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Sumner
Insurance Glossary |
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What
should I do if I'm involved in an accident? |
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The first
priority is the condition of those involved. Call for medical
help if anyone at the scene is injured. Notify the police
as soon as possible. Obtain the names, addresses, and telephone
numbers of all persons involved, including passengers and
witnesses, and the license plate numbers of all other cars
involved.
It's best
not to admit an accident was your fault, even if you think
it was. A simple apology can be construed as an admission
of fault. Let the authorities determine who was responsible.
Auto accidents can be disorienting even if you are not physically
injured. You may not be aware of all factors leading up to
the crash, so state only what you know about what happened.
Contact your insurance company as soon as possible, even if
damages were minor. |
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What
does it mean when a car is "totaled"? |
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After
an accident or theft recovery, if the insurance company decides
your car is "totaled," it means the estimate of repairs exceeds
the car's value. At this point, the insurance company will likely
send you a check for your car's value. It gets to keep your
car unless you make arrangements to buy it back "as is". |
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What
should I do if another driver hits my car? |
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If
you were not at fault in the accident, you will make a third-party
claim to the at-fault driver's insurance company. Because you
are the claimant, the insurance company typically will issue
the check directly to you. It's your responsibility to pay the
repair shop, and the lender if you have a car loan. If the other
driver doesn't have insurance, your uninsured motorist coverage
will take effect. Top |
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How
do I handle a claim if I cause an accident? |
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If
you own your vehicle and have collision insurance, you will
file a first-party claim with your insurance company. It may
issue a check either to you, the shop that repairs your vehicle,
or to both of you. If you have a lease or a loan, the lending
institution may be named on the check. Of course, you will also
have to pay your deductible. If other vehicles were involved,
the insurance company will settle with the other drivers and
you probably won't be involved. Top |
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What
happens if my car is stolen? |
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If your
car was stolen, be prepared to wait. Most insurance companies
will impose a waiting period to see if the police recover
your car. If your car is still missing after the waiting period,
usually 21 days, you should receive a settlement soon after.
If your car is recovered during the waiting period, the insurance
company will want to see a repair estimate before deciding
how to proceed.
If your
policy has a provision for replacement transportation, you
may be required to pay for a rental car out of your own pocket
and then submit a claim to the insurance company for reimbursement. Top |
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What
effect does my driving record have on my auto insurance? |
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A
good driving record is critical to your ability to obtain auto
insurance. If your past is free of tickets, accidents, and drunk
driving arrests, chances are excellent that you will pay much
less than the person who has a history of these infractions. Top |
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Does
the kind of car I drive matter to an insurance company? |
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Yes!
In addition to your age and driving record, the type and value
of the car you drive is one of the most important factors in
the amount of your premium. Sports cars, for example, can cost
significantly more to insure because they may be a favorite
among thieves, because statistically people tend to drive them
faster, and because they may have a higher replacement cost
than a sedan or a van. Top |
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Why
would I want to buy more insurance than state law requires? |
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If
you are found to be liable for an amount greater than the coverage
limits of your policy, you must pay the difference. If you don't
have enough cash, the injured party can go after your home,
financial assets, and even future earnings. It's wise to consider
increasing your liability limits when you own a house or other
valuable assets. Top |
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Why
does a high deductible cause my premium to go down? |
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Generally,
the more risk you assume, the less risk you assign to the insurance
company, which charges according to how much risk it is insuring
against. A deductible is the initial dollar amount of a loss
that you must assume before the insurance company will pay your
claim. Auto insurance deductibles typically range from $250
to $1,000. Top |
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Why
does my insurance company want to know my age? |
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Statistically,
the risk of an automobile accident fluctuates with age. Teenagers
are among the most expensive drivers to insure because their
inexperience makes them more likely to be in an accident than
drivers over age 25.
Just as
a teenager will have to pay more for being young and inexperienced,
drivers can expect to pay less as they reach the age range
where they are statistically the safest on the road, roughly
from ages 40 to 55. In some cases, rates may go up as a driver
becomes elderly. Top |
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Yes.
Recreational boat insurance is similar to automobile insurance.
You can purchase liability coverage and physical damage coverage.
Some policies also offer medical payments, uninsured boater
coverage, and legal defense coverage. If you borrowed money
to buy the boat, your lender will probably require you to carry
insurance. Top |
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I
am retired, but I work part-time as a handyman. Do I need special
insurance coverage for my truck, which I use when I'm hired
to make repairs? |
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Generally,
a personal auto policy may be all you need unless you are driving
other people around frequently. In some cases, an independent
contractor such as a carpenter or landscaper may need a commercial
policy -- if the vehicle is used more than 50 percent of the
time for business purposes. And personal auto policies must
have increased limits to cover any equipment that is permanently
attached to the vehicle, such as an expensive generator. Top |
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I
have towing and labor coverage on my auto policy. Does it only
come into effect after an accident? |
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Towing
and labor coverage provides emergency road service and pays
for towing charges. This coverage is not limited just to accidents,
but can be used any time your car breaks down. Labor such as
a tire change or battery jump-start performed at the site of
a disabled vehicle will be covered, but not the later repair
work performed in a service station. Top |
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What
is the difference between the cancellation and non-renewal of
an auto policy? |
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A non-renewal
means only that your company does not want to offer you a
policy any longer -- possibly because of your driving or claims
record over the last three to five years. More than likely,
you will find other insurers that are willing to provide insurance
at a higher price.
Auto insurers
may cancel your policy at any time if you fail to pay your
premium, lose your driving privileges, or have not accurately
reported the facts relating to your level of risk. A cancellation
will make it hard to get insurance for a long time to come. Top |
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My
state requires minimum insurance coverage of 15/30/5. What does
that mean? |
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Minimum
liability limits of 15/30/5 refers to $15,000 bodily injury
liability per person, $30,000 per accident, and $5,000 for property
damage. Insurance requirements vary from state to state. Top |
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I
have heard of states with no-fault laws and PIP coverage. How
does that differ from states with standard coverage? |
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There
are some states with various forms of no-fault insurance. Generally,
no-fault laws require each person involved in an auto accident
to pay his or her own medical expenses and lost wages -- and
stricter versions disallow certain pain-and-suffering lawsuits.
Therefore, many no-fault states require drivers to have Personal
Injury Protection (PIP), which pays extensive medical expenses,
lost wages, and a small death benefit for the driver and all
passengers. PIP usually comes with a 20 percent deductible.
In some states, both no-fault and PIP coverage are optional. Top |
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I
plan on driving through several states during my next vacation.
I carry the minimum coverage allowed by my state, but will my
insurance cover me if I have an accident in another state while
I am away? |
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Clearly,
the laws concerning insurance coverage can vary greatly from
state to state. It might be comforting to know that if you have
the minimum auto liability coverage for your home state, but
are involved in an accident in another state, your policy will
generally adjust to meet that state's minimum legal requirements. Top |
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Can
a driver be found partially to blame for an automobile accident? |
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In
some states, comparative negligence laws make it possible for
more than one driver to share responsibility. If a red car is
driving too fast and rear-ends a blue car, but the blue car
did not have functioning taillights, then the red car may be
found 70 percent responsible and the blue car 30 percent. A
driver may only collect damages for the percentage of the accident
that was not his or her fault, so the driver of the blue car
could recover only 70 percent of the damages. Top |
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What
exactly are the types of coverage included in a standard personal
auto policy? |
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- Bodily
Injury Liability - Pays for medical expenses, legal expenses,
and judgments against you when you or your car is involved
in an accident that causes the injury or death of another
person.
- Property
Damage Liability - Pays for damages to the property of others,
caused by you or your vehicle.
- Uninsured/Underinsured
Motorist (UM/UIM) - Covers the costs associated with damage
or injury caused by an uninsured, underinsured, or hit-and-run
driver.
- Medical
Payments - Covers the medical bills of you and your passengers
after an auto accident, regardless of who is at fault.
- Collision
- Covers the damage to your vehicle resulting from a collision,
regardless of who is responsible. Collision coverage requires
the payment of a deductible by the insured.
- Comprehensive
Physical Damage - Pays for damage to your car that is not
the result of an auto accident, such as theft, vandalism,
fire, hail, natural disasters, hitting a deer, etc. Comprehensive
coverage also requires a deductible, and will only pay as
much as the car was worth before sustaining the damage. Top
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Why
should I buy homeowner's insurance? |
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A
home can require a tremendous investment of money, time, and
energy. Homeowners insurance is designed to protect that investment
by insuring the actual structure or structures and the personal
possessions in and around them, as well as providing liability
protection for the residents. Through homeowner's insurance,
you can protect yourself and your family from enormous loss
in the event of damage or destruction to your home and property.
Most likely, if you have a mortgage on your home, you are required
to carry homeowner's insurance. Top |
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Deductibles
place responsibility for the initial cost of certain claims
-- and some of the risk -- back on the insured. Basically, a
deductible is the amount you must to pay out of pocket before
the insurance company will step in and pay for the loss of your
property. Your deductible has a direct effect on the amount
of your premiums. The higher the deductible -- that is, the
more you have to pay out of pocket -- the lower your premiums
will be. Top |
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How
much will I pay for homeowner's insurance? |
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To set
the amount of your premiums, the issuing company will first
want to assess what kind of risk you might present. Be prepared
to share plenty of information about you and your home. The
company will consider your credit rating, whether you have
a criminal record, your previous addresses, and if you have
a history of insurance claims. An insurer will want to know
what kind of work you do, your employment history, your marital
status, and your age.
An insurer
will also want to know about the construction of the home.
Is it brick or wood? How many square feet is it? How old is
it? Are there any unattached structures on the parcel? How
far is the house from a fire station? Is it perched on a cliff
above the ocean? Deadbolt locks, smoke detectors, and other
preventive measures can lower your rates. But certain kinds
of pets, a pool, and other potential opportunities for personal
injury can raise your rates. So can running a home business. Top |
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How
can I lower my premium? |
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If
you want to lower your monthly premium, or buy more coverage
for less money, one way is to carry a higher deductible. A higher
deductible also may make sense if you believe that your chances
of making a claim are remote enough to warrant assuming extra
financial risk. Top |
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What
if I'm found liable for injuring another person? |
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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. Top |
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What
kinds of damage does a basic homeowner's policy cover? |
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Most
basic policies protect against damage from: |
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- 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
- Volcanic
eruption
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You
can also step up coverage to include: |
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- Falling
objects
- Weight
of ice, snow, and sleet
- Three
kinds of water-related damage from home utilities or appliances
- Electrical
surge damage
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Protection is subject to policy
limits and deductibles can vary. |
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What
damage to my house would not be covered by my homeowner's policy? |
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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. Other exclusions may also
apply. Top |
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If
my home burned to the ground, how much money would the insurance
company give me? |
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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. Top |
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How
will I be able to recall the contents of my home if it is destroyed? |
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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. Top |
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What
can I do about expensive possessions, like jewelry and camera
equipment, that are far more valuable than the coverage limits
of my homeowner's policy? |
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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. Top |
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I
want to buy a condominium. Will my homeowner's policy be different
from the one I had when I owned a house? |
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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. Top |
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I'm
renting an apartment. Will my landlord's insurance cover my
belongings if the building burns down? |
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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. Top |
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Besides
me, who else is covered under my homeowner's policy? |
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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. Top |
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