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Insurance Basics

Auto Insurance Basics

Automobile insurance pays for damages, injuries, and other losses specifically covered by your policy. Many insurance companies use a standardized policy form that offers eight types of coverages.

Read your policy carefully because coverages can vary by policy and company. Pay special attention to the exclusions section, which lists the things your policy doesn’t cover. The front page of your policy – called the declarations, or dec, page – shows the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.

The following summarizes the eight coverages in the Automobile Policy. Although your coverages and policy terms may differ from these, this summary can help you understand the coverages and the way they work.

1. Liability Coverage

What it pays: Other people’s expenses for accidents caused by drivers covered by your policy, up to your policy’s dollar limits. These may include the other people’s medical and funeral costs, lost wages, and compensation for pain and suffering car repair or replacement costs auto rental while the other driver’s car is being repaired punitive damages awarded by a court.

Liability insurance also pays your attorney fees if someone sues you because of the accident and your bail up to $250 if you are arrested.

Who it covers: You and your family members. Family members include anyone living in your home related to you by blood, marriage, or adoption, including your spouse, children, in-laws, adopted children, wards, and foster children. Other people driving your car with your permission, family members attending school away from home, and spouses living elsewhere during a martial separation might also be covered.

You and your family members might be covered when driving someone else’s automobile – including a rental car – but not a car that you don’t own but have regular access to, such as a company car.

Note:  Some policies won’t cover other people, including family members, unless they’re specifically named in the policy. Your policy’s declarations page should list the names of all of the people covered by the policy.

2. Medical Payments Coverage

What it pays: Your medical and funeral bills resulting from accidents, including those in which the other person is a pedestrian or bicyclist.

Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

3. Personal Injury Protection (PIP) Coverage

What it pays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

An insurance company must offer you PIP.  If you don’t want PIP, you must reject it in writing.

4. Uninsured/Underinsured Motorist (UM/UIM) Coverage

What it pays: Your expenses from an accident caused by an uninsured motorist or a motorist who did not have enough insurance to cover your bills, up to your policy’s dollar limits. Also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to police.

Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability.

Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car. There is an automatic $250 deductible, which means you must pay the first $250 of the repairs yourself.

Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

Insurers must offer UM/UIM coverage. If you don’t want it, you must reject it in writing.

5. Collision (Damage to Your Car) Coverage (If you still owe money on your car, your lender will require you to maintain collision and comprehensive coverages.)

What it pays: The cost of repairing or replacing your car after an accident. Payment is limited to your car’s actual cash value, minus your deductible. Actual cash value is the market value of a car like yours without damages.

Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

6. Comprehensive (Physical Damage Other than Collision) Coverage

What it pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or a cause other than a collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won’t pay for an auto theft unless you report it to police. Payment is limited to your car’s actual cash value, minus your deductible.

If you still owe money on your car, your lender will require you to have collision and comprehensive coverage.

7. Towing and Labor Coverage

What it pays: Towing charges when your car can’t be driven. Also pays labor charges, such as changing a tire, at the location where your car became immobile.

8. Rental Reimbursement Coverage

What it pays: A set daily amount for a rental car if your car is stolen or is being repaired because of damage covered by your policy

Other Coverages

Stereo Equipment

Your policy won’t pay for CDs, MP3 players, cell phones, citizen band radios, or stereo equipment not permanently installed in your car. However, you can buy endorsements to your policy that provide separate coverage for these items for an additional premium.

New or Additional Automobiles

If you buy another car, your policy might automatically cover it with certain limitations. Read your policy to know whether it automatically covers an additional or replacement car.

In general, an additional car usually has the same coverage as the car on your policy with the broadest coverage. For example, if you have two cars – one with liability coverage only and one with liability, collision, and comprehensive coverages – and you buy a third car, the third car will automatically have liability, collision, and comprehensive coverage.

A replacement car usually has the same coverage as the car it replaced. For example, if you trade in an older car that only had liability coverage, the new car will automatically have only liability coverage.

Be sure to tell your insurance company as soon as possible that you have added or replaced a car and which coverages you want. You could lose coverage on an additional or replacement car if you wait longer than the number of days specified in your policy to notify your insurance company.

Discounts

Everyone loves a discount, which is why we make sure you receive all the available discounts to help save you money on auto insurance. The summary below is a basic rundown of what we can offer.

Discounts For Safe Drivers

Premier Discount – If you’ve been safe on the road and accident-free for the past three years, and you’re also clear of any moving violations, you might qualify for the auto insurance Premier Discount.

Premier Plus Discount – The best auto insurance discount yet, the Premier Plus could be yours if you’re a safe driver with no moving violations, who’s been accident-free for the past five years.

Discounts For Safe Cars

  • Passive Restraint Systems – If your car came equipped with airbags, or factory-installed motorized seatbelts, you could receive a Passive Restraint Discount on your auto insurance.
  • Anti-Lock Brakes – Alternately, if your car has factory-installed ABS (all-wheel, anti-lock braking system), this discount can bring your premiums down.
  • Anti-Theft Devices – We can save you money if your car came equipped with approved anti-theft devices.
  • Other Discounts
  • Multi-Policy Discounts
  • Good Student Discount
  • Senior Adult Discount
  • 55 and Retired
  • New Car
  • Economy Car
  • Utility Vehicle
  • Resident Student

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Homeowners Insurance Basics

If, in a violent windstorm, a tree branch blows through your bedroom window and crushes your

Homeowners insurance is a type of insurance that almost any homeowner should know about. Not only is homeowners insurance among the most popular forms of personal insurance, it is also among the most compulsory of all the different types of insurance. You cannot imagine substituting homeowners insurance with any other type of insurance for this reason. Almost any homeowner who either owns or leases a property will need one and fortunately with so many leading insurers dealing with it, get one with ease these days.

Your home would be one of the single biggest investments that you would make in your life and it is but natural that you would like to protect it. This is where homeowners insurance will help you. Homeowners insurance is also important for another reason. Most of the mortgage lenders need homeowners insurance in order to protect their interests. In the event of a homeowner defaulting on monthly mortgage payments, the insurance would protect the lender’s investment.

Also be sure to check the value of your insurance policy against rising local building costs each year. Ask your insurance agent or company representative about adding an Inflation Guard Clause to your policy. This automatically adjusts the dwelling limit when you renew your policy to reflect current construction costs in your area. Also be sure to increase the limit of your policy if you make improvements or additions to your house.

Here are a few of the basics that will help you make a more informed decision about your homeowner’s insurance coverage’s.

Insuring the home (Dwelling)

The price you paid for the home isn’t always the amount that you would chose to insure it for. The majority of homeowner’s companies require that your home be insured for ‘replacement cost.’ (The cost to actually rebuild the home from the slab up)  As professional agents, we will help you determine the replacement cost of your home, so that you are properly protected against even the most unfortunate events.

Insuring your stuff (Personal Property)

The standard policy will include 40% of dwelling coverage to cover your personal property. For example, if your dwelling is covered for 100k then most companies will cover personal property for 40k. A good way to think of personal property is anything not permanently attached to your home; furniture, clothes, electronics, etc. Most polices contain much more than 40% coverage for contents. Please ask us about higher contents coverage.

Liability Insurance

Accidents happen and unfortunately when they do, lawsuits may happen. Liability Coverage helps protect you against the financial risk arising from injury or property damage that you or your family may cause to other people. It can even help provide for legal defense expenses for your day in court. We will help you determine the amount of liability coverage that is needed to protect your financial well being in such an unfortunate event. If the limits within your homeowner’s policy aren’tsufficient, we’d recommend a Personal Umbrella Policy that can extend your protection to higher amounts, such as 1, 2, even 3 million.

A Few Things That Determine The Price of Homeowners Insurance

There are so many factors that go into determining the price of any insurance policy, but here are a few key factors for you to consider:

  • Age of construction (any updates)
  • Proximity to the coast
  • Amounts of coverage
  • Deductibles selected
  • Proximity to fire hydrants and fire station
  • Claim History and prior losses
  • Continuous coverage, has your insurance lapsed at any time?
  • Discounts ( burglar alarm, new roof, etc)

The insurance industry is nothing if not arcane. No better example is the system of naming the various types of homeowners policies with a stream of HOs: HO-1, HO-2, HO-3…you get the idea. Each HO refers to a different type of policy, broken up by what they cover and what they don’t. These policies are pretty much industry standards, but the terms and coverage offered by any given company can vary.

HO-1: This is known as “basic” homeowners, and boy is it basic. Sometimes dubbed “named-perils,” it only protects against 11 mishaps, including fire, lightning, windstorms, explosion, riot, theft, vandalism, smoke, and volcanic eruption. Many states are phasing out this kind of coverage, since it is so limited.

HO-2: These so-called “broad” homeowners policies protect against 17 named perils, adding things like falling objects, weight of snow and ice, freezing of plumbing and damage caused by faulty electrical and heating systems.

HO-3: This kind of “special” homeowners policy makes the most sense for the most people. While it costs more than HO-1, it is a lot more valuable. Instead of naming a bunch of unlikely perils like “riots,” HO-3 policies protect against all perils except the ones explicitly excluded from the policy. Earthquake, flood protection, war and nuclear accident are almost always excluded.

HO-4: This is the policy that renters buy. It will protect your possessions against the same 17 named perils names in the “broad” coverage, but not the structure itself. To save a few bucks, you usually don’t have to buy liability protection with these policies.

HO-6: If you own a co-op or condominium, this is the insurance for you. It covers personal property and provides liability coverage. But, similar to a renter’s policy, it doesn’t cover the structure, since the building will have its own policy.

HO-8: If you have a beautifully crafted older home, you may not be able to obtain a guaranteed replacement policy. The reason: Insurers figure the cost of rebuilding an older home with the original materials is prohibitively high. An HO-8 is your alternative. It covers you against the 11 named perils designated in an HO-1 policy, promising to repair the damage (but not necessarily using the same quality materials), or pay you the actual cash value of your home, minus depreciation.

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Life Insurance

Why do I need Life Insurance?

Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure that your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents will not have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries. The death benefit of a life policy owned by a C corporation may be included in the calculation of the alternative minimum tax.

How much Insurance do I need?

Before buying life insurance, you should assemble personal financial information and review your family’s needs. There are a number of factors to consider when determining how much protection you should have. These include:

  • Any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes
  • Funds for a readjustment period, to finance a move or to provide time for family members to find a job
  • Ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.

Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb used is, buy life insurance that is equal to five to seven times annual gross income.

If you want to be more precise, take the time and complete the Needs Analyzer.

Choosing A Plan

Buying life insurance is not like any other purchase you will make. When you pay your premiums, you’re buying the future financial security of your family that only life insurance can provide. Among its many uses, life insurance helps ensure that, when you die, your dependents will have the financial resources needed to protect their home and the income needed to run a household.

Choosing a life insurance product is an important decision, but it often can be complicated. As with any other major purchase, it is important that you understand your needs and the options available to you.

The main types of life insurance available are term and permanent. Term insurance provides protection for a specified period of time. Permanent insurance provides lifelong protection. To learn more about term and permanent insurance click on the appropriate button at the top of this page.

Frequently Asked Questions

1. What happens if I fail to make the required payments?

If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium. After that, the policy will lapse. You may be able to reinstate with evidence of insurability depending on your policy’s provisions. If your policy has sufficient cash value, the company can, with your authorization, draw from a permanent policy’s cash surrender value to keep that policy in force. This does not apply to term insurance because there is no cash value to draw from. In some flexible premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values.

2. What if I become disabled?

Provisions or riders that provide additional benefits can often be added to a policy. One such rider is a waiver of premium for disability. With this rider, if you become totally disabled for a specified period of time, you do not have to pay premiums for the duration of the disability.

3. Are other riders available?

(availability, specifics, and costs of these riders vary by carrier and state.)

  • “Accidental death benefit”, provides for an additional benefit in case of death as a result of an accident.
  • “Accelerated benefits”, also known as “living benefits.” This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home.
  • “Child rider”, provides insurance for all your children, usually from $1,000 to $20,000 of death benefit.

4. When will the policy be in effect?

If you decide to purchase the policy, find out when the insurance becomes effective. This could be different from the date the company issues the policy.

5. How do accelerated death benefits work?

It allows policyholders to receive all or part of the policy’s proceeds prior to death under certain circumstances, including the need for long-term care and confinement to a nursing home. Because payments may affect tax status and Medicare eligibility, and will be deducted from the overall benefits paid later to beneficiaries, policyholders should thoroughly investigate options in advance.

6. By using medical tests are insurers trying to eliminate any applicant likely to develop a serious health condition?

Medical tests can provide accurate and current information about an applicant’s health, thus enabling insurers to charge premiums that reflect the level of risk an applicant represents. Because some health conditions are easily managed through proper medication, therapy or lifestyle changes, medical information sometimes makes it possible for insurers to cover applicants who might not otherwise be insurable. More serious or incurable conditions present an enormous risk that an insurer simply cannot assume.

7. What should I consider in naming life insurance beneficiaries?

  • Always name a “contingent,” or secondary, beneficiary, just in case you outlive your first beneficiary.
  • Select a specific beneficiary, rather than having the proceeds of your life insurance paid to your estate. One of the great advantages of life insurance is that it can be paid to your family immediately. If it is payable to your estate, however, it will have to go through probate with the rest of your assets.
  • Be very clear in wording beneficiary designations. Naming specific children may exclude those born later. If your child dies before you, do you want the proceeds to go to that child’s children? Changing the beneficiary designation is easy, but you have to remember to do it.

8. Does it make sense to replace a policy?

Think twice before you do, because in many situations it may not be to your advantage. Before dropping any in-force policy, make sure your “new” policy is paid for and in effect and first consider:

  • If your health status has changed over the years, you may no longer be insurable at preferred or standard rates.
  • Even if both policies pay “dividends,” it may be years before the new policy’s dividends equal those of your present one.
  • If you replace one cash-value policy with another, the cash value of the new policy may be relatively small for several years and may never be as large as that of the original one. There may also be a period wherein a surrender charge is applicable on the first policy.
  • You should ask for a detailed listing of cost breakdowns of both policies, including premiums, cash surrender value and death benefits. Compare these as well as the features offered by both policies.
  • If you decide to surrender or reduce the value of the policy you now own and replace it with other insurance, be sure your new policy is in force before you cancel the old one.

9. As a single person, do I need insurance?

The answer almost always is yes. You may want to consider these options:

  • Disability income insurance – especially important for self-supporting singles without sizable assets, this can replace a good part of the income you would lose if you were unable to work because of accident or illness. If you don’t have long-term disability coverage at work, it would be wise to consider an individual policy designed to replace at least 60 percent of your income.
  • Health insurance – if you don’t have on-the-job coverage, an individual policy is your first line of defense against ever-escalating medical and hospital costs. You can keep premium costs down by electing a large deductible, thereby “self-insuring” as much as you can afford.
  • Life insurance – even if you have no dependents now, you may later. If you buy now when you are younger and healthier, you can “lock in” lowest-cost coverage, including guaranteed insurability.

Basic Life Insurance Options:

When considering life insurance, it’s important to consider the experience and financial strength of the company issuing the policy.

What Do You Want from Your Life Policy?
There are two types of life insurance available today: term and permanent. One is straightforward life insurance with a basic cash payout. The other works a little harder for you. The type you choose will depend on your financial situation and what you’re looking for in an insurance policy.

Permanent Is for Life

One main difference between term and permanent life insurance is that permanent doesn’t expire. As long as premiums are being paid, it stays with you permanently.

Cash Value
The other big difference is that with permanent life insurance, your premiums are invested to produce returns. This gives your policy a cash value, which usually accumulates at a guaranteed minimum interest and is available to help fund retirement, emergencies and more.

Tax Deferral
The law currently allows your cash value to grow tax deferred. Because of this benefit, a permanent life insurance policy has become more than a protection tool for some people—it’s also a financial tool.

 

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