Home Insurance FAQ
Asset Protection: More coverage generally means you will have less to pay out of your own pocket if disaster strikes. You must determine the amount you can financially afford to lose. Depending upon your determination, more insurance may be the answer. You should insure your property to the value you believe your home is worth to obtain maximum protection. You need enough liability coverage to protect yourself from lawsuits resulting from your possible negligence.
Type of Construction: Frame houses usually cost more to insure than brick.
Age of House: New homes may qualify for discounts. Some insurance companies offer limited coverage or may not insure older homes.
Local Fire Protection: The number of fire hydrants and fire departments and the availability of water are just some factors which determine your area's fire protection class. If you reside in an area without fire protection, you will pay more for fire insurance.
The deductible applies only to coverages on your house and personal property. It is the amount you have to pay out of your pocket on each claim. Insurance only attaches once the deductible amount is exceeded. A policy with a $100 deductible will cost more than one with a $250 deductible. Higher deductibles may be available at a reduced price, but purchasing, for example, a $250 deductible in lieu of a $100 deductible will mean you will normally pay $150 more out of your pocket at the time of a loss.
Property damage coverage helps pay for damage to your home and personal property caused by such perils as fire, lightning, windstorm or hail. The perils of flood and earthquake are not covered. If you believe you need flood insurance and your insurance company will not provide it, you may obtain coverage through the Federal government's National Flood Program ("NFP"). To learn more about the NFP you can contact an insurance agent. You should carefully read your policy before you have a loss to determine exactly what types of losses will be covered.
In general, the contents of your home and other personal belongings owned by you or family members who live with you will be covered under the policy in an amount equal to 50% of the limit of liability carried on your dwelling. However, high valued personal property such as jewelry and cameras should be scheduled on the policy so that you are adequately protected to avoid the possibility of these items not being fully covered at the time of loss.
Most home insurance policies provide for the necessary increase in expenses you incur if your home is damaged by an insured event and you cannot live there while repairs are being made or if you are denied access to your home by government order. The coverage is generally subject to duration limits and commonly covers any expense incurred by you so that your household can maintain its normal standard of living. In some instances, this coverage may include the costs of a motel, eating in a restaurant, or storing some of your property.
Personal Liability Coverage protects you and all family members who live with you against a claim or lawsuit resulting from (non-auto and non-business) bodily injury or property damage to others and for which you become legally obligated to pay. Defense costs are included, but the insurance company has no duty to defend you after the limit of liability on the policy has been exhausted.
Regardless of who is at fault, this coverage pays the reasonable expenses for others accidentally injured on your premises or the areas immediately adjoining your property such as sidewalks or alleys. Medical Payments Coverage does not apply to your own injuries or those of family members living with you or injuries arising out of activities involving a business that you operate out of your home, your intentional acts, or arising out of the rental of your premises.
Replacement Cost is the amount necessary to replace or rebuild your home or repair damages with materials of similar kind and quality without deducting for depreciation. (Depreciation is the decrease in the home's value since the time it was built because of age or wear and tear).
Actual Cash Value usually means the sum of money required at the time of the loss to repair or replace the property destroyed, less an amount for depreciation. Actual Cash Value equals the replacement cost less depreciation. Most standard home insurance policies cover the contents of your home (i.e., personal belongings) on an actual cash value basis, but it is possible to purchase replacement cost.
As long as the injury was due to your negligence and was not intentional, your homeowner's policy should cover any medical bills and legal expenses, up to the liability policy limits.
Most basic policies protect against damage from: Fire and lightning, windstorm and hail, explosion, riot and civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, theft, damage by glass or glazing material that is part of a building, and volcanic eruption.
You can also step up coverage to include: Falling objects, weight of ice, snow, and sleet, water-related damage from home utilities or appliances, electrical surge damage. Before any loss call your insurance agent. Protection is subject to policy limits and deductibles can vary.
It depends on the type of policy you own. But in general, unless you buy additional coverage, you won't be compensated for losses due to floods, earthquakes, nuclear accidents, wars, intentional damage, and normal wear and tear. Call your insurance agent, other exclusions may also apply.
Insurance companies normally use one of two methods to figure how much you will be reimbursed for a loss if the amount is less than your coverage limits. The most common calculation is the actual cash value, which is the replacement value minus depreciation. The second calculation is simply the replacement cost of the lost property with no depreciation, but usually with a maximum value. Also, don't forget that the company will subtract the amount of your deductible from the settlement.
It's wise to generate a detailed list of your possessions. Making a video or photographic record of your possessions is advisable, as well. You may want to consider storing your inventory in a safe-deposit box off your property, or at least in a lockable fireproof storage box in your home. Not only will a record of your possessions take most of the guesswork out of filing a claim, police say such documentation can help you prove ownership in case your belongings are recovered from a thief. Also, you may want to videotape or photograph the mess after a disaster and before you begin the cleanup. This can help you prove the extent of damage without having to wait to get your life back in order. Always contact your insurance agent and your insurance carrier before any claim is filed and before any clean-up is performed.
You can purchase additional coverage, through an endorsement to your existing policy or with a separate policy, to extend the limits of coverage for specific items. Talk with your insurance agent.
Insuring a condominium is different from insuring a house because of the way ownership is structured. A homeowner's policy covers against losses, and you can only suffer a loss if you have ownership. Because there are areas of common ownership in a condominium complex, your homeowners association may have a master policy. The extent of the coverage you buy will depend on what the master policy covers. The standard homeowner's policy for condominiums is called HO-6. It will likely cover your personal property, shield you and your family from some types of liability, plus pay to repair any portion of the unit you own under the terms of the condominium or cooperative documents.
If you rent an apartment or a house, the building owner is responsible for any perils that befall the property. Rest assured, if the place burns down, your landlord's insurance is responsible to compensate him for damage to the structure. But if your personal belongings - your furniture, your stereo, your clothing - are destroyed, it's you who loses; unless you have renter's insurance. Renter's insurance is a kind of homeowner's policy for non-homeowners. It contains most of the same provisions of a basic homeowner's policy, except the part that covers the home itself. Up to certain limits, a renter's policy covers your personal belongings against destruction or theft, and protects you against claims of liability if you cause injury to someone or an individual's property.
In general, a homeowner's policy will have a named insured, which is usually the owner or tenant named on the deed or lease. The named insured's spouse is covered as well, even if he or she is not named on the policy declaration. Other users and residents also may be covered to a lesser extent by the personal property and liability provisions in the policy. For instance, the insured's children or someone under 21 in the insured's care would likely be covered. Employees such as gardeners or housekeepers may also be covered against loss of personal property on the premises. And you may also extend coverage to your guests if you make a request to your insurance company in advance.
Auto Insurance FAQ
Some insurers may provide coverage for business use vehicles depending upon the type of vehicle and its particular use in business, but you may need to purchase a commercial auto policy to receive the coverage you need. You should consult with an insurer or insurance agent or producer to determine the proper policy needed.
If you vacation within the United States (and in many cases Canada), for liability coverage, the policy carried by the rental company will be primary (pay first), and your policy will be excess (pay second) if the rental company's limits are not enough to pay for the injuries or property damages you cause. For physical damage to the rental vehicle, some companies insurance allow the coverages you have under your comprehensive and collisions coverages to apply to the rental vehicle, subject to the deductible stated in your policy. Before renting, check with your insurance agent to determine if your coverage applies to the rental vehicle.
Some of the coverages provided under Comprehensive include theft of all or part of the vehicle, glass breakage, and damage due to fire, windstorm, hail, water, falling objects, vandalism, explosion, or hitting a bird or animal.
Collision coverage pays if your auto collides with an object, including another car, or if it overturns. Your insurer will pay to repair these damages even if the collision is your fault.
If you have assets you need to protect, you may want to carry higher than minimum liability limits to protect yourself from lawsuits by a person or persons you may injure in an accident.
Bodily Injury pays for bodily injury to others for which you become legally responsible due to an auto accident in which you were involved. It does not pay for bodily injury you may sustain. You would need to have Medical Payments coverage in order to have the injuries you sustain in an auto accident covered under an auto policy.
No. Property Damage coverage protects you for damage you may cause to the vehicles or property of others. You would need to have Collision coverage on your auto policy in order to have coverage to fix or replace your vehicle in this situation.
The deductible for Comprehensive or Collision applies to each loss that occurs to your vehicle. A deductible is the dollar amount you will have to pay toward the loss before the insurer begins to make payments on the loss.
You will need to read your policy for a complete description of the coverage provided. Basically, Medical Payments coverage provides coverage for necessary and reasonable medical and funeral expenses incurred as the result of an automobile accident up to the limit stated in the policy for you or passengers in your vehicle.
Even though you have major medical insurance, you may still wish to carry some medical payments insurance to cover deductibles and co-payments which are not covered by your health insurance plan.
Uninsured Motorist coverage protects you or passengers in your vehicle for bodily injury you or your passengers sustain in an accident involving a driver who has no liability coverage. Underinsured Motorist coverage protects you or passengers in your vehicle for bodily injury you or your passengers sustain in an accident involving a driver who has insufficient insurance to cover the injuries of you or your passengers.
Even though the law requires all motorists to carry liability insurance, not all motorists have liability coverage in force. Also, motorists may come from other states or countries and not have liability coverage on their vehicles.
Rental Reimbursement coverage provides a specified amount for you to rent a vehicle while your covered auto is being repaired or replaced after it has been damaged because of a loss covered under Comprehensive or Collision. It does not provide coverage for mechanical repairs that result from mechanical breakdown that are not related to a comprehensive or collision loss.
The policy covering the vehicle would be primary and in most cases, your policy would cover the vehicle on an excess basis. If no policy covers the borrowed car, most companies will treat your policy as the primary coverage for the borrowed car. (Primary means that policy will provide coverage first, and excess means that policy will provide coverage after the limits of the primary policy have been exhausted).
An insurer's premium increases are a direct reflection of the countrywide or statewide pool of losses that the insurer experiences. The losses of the few within the insurer's pool of policyholders are paid for by all policyholders within the pool. This is the basic premise upon which the concept of insurance is based and without which no insurance would be available. This does not mean that your own favorable loss experience cannot be recognized. Various insurers give numerous discounts to policyholders which recognize their excellent driving records. (See next question for type of discounts). Other reasons for the increase in the cost of auto insurance are attributable to the costs to settle losses such as the costs to repair vehicles and the medical costs for injured persons which continue to rise. The increase in lawsuits is also a major factor in insurer rate increases.
First, discuss with your insurance agent what steps they recommend. You may also wish to refer to your insurance identification card, as the steps you need to follow may be listed on the card.
Generally you should first notify the police. Then write down the names, addresses, telephone numbers and license numbers of persons involved and of witnesses. Also write down the license plate number and state of each vehicle involved. You may even want to keep a disposable camera in your glove compartment to take photos of the accident. Do not admit fault, and do not discuss the accident with anyone except your insurer representative or insurance agent or producer, or the police. Notify your insurance agent or producer promptly. Cooperate and answer all questions fully. Take notes whenever you talk with insurer employees, your insurance agent, lawyers, police or others about the accident. Write down the date, times, names and subjects you talked about and include all decisions or promises made. Save your receipts for such items as car rental or a hotel room if the accident happens out of town, and save copies of all documents you send or receive.
Write down the date, times, names and subjects you talked about and include all decisions or promises made. Save your receipts for such items as car rental or a hotel room if the accident happens out of town, and save copies of all documents you send or receive.
First, make sure you are taking advantage of the discounts offered by your insurer. Most insurers provide discounts for at least some of the following: accident free drivers discount; a package discount for insuring your home and auto with the same insurer; multiple auto discount; good student discount; nonsmokers discount; and passive restraint discount (for vehicles with air bags or automatic seat belts). Talk with your insurance agent for detail regarding your policy.
Second, drive safely. Avoid tickets and accidents. Don't drink and drive. A poor driving record adversely affects your rates.
Third, drive a safe reliable vehicle. Before purchasing a new vehicle consider the cost of insurance. Some vehicles such as sports cars, SUV's, and other high-profile vehicles cost more to insure.
Fourth, discuss with your insurance agent to make sure that you have appropriate coverages for you and your vehicle. You may consider higher deductibles for your comprehensive and collision coverages.
Finally, be pro-active regarding your credit or insurance score. Many insurers offer discounts for good credit. Understanding and maintaining a good credit score may significantly reduce your premiums in the future.
If you are un-insured you may be ticketed and fined, your vehicle registration may be suspended, your drivers' license could be suspended and your vehicle could be impounded. If you cause an accident you (and your parents if you are living at home) could be sued. When you apply for insurance again you typically will pay more for your insurance because most insurance companies charge higher rates for previously uninsured drivers.