and health history are all considered when you apply. 

And it’s tempting to think a medication, health condition, or old diagnosis isn’t important enough to

Graphic with elements depicting which factors affect life insurance premiums. Factors read: age (depicted by a calendar icon), gender (depicted by the outline of a male and female stick figure), occupation (depicted by a briefcase), and health (depicted by a heart)

 mention when applying. But leaving information off your application can create problems during the underwriting process.

Why is medical history important for life insurance?

The underwriting process can affect both your eligibility for coverage and the premium you’re offered. 

And all of the information your insurer (or the underwriter) asked you about? These details help insurance companies determine the perceived risk of insuring you.

Do you smoke? Does heart disease run in your family? Have you been diagnosed with any chronic illnesses? If so, you may be considered a higher risk. And the riskier you appear, the higher your premiums might be. 

If information comes to light that wasn’t included on the application, it can affect the underwriting decision, premium, or how long it takes to complete the process. 

We’ve seen this happen even to clients who aren’t hiding anything on purpose. 

One client was in a serious car accident and, during treatment, was prescribed medication she never actually filled or took. She didn’t think to mention it on her life insurance application months later — it wasn’t something she considered relevant. But because it was in her medical records, the insurer flagged it during underwriting, and she had to go back and prove she’d never filled the prescription before her policy could move forward. Even information that feels minor or unrelated can surface, and it’s easier to disclose it upfront than to untangle it after the fact. 

The best approach is to answer the questions as accurately as you can and ask your agent if you’re unsure whether something needs to be disclosed.

Your goal isn’t to tell the insurer only what you think they want to hear. It’s all about giving the insurer an accurate picture of your health and circumstances from the beginning.

Avoid These Life Insurance Mistakes Before They Become Problems

Life insurance is easy to put on the back burner, but your coverage should keep pace with the changes in your life. Marriage, children, a new home, or a changing income can all be reasons to take another look at your policy. 

The good news is that avoiding these mistakes doesn’t necessarily mean changing your policy. It starts with understanding whether your coverage, policy ownership, beneficiaries, and application information still reflect your family’s current situation. 

Now that you know what to look for, review your current policy and consider whether anything in your life has changed since you first purchased it. If you’re unsure of what type of insurance you need, start by learning the differences between term and life insurance policies and which one might be the best fit for you.  Or, give our office a call to connect with a life insurance agent to discuss your options. 

At Grimes Insurance Agency, we’ve helped families navigate these questions for 78 years. If your review raises questions about your coverage or beneficiaries, our agents are here to help you understand your options.

4 Common Contractor Insurance Gaps

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By: Ryan Rogers, Commercial Lines – Executive

Executive Summary:

Contractor insurance gaps can develop when your policy no longer matches the way your business operates. Four common problems include inaccurate information on your insurance application, taking on work outside your primary trade, relying on uninsured subcontractors, and overlooking workers’ compensation exposure. Reviewing these areas before a claim can help you identify potential gaps while there’s still time to address them.

Have you ever been on a leaky boat? Imagine stepping into a boat that looks perfectly sturdy on land. You expect it to keep you dry… until it hits the water and you find yourself in trouble. Soaked and sinking, you realize a sneaky little hole has left you exposed.

Contractor insurance gaps paint the same picture. What might look like a solid business policy can turn out to be full of holes, leaking coverage where (and when) your company needs it the most.

At Grimes Insurance Agency, we understand how the details of a contractor’s operations can affect coverage, eligibility, and cost. With over 75 years of commercial experience, we’ve seen how seemingly small details can create significant problems when they’re not addressed before a claim. 

In this article, we’ll look at four common contractor insurance gaps, what causes them, and what you can do to identify them before they become a problem.

Note: This article focuses primarily on general liability and workers’ compensation exposures. A complete commercial insurance policy may also include commercial auto, property, tools and equipment, and other coverages.

1. What Happens if Your Contractor Insurance Application is Inaccurate?

One of the first places a coverage gap can develop is before your policy is even issued. 

When you apply for contractor insurance, your carrier needs an accurate picture of your business to determine what it is willing to insure and how to structure your policy. That’s why many contractor and roofer policies require a supplemental application before coverage is bound.

Contractor Supplemental Application Example:

Screenshot of the first page of an example contactor supplemental application page.
Screenshot of the first page of an example contactor supplemental application page.
Screenshot of the second page of an example contactor supplemental application page.
Screenshot of the second page of an example contactor supplemental application page.
Screenshot of the third page of an example contactor supplemental application page.
Screenshot of the third page of an example contactor supplemental application page.
Screenshot of the fourth page of an example contactor supplemental application page.
Screenshot of the fourth page of an example contactor supplemental application page.
Screenshot of the fifth page of an example contactor supplemental application page.
Screenshot of the fifth page of an example contactor supplemental application page.

These applications can ask about details such as: 

  • The types of work you perform
  • Whether you work on new construction or existing structures
  • How often you use subcontractors
  • Whether subcontractors carry their own insurance
  • The size and scope of your projects
  • Your estimated gross sales and payroll

A supplemental application is more than paperwork. It lays the foundation for the coverage and pricing you receive. The information you provide helps your insurance carrier understand the risk they’re being asked to insure. 

What happens when the information isn’t accurate?

Sometimes an inaccurate answer is an honest mistake and can be corrected by talking with your agent. Other inaccuracies may be identified during the annual insurance audit, which reviews your business information and actual exposures.

 However, waiting until the annual audit to make a change can end up being costly. 

One of the most common mistakes we’ve seen happen is misestimating gross sales or payroll estimates. If your actual numbers are significantly higher (or lower) than your estimates, you could owe additional premium when those numbers are reviewed. 

An example: a costly underestimation

In one prior roofing client example, the company estimated their annual sales at $6,000,000. Using this number as a factor, their original premium was rated at $50,000. 

However, their sales nearly doubled their estimate, producing $11,000,000 in gross sales. After the yearly audit, they were billed an additional $39,000 in premium to settle the difference.

Sometimes, your business simply changes after the application is completed. And oftentimes, the change is for the good. Either way, the end result can be the same: your policy might not be reflecting the business you’re actually running. 

How can you avoid this gap?

Complete the application based on how your business actually operates, not how you expect it to. 

Before binding coverage, review your answers carefully. Make sure your work, subcontractor use, project types, sales, and payroll estimates accurately describe your business.

When you’re unsure how to answer a question, ask your agent to walk through it with you before submitting. Client education and understanding are an essential part of preventing coverage gaps. 

If you’re ever unclear about your supplemental application information, or have additional insurance questions, feel free to give us a call, and Grimes Insurance Agency can help you sort it out. 

2. Can Taking on Different Types of Work Create a Contractor Insurance Gap?

As a contractor, you probably consider yourself according to your primary trade: 

“We’re a siding contractor.” “We’re a roofer!” “We’re a concrete contractor.”

But what happens when you start taking on work outside of that category? 

A siding contractor, for example, may occasionally accept roofing, gutter, or exterior projects. That flexibility can help your business grow… but it can also create an insurance issue if your policy only reflects your primary trade.

Adding a higher-risk service can affect your classification, eligibility, or premium—even if that service represents only a small portion of your business. 

Why can mixed-trade work create coverage problems?

Insurance carriers use classifications to evaluate the risks associated with different types of contracting and commercial work. These look like numbered “class codes” assigned to your business, based on the type of work you offer. 

Image depicting a green background with three images of three different storefronts. #1 has a saw and hammer logo above it, titled "residential roofing" and lists its class code (98678) underneath it. #2 has a dropping faucet logo, with "commercial plumbing" and its class code (98482) listed below it. #3 has a logo with hair tools, with the title "barber shop" and its class code (10113) underneath.

For example, a business may earn most of its revenue from siding, but occasionally take on roofing work. Roofing presents a different risk than siding, so your insurance carrier may need additional information before determining how that work should be classified and rated. 

Want a more in-depth understanding of class codes? Read our Guide to Comparing Contractor Insurance Quotes to learn more about why these classifications matter.

How can you avoid this gap?

Tell your agent when your services change, even if the new work is occasional. Before adding a service, ask how it may affect your existing coverage, classification, eligibility, and premium.

If you regularly perform significantly different types of work, you may also want to discuss your business structure with your insurance agent and other professional advisers. Separate entities may make sense in some situations, but they are not appropriate for every contractor. 

3. Does Your Contractor Insurance Account for Your Subcontractors?

Subcontractors can be helpful additions for your business operations. But hiring another company to perform work doesn’t automatically eliminate your exposure.

Imagine you hire a subcontractor who damages a customer’s property. Or their work contributes to a claim. Or, maybe they end up injured during a project.

You might expect their subcontractor insurance to respond, but do you actually know what coverage they carry?

The thing is, your general liability policy does not necessarily provide the same protection regardless of whether a subcontractor has their own insurance. Some policies may provide coverage in certain situations, while others may exclude work performed by uninsured subcontractors or apply different conditions. 

Your policy’s language controls how your coverage responds to subcontractor-related exposures.

Why is this a common contractor insurance gap?

Texas is different from many states because not all contractors are required to hold a license or insurance. Whether a contractor needs a license can depend on the trade and the location where they work. Texas-specific licensing information should be reviewed alongside your own insurance requirements.

This can make it especially difficult to understand who you’re hiring, what insurance they carry, and how your own policy responds if they don’t have coverage.

What should you check before hiring a subcontractor?

Before hiring a subcontractor, consider:

  • Does your contractor policy require specific insurance?
  • Does the subcontractor carry general liability insurance?
  • Does the subcontractor carry workers’ compensation insurance?
  • Does your policy address uninsured subcontractors?
  • What documentation should you collect?

Maintaining up-to-date documentation, like certificates of insurance (COI), is the best way to stay on top of these details before gaps happen. A certificate of insurance is the document you provide to customers, project owners, or contractors (like yourself) to prove your business carries the required insurance coverage.

Other helpful records to keep on file include:

Titled image "business should maintain records such as:" including a bulleted list, reading: maintenance records, equipment information, incident reports, photos of damage, receipts, and contracts

The goal isn’t simply to collect a certificate and check a box. It’s to understand where responsibility falls if something goes wrong.

If you regularly rely on subcontractors, talk with your agent about how your specific policy treats their work before you need to rely on that coverage.

4. Could You Have a Workers’ Compensation Insurance Gap?

It’s important to understand that not every insurance gap involves liability. Workers’ compensation can create another significant area of exposure.

Texas has different standards from many states when it comes to private employer workers’ compensation coverage. In fact, most private employers in Texas aren’t required to have workers’ compensation coverage. However, choosing not to subscribe can create different legal and financial exposures if an employee is injured. 

The fact that workers’ compensation may be optional doesn’t mean the decision has no consequences.

How can you address this potential gap?

One option is to add workers’ compensation to your insurance policy. It may be an important way to protect your business, employees, and operations, but every business has different circumstances.

Talk with your insurance agent about your options and the exposures your company may face before deciding whether workers’ compensation is appropriate for your business.

How does your claims history affect your workers’ compensation costs?

If workers’ compensation is the right choice for your company, your claims history can also affect your premium costs through your experience modification factor (EMOD).

Graphic depicting the EMOD range, reading: on the left, 0.75 (lower premium), in the middle, 1.0 (average), and on the right, 1.50 (higher premium).

In simple terms, your EMOD is a scaled value that shows how your business compares to others within the industry based on your workplace losses. A higher EMOD increases your premium. A lower EMOD decreases it.

 

Interested in learning how to lower your company’s EMOD score? Read about How Much Contractor Insurance Costs to learn 4 ways to keep your score in check.

What Should You Do if You Think Your Contractor Insurance Has a Gap?

Contractor insurance gaps often develop when your business changes but your insurance doesn’t change with it. 

Maybe the application doesn’t accurately describe your business. Maybe you’ve added work since the policy was issued. Or maybe you’ve assumed coverage where your business’ policy simply doesn’t include it.

Each one can create an exposure that’s difficult to recognize until something happens.

If your business has changed since your last policy review, you don’t have to wait for renewal (or a claim) to find out whether your coverage still fits. Give our team a call, and we’ll connect you with an agent to review your current coverage. 

At Grimes Insurance Agency, we can help you identify potential gaps and determine whether your policy reflects the business you’re actually running. Unsure if Grimes may be the right fit? Learn Why West Texas Contractors Trust Grimes with their business insurance needs. Even if you don’t work with our team, we want your business to be well equipped with the right coverage.

How to Look for the Best Roofing Business Insurance Policy

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By: Ryan Rogers, Commercial Lines – Executive

If you’re a roofing company owner shopping for commercial insurance, you probably want a simple answer: which policy gives me the best protection without paying for coverage I don’t need? 

The problem is that there isn’t a single insurance carrier or policy that’s automatically “best” for every roofing company. Exclusions, coverage limitations, and/or coverage requirements make all the difference in what you actually pay and what your policy covers.

At Grimes Insurance Agency, we currently help insure several roofing companies, giving us firsthand experience with the unique coverage considerations roofers face. A policy that looks inexpensive can become very expensive when it doesn’t cover the work actually being performed. 

Rather than fitting every roofer under the same type of policy, the right coverage depends on the work their business performs and what it needs.  

The best commercial insurance for a roofing company: 

  • Doesn’t leave critical gaps in coverage
  • Accurately classifies the operations performed by your business
  • Covers the work your company actually performs
  • Considers your company’s current and future growth

In this article, we’ll break down these four areas, so you know what to look for when comparing or renewing a roofing business insurance policy.  

1. The Best Roofing Insurance Doesn’t Leave Room for Coverage Gaps

If it isn’t already obvious, roofing is a risky business. According to USA Business Insurance’s latest review, roofing contractors are considered one of the riskiest trades to insure for general liability. However, your risk extends beyond the physical labor involved in installing or repairing a roof. 

This makes certain commercial policies nonnegotiable to properly cover your business:

Image lists the three important commercial policies for roofing businesses. Includes general liability, workers' compensation, and business auto liability

Why is general liability important for roofing companies?

Roofing carries two main types of risk on nearly every job, and general liability is what protects your business against both.

Water damage

If you’ve been in the roofing business for any length of time, it’s no surprise it’s one of the most common claims roofers face. 

Even a small installation issue, like flashing that isn’t properly tucked under siding, can let water work its way behind the roofline and cause a sneaky (and costly) amount of damage. 

Third-party property damage 

Did equipment fall off the roof and dent a neighbor’s car? Did materials slip and damage a neighboring house? 

Without appropriate liability coverage, those costs fall entirely on your business. That’s what makes it a foundational policy for your company to have. 

Why is workers’ compensation important for roofing companies?

Texas doesn’t require most private employers to carry workers’ compensation insurance, but choosing not to carry it doesn’t eliminate the risk of an employee injury. 

Without it, you’re stating your business will be a non-subscriber for Workers’ Compensation coverage, but this doesn’t relinquish responsibility in the event an employee is injured in the scope of work performed for your business. An injured employee may have other avenues to seek compensation from your business, depending on the circumstances.

Subcontractors can be another blind spot. Some policies cover uninsured subcontractor labor; others exclude it outright. This is especially important to understand in Texas, where not all contractors are required to carry insurance or hold a license to take on work. 

If you haven’t confirmed which applies to you, you may be assuming coverage that isn’t there. To verify how subcontractors are covered under your policy, consider meeting with your insurance agent to discuss your specific policy. 

Why is business auto liability important for roofing companies?

If your roofing company owns, leases, or regularly uses vehicles for business, business auto liability helps protect your company when one of those vehicles is involved in an accident that causes bodily injury or property damage to someone else.

For a roofing company, that could mean an accident involving a truck hauling materials to a job site, a company vehicle driven between projects, or another vehicle being used for business purposes. 

What should roofing companies look for in a business auto liability policy?

When reviewing your commercial auto coverage, consider:

  • Which vehicles are covered?
  • Who is allowed to drive them?
  • How are the vehicles being used?
  • Are employees using personal vehicles for business?

The important thing is to make sure your business’ auto coverage reflects how your roofing company actually uses its vehicles. A policy that looks adequate on paper may not provide the protection you expect if your vehicles, drivers, or business use aren’t properly accounted for. 

2. The Best Roofing Insurance Accurately Classifies Your Work

One of the first things to look at is whether your policy accurately describes the work your company performs. 

If you do both residential and commercial roofing, both types of work need to be properly accounted for. Even if one represents a much smaller percentage of your business, it still affects how your company is classified. 

Why does it matter how my roofing business is classified?

The simple answer: your classification helps determine how your business is rated and what premium applies to your operations. Let’s explore how. 

Every business is given a number called a classification (or class) code. These codes are used by insurance companies to group businesses and jobs by their levels of risk. Plumbing companies, electrical contractors, roofing companies, and even barber shops have their own codes. 

Image depicting a green background with three images of three different storefronts. #1 has a saw and hammer logo above it, titled "residential roofing" and lists its class code (98678) underneath it. #2 has a dropping faucet logo, with "commercial plumbing" and its class code (98482) listed below it. #3 has a logo with hair tools, with the title "barber shop" and its class code (10113) underneath.

Each business also has additional codes specific to the type of commercial insurance they have. Let’s bring back the residential vs. commercial roofing example and look at general liability insurance.

If you’re a roofing company, you may have seen class codes similar to these:

Residential roofing (three stories and under)  Commercial roofing (or residential over three stories)
General Liability Classification Code: 98678 98677

Further, if your company performs both residential and commercial roofing, your policy would reflect both codes. 

A misclassification can affect how your business is rated, which is why it’s important to make sure your class code(s) accurately reflect the work your company performs.

Misclassification can also leave you exposed in the event of a claim. If the insurance company didn’t have the commercial class code on your policy, but an event occurs on a commercial job resulting in a claim, you might not have coverage if you’re not classified correctly on your insurance policy. 

If your business has expanded into commercial roofing, started working on taller buildings, or added another type of operation, make sure your agent knows.

3. The Best Policy Covers the Roofing Work You Actually Do

A policy can look great on paper… until you find an exclusion that applies directly to your work. Then, you’re left uncovered for tasks you do every day.

Two of the most common exclusions roofing companies face include:

  • Building story or height limits: Some policies may restrict roof work performed above a certain height
  • Hot work exclusions: Restrict labor involving torches or heat (often used during roof flashing)

How do I know what to exclude or include on my business roofing policy?

It all boils down to being transparent about what your business does. 

Let’s say your roofing company doesn’t regularly offer hot work. Instead of torch-down roofing, you offer a different method for your main service. However, you offer it for certain roofing projects on occasion. 

Even if torch-down roofing isn’t your main operation, you should disclose additional services to your insurance agent to determine whether your policy provides the coverage your business actually needs. 

 Before you choose a policy, ask:

  • Does the policy list any exclusions or limitations?
  • Do those limitations match the buildings my company actually works on?
  • Are there available endorsements to add protections to my policy?
  • Does the policy address all of the roofing operations my company performs?

At the end of the day, the best policy isn’t the one with the longest list of benefits. It’s the one that doesn’t exclude a critical part of your operation.

4. The Best Roofing Policy Makes Sense for Your Company’s Growth

Roofing companies can have significant swings in revenue from one year to the next. Based on how your policy is rated, though, those swings can create major surprises during your next insurance audit.

What exactly is an insurance audit? Great question! Watch this video to learn about insurance audits, what to expect, and how your business can prepare for one.

Roofing policies are typically rated one of two ways:

  • Based on your gross payroll
  • Based on your gross sales

Graphic listing gross sales vs. gross payroll definitions. Text reads, gross sales: company's total revenue from goods or services before deductions, gross payroll: company's total compensation paid to employees before withholding and taxes.

A gross payroll-based quote often comes in lower, but can change more often. A stronger year, a few new hires, or some overtime can push your payroll up dramatically. 

Generally, gross sales are a steadier number to build a policy around. However, it’s still important to remain mindful (and realistic) about your company’s capability. We’ve seen how it can easily backfire firsthand.

An example: a costly underestimation

Based on a prior example, a roofing company client estimated their annual sales at $6,000,000. Using this number as a factor, their original premium was rated at $50,000. 

However, their sales nearly doubled their estimate, producing $11,000,000 in gross sales. After the yearly audit, they were billed an additional $39,000 in premium to settle the difference.

How can you avoid a surprise audit bill?

As much as we wish it were possible, you can’t always predict how a fiscal year will play out. However, some of the best ways to keep audit surprises to a minimum include: 

  • Consistent communication with your agent
  • Keeping an eye on your finances

As things change within your business, make them known to your agent. Updating your gross sales or payroll, or adding new operations as your business changes, can spread those costs over time, rather than surprising you with a single large bill. 

Have you made any recent changes to your business? Contact Grimes Insurance Agency to speak with an agent about amending your commercial coverage.

Whichever option you decide to base your premium on, verify that it makes sense for your company’s growth. Consider where your company currently is and where you can realistically see yourself by the end of the year. 

To dive deeper into what affects your commercial policy rates, read about how much contractor insurance costs.

How Do You Find the Best Roofing Business Insurance?

Finding the best roofing insurance isn’t about choosing the carrier with the cheapest quote or the longest list of coverage options. The right policy should accurately reflect your roofing operations, protect you from the risks you actually face, and make sense for the way your company is growing.

Before choosing or renewing your policy, review four key areas:

  1. Coverage gaps: Does your policy provide the coverage your business needs?
  2. Classification: Does your policy accurately describe the work your company performs?
  3. Exclusions: Are there limitations that could leave you uncovered for work you actually do?
  4. Growth: Does the way your policy is rated make sense for your expected sales or payroll?

You shouldn’t have to discover a coverage gap or a major premium adjustment after something goes wrong. Since 1948, Grimes Insurance has helped roofing companies look beyond the price of a policy and understand how their operations, classifications, exclusions, and growth can affect their coverage.

If your roofing company has changed, grown, or you want to know whether your policy still fits, Grimes Insurance Agency is available to help review your commercial coverage. Give our office a call to connect with an agent and review your current coverage. Or, if you’re ready to shop your policy, request a business insurance quote and explore your best options with our team.

A Guide to Comparing Contractor Insurance Quotes

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By: Ryan Rogers, Commercial Lines – Executive

If you’ve ever received multiple contractor insurance quotes and the premiums look nearly identical, how do you know which one is right for you? Price is easy to compare, but it doesn’t tell you whether two policies provide the same coverage.

To most policyholders’ surprise, price alone rarely tells the whole story. Two quotes can carry nearly identical premiums and still protect one business dramatically better than the other. So, what else are you supposed to look for? It’s a question we’ve helped answer for decades. 

At Grimes Insurance Agency, our commercial lines team has helped contractors compare their options for over 78 years. We currently represent several commercial contractors and are dedicated to educating clients about the right coverage for their business.

By the end of this article, you will know:

  • What to look for when comparing contractor quotes
  • How to know which contractor coverage is the best fit
  • What questions you should ask when comparing

A quick note before we dive in: everything below focuses on general liability coverage. A full commercial insurance package for a contracting business typically also includes commercial auto, property, workers’ comp, and sometimes umbrella coverage – each with its own set of considerations. 

What Should I Look for When Comparing Contractor Insurance Quotes?

There’s more to your insurance policy than price, especially when insuring your contractor business. The thing is, businesses are built differently. While you may be in a similar contracting market, your business is unique to you. In the same vein, your policy should be, too. 

What your policy covers should be specific to the work you do. From our experience with local contractors, there are four items you should pay attention to when comparing your insurance quote:

  1. Your company’s classification codes
  2. How your company’s policy is rated
  3. The exclusions listed on your policy
  4. How your policy includes subtractors

Let’s break each of these down together.

1. Verify your insurance classification codes

A classification (often shortened to class) code is a number used by insurance companies to group businesses and jobs by their levels of risk. 

Think about it like a library; There are thousands of books all organized by genre, author, and title. The same idea applies to insurance classification codes. Contractors, barber shops, and insurance agents are all classified differently. 

Image depicting library example mentioned above for commercial class codes. Image includes three books. Each book includes an example commercial class (residential roofing, commercial plumbing, and barber shops) with their corresponding class code along the spine. The photo is for example purposes.

Why do class codes matter?

Class codes can drive your premium rate. Specifically for general liability insurance, it can also affect your eligibility for a policy. 

Think about it this way: a plumber’s class code carries a lower rate than a roofer’s simply because roofing naturally has a greater risk. Even something that sounds low-risk, like window cleaning, can jump into a much higher-rated class once the work goes above two stories. 

Who assigns classification codes?

Because not all states rely on the same kind of classification system, it can vary. However, a common system insurers use is the National Council of Compensation Insurance (NCCI).

There are also specific classification codes for different types of commercial insurance. Meaning, you often have more than one class code to look for. This article is specifically discussing general liability. However, other types of commercial insurance that use specific class codes include: 

  • Workers’ compensation
  • Commercial auto
  • Commercial property

Class codes can get more complicated when you look beyond general liability. To understand how classification codes affect different types of commercial insurance, USA Business Services Inc. breaks down how these codes are used across different policies in its guide to commercial class codes.

How can your contractor business be misclassified?

You could be accidentally misclassified in a few different ways. Sometimes the wrong information gets passed along, or maybe your underwriter made an assumption based on incomplete details. 

Either way, the fix is the same: ensure that your insurance agent has a full, accurate picture of what your business does before a quote is ever built. If you’re insured as a roofing contractor, but also offer gutter repair services, it’s important to communicate that with your agent so that your class codes reflect correctly in your quoted premium. 

How do I find my classification code?

You might look at your contractor’s quote and realize that you don’t even know your business’ class. You’re not the only one. 

There are a handful of websites where you can search for your classification based on your industry and the type of commercial insurance you’re purchasing. Consider reviewing your class code using one of these tools:

While these tools can be a helpful resource, always verify your classification information with your insurance agent before assuming your codes are correct.

2. Understand how your contractor policy is rated

Contractor policies are typically rated one of two ways:

  • Based on your gross sales
  • Based on your payroll

Graphic listing gross sales vs. gross payroll definitions. Text reads, gross sales: company's total revenue from goods or services before deductions, gross payroll: company's total compensation paid to employees before withholding and taxes

On paper, a payroll-based quote often comes in lower. However, in practice, payroll tends to be far more volatile than gross sales. A stronger year, a few new hires, or some overtime can push your payroll up dramatically. 

That difference is more important than you might think, and it typically gets caught (and billed for) when annual audit time comes around. 

In our client experiences, gross sales tend to move less dramatically year to year, making it a steadier number to build a policy around. If two quotes look similar, but one is based on payroll and the other on gross sales, don’t assume they’re apples to apples. The payroll-based policy may look cheaper today and cost you more down the road in unexpected premium jumps. 

Interested in learning more about how these rates affect your commercial policy? Read How Much Does Contractor Insurance Cost? to understand how your policy can be calculated.

3. Carefully review the exclusions listed in your policy

This is the step where quotes that look nearly identical can turn out to be worlds apart.

What is an exclusion?

Exclusions are the specific situations or types of work a policy won’t cover. If a loss were to happen because of the excluded cause, your insurance provider would not pay for the incident. This information is often buried deep in the pages of a policy most people never read. 

An exclusion example: A local roofing company

A recent client insuring their roofing company was paying around $6,000 a year for a policy that excluded “hot work”. Hot work is any labor involving torches or heat, which many roofers use to melt tar or adhesive when securing roof flashing, even if torch-down roofing isn’t their main service. 

When their crew accidentally started a fire that spread to a garage, the total uncovered claim cost roughly $89,000 (ouch!). Because hot work was excluded from their policy, none of the damage was covered, causing the business owner to pay the entire amount out of pocket. 

That’s the risk of chasing the lowest number. Most contractors don’t realize what they may be giving up in coverage just to get to a lower price. 

4. Ask about your policy’s subcontractor usage

If your business relies heavily on subcontractors, this is one of the most important (and commonly overlooked) pieces of a quote.

Some policies will cover labor performed by uninsured subcontractors. Others will exclude it outright. If you’re using subs and haven’t confirmed which category your policy falls into, you could be assuming coverage that simply isn’t there. 

This is especially relevant in Texas, where not all contractors are required to carry insurance or hold a license to take on work. It’s common, which means it’s worth a direct conversation with your agent about how your policy treats uninsured subcontractor work. 

How do I know which contractor insurance quote is best?

Once you’ve looked beyond the premium, you can start comparing the quotes based on how well each one fits your business.

Instead of asking, “Which quote is cheapest?” begin to ask, “Which quote gives my business the coverage it needs at a price that makes sense?”

A simple way to do this is to put your quotes side by side and look for meaningful differences, like this:

Quote 1 Quote 2
Annual premium $5,400 $5,900
Class codes Roofing Roofing + gutter work
Rating basis Payroll Gross sales
Liability limits $1 million/ $2 million $1 million/ $2 million
Exclusions Hot work No hot-work exclusion
Subcontractor provisions Excludes certain uninsured subcontractor work Provides coverage for eligible subcontractor work

Quote 1 is $500 cheaper. But if the contractor performs hot work and regularly uses uninsured subcontractors, the cheaper quote may not provide the coverage their business actually needs. On the other hand, if the two quotes provide essentially the same coverage and one costs significantly more, it’s reasonable to ask the agent why.

So, is quote 1 or 2 the best? Your answer: The better quote is the one that appropriately covers the contractor’s actual operations and needs. 

The goal isn’t necessarily to find a quote that wins every category. It’s to identify why the quotes are different and decide whether those differences matter to your business.

Learn more about how you can find the best insurance for your contracting business:

What Questions Should You Ask Before Choosing a Contractor Insurance Policy?

If you’re having trouble determining how two quotes differ, take them back to your agent and ask them to explain the differences. 

Here are a few questions to start with:

  • Why is one quote more expensive than the other?
  • Are both quotes using the same classification codes?
  • Are there any coverage differences I should be aware of?
  • Is either quote excluding work that my business performs?
  • How does each policy treat subcontractor labor?
  • Is there anything about either quote that you would recommend I change based on my business?

It’s important to remember that you don’t have to do the comparison alone. At Grimes Insurance, your agent is with you at every step of the process. If you find yourself confused between quotes, call our office, and we can help explain your options and which may be the best fit for your business.

The Best Contractor Insurance Quote Isn’t Always the Cheapest

When you first receive a handful of insurance quotes, the premium is probably the number you’ll notice first. But the real question is what your business is getting for that premium. 

Before you choose your contractor insurance policy, put your quotes side by side, identify the differences, and ask your agent to explain anything you don’t understand. 

If you’re still comparing contractor insurance options and would like to walk through them with an agent, give us a call, and we’ll connect you. At Grimes Insurance, we can help you understand the differences between your options and determine which coverage may be the best fit for your business. 

Unsure if Grimes may be the right fit? Learn Why West Texas Contractors Trust Grimes with their business insurance needs. Even if you don’t work with our team, we want your business to be well equipped and covered.

The Best Car Insurance Options for Teen Drivers in West Texas

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Quick Answer:

For most families with a teen driver, the best insurance setup includes higher-than-minimum liability limits, collision, comprehensive, and uninsured motorist coverage. Adding your teen to your existing policy, choosing an appropriate vehicle, and taking advantage of available discounts can help manage the higher premium without creating coverage gaps.

Adding a teen driver to your car insurance can be one of the biggest premium increases your family faces. It tends to be a juggle between maintaining a manageable price and determining which coverage setup gives your family the protection you need.

A 16-year-old can double or triple your policy cost overnight, adding $3,211 a year on average. Most families respond by looking for ways to cut coverage and reduce the number of policies. However, that’s the wrong move. 

The families who end up with the best outcome are the ones who understand which coverage is non-negotiable, which options are genuinely flexible, and which discounts actually move the needle.

At Grimes Insurance Agency, we help West Texas families structure teen-driver coverage every week. We see the same mistakes repeatedly, and we see which setups protect families and which ones leave them exposed. We’ve been determined to help families get this right since 1948.

In this article, we’ll break down:

  • The best coverage setup for your teen driver
  • The best way to structure your policy
  • The best ways to lower the added

Why Does Teen Driver Insurance Cost So Much? 

You’re not the only one asking this question. It’s a common curiosity our clients have. 

The fact is this: teen drivers (between ages 16 and 19) are statistically involved in accidents nearly three times more than drivers over 20. Insurance carriers price that statistical risk into every policy the moment a teenager is added. The premium increase may not be negotiable, but the coverage decisions you make around it are. 

Let’s review what we consider some of the best options together.

What Makes a Teen Driver’s Insurance Coverage “Best”?

“Best” doesn’t necessarily mean the cheapest policy.

For this article, we consider the best teen-driver setup to be the one that provides strong protection against the financial risks a young driver is most likely to create while giving the family reasonable ways to manage the additional premium.

That means we’re looking at four things:

  1. Protection: Does the coverage adequately protect your household if there’s a serious accident?
  2. Vehicle exposure: Does the policy protect the vehicle your teen actually drives?
  3. Local risk: Does the coverage account for risks common to West Texas, such as severe weather?
  4. Cost management: Can you reduce the premium through discounts, vehicle selection, deductibles, or carrier comparisons without eliminating important protection?

We recently helped a household with three teenage drivers find their best coverage. In their case, removing rental reimbursement coverage made sense because they had additional vehicles at home. In those situations, Grimes Insurance Agency can help you find ways to reduce your premium while still keeping other important protections in place.

What is the Best Teen Car Insurance Option?

For most families, the best coverage setup combines four important types of protection: 

Graphic highlights the four best insurance options for teen drivers with corresponding icons. Text overlay reads: High liability coverage, collision coverage, comprehensive coverage, and uninsured motorist coverage"

It seems like a lot, but we’ll help you break it all down. Here’s why each one earns a place in our recommended setup.

What Liability Limits Should a Teen Driver Have?

In Texas, drivers are required to purchase minimum liability insurance, commonly expressed as 30/60/25. This includes at least:

  • $30,000 per person for bodily injury
  • $60,000 per accident for bodily injury
  • $25,000 for property damage

However, those minimums may not provide enough protection for a household with a teen driver. A serious accident can result in medical bills, property damage, or other losses that exceed minimum limits.

 

At Grimes Insurance, our liability standard for clients is 50/100/50.

That means $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $50,000 for property damage. 

Definitions of Texas Liability Limits and Grimes' Liability Limit Standards (50/100/50). Information is included in written section above.

The Insurance Information Institute (III) recommends an even higher minimum liability coverage of 100/30/100 when adding a teen driver.  

Why this is our best option: A teen driver’s increased accident risk makes adequate liability protection especially important. The goal isn’t to assume your teen will cause an accident; it’s to make sure your family is prepared if an unexpected accident happens.

Should a Teen Driver Have Collision Coverage?

Collision coverage involves vehicle damage caused by colliding with another object. This includes other vehicles, road signs, buildings, trees, and other types of property. 

Because teen drivers have less experience behind the wheel, we consider keeping collision coverage one of the strongest protection choices for a vehicle a teen regularly drives.

Dropping collision coverage may lower the premium, but it also means your family could be responsible for the vehicle’s repair or replacement costs after a covered accident.

Why this is our best option: The premium savings from dropping collision coverage may not justify the financial exposure if your family can’t comfortably replace or repair the vehicle.

Is Comprehensive Coverage Worth It for a Teen Driver?

Comprehensive coverage protects against damage that isn’t caused by a collision, including weather, theft, and other covered events. 

For West Texas families, hail and dust weather deserves special consideration. 

Comprehensive coverage isn’t legally mandatory simply because you live in West Texas, but our region’s hail exposure makes it an important coverage to think about.

In our experience, we’ve seen a single storm can cause $3,000 to $8,000 worth of damage. However, annual comprehensive premiums are typically cost-effective, running a little over $134 per year. 

Why this is our best option: If your teenager’s vehicle is exposed to frequent severe weather, saving money by dropping comprehensive insurance can create a much larger financial risk than the premium savings.

Does a Teen Driver Need Uninsured Motorist Coverage?

Uninsured motorist coverage is designed to help cover any injuries caused during an accident involving an uninsured driver, and many drivers are quick to remove it to save on their premium. 

However, one in eight Texas drivers carries no insurance (ouch). If one of them hits your teen, uninsured motorist coverage pays for the damage and injuries that would otherwise come out of your pocket.

Why this is our best option: Your teen’s insurance protection shouldn’t depend entirely on the other driver having adequate coverage.

Interested in adding uninsured coverage to your auto policy? Watch this video to first understand your rights in an uninsured driver accident before discussing with your agent:

The Best Options for Structuring Teen Driver Coverage

Should You Add Your Teen to Your Existing Car Insurance Policy?

For most families, the best starting point is adding their teen to the existing family auto policy. Your current multi-car, bundling, and other applicable discounts may help offset part of the teen-driver surcharge.

Why this is our best option: Keeping the teen on the family policy is often the simplest way to maintain the household’s existing coverage structure while taking advantage of discounts already available to you. 

That doesn’t mean your insurance company will always offer the lowest price. Teen-driver pricing can vary significantly between insurance carriers, so it’s helpful to research before settling with your current policy. 

If you’re interested in comparing cost options, Grimes Insurance Agency can help you shop across carriers. We’d love to help you review your coverage and find your best option.

Should Your Teen Drive an Older Vehicle?

If your family has multiple vehicles, consider which one your teen will regularly drive.

Assigning your teen to an older, lower-value vehicle can reduce the collision and comprehensive premium compared with assigning them a newer or more expensive vehicle. 

Now, this doesn’t mean the oldest vehicle in the driveway is automatically the best choice. Safety features, reliability, condition and whether the vehicle is appropriate for a new driver should all be considered. 

Why this is our best option: It can reduce the cost of insuring a teen without eliminating important coverage.

What if Your Teen Owns Their Own Vehicle?

If the vehicle ownership belongs to your teenager, it changes the dynamic. Most insurance companies require teenagers who own their vehicle to purchase a separate policy, apart from their parents. However, the process of doing so is often expensive and requires a co-sign from a parent. 

Graphic includes icons to depict the three best options for structuring teen coverage, as listed in the above section. The overlay text reads: add to a current policy, drive an older vehicle, and own a personal vehicle"

What are the Best Ways to Lower Teen Driver Insurance Costs

Once you’ve established the coverage your family needs, look for discounts and policy changes that lower the premium without sacrificing important protection. Some of the top savings strategies we recommend include:

1. Ask About a Good Student Discount 

Most carriers offer this for teens who maintain a B average or higher. We consider this one of the simplest discounts for eligible teen drivers to look into. 

Requirements vary by carrier, so confirm what documentation and grade requirements apply to your policy. 

2. Ask About Driver Education Discounts

Completing an approved driver education course also qualifies for premium credits with most Texas carriers. 

Before paying for a course specifically to receive an insurance discount, confirm with your agent that the course qualifies with your carrier. 

Some courses that may be worth looking into include:

The Texas Department of Licensing and Regulation (TDLR) maintains information about approved driver education providers.

3. Consider a Telematics Program 

Usage-based programs (also known as telematics) monitor driving behavior and may reward qualifying drivers with discounts over time. 

This can be one of the better options for families whose teen consistently demonstrates safe driving and who are comfortable with the program’s monitoring.

Before enrolling, understand what the program tracks and how the carrier uses that information:

4. Consider a Higher Deductible 

Raising the collision deductible on an older assigned vehicle can reduce the premium without removing the coverage. 

This option is best for families that could comfortably pay the higher deductible if an accident occurred. 

A lower premium isn’t worth much if your household can’t afford the out-of-pocket expense after a claim. 

Finding the Best Teen Car Insurance With Grimes

Adding a teen driver can create a significant increase in your insurance premium, but the lowest premium isn’t necessarily the best outcome.

The best setup balances strong protection with practical ways to manage the added cost.

For most West Texas families, that means full coverage with higher liability limits, uninsured motorist coverage, adding the teen to the existing policy when it makes sense, and assigning the teen to an appropriate vehicle. 

If you’re trying to figure out what works right for you, give us a quick call. We can provide some free advice on which direction to lean. And even if you don’t work with us, we want you to feel equipped to find and get the best insurance possible.

If you’re still unsure and want to learn more about managing coverage costs, read 7 Ways to Lower Your Car Insurance to understand which changes can reduce your premium without creating new coverage gaps.

Grimes Insurance Agency has been helping West Texas families structure teen driver coverage since 1948. If you want help comparing coverage, deductibles, and carrier pricing for your household, our team can help you review your options.

Frequently Asked Questions

How much does adding a teen driver to your car insurance policy increase your premiums? 

Adding a teen typically increases a family’s premium by 50 to 100 percent or more, depending on the carrier, the teen’s age, and the vehicle they drive.

Should a teen driver have their own policy or be added to the family policy? 

For most families, adding the teen to the existing policy costs less. A separate policy makes more sense when the teen owns their own vehicle. 

What is the best car insurance coverage for a teen driver? 

Full coverage, which is liability at higher-than-minimum limits, collision, comprehensive, and uninsured motorist, is the best setup for most teen drivers. The goal is not the lowest premium but the coverage that performs when a teen’s higher accident risk results in a claim.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal, financial, or insurance advice. Coverage options, terms, and availability may vary. Please consult with a licensed professional for advice specific to your situation.