Understanding your coverage

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Our Frequently Asked Questions page makes it possible for you to access the information you need quickly and easily. We’ll also keep you informed of industry trends and changes by posting articles and announcements affecting the insurance industry.

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Frequently Asked Questions

Personal

Most people find that “enough” means the amount needed to rebuild their home. However, because foundation and land are not covered under homeowner policies, they will not figure into an insurance settlement. When determining the replacement cost of your home, do not use the sales price, the tax assessment or the value the mortgage company calculated, as all of these can vary greatly from the construction costs.

Covered losses under a homeowner’s policy can be paid to the insured in two ways: actual cash value or replacement cost. When “actual cash value” is selected, the policy owner is entitled to the depreciated value (value at the time of the loss) of the damaged property. “Replacement cost”coverage reimburses the insured the amount necessary to replace the article with one of a similar type and quality at current market prices.

A knowledgeable insurance agent is the best safeguard against the pitfalls of being over, or under, insured. The next best way to keep your overall insurance costs down, homeowners or otherwise, is to increase your deductibles. Increased deductibles mean lower monthly premiums. For example, if you could easily come up with $1500 in the event of an auto accident claim, why carry a low deductible of $500 and pay higher premiums month after month, year after year? Raising your deductible to $1500 would save you significantly in the long run. Also, be sure your policies aren’t loaded with “convenience coverages” that look great on paper, but end up costing you greatly and are rarely needed.

While it is true that insuring teenagers can be costly, there are strategies that will save you money. First, your teenage driver will qualify for discounts if he or she carries at least a “B” grade point average. Next, it is typically less expensive to add a teen driver to your existing policy, UNLESS you drive an expensive or brand new car. In this case, it may save you money in the long run to help your teen buy a his own slightly older or less expensive vehicle.

What you drive and how you drive it are the two most important factors to keep in mind. Newer, more expensive cars cost more to insure than older models. Commuting, driving record, where you reside, even how you use credit can affect your auto insurance rates. Be sure that when you compare rates among companies, you are considering all of these details and comparing like policies.

Be sure to carry the highest deductible you can comfortably afford to meet. Carrying low deductibles will result in higher monthly premiums, which add up to a substantial amount of money over the years.

An umbrella policy does just what the name implies: it protects by extending liability coverage on all of your policies, preventing catastrophic financial losses in the event of a lawsuit or major medical bills. Umbrella policies are affordable and easily coordinated with existing policies.

Once thought to be for high net worth individuals only, umbrella policies have become commonplace for just about anyone who has a variety of policies or even just basic assets to protect.

Commercial

Commercial insurance protects your business against a variety of losses, including: damage or destruction to your business vehicles, office equipment and inventory. It may also protect against loss of income in the event you are forced to close your business temporarily due to a covered claim, such as damage from fire, a robbery or vandalism.

If you use your personal vehicle to conduct business with regard to transporting materials, clients or equipment, a commercial auto policy is necessary. Or, for frequent business travel or daily commuting to your business, a commercial policy is also recommended.

There are a variety of issues to consider when insuring a business – big or small, such as location, whether you lease or own the property, where sales are conducted (online, onsite or offsite), what type of goods or services you sell, etc.

If customers come to your business property, regardless of whether you own the property or not, you will need general liability insurance. If you rely heavily on computers or the internet to conduct your business, you may want to check with your internet provider and web hosting service regarding special computer insurance that protects against technical failure or excessive downtime.

Finally, keep in mind that if your business operations are disrupted, whether due to fire, lawsuit or mechanical malfunction, you will need insurance against lost income – much the way disability insurance works in the event you are physically unable to perform your duties.

No business can afford to be unprepared for a lawsuit. General liability insurance protects your business assets when the business is sued for something the business did (or failed to do) which contributed to injury or property damage to someone else. Liability coverage extends not only to paying damages but also to the attorneys’ fees and other costs involved in defending against the lawsuit whether it was frivolous or not.

Health

Individual health insurance is the insurance of people against bodily injury, disablement, or death by accidental means. Health insurance premiums vary widely depending upon lifestyle habits, health history and occupation.

The insurance you carry should be affordable and give you optimum coverage while considering your unique health circumstances.

The major difference between obtaining group and individual health insurance is evidence of insurability. To purchase individual insurance, a person usually answers a health questionnaire and undergoes a medical examination to provide evidence of insurability to the insurance company. An insurer may decline coverage based on the applicant’s personal habits, health, medical history, age, income or any other associated factors.

Most group insurance, however, is issued without medical examination or other evidence of individual insurability because the insurer knows that it can cover enough individuals to balance those in poor health against those in good health.

A Health Maintenance Organization (HMO) provides comprehensive health services to its members, usually at a central location, for a prepaid, fixed fee. Kaiser Permanente is an example of a California HMO.

A Preferred Provider Organization (PPO) has no separate physical facility in which to see patients. Patients may choose any family physician that contracts with the PPO and can choose from among their community hospitals in the event they need to visit one. Blue Cross/Blue Shield is one example of PPO insurance.

Choosing a PPO will usually cost a little more because it provides greater flexibility in choosing doctors and seeing specialists than the HMO.

While it is still unknown exactly what changes will take effect, or what choices you will have regarding health care, one thing is certain: having a qualified agent who can explain your options is the best strategy for getting the highest quality healthcare available at an affordable price.

Life

Many factors determine the correct amount of life insurance you should carry: marital status, income, (projected) future income, dependents, value of your assets, etc. A commonly used guideline is that your life insurance benefit should equal 5-10 times your current yearly income. However, that rule varies from person to person. For example, older people who no longer have a mortgage, or who have no dependents may not need as much insurance as a new homeowner raising children. And if you’re single, a basic policy available through your employer may be enough.

While your individual circumstances will determine which life insurance product is right for you, the following guidelines may help:

Benefits of term insurance (specific period of time):

  • adaptable to changing needs of family or business
  • provide the most coverage for your insurance dollar
  • renewable at end of term

Benefits of whole life (permanent) insurance:

  • covers a person’s entire life with set premiums
  • builds cash value
  • benefits may be accessed during a person’s lifetime