EASY MONEY>BOOKSHELF

Emotionomics: Leveraging Emotions for Business Success

By Dan Hill

The big idea: What people really think or feel about something, whether it’s an advertising message or a manager’s announcement, is often different from what they say. Facial coding, which is the interpretation of expressions in our faces, is the better way of understanding emotions and intentions.

What’s good: The author applies this science of facial coding into the world of business, specifically in marketing products and services as well as managing people, so there are plenty of actionable lessons from the book. The use of case studies and graphics brings the concept to life.

What’s bad: There’s a fair amount of self-promotion for the author’s consulting business throughout the book, and after the initial aha moment, things start to get repetitive.

Web site: www.sensorylogic.com

Recommendation: Browse it

The Richest Man in Town: The Twelve Commandments of Wealth

By W. Randall Jones

The big idea: Former Worth publisher spins off a magazine article into a full-blown book, surveying the richest person in 100 US cities and towns and interviewing many of them to find their common denominator. The result is what he calls the Twelve Commandments of Wealth, which includes: find your passion, be your own boss, say yes to sales, work through obstacles, and never retire.

What’s good: Plenty of anecdotes and quotations from most of the so-called RMIT (Richest Man in Town), including those not as well-known as Bill Gates, giving readers access to their insights and experiences.

What’s bad: Most of the commandments of wealth are things you already know and have read in countless books and magazine articles.

Web site: www.richestmanintown.com

Recommendation: Browse it

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It

By Michael E. Gerber

The big idea: Already considered a classic, with over two million copies worldwide, Michael Gerber’s book busts the main myth about entrepreneurship: that it’s not about working in your business but working on it. That means using the franchise model in setting up turnkey systems that let anyone run each aspect of your business with as little discretion and training as possible.

What’s good: The book’s popularity obviously meant the concept has struck a nerve among the burnt-out self-employed who really are nothing more than technicians producing products rather than entrepreneurs building the business itself to basically run on its own. The key is to balance the three roles of technician, manager, and entrepreneur. If you’re in the habit of collecting business bestsellers, it wouldn’t be embarrassing to have this on your bookshelf.

What’s bad: The story-telling approach is a tad annoying. The concept is solid and there’s an attempt to offer specific steps, but the book remains short in details (hence the author’s consulting business and ancillary products).

Web site: www.e-myth.com

Recommendation: Buy it

Off The Wall Marketing Ideas: Jumpstart Your Sales without Busting Your Budget

By Nancy Michaels and Debbi J. Karpowicz

The big idea: For small business, there are many ways of selling your products and services that cost little or nothing at all. All it takes is a little creativity and out-of-the-box thinking.

What’s good: This is a quick read with quite a number of helpful tips, particularly in the savvy use of PR. The authors are also generous with real-world examples of creative marketing from famous and not-so-famous business owners.

What’s bad: Many of the ideas – fancy business cards, speaking engagements – are trite (if you’ve already read Jay Conrad Levinson’s Guerilla Marketing, there’s nothing really fresh in this book) and not exactly off-the-wall edgy (except the part called Madcap Marketing). Recommendation: Skip it

[Best Sellers logo] All these titles are available at all NBS Bestsellers branches.

Escape from Cubicle Nation: From Corporate Prisoner to Thriving Entrepreneur

By Pamela Slim

The big idea: To make the transition from cubicle-trapped employee to flexible entrepreneur, you need to overcome what’s been stopping you, make a solid plan, and use pilot tests and prototypes to get your business off the ground.

What’s good: As a life coach and blogger, the author writes in just the right empathic, encouraging, and earnest tone that makes the book quite engaging to read. It helps that the book is well-organized, comprehensive, and practical without the dull and dizzying information overload found among less talented authors.

What’s bad: The first few chapters are a little touchy-feely, but the author hits her stride right after.

Web site: www.escapefromcubiclenation.com

Recommendation: Buy it

Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School

By John Medina

The big idea: Understanding how the brain really works can help us deal with other people better whatever the situation. Some examples: the brain can focus on one thing at a time, so it’s useless to multi-task. It can pay attention for only 10 minutes before it needs to reset. The brain responds to visual input best. It needs to rest and exercise increases its power. It loses cells over time but it can grow new connections so we can continue to learn new things even in old age.

What’s good: Neuroscience is the new pop economics, at least as far as topics for non-fiction best-sellers are concerned. And this book definitely lives up to its promise. It’s a fun and engaging read.

What’s bad: Perhaps a few more applications in business and family life would have added actionable steps. But this is just a quibble – get your brain working!

Web site: www.brainrules.net

Recommendation: Buy it

Decorative Concrete: Expanded Edition: Recipes for Finishes Indoors and Out
By Jeanne Huber

The big idea: There’s more to concrete than dull pavements, walls, and floors. The book shows the flexibility of the material through innovative projects at home.

What’s good: Lots of contemporary design ideas and step-by-step instructions for floor tiles, furniture, countertops, sinks, pathways, etc. If you’re looking for original and affordable ideas to decorate your home inside and out, you’ll find plenty of projects here.

What’s bad: It takes a fair amount of work to pull off these projects.

Recommendation: Browse it

Home Essentials: Hundreds of Inspirational Ideas for Decorating and Furnishing Your Home

By Ros Byam Shaw, Maggie Stevenson, Fay Sweet, and Judith Wilson

The big idea: Decorating your home takes little cost but lots of creativity. This team of interior designers takes readers to each part of the home, breaking design into the basic components like color and storage, and then offering style options such as Contemporary, Country, Retro, and Family-friendly

What’s good: Generous use of big photos of real homes, helpful tips, and a strong emphasis for making the most of small spaces offer readers plenty of inspiration.

What’s bad: Good for an overview of interior design but not very helpful if you already have a specific style in mind.

Recommendation: Browse it

[Best Sellers logo] All these titles are available at all NBS Bestsellers branches.

EASY MONEY> 5 TIPS

Simplify Your Financial Life

Five credit cards, three savings accounts, four time deposits, two checking accounts, three mutual funds, six insurance policies – how can you possible keep track of them all? Unfortunately, many of us fall into the trap of “the more, the messier.”  How do you keep your financial life simple, easy, and manageable?

1. Consolidate your deposit accounts. Do you really need all those bank accounts? You’ll end up with a truck load of bank statements, passbooks, ATM cards, and certificates of deposits. Not only can it be confusing, you’re setting yourself up for overdraft fees, dormancy charges, below-minimum penalties, and lower interest income. Keep your payroll account (or primary savings deposit account) and link it to a checking account for bills payment. Stay with one bank for transactional purposes (paying bills) and with another, if necessary, for investing purposes (higher-rate time deposits).

2. Stick to two credit cards. It’s too easy to say yes to pre-approved credit cards. Well, it’s time to learn to say no. More cards can lead to late fees, high charges on minimum payments, and the road to debt perdition. Instead, keep one card (with a relatively small credit limit, so it wouldn’t hurt as much if it gets stolen) in your wallet for everyday purchases, and store another (with a higher limit) for international travel, high-ticket purchases, and financial emergencies.

3. Avoid complex financial products. Complexity is what caused the recent global financial crisis, and if you like to complicate your financial life, you could also end up with your own little crisis. So if you need life insurance, stick to term insurance. If you want to have a diversified investment portfolio, go for one balanced fund or one stock fund and one bond fund.

4. Set up a bills calendar. Too many bills, too little time, right? If you want to avoid the misery of paying unnecessary fees and charges, you have to be on top of your bills payment schedule. For that, you need to set up a bills calendar, whether it’s a paper calendar on your desk or an electronic one in your computer or mobile phone. Being alerted to due dates is crucial.  An alternative is to pay only once or twice a month on a fixed day, say every 15^th and 30^th, regardless of the actual due dates, so you don’t even have to try remembering them anymore.

5. Automate it. If you can make your financial transactions automatic, the fewer mistakes you make. If you can enroll all your utility bills and insurance premiums to your credit card, do it. If your mutual fund or UITF can automatically debit your savings account on a regular basis, set it up. If you can have your savings deposit set aside a fixed amount every month to a higher-rate account, do it. If your bank lets you automatically transfer funds to your checking account when necessary, let them.

7 Ways to Cut Your Healthcare Costs

With the staggering cost of health-related expenses, an ounce of prevention is still better than a pound of cure

By Arlyn W. Cheng, LUTCF,CIS

A financial plan cannot be complete without taking into consideration protecting the health of your most valuable asset – YOURSELF. As they say, “health is wealth,” and maintaining one’s health is more important than accumulating money, which could be wiped out by a single hospitalization or a prolonged critical illness. This may eventually leave your loved ones with huge financial obligations.

It is estimated that a patient will spend an average of P90,655.43 for a period of 7.7 days of hospitalization due to a heart attack and P166,754.40 for a total of 11.9 days of hospitalization due to stroke. These cover hospital confinement, tests, and professional fees and do not include the cost of complications, disease progression, and disability, according to the Pfizer Philippines Web site (www.pfizer.com.ph).

With rising medical costs, health protection cannot be ignored. We need to think of ways to avoid the damaging financial effects of hospitalization and general health care. We have heard of people on a collision course with financial ruin when faced with piling medical obligations.

Here are some tips you can consider to save on healthcare cost:

TIP #1: SET A BUDGET

With the pressures of daily living, staying healthy is not easy. Do you set aside a certain amount of your income for healthcare or for an emergency fund? The issue is that we can’t tell how much to set aside for medical emergencies nor can we tell when a medical emergency will happen. Other than the anxiety of incurring an illness, it’s the financial burden of having to pay for the cost of consultation fees, laboratory examinations, hospitalization, and medication.

A better approach would be to supplement your emergency fund with health insurance or HMO that is suitable for your needs. With HMO coverage, you know exactly how much premium you need to set aside from your income to take care of at least one year coverage.

Review your existing coverage. What medical services are covered and not covered? How much is the maximum benefit? Does it include your dependents? Some members of the family who are working may already have company-provided health benefits.

In order to ascertain sufficiency of your coverage, assess the risks you are exposed to. Among the factors to consider are age, gender, occupation, earning capacity, place of work, residence, and lifestyle. You can fill in the gaps through the various health insurance providers in the market. However, you need to check the firm’s financial stability. According to Roberto Arroyo, Philamcare’s Senior Vice President for Sales & Marketing, the measure of an excellent HMO is how its service capabilities and competencies are able to satisfy the needs of its members. He adds, “A medical emergency can happen anytime, and the ability of the service provider to actively coordinate the service delivery so the member gets the required health service without delay is a responsibility that Philamcare strives to maintain.”

HMO coverage will generally provide most of the medical benefits for in-patient, outpatient care, preventive health care, emergency treatment, annual physical examination, and some coverage for sophisticated medical procedures. Some HMOs have optional benefits like dental care and term life insurance. The thrust of HMOs is preventive, hence the emphasis on annual physical check-ups and regular consultations. Screening tests for various diseases and vaccines are also available. Medical expense coverage is within their accredited hospital or institutional network.

However, you need to review the provisions of the contract for limitations, excluded risks, or maximum amount of coverage depending on the plan and company you are dealing with. Pre-existing illnesses are generally subject to exclusions for individual accounts. Take note that there is a limit in eligibility ages. Once you reach your senior years, it is a sad fact that you could no longer be eligible for coverage when you need it most. HMOs can only provide coverage up to a certain age. By that time, your medical needs and expenses would have started to pile up. The question is: Do you have the financial resources to cover for these?

The alternative to HMOs is health insurance, which generally extends coverage to seniors. For instance, Philamlife announced the launching of a health insurance product called Health 100, which is a limited pay health insurance product with no annual premium increase that provides a wide range of benefits that covers you until age 100. Aside from living benefits like daily hospital income, outpatient cash, and surgical allowance, there are additional benefits for critical illness and long term hospitalization as well as intensive care confinement. It also offers cash benefits to cover for medical needs at an advanced age and a unique feature for heart disease and female cancer. Remember, it is wiser to hedge for one’s medical needs.

TIP #2: WATCH YOUR WEIGHT

Here, we tackle the issue of obesity. According to the World Health Organization (WHO), obesity is a major risk factor for chronic diseases like diabetes, cardiovascular diseases, and cancer. Sleep apnea can also be caused by obesity. Obese people are also susceptible to osteoarthritis because the additional pressure needed to support excess weight causes the joints like ankles, knees, and hips to be weaker. Obesity is not just about overeating. Genetics, hereditary background, and environmental factors are contributing factors which predisposes a person to obesity.

As much as possible, avoid dietary supplements, herbal diet pills, and slimming teas that promise amazing results. In 2004, the US Food and Drug Administration (FDA) ruled that certain substances in dietary supplements raised serious safety issues at certain concentrations. These quick-fix remedies can have various side effects ranging from dryness in the mouth and excessive sweating to loose bowel movement and dehydration. Medical complications could also arise. So, before you buy any health supplement, read the label and product information. Check the credentials of the manufacturer behind it. To determine the value of a health product or treatment, it is safer to consult a health professional. In recent years, liposuction and other medical intervention procedures have gained popularity. As long as it is under close medical supervision of a licensed and well-trained doctor, procedures like these are generally safe. However, don’t consider them a panacea.  Strategies such as changing your lifestyle, better eating habits, a balanced diet, and exercise under the supervision of professionals are still the best way to lose weight.

TIP #3: EXERCISE

One of the most neglected aspects of health is proper exercise. According to Fitness First Manila’s Operations Manager Richard Manansala, to reap the benefits of proper exercise, one must have the discipline to set the time to do workouts. The physical benefits of exercise are numerous: it helps burn off those excess carbohydrates, increases HDL (the good cholesterol), promotes good bones and joint stability, tones muscles, lowers blood pressure, and boosts the immune system. Mentally, exercise gives you the natural high of feeling better.

You can do combination aerobic exercises such as brisk walking, jogging, dancing, swimming, and cycling which provide a good cardiovascular workout. You can also go for strength training which concentrates on toning the muscles, increasing strength, and maintaining or increasing lean muscle tissue. An increase in muscles stimulates metabolism. As your body becomes more efficient in burning calories, you’ll find it easier to lose weight.

Flexibility training increases blood flow to the muscles which results in improved circulation (source: Fitness First’s BODYFIRST book). You can do all of these training under the supervision of a fitness trainer. Fitness trainers recommend that you do exercises at least three times a week. If you have any medical problems, get a clearance from your doctor before embarking on an exercise program.

TIP #4: HYDRATE

Remember how our teachers used to tell us to drink eight glasses of water a day? Proper hydration is essential for good health and biological processes. The body performs better when hydrated. At Fitness First, members are encouraged to take fluids prior to, during, and after exercises. When the weather is hot, we need to replace lost fluids due to perspiration.

In his book Your Body’s Many Cries for Water, Dr. F. Batmanghelidj tells us of the curative powers of water which can treat several conditions. Water makes cellular operations, such as metabolism and clearance of toxins more efficient. When properly and skilfully applied, water treatments are very effective in relieving pain, washing away tensions, soothing the body after hard work, and regulating blood circulation. Water therapy is done to rehabilitate a specific area of the body that has been injured or is causing pain. It also helps in the treatment of arthritis and other debilitating conditions.

TIP #5: TRY GENERIC DRUGS

With the skyrocketing cost of branded medicines, the average Filipinos could not afford to buy them, thereby curtailing or delaying treatment, prevention, and control of illnesses. Thus, the Generics Act of 1988 was enacted to promote, require, and ensure the production of an adequate supply, distribution, use, and acceptance of drug and medicines identified by their generic names.

Furthermore, the Department of Health (DOH) and Philhealth embarked in a strategy called Drug Price Reference Index (DPRI) to promote price transparency. Because of this, many Filipinos are now empowered to choose generics when making purchasing decisions. They can compare prices among different brands and manufacturers. According to Benjamin Liuson, President of The Generics Pharmacy, “The Generic Law requires generics to have the same quality, strength, purity, and stability as their branded variants, but for a fraction of the latter’s price.” What you save from medicines can be allocated for your family’s other needs.

TIP #6: RELAX

Studies show that stress is a major cause of illnesses that makes you more prone to infections and unduly strains your heart and immune system. Hence, reducing stress can lead to significant and long term health benefits. Going to a spa helps lessen those medical appointments in an inexpensive way. Massage increases blood circulation, boosts the immune system, and detoxifies the body.

Another inexpensive way to lower your risk of getting sick is to enliven your loving relationships. When you feel loved and nurtured, you are much more likely to be happier and healthier. Satisfying relationships are valuable for better physical health and longevity, resulting in lower risk of dying from major diseases, according to John Gottman, Ph.D., a prominent psychologist.
TIP #7: MAINTAIN A HEALTHY LIFESTYLE

A healthy lifestyle consists of a nutritious and balanced diet, appropriate physical exercise, no cigarette smoking, minimal alcohol consumption, clean sex, and making the necessary lifestyle changes. Staying healthy is a lifetime endeavour, a conscious choice we make everyday.

In the end, prevention only works if we take responsibility for our health and make the right decisions in our own lives. We need to keep a tight rein of the major risk factors. Most diseases are preventable if only people will decide to have a sound fitness program and focus on a lifestyle shift. As they say, “An ounce of prevention is better than a pound of cure.” If you already have an existing illness, then it is best to comply with your physician’s order. Life is great! Let’s strive to achieve a better quality of life!

HERE’S A FINAL TIP

Sailing into Blue Ocean

By Prof. W. Chan Kim

Competing in existing market space, beating the competition, exploiting current demand, making the value-cost trade off, and aligning the whole system of a firm’s activities with its strategic choice of differentiation or low cost – these are the collective strategy used by all industries in existence today – the red oceans as we define them.

There is still a largely untapped strategy to consider, especially this time of global economic and financial crisis: a strategy to create uncontested market space, make the competition irrelevant, focus on non-customers, create and capture new demand, break the value-cost trade off by seeking greater value to customers and low cost simultaneously, and align the whole system of a firm’s activities in pursuit of differentiation and low cost – these are the collective blue ocean strategy (BOS).

*To further understand what BOS is, and how a company or individual can apply BOS to get out of the red ocean of competition:

Create demand. To start, red ocean strategists focus on dividing up the red ocean, thus limiting growth. Blue ocean strategists think that extra demand is out there, largely untapped. BOS requires attention from supply to demand, from competing to creating innovative value, achieved via the simultaneous pursuit of differentiation and low-cost. Competition in the old game is therefore rendered irrelevant. By expanding the demand side of the economy new wealth is created. Such a strategy therefore allows firms to largely play a non-zero-sum game, with high payoff possibilities.

Out-compete rivals. Red oceans will always matter and will always be a fact of business life. It will always be important to swim successfully in the red ocean by out-competing rivals. Companies need to go beyond competing. To seize new profit and growth opportunities they also need to create blue oceans.  A better balance must be struck across red ocean and blue ocean initiatives.

Unlock innovative value. Innovation goes up while the economy goes down. Despite the pain, recessions are historically times of enormous creativity and breakthrough business launches. Microsoft, General Electric, FedEx, CNN, and Apple are among the hundreds of companies that created blue oceans during an economic downturn. Our experience though further suggests that, first, companies in these industries tend to view their businesses as commodity businesses with little room to offer innovative value.  The more these companies view their businesses as commodities, the more they treat their businesses as such. Second, the more removed companies are from the final customer, the more levers there are to unlock innovative value as every company in that chain can be viewed as a customer.  If a company can’t see an opportunity to unlock innovative value for the next direct customer in that chain, there are still opportunities to unlock innovative value for that customer’s customers, and so forth.

Make the right strategic moves. We found that blue oceans were created by both industry incumbents and new entrants, challenging the lore that start-ups have natural advantages over established companies in creating new market space. The blue oceans made by incumbents were usually within their core businesses. In fact, most blue oceans are created from within, not beyond, red oceans of existing industries. This challenges the view that new markets are in distant waters. Blue oceans are right next to you in every industry. Companies that understand what drives good strategic moves—incumbents or start-ups—will be well placed to create multiple blue oceans over time, thereby continuing to deliver high growth and profits over a sustained period. The creation of blue oceans, in other words, is a product of strategy and as such is very much a product of managerial action, not the size or age of the firm.

*Excerpted from the Q8A with Kim and Renée Mauborgne, authors of the international bestseller, Blue Ocean Strategy, with notes from the exclusive press conference and presentation of Kim during the Philippine Blue Ocean Strategy Day on March 12, 2009.

PROF. W. CHAN KIM is the recipient of the Nobels Colloquia Prize for Leadership on Business and Economic Thinking 2008 and a winner of the Eldridge Haynes Prize by the Academy of International Business and the Eldridge Haynes Memorial Trust of Business International. A fellow of the World Economic Forum, Kim is also co-director of the INSEAD Blue Ocean Strategy Institute and the Boston Consulting Group Bruce D. Henderson chair professor of Strategy and International Management at INSEAD, France (the second largest business school).

THE BOTTOMLINE>CAR INSURANCE

Buying a Car Insurance Policy

Protect yourself against loss due to road accidents and car theft. Here’s a primer on auto insurance

By Arlyn W. Cheng, LUTCF, CIS

Do you know that road accidents are now the fourth leading cause of death in the country? Based on the 2006 report of the Philippine National Police, an average of 41 traffic accidents occur in a day  due to driver errors, mechanical defects, over speeding, cell phone use while driving , driving under the influence of alcohol and drugs, etc. These traffic accidents resulted in 674 fatalities, 3,767 injuries and 10,623 property damages.  In recent years, there has been an alarming increase in the number of traffic accidents. For instance, the June 2008 data alone showed 1,648 incidents.

So what does it indicate to all of us? For car owners, we are all exposed to road hazards. No matter how careful you are in driving, if the driver behind you is undisciplined or sleepy, you could still be in trouble. An accidental collision involves property damage and possible bodily injuries. Worst, it could be fatal. A lawsuit can be financially and emotionally draining aside from time consumed in attending court hearings. Another possibility is car theft, which is rampant in our country. Hence car insurance coverage becomes a necessity to protect us against potential financial loss. Below is a guide in choosing the right coverage:

WHAT IS MOTOR CAR INSURANCE?

Motor car insurance is a contract whereby an insurer undertakes to indemnify the insured against loss, damage and/or liability that may result, due to an accident arising from the use of a motor vehicle in exchange for a premium.

WHAT ARE THE MOST IMPORTANT CONSIDERATIONS IN CHOOSING AN INSURANCE COMPANY?

Select a company that is financially sound since you buy insurance to protect you financially. You may view the ranking of authorized non-life insurance companies at the Web site of the Insurance Commission at www.insurance.gov.ph. Their ranking provides us a clue to their financial capability to settle claims promptly. Another basis is to look at their ratings from independent rating agencies.

Deal only with reputable providers who have a track record of attending fairly, efficiently, and as quickly as possible to their clientele. It is best to deal with licensed and ethical non-life insurance professionals as they are mostly affiliated to reputable firms and have been trained to give you proper advice on the right coverage to buy.

WHAT IS THE COVERAGE AVAILABLE IN A COMPREHENSIVE MOTOR CAR INSURANCE?

The typical policy has six components. Here’s a primer from Malayan Insurance:

1. COMPULSORY THIRD PARTY LIABILITY (CTPL) – The state (PD 612, Chapter VI) requires that before the registration and operation of any motor vehicle, it must be covered against liability for death and bodily injury of third parties. A Schedule of Indemnities for Bodily Injury &/or Death is contained in Sec I/II of a standard motor car policy.

1. OWN DAMAGE & THEFT (OD/Theft) – This protects against loss (theft) or accidental damage to the insured’s own vehicle.

1. VOLUNTARY THIRD PARTY LIABILITY – Excess Bodily Injury (VTPL-EBI) – This is the second layer to the CTPL coverage which provides additional insurance coverage (in excess of the P100,000 required by law). If you are found legally responsible for bills beyond the limits, you might find yourself in a situation where you have more out-of-pocket and in the long run, the cost could wipe you out. An example is when you run over a man who becomes permanently disabled.

1. VOLUNTARY THIRD PARTY LIABILITY – Property Damage (VTPL-PD) – This is additional coverage against liability due to the insured vehicle’s accidentally damaging a third party property. What if you had an accidental collision with luxury cars like BMW or Porsche, will your coverage be enough to cover the cost of damage?

1. EXTENDED PERILS COVER – For an additional premium, these perils may be added:

• Acts of God – flood, typhoon, hurricane, volcanic eruption, earthquake (FTHVEE)
• Strike, Riot, Civil Commotion (SRCC)

1. PERSONAL ACCIDENT – This covers against losses due to the accidental death or disablement and/or medical expenses of the vehicle occupants who are riding in the insured vehicle involved in an accident.

For an additional premium, you may opt for a Loss Of Use coverage (if offered by your provider) which provides transport allowance while your car is undergoing repair due to a motorcar claim.

WHAT IS THE SHARE OF THE INSURED IN THE EXPENSES FOR INCURRED LOSS/DAMAGE – THE SUBJECT OF SETTLEMENT OF A MOTORCAR CLAIM?

DEDUCTIBLE – Deductibles represent the amount of money you pay before your insurance policy kicks in.  The policy, be it a Private Vehicle (PV) Policy or Commercial Vehicle (CV) Policy,  provides that the insured must share in the loss/damage – the expenses of the repair/reinstatement of the vehicle, equal to 1% of the sum insured for CV, and 0.5% for PV; Minimum deductible amount is P3,000 for CV and P2,000 for PV. This must be paid by the insured before the vehicle is released from the repair shop or by the insurance company.

DEPRECIATION – Depreciation is a decline in value caused by the effects of age, wear and tear, use, weather, and other similar factors. When a motorcar part is used to replace a damaged part, the insured has to pay the difference (amount) between the value of the part at the time the car has been purchased and the value of the part at the time it is replaced.

WILL THE INSURANCE COMPANY PROVIDE LEGAL ASSISTANCE IF THE DRIVER OF THE INSURED VEHICLE IS SUED BY THE OTHER PARTY AS A RESULT OF A CAR ACCIDENT?

If you have comprehensive cover, it can shield you from legal liability to third party. Having car insurance does not stop anyone from suing you. But it does provide the assurance that if you are sued as a result of an auto accident, the financial and legal resources of the insurance company will assist you in defending against the suit and paying any resulting damages.

In summary, buying an adequate coverage will take away the worry and hassles when a road mishap occurs.  Just like a spare tire, we carry it just in case. Drive with confidence and peace of mind.  An insurance coverage can be a vital financial safety net!

PROFILE

Arlyn W. Cheng, LUTCF, CIS is currently affiliated with leading companies that provide various financial services in life insurance, non-life insurance, mutual funds, pre-need, and HMO. A business management and psychology graduate of De La Salle University, she has a passion for analyzing how a person’s lifestyle  is affected by the way he manages his personal finances. After taking up the RFP course, she became a staunch advocate for financial literacy. For questions or comments, kindly send your e-mail to arlyn2005_aig@yahoo.com.

[sidebar]

HOW DO WE SAVE ON COST OF INSURANCE?

Tip #1. Before you buy a new or used car, check into the cost of insurance. If you do not have a preferred agent, you can obtain a quotation from several providers directly and compare.  Generally, you pay more for higher coverage depending on the type of vehicle.

Tip #2. You can ask for higher deductibles. Consider your insurance as a backstop against major losses, not a way to pay for minor scratches and damages. By requesting for higher deductibles, you can lower your cost substantially. But make sure you have adequate savings to pay the deductible amount if you have an accident.

Tip #3. Consider dropping or reducing comprehensive coverage on older cars. Depending on the age of the car, it may not be cost-effective considering that you have to pay higher depreciation costs in case of a claim.

Tip #4. Inquire about discounts. There may be discounts such as No Claim Bonus from your provider if there had been no claims filed in the previous year. There are also fleet rating discounts for the insured with 10 or more vehicles under the same owner.

Tip#5. Look for add-ons. Some insurance companies provide free membership road assistance program like free towing, vehicle breakdown minor repair service, ambulance, alternative transport, etc. if you buy from them comprehensive car insurance. If your provider doesn’t have this service, you can join auto clubs like AAP (Automobile Association of the Philippines) to assist you in case of vehicle breakdown on the road.

Tip #6. Understand the coverage you are buying. Review the provisions of the contract, limits of coverage, etc.  Clarify from your agent/broker and what benefits you can possibly add or delete.