FAQs : Frequently Asked Questions

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.

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.

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.

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.

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

• Volcanic eruption

You can also step up coverage to include:

• Falling objects

• Weight of ice, snow, and sleet

• Three kinds of water-related damage from home utilities or appliances

• Electrical surge damage

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. Other exclusions may also apply.

Insurance companies normally use one of two methods to figure how much you will be reimbursed for a loss per your policy provisions. 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.

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.

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.

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.

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".

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.