Every year, people report fraud, identity theft and bad business practices to the Federal Trade Commission (FTC) and law enforcement partners. According to FTC data, nearly 3 million people reported fraud in the past year, and 1 in 4 said they also lost money. The median loss in scams that start with a call is $1,200, higher than any other contact method.

As such, the chances are likely that you have or will be on the receiving end of a phone scam. Technology has made this even easier as scammers leverage robocalls or spoofing tools to change phone numbers. This article highlights the warning signs of scams and tips on protecting yourself from phone scams.

Warning Signs

Recognizing the common signs of a scam could help you avoid falling for one. Here are some general indications that a call or text is a scam:

Scammers pretend to be from a familiar organization. Scammers may pose as someone from a charity, utility company, law enforcement or federal agencies. They may use a real organization name or make up something that sounds official.
Scammers say there’s a problem or a prize. Remember, if you have to pay to get the prize, it’s not really a prize.
Scammers pressure you to act immediately. Legitimate businesses will give you time to think about their offer. Real businesses won’t make you stay on the phone (so you can’t check out the story) nor threaten to arrest you, sue you or take away your driver’s license.
Scammers tell you to pay in a specific way. There’s never a good reason to send cash, pay with a gift card, wire money or pay using a transfer app. These methods make it difficult for you to get your money back, which is ideal for scammers.

Phone scams come in many forms, but they often make similar promises or threats. Trust your gut if something seems off or too good to be true.

Consumer Tips

To prevent unwanted robocalls and phony texts and potentially avoid phone scams, the FTC recommends the following tips:

- Block unwanted calls and text messages. Talk to your phone company about call blocking tools they may have and check into apps that you can download to your mobile device to block unwanted calls and text messages.
- Register your number on the Do Not Call Registry. Legitimate telemarketers consult this list to avoid calling both landline and wireless phone numbers on the list.
- Don’t answer calls from unknown numbers. If you answer a robocall, hang up immediately. Remember that even though caller ID may show a “local” number, the call isn’t necessarily from a local caller, as it could be spoofed.
- Don’t provide your personal or financial information in response to a request that you didn’t expect. Legitimate organizations won’t call, email or text to ask for your personal information, such as your Social Security number, bank account or credit card numbers.
- Understand how scammers tell you to pay. Never pay someone who insists you pay with a gift card or a money transfer service. Additionally, you should never deposit a check and send money back to someone.
- Resist the pressure to act immediately. Legitimate businesses will provide you time to make a decision or provide payment. If it seems rushed or threatening, it’s likely a scammer.
- Don’t click on any links even if you get a text from a company you usually do business with and think it’s real. Instead, contact the company using a trustworthy website or look up their phone number. Don’t call the number they provided or the number from your caller ID.
- Talk to someone you trust. Before you do anything, tell a friend, family member, neighbor or other trusted person what happened. Talking about it could help you realize it’s a scam.

If you spot a scam or have given money to a scammer, you can report it to the FTC by filing a consumer complaint online or calling 1-877-FTC-HELP (382-4357). You can also visit the agency’s website to learn more about other consumer topics and more ways to protect yourself from scammers.

Here are some things to think about when it comes to carrying insurance as a couple. Use the topics in this article as a way to start a discussion about your insurance needs. We can then help you narrow down your options.

Auto Insurance

If you and your spouse have separate auto insurance policies, it may be wise to combine them. Get quotes from each of your carriers, and shop around to see if any others offer multivehicle discounts.

Keep in mind that it may not always make sense to bundle your car insurance policies. If your spouse has a poor driving record, you may end up paying more by bundling. Nonetheless, you may still qualify for a discount just for being married. Insurers typically offer discounted rates to people just for being married, because of the assumption that married people drive safer.

Renters Insurance

If you rent your living space, you should consider renters insurance to cover the value of your possessions. If you already have renters insurance, don’t forget that you have more to lose now that you have combined belongings, such as furniture, electronics and jewelry. Consider increasing your limits on personal property coverage, which pays to replace or repair items that are stolen or damaged.

Homeowners Insurance

Homeowners insurance is similar to renters insurance, but it covers more than just your possessions. It also covers your home in case of fire, theft or other perils. Both renters insurance and homeowners insurance also provide liability coverage.

Life Insurance

Newlyweds who both have jobs and are not yet dependent on their spouse’s income may not see the need for life insurance. However, as they build their lives together, that dependency grows. If you’re young and healthy, you can benefit from getting life insurance early in your marriage, since you can typically lock in better rates than if you were older. Remember that the older you get, the higher the rates, so don’t put it off for too long.

While life insurance is less urgent for young couples who are both working and don’t have children, it is important for newlyweds with only one working spouse or those who have children from a previous marriage to purchase life insurance early in their marriage.

If you already had life insurance prior to tying the knot, don’t forget to add your new spouse as a beneficiary.

Disability Insurance

Young people are more likely to become disabled than die prematurely. In fact, more than half of Americans identified as disabled are in their working years—between ages 18 and 64— according to the Council for Disability Awareness.

Disability insurance is historically inexpensive, and can pay you between 50-70 percent of your regular monthly income if an accident, illness or injury prevents you from being able to work. If your employer doesn’t offer disability insurance, you can purchase it on your own. This coverage can be critical for you and your loved ones.

We’re Here To Help

Addressing your insurance needs early provides a solid foundation for your marriage. Review your financial situation and objectives with your spouse, and contact us to help you find sufficient coverage within your budget.

BEGIN YOUR MINI-STORAGE INSURANCE QUOTE

Previous slide

Next slide

Mini-Storage Insurance Packages

MiniPak Gold offers superior coverage, competitive rates and world-class customer service. Integrity, dedication, and understanding of the issues that self-storage professionals face. We keep our expenses to a minimum. We control claim fraud. We make sure you have the coverage you need. That’s why MiniPak Gold is the leading commercial insurance program for the self-storage industry. That’s why you will want MiniPak Gold to protect your self-storage facility.

MiniPak Gold Policy Highlights

Business Property and Business Income Coverage is provided for the following exposures:

Buildings and structures including fences, building glass, signs, lawns, walks and roadways, and buildings under course of construction.
Business personal property including mini-computer equipment.
Business income (actual loss incurred up to 15 months)

Coverage features include the following:

Replacement cost coverage.
No co-insurance clause.
Deductible options of $500, $1,000, $2,500, $5,000, $10,000 and $25,000.
Business income coverage includes extra expenses.
Business income includes actual losses sustained up to 180 days beyond the date of repair or replacement.

Additional coverage is provided for the following exposures:

$25,000 pollutant cleanup and removal (must result from a covered loss and be reported within 180 days). May be increased up to $100,000.
$5,000 for employees’ personal property (may be increased up to $15,000).
Building ordinance coverage included in property limit.
$25,000 personal property off premises and in transit.
$10,000 for trees, shrubs and plants (not to exceed $1,000 on any one tree, shrub or plant).
$25,000 valuable papers and records.
$25,000 accounts receivable.
$10,000 fine arts.
$10,000 recharging of fire protection systems.

Crime

$10,000 money on premises and $5,000 money off premises.
$10,000 employee dishonesty.
$10,000 forgery.

Business Liability Coverage is provided for the following exposures:

Business liability ($500,000 to $2,000,000 limits available).
Personal injury and advertising injury.
Hired and non-owned auto liability.
Medical expenses ($5,000 limit).
Umbrella policy available.

Customers’ Goods Legal Liability

Protects against liability claims by storage customers for loss to their stored personal property while at the insured premises.
Limits available from $25,000 to $1,000,000.

Sale and Disposal Legal Liability

Protects against liability claims by customers for loss to their stored property due to lockout or the sale, removal or disposition of the property as a result of the sale and disposal operations.
Limits available from $10,000 to $1,000,000.

Optional Coverages Available

System protection.
Earthquake (not available in California or Alaska).
Employment practices liability.
On-site managers’ liability coverage.
Limited pollutant removal (limits of $25,000/$100,000 and $50,000/$200,000 available).

NEW SITE QUICK CONFIG

AGENCY NAME

EMAIL ADDRESS DEFAULT (no @ or domain)

GRAVITYFORMS: --AGENCY-NAME

AGENCY TELEPHONE #

FAX #

TOLL FREE # (delete if none)

245 Commerce Green Blvd, Ste 110

Sugar Land

Texas

Sugar Land, ST

TX

77478-3758

Office Hours

245 Commerce Green Blvd, Ste 110

Sugar Land, TX 77478-3758

Licensing

in/throughout StateLong

Year Began

DOMAIN NAME LIVE (no extension)

DOMAIN EXTENSION LIVE (no dot - com, net, etc)

AGENCYINFO-ELEM

LIVE-SITE SUB-DIRECTORY
(no slashes - leave blank if none))

NO SUBDIRECTORY?
(remove trailing slash from public-html)

NO SUBDIRECTORY
(delete trailing slash if none - /)

NO SUBDIRECTORY?
(delete trailing slashes if none - \/)

FIRSTLOOK DOMAIN

FIRSTLOOK DOMAIN EXTENSION

FIRSTLOOK DIRECTORY

FACEBOOK PAGE DIRECTORY

YOAST-CITY

YOAST-CITYCITYST

YOAST-STATE

YOAST-ST

DOMAIN HOSTING USERNAME

DOMAIN HOSTING PASSWORD

Unfortunately, many people wrongly assume that auto and umbrella insurance policies will provide reimbursement for all aspects of an accident on the road. Instead, both of these policies cover your own liability and provide compensation to others in the event that you are responsible for an accident. However, if another driver causes an accident and doesn’t have enough insurance coverage to compensate you, your own auto or umbrella policies may not be enough.

If another driver doesn’t have enough insurance coverage to pay for your medical bills, you could face extremely high costs or lengthy court battles. However, by purchasing stand-alone uninsured (UM) or underinsured (UIM) motorist coverage, or by adding the coverage as an endorsement to your umbrella policy, you can be fully protected on the road.

Why Isn’t There Coverage?

Auto insurance is required in most states because all drivers on the road essentially put their trust in one another to not get into an accident. As a result, your regular auto insurance policy will reimburse another driver if you are the cause of an accident. In a similar way, umbrella policies provide you with excess coverage for a number of different personal liabilities.

However, if another driver doesn’t have enough coverage to fully pay for the damage of an accident, you could be left to pay the bills yourself.

Uninsured motorists simply don’t purchase an auto insurance policy. As a result, if they cause an accident, there isn’t a policy in place to reimburse you for medical bills. According to the Insurance Research Council, approximately 1 in 7 drivers in the United States are completely uninsured.
Underinsured motorists have an insurance policy, but don’t have a high enough coverage limit to pay for all of the expenses of an accident. Some states only require a small amount of coverage, which won’t be enough to pay all of your medical expenses.

To protect yourself from these risks, it’s important to contact us about a stand-alone policy or an endorsement to your umbrella coverage.

Coverage Specifics

Without UM or UIM coverage, you’re essentially paying more for the protection of strangers than you are for yourself and your family. And, although uninsured and underinsured drivers are all too common, many people believe that they’re already covered if someone else causes an accident.

UM or UIM policies are available, as are endorsements to umbrella policies that can protect you from uninsured or underinsured drivers. In fact, in many states, you may be required to purchase UM or UIM coverage. However, just like a normal auto policy, there are some aspects of this coverage that you should consider.

Depending on the state, you may only be required to purchase a small amount of UM or UIM coverage. However, since these policies will protect you and your family in the event of an accident, it’s generally a good idea to purchase the same amount of coverage as your regular auto policy. Coverage is also inexpensive.

What do I give up by not using a licensed independent agent to purchase insurance?

The disadvantage of not using a licensed agent to purchase insurance is that the policyholder does not receive as much, or often any, personal service. A licensed agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim. Without an agent to act as your personal advocate during the claims process, you are left to take care of the details on your own. You may be unsure who to contact at the insurance company or who you can really trust to help you during the times in life when you need help the most. Without an agent you are on your own to absorb the frustration and expense of resolving your problems.

The disadvantage of not using a licensed independent agent to purchase insurance is that agents who only represent one insurance company can only offer insurance based on that one company’s policies and rate structures. As an independent agency we represent numerous insurance companies and are deeply familiar with the intricate differences between them. Therefore we are able to match your needs with the best company to meet those needs and your budget without having to sacrifice coverage in order to find affordability.

What’s the risk in not using an agent?

Many insurance companies that can be called directly as a customer fail to tell you that the “call center personnel” who will take your information and issue the policy ARE NOT licensed to sell insurance, therefore lacking the professional knowledge to guide you toward an acceptable level of protection. These companies are conducting business using a loophole within the law which allows the company to have one license while everyone else works without it. Going this route can place your financial future at risk because unlicensed personnel are trained to simply sell you a policy without being aware of what “real” protection means.

For instance, imagine you own a $150,000 home and your auto insurance policy’s liability limits are $50,000. When you purchased the policy you were told this was plenty of protection considering your state’s minimum requirement for liability is $20,000. Yet if you have an accident and are sued for $200,000 your policy is only going to pay out $50k, leaving you responsible for the remaining $150k. Since your home would cover the difference, a court judgment could force you into selling your home as a way to settle the suit. If your policy’s liability limits had protected you at a minimum of $200,000, the policy would be paying for the total suit.

Because direct writers are typically located nowhere near where you live, many won’t hesitate to sell you a policy with low liability limits as a way to simply make the policy cheaper while convincing you to buy it. Leaving you extremely vulnerable to financial disaster.

Looking for an agent with your best interests at heart? That’s exactly why we’re here.

For many of us, the holiday season is a time of joy, celebration and tradition. We look forward to hosting or attending festive gatherings or concerts. We travel near and far to share in the spirit of the season with family, friends and co-workers. We cook more, shop more and decorate more.

However, all that extra cooking, traveling, shopping, celebrating and decorating we do can post potentially serious hazards at home, in the office and on the road. Reports from leading safety organizations indicate that the time from Thanksgiving through the New Year is also one of the most dangerous for homeowners.

Whether you are planning or participating in the festivities, knowing the risks and how to help avoid injury, theft and damage to property through the holiday season are important however you choose to celebrate.

Fire Hazards
According to the National Fire Protection Association (NFPA), home fires and home fire deaths peak between December and February.* Cooking is the leading cause of home fires year round, and the increased use of stovetops and ovens for preparing holiday meals can increase the risk. Holiday decorations and the open flames of fireplaces and candles used during the holidays can also pose a threat.

To help reduce the risk of fire, consider using non-flammable or flame-retardant decorations. If you decorate a Christmas tree this time of year, select a quality artificial tree and decorate with only UL-listed lights. If you choose to have a fresh tree, be sure to keep water in the stand at all times. According to the NFPA, even a well-watered fresh tree should be taken down after four weeks. If you celebrate using a menorah, consider lighting using dripless candles. Remember to keep decorations and trees away from candles, fireplaces and heaters. Never leave an open flame or stove unattended.

Decorative Displays
Decorating the home, office or yard is a popular way to get into the spirit of the season. Planning your displays carefully is important to help reduce the risk of fire, electrical shock, trips and falls, and property damage. If a ladder is to be used always use a fiberglass or wooden ladder as they do not conduct electricity should the ladder come in contact with an open power source. Be diligent about everything you do while decorating to help keep your family and friends safe when putting up, playing around or packing away your festive displays.

Winter Driving Safety
Over the river and through the woods to grandmother’s house, shopping malls and holiday parties we go — all increasing our risk of having to drive in sometimes hazardous winter conditions.

Always check the weather before going out, and avoid driving in snowy, icy or other severe conditions if possible. Take a vehicle survival kit stocked with cold weather essentials on every trip, and try to keep your gas tank from getting far below the half empty level. Following your common sense and basic winter driving tips can help ensure you and your passengers reach your holiday destinations safely.

Consumer Protection Safety Commission, http://www.cpsc.gov/; Electrical Safety Foundation International, http://esfi.org/.

Prepare Yourself for IRS Phone Scams

Your phone rings. When you check, the caller ID shows it’s the IRS calling. (Three letters that can give you a sinking feeling in the pit of your stomach.) But you think to yourself: I don’t believe I owe any taxes. And I haven’t even submitted this year’s return. Why are they calling me? But it says it’s the IRS, so it must be them… right?

WRONG.

For a number of years scammers have been calling people across the country, spoofing the caller ID, claiming to be IRS officials, and demanding immediate payment of fines or back taxes. Their goal is to trick you into giving them personal information and/or get you to send cash.

So the REAL IRS has assembled a number of tips to help you understand what the criminals are doing and how to avoid becoming a victim of one of their scams:

Scammers try to scare you. Many phone scams use threats to intimidate and bully you into paying a bogus tax bill, usually through a prepaid debit card or wire transfer. They may even threaten to arrest, deport, or revoke your license if they don’t get the money. (If they don’t get through to you, they may also leave “urgent” callback requests through phone “robo-calls,” or via phishing email. )

Scams use caller ID spoofing. Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legitimate. They may use your name, address and other personal information (even your Social Security Number) to make the call sound official.

Cons try new tricks all the time. Some schemes provide an actual IRS address where they tell you to mail a receipt for the payment you make. Others use emails that contain a fake IRS document with a phone number or an email address for a reply. These scams often use official-looking IRS letterhead in emails or regular mail that they send you. They try these ploys to make the ruse look official.

Scams cost victims over $23 million. You probably think “I’ve heard this before; they won’t fool me.” But the Treasury Inspector General for Tax Administration has received reports of about 736,000 scam contacts between October 2013 and November 2015. Nearly 4,550 victims have collectively paid over $23 million as a result of the scam. The crooks get more sophisticated every year. The communications look and sound more real all the time too. And we’ll bet that a certain number of those 4,550 victims thought they wouldn’t be scammed either.

So to protect yourself, remember the following:

The IRS will NOT call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.

The IRS will NOT demand that you pay taxes and not allow you to question or appeal the amount you owe.

The IRS will NOT require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.

The IRS will NOT ask for your credit or debit card numbers over the phone.

The IRS will NOT threaten to bring in police or other agencies to arrest you for not paying.

Phone scams first tried to sting older people, new immigrants to the U.S. and those who speak English as a second language. But it has become such a profitable enterprise, the crooks now try to swindle just about anyone. And they’ve ripped-off people in every state in the nation. Stay alert. Don’t let the next victim be you!

Business Management Liability

Management Liability Insurance covers a range of exposures faced by directors, officers, managers, and business entities that arise from governance, finance, benefits, and management activities (also called “executive liability insurance”).

These coverages may be written as stand-alone insurance policies or combined into a single, “package” policy. Management liability policy “package” policies usually contain a set of common conditions applying to all of the coverage lines purchased. In most cases, an insured must select a minimum of two types of coverage to be eligible to purchase a management liability “package” policy. This arrangement can offer meaningful premium discounts because much of the same data is needed to underwrite your insurance.

QUOTE ME NOW

Directors and Officers

Designed to protect the directors and officers of your organization from damages and defense costs due to civil claims, claims of negligence, and of errors and/or omissions.

Fiduciary Liability

There has always been potential liability for various officers of an organization as well as other persons acting in some capacity relating to an employer’s pension, savings, profit-sharing, employee benefit, and health and welfare plans. Specifically, those persons employed by organizations to design and administer such pension and employee benefit plans, including the management of the assets and liabilities of the plans, are liable to the plan beneficiaries for any breach of these fiduciary duties.

Professional Liability

Provides coverage for defense costs and awards for liability arising from improper professional practices and errors and omissions in the conduct of business activities.

Cyber Liability

A type of insurance designed to cover consumers of technology services or products. More specifically, the policies are intended to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network.

In addition, the policies cover liability arising from website media content, as well as property exposures from: (a) business interruption, (b) data loss/destruction, (c) computer fraud, (d) funds transfer loss, and (e) cyber extortion.

Cyber and privacy insurance is often confused with technology errors and omissions (tech E&O) insurance. In contrast to cyber and privacy insurance, tech E&O coverage is intended to protect providers of technology products and services, such as computer software and hardware manufacturers, website designers, and firms that store corporate data on an off-site basis. Nevertheless, tech E&O insurance policies do contain a number of the same insuring agreements as cyber and privacy policies.

Employment Practices Liability

Provides coverage for defense costs and liability arising from allegations of improper employment practices, sexual harassment, and discrimination.

Why Is General Liability Insurance Important To Your Business?

For many business owners, general liability insurance is the first insurance policy they secure. General liability insurance provides coverage against claims in which someone is injured or their property is damaged as a result of the work or product your business performs.

Construction, retail, and wholesale-type businesses are fraught with mishaps and accidents. This kind of insurance is designed to cover medical expenses or compensation to the claimant so that your business isn’t covering their costs directly out of pocket.

What does general liability insurance cover?

General liability insurance represents a significant portion of all the insurance issued to businesses across the country and is the foundation for most all business insurance. Typically, general liability insurance covers the following:

Medical costs for the claimant if they hurt themselves while at your business
Attorney fees to defend your business if a claim is made
Property damage that has occurred on your property or as a result of your product’s use or services

Additionally, general liability can cover your business’ brand. For example, a TV ad might inadvertently harm another business through its messaging, and this could be grounds for legal damages. This is called advertising injury and most general liability policies include protection of this, as well as coverage should your business be found liable for copyright infringement or reputational harm.

A standard general liability insurance policy is broken down into 3 parts:

Coverage A: Bodily Injury and Property Damage

Coverage B: Personal & Advertising Injury

Coverage C: Medical Payments

These three parts will cover you in multiple different areas:

Premises liability. A feature that protects your business should a customer or someone not employed by the company sustain an injury at your site.
Products liability. A feature that protects your business if a customer experiences a bodily injury as a result of using your product or service. These features vary widely and are based on the nature of your business.
Personal advertising liability. A feature that provides coverage to your business should you incur costs defending a claim of libel, slander, and certain types of copyright infringement.

Why should my business get general liability insurance?

For many business owners, the risks of not having general liability insurance outweigh the benefits. Even if you aren’t required by law to have a general liability policy, clients, your landlord, or a certifying agent for your line of work may require proof of coverage.

Because of the importance of general liability coverage, many business owners opt to start a policy at the time they establish their business. Providing proof of insurance is a great way to prove to your customers and your community that your business is reputable and ready to offer services. For general contractors, liability insurance is a critical component of protecting your personal assets in the event of a filed claim. Possession of a general liability insurance policy allows the business the ability to weather the financial burden of settling the claim without having to take out significant personal capital or capital from the business itself. The same can be said for retail and wholesale establishments. From hardware stores to nail salons, protection against claims where an accident threatens your businesses’ very existence is a necessity.

How do I get a general liability policy if my business needs one?

The agents at Assurance One of Texas, LLC can quickly help to get your business insured. Because of our varied markets, an insurance program chosen from a host of reliable and secure insurance companies will be selected, providing you with the additional peace of mind that comes with your liability business coverage.

QUOTE ME NOW

For many the high school experience comes with social pressures and obligations to fit in and belong, and sadly this can lead to exclusion and isolation of some students. At some point everyone probably said something in their teen years in the heat of the moment that they now wish could be taken back, but today’s teens face the added burden that if they convey those statements on social media sites like Facebook and Twitter, their words could be around for a lot longer than just the heat of the moment.

In addition to hurt feelings, cyber bullying could potentially damage someone’s reputation. With college admissions offices and employers beginning to look up applicants on social networking sites, rumors and gossip have the very serious potential to damage someone’s ability to get into the college of their choice, or find a job. For parents, this could create a potentially serious exposure to a lawsuit if their children engage in cyber bullying.

Aren’t my kids covered under my insurance?

Generally speaking, any coverage a parent has through their homeowners or renters insurance policy also provides coverage to other residents of the household, including teenage children. Standard homeowners and renters policies include liability protection for bodily injury or property damage, which would pay for the costs to cover medical bills or repair/replacement costs if a child injured a friend in a pick-up basketball game or if they were at a friend’s house and accidentally spilled soda on a $13,000 oriental rug, subject to the policy’s deductible.

But what if a child were to post rumors about other teens online that implied negative information that could damage that person’s reputation? Interestingly, a standard homeowners or renters policy would not cover these instances.

What can be done?

In order to cover claims from that kind of situation, homeowners and renters policies must have what is called an endorsement- extra language that is inserted into the policy to expand coverage- in order to have liability protection extended to cover “personal injury”.

As insurance professionals we will be able to tell you if your current insurance policy already has this personal injury endorsement by reviewing it, and if it doesn’t, we would be able to help you get one. You may be surprised to find that this expanded coverage may not cost you much in additional premium. A personal injury endorsement will pay the costs up to the limits of your policy to defend you, pay a judgment or settle a case when legal action is brought against you or your children for defamation.

Make sure that if you’re a parent, you talk to your children about social media, how they use it and what’s expected of them regarding personal responsibility. It’s critical that they understand how their use of social media not only has the potential to hurt others, but that it could impact your family as well.

Some parents choose to actively monitor their children’s use of social media, and there are various software programs available to assist those who want to closely monitor what their children do in social spaces for parents who want access to their children’s profiles. No matter what you choose to do, begin with treating others with respect as the best way to avoid this type of risk.

Be Aware of What Your Kids Are Doing Online

Know the sites your kids visit and their online activities. Ask where they’re going, what they’re doing, and who they’re doing it with.
Tell your kids that as a responsible parent you may review their online communications if you think there is reason for concern. Installing parental control filtering software or monitoring programs are one option for monitoring your child’s online behavior, but do not rely solely on these tools.
Have a sense of what they do online and in texts. Learn about the sites they like. Try out the devices they use.
Ask for their passwords, but tell them you’ll only use them in case of emergency.
Ask to “friend” or “follow” your kids on social media sites or ask another trusted adult to do so.
Encourage your kids to tell you immediately if they, or someone they know, are being cyber bullied. Explain that you will not take away their computers or cell phones if they confide in you about a problem they are having.

Sources: stopbullying.gov | trustedchoice.com

This time of year can be just great here in StateLongName. However, you won’t get much fireside snuggling done if your chimney clogs or your roof springs a leak. And while prepping your home for winter weather isn’t much fun, once you do it, your peace of mind can last all season long.

Here’s a handy checklist to make sure the weather stays outside where it ought to be.

Furnace Follies
If you have a forced-air furnace, visually inspect the outside of your system, the ducts, and other points attached to the unit. Repairing potential air leaks is easy to do with a little duct tape. It’s also a great time to clean or replace the filter according to the manufacturer’s instructions. If you can reach them, vacuum off the blower blades while you’re in there.

Winter Weather Stripping
A common source of heat loss and drafty spaces is faulty door or window weather-stripping. Check for drafts by holding a lit candle a couple of inches from the seam. If the flame moves (and you’re sure it’s not the dog breathing over your shoulder) you could have a leak. Typically these are easier to replace entirely than “spot repairing” and kits for doing so may be found at any hardware store.

Chim Chim Cher-ee
Creosote is the black, scaly deposit left behind in wood-burning chimneys. It slows airflow and is an enormous fire hazard. While the chimney is cool, take a flashlight and look for build-up past the damper (at the mouth of the flue near the base of the chimney). If you burn a lot of wood during the season–or very resinous wood like pine–cleaning the chimney is an annual must-do. This is one repair where hiring qualified professionals is best because they have the proper tools and experience to make sure it’s done right.

Stormin’ the Doors
Operational storm doors and windows prevent additional drafts and save energy costs. Make sure the hinges are lubricated and adjusted so they close properly. If you have interchangeable glass panels, make sure to install them instead of leaving the screens over winter.

Rain Gutter Braining
Clean gutters help prevent many cold weather problems from arising, such as basement flooding, siding damage, and door and window leaks. Clean gutters also help keep your foundation dry and repair-free. Plus, if your gutters are holding too much water they can pull free of eaves and fall off at any time, posing a hazard to your noggin.

Show Your Best Siding
In some cases you’ll need to hire a professional to make siding (or paint) repairs, but you can easily inspect for cracks and separations, peeling paint, or other damage that’s not difficult to repair yourself. Usually, a little caulk and some paint do the trick. But don’t leave it to chance–or leave it too long–because when water gets behind siding it’s expensive to repair as well as a health hazard.

Put a Lid On It
If possible, check your roof close up. You can use binoculars to inspect safely from the ground. Look for missing tiles, cracked shingles, and “bald spots”. If you have a composition roof past its warranty, make sure to check for brittleness, a sure sign it needs replacing. Also, if you notice lots of asphalt granules in your newly spotless rain gutters, it’s a sign your roof is eroding and needs replacing soon. Lastly, make sure to check the flashing around the edges of the roof for damage.

Taking just a few minutes this time of year to inspect your home for these common cold weather entry points and it will prevent more costly repairs, reward you with a lower energy bill, and help you have a relaxing holiday season.

Life Insurance Knowledge Center:

Click any of the following general topics to reveal all the helpful details.

DISCLAIMER: Statements on this website provide general information only as it relates to policies and coverages. All coverages are subject to the terms, conditions and exclusions of the actual policy issued so contact one of our licensed agents for questions regarding your specific needs and policy.

THE BASICS

Choosing An Amount

It turns out that for life insurance, the solution to the puzzle of “how much” can be found with some basic calculations. The reason for purchasing life insurance, of course, is to provide your family with long-term financial security. To come up with a dollar figure that will provide that security, you should begin with a careful review of your financial situation.

Essentially, there are two categories that you should consider-what your family’s immediate needs will be if something happens to you, and what their ongoing needs will be.

Immediate needs can include the final expenses associated with a terminal illness, burial costs, estate taxes, the balance of an unpaid mortgage and even relocation expenses.
Ongoing needs might include monthly bills and expenses, mortgage payments, daycare costs, education, income replacement and retirement.

Most people aren’t so anxious to figure out how their family will replace the income lost if they die, or even to tackle such details as how much their own funeral will cost, or if the family will have to sell their home should such an event occur, and what the marketplace will be like if selling the home is neccesary. One way to start the process is to consider this basic rule of thumb for life insurance:

In general, most people should have life insurance that is equal to five to seven times their annual gross income.

Life insurance comes in two basic forms. There is:

Term life insurance and
Permanent life insurance (also known as Cash-Value). Knowing which one is appropriate for you means understanding what your needs are and what you are protecting.

You should elect an amount necessary to meet the needs you are trying to satisfy.

Choosing The Type

There are two basic types of life insurance, term insurance and cash value insurance. There are many variations on these two basic types. Term Policies provide life insurance for a specified period of time. These policies provide benefits in the event of death, but they generate no “cash value”. If you have a limited amount to spend, and only need the additional coverage insurance for a finite period of time (for instance.. until the children graduate from college), you may be able to get more coverage by acquiring term insurance than by with cash value insurance. Today’s term policies usually have two sets of premiums – guaranteed maximum premiums, and “current premiums”, which are usually much lower. The company cannot increase current premium above the guaranteed maximum premiums shown in the policy.

When you buy term insurance you need to make a choice as to how long you want the protection. You may renew the policy without a physical examination for the period of years specified in the policy. Some term insurance can be converted to cash value insurance up to a specified age with no physical examination. Premiums for the converted insurance will initially be higher than the premiums you would be paying for the term insurance. Cash-Value Insurance combines death benefits with a cash accumulation feature. The buyer of a cash value policy pays more in the early years than for term insurance, but the money not needed to pay for the cost of the death benefit accumulates as interest. If the policy is surrendered before the insured dies, there may be a cash value paid to the owner. In addition you can make loans from your policies cash value. This interest rate for most policies decreases after a specified number of years, and if the loan is never paid back then the amount is deducted from the policy’s benefit. As a general rule, it is not a good idea to buy cash value life if you plan to surrender early.

If all premiums are paid, cash value insurance usually lasts for the whole life of a person, and pays death benefits to the beneficiaries named in the policy upon the death of the insured. The cash value can be used as loan collateral for borrowing funds at the interest rate specified in the policy. Any outstanding loans are deducted from policy proceeds at death or surrender. Some of these products may enjoy tax advantages.

Choosing Beneficiaries

Designating a Beneficiary

A beneficiary is the person or entity you name (designate) to receive the death benefits of a life insurance policy.

Revocable and irrevocable beneficiaries
The beneficiary can be either irrevocable or revocable. Once named, you cannot change an irrevocable beneficiary without his or her consent. A revocable beneficiary can be changed at any time.

Primary, secondary, and final beneficiaries

You can name as many beneficiaries as you want, subject to procedures set in the policy. The beneficiary to whom the proceeds go first is called the primary beneficiary. Secondary beneficiaries are entitled to the proceeds only if they survive both you and the primary beneficiary. A third level of beneficiary (“final” beneficiaries) can be named as well. Final beneficiaries receive proceeds only if they outlive all other beneficiaries. Usually aunts, uncles, nieces, nephews, and charities are named at this level.

You should name both secondary beneficiaries and final beneficiaries. You may outlive the primary beneficiary, you may die simultaneously, or the primary beneficiary may be unable to collect the proceeds. In these cases, if you have not named secondary beneficiaries, the proceeds pass to your estate. Proceeds paid to your estate are subject to all the expenses and delays associated with settling an estate, whereas named beneficiaries can receive proceeds almost immediately after your death.

Multiple beneficiaries
You may name multiple beneficiaries if you choose. There are no legal restrictions–and few company restrictions–on the number of beneficiaries you can designate. The only requirement is that they must all have an insurable interest in you (e.g., spouse, child, business partner, etc.) at the time you apply for the insurance.

If you name multiple beneficiaries, you must also specify how much each beneficiary will receive. You may not want to give each beneficiary an equal share, so you must state how the proceeds should be divided. Because of the numerous interest and dividend adjustments the insurance company must make, the death benefit check often does not exactly equal the policy’s face value. Thus, it’s wise to distribute percentage shares to your beneficiaries, or to designate one beneficiary to receive any leftover balance.

How do you name or change a beneficiary?

When you buy life insurance, the insurer will provide you with a beneficiary designation form. Generally, you only need to list the names of the beneficiaries, sign the form, and date it. When changing a beneficiary, a similar form is used. It is advisable to specifically revoke any previous designations by writing this in on the change of beneficiary form. You may want to review your beneficiary designation every two or three years. Additionally, be sure to check and update your designation upon certain life events (e.g., divorce, remarriage, the birth of children, etc.).

Don’t make the mistake of thinking that you can change your beneficiary in your will. A change of beneficiary made in your will does NOT override the beneficiary designation form. If you want to change the beneficiary, execute a change of beneficiary form. Do not rely on your will to do so.

Why designating the proper beneficiary is important

Life insurance is purchased for two primary reasons: to create an instant estate to provide for your family members, and to solve cash flow problems caused by your death. To attain these goals, you want to ensure that all the life insurance proceeds are received by the beneficiary. To do this, you need to avoid estate taxes that will deplete these funds. One way to avoid taxes is to properly designate the beneficiary.

Should you name your spouse as beneficiary?

Most married people name their spouse as primary beneficiary. If your spouse is the beneficiary, then the proceeds pass free of estate taxes under the unlimited marital deduction, regardless of who owns the policy. However, if the spouse also has a sizeable estate, the proceeds will be included when he or she dies (unless, of course, they have been spent). In the later case, you may end up only postponing estate taxes, not completely avoiding them.

Additionally, if you and your spouse die simultaneously, the Uniform Simultaneous Death Act (USDA) provides that the beneficiary will be presumed to have died first. This means that the unlimited marital deduction will be lost, and the proceeds will be included in your gross estate.

Be aware, however, that if you live or move to a community property state, your spouse must give written consent before you can designate anyone else as your beneficiary.

Other things to think about

Be careful if you name your estate or your executor

If your estate or your executor is named as beneficiary on your life insurance, the proceeds will be included in your gross estate for federal estate tax purposes. If your gross estate is large enough, estate taxes must be paid. These taxes reduce the life insurance proceeds available for your family, and the process of settling the estate will delay the availability of the life insurance proceeds.

Of course, your child or spouse may also serve as your executor. In this case, he or she may be a perfectly appropriate beneficiary. Just make sure you indicate that the beneficiary is your child or spouse, and not just the executor of your estate.

Be careful if you name a creditor, or someone who will use the proceeds to do you a favor

Occasionally, a beneficiary is considered by the IRS to be for the benefit of your estate. When this happens, the proceeds from the life insurance policy are included in your gross estate for estate tax purposes. Examples of this include:

naming a creditor as beneficiary (in payment of a debt)
naming a beneficiary to receive proceeds under an agreement that requires him or her to pay your estate’s debts or expenses
naming a beneficiary to receive proceeds to pay alimony or support

Don’t name a minor unless a guardian has been appointed or a trust is used

Insurers generally will not make settlements directly to minors. Do not name a minor as a beneficiary unless you also appoint a guardian or use a trust.

Name a beneficiary in accordance with a divorce decree, settlement agreement, or state law

Your right to change a beneficiary may be limited by a divorce decree or settlement agreement. In some states, divorce automatically terminates a spouse’s interest. In other states, divorce allows a policyowner to change the beneficiary, even if the beneficiary is irrevocable.

Claiming Benefits

How do you claim life insurance benefits?

Life insurance benefits are not paid automatically. If you are the beneficiary of a life insurance policy, you must file a claim in order to receive any money. Often, this is as simple as contacting your insurance agent, and filling out some paperwork.

However, if this is the only step you take, you may be missing out on other life insurance benefits to which you are entitled. For example, your spouse or family member may have owned one or more group policies that pay benefits depending on how the insured person died, or in restricted amounts. If you spend time uncovering these unseen policies, you may uncover additional support funds from life insurance than you had expected.

Finding individually-owned life insurance policies

Your spouse or family member may have owned one or more permanent or term life insurance policies. Individually-owned term or permanent policies are what most people think of as life insurance. These policies are purchased by one person, and pay benefits when the insured person dies. If your spouse or family member owned one of these policies, he or she probably kept it with his or her important papers; in a file, or in a safety deposit box. However, if you know that your spouse or family member owned an individual policy and you can’t find it, call his or her insurance agent or company to check. If you’re not sure if your spouse or family member owned a policy, you can contact the American Council of Life Insurance. Its members can do a free search for you.

Finding group life insurance policies

Group life insurance policies provide coverage to many people under one policy. Group insurance policies may be issued through an employer, bank, credit agency, or other professional or social organizations, and they often pay benefits in specialized circumstances. Because the group holds the actual policy, the insured person receives a certificate of insurance as proof that he or she is insured. Look for these certificates in your spouse’s or family member’s personal papers, files, and safety deposit box. However, even if you can’t find any certificates, this doesn’t necessarily mean your spouse or loved one wasn’t insured. You should still check with your spouse’s or family member’s employer, bank, or credit agency, or study loan paperwork or purchase contracts. Read the following sections for information about types of group policies your spouse or family member may have owned.

Employer-based group life insurance

If your spouse or family member was employed at the time of his or her death, you may be the beneficiary of a life insurance policy issued through his or her employer. Because some employers offer their employees a certain amount of life insurance at no cost, you may not even be aware that your spouse or family member was insured by a group policy because he/she did not pay his/her own premiums. In addition, your spouse or family member may have had the option of purchasing additional group life insurance through his/her employer, paying the extra premiums himself/herself. Thus, before assuming that your spouse or family member did not have group life insurance, you should check his/her pay stubs, and call his/her employer.

Accidental death and dismemberment policy

Your spouse or family member may have been offered an accidental death and dismemberment policy through an employer, credit card, or bank. These policies pay benefits if an insured individual dies accidentally. This is another type of life insurance you may be unaware that your spouse or family member had because, occasionally, these policies are offered as part of a loan package, or even issued as a free benefit by banks, or as a rider to an employer-issued insurance policy. If your spouse or family member died accidentally, look for such a policy in his or her files, or contact his or her employer, bank, credit card issuer, or insurance company.

Travel accident insurance

If your spouse or family member was killed while traveling by air, boat, or train, you may be eligible to receive the proceeds from a travel accident insurance policy he or she may have purchased when buying tickets. In addition, if your spouse or family member used a credit card to purchase travel tickets, you could be automatically entitled to a life insurance benefit payable if he or she dies as a result of an accident when using those tickets. Some travel agencies and road and travel clubs also routinely issue travel accident insurance policies, and employers sometimes pay death benefits to employees who are killed while traveling on company business.

Mortgage life insurance

If your spouse or family member owned a house, he or she may have purchased mortgage life insurance. A mortgage life insurance policy pays off the balance of the policyholder’s mortgage upon his or her death. If you’re not sure whether your spouse or family member purchased such a policy, check with the mortgage lender.

Credit life insurance

Banks and finance companies routinely offer credit life insurance when someone takes out a loan, or is issued a line of credit. This insurance will pay off the outstanding balance of a loan or account if the insured individual dies. A few extra dollars is added to the monthly loan payments to pay the premiums. Many institutions try to sell this type of policy when someone finances a purchase, or signs up for a line of credit, and occasionally they add it to a contract before the individual signs it. Thus, it is likely that you won’t find out that your spouse or family member owned such a policy unless you check with credit card companies, banks, or any lenders to whom your spouse or family member owed money at the time of his or her death.

How do you file a life insurance benefit claim?

Notify the insurance company that the policyholder has died
You should contact the insurance company as soon as possible. Call the policyholder services department directly, or if the life insurance policy was issued through our agency or an employer, ask us/them to notify the company for you to begin the claims process.
File a claim form
You’ll begin the claims process by filling out and signing a proof of death form, and then attaching to it an original or certified copy of the policyholder’s death certificate. If you are too distraught to fill out the form yourself, we may fill it out for you, although you’ll still have to sign it. If there is another beneficiary named on the policy, that person must also fill out a claim form. You may also have to fill out Form W-9 (Request for Taxpayer Identification Number and Certification), which will enable the insurance company to notify the Internal Revenue Service of any interest it has paid to you on the value of the policy. To expedite your claim, follow the insurance company’s and/or policy instructions carefully.
Wait for the company to process the claim
Life insurance claims are usually paid quickly, often within a few days. First, however, the insurance company will ensure that you are the beneficiary of the policy, that the policy is current and in force, and that all conditions of the policy have been met. This is usually a simple matter, and does not delay the claims process. Claims are more often delayed because the insurance company has not received a valid death certificate. The insurance company also has a right to challenge or deny a claim if it believes that a specific policy provision has been violated.

How should you receive the life insurance proceeds?

In a lump-sum cash payment

Life insurance proceeds are often paid as lump-sum cash payments. Most people elect this form of payment because it enables them to control how the insurance money is invested or spent. In addition, if you elect to receive a lump-sum payment, you will not owe income tax on the life insurance proceeds.

Through a settlement option

A settlement option is a way of paying the proceeds of a life insurance policy other than in a lump-sum cash payment. Many types of settlement options are available, but all are designed to ensure good money management in situations where the beneficiary is unable or unwilling to manage a lump sum of cash. Either the policy owner chooses the settlement option at the time he or she purchases the policy, or the beneficiary chooses the option at the time the benefit becomes payable (unless the policy owner had chosen an irrevocable option).

If you receive the proceeds of an insurance policy through a settlement option, the insurance company will keep the policy proceeds, invest them, and pay you interest. Or, you may be allowed to withdraw part of the proceeds or receive periodic payments of both principal and interest.

Reading Policies

Most life insurance policies are filled with fine print, legalese, and technical insurance jargon. However, if you can find the time and muster the patience, it’s probably a good idea to sit down and read through your policy. If you do, you’ll understand your policy better and gain an understanding of your rights and obligations under the contract.

Here are some common provisions to look for when you read your policy:

Entire contract clause

When your life insurance policy takes effect, the application for insurance that you filled out is incorporated into the contract. The statements you made on the application become contractual provisions and can be used as evidence in a dispute over the contract’s validity. Typically, states require that a clause be inserted in your policy stating that the policy and the application attached to it together form the entire contract between you and the insurer. This clause is beneficial to you because if your insurer accuses you of misrepresentation and seeks to void the contract, they’re prevented from using other evidence outside of the contract. They can only void the contract if you made false statements on your application.

Ownership clause

A life insurance policy is a piece of property. The owner of the policy may be the individual whose life is insured under the contract, it may be the beneficiary, or it may be someone else. In all likelihood, if you are the insured, you are also the owner of the policy. As the owner, you have certain privileges of ownership, including the right to transfer or assign the policy, the right to change the beneficiary, the right to receive the cash value and dividends (if applicable), and the right to borrow against the cash value (again, if applicable).

Beneficiary clause
The beneficiary clause allows you to name the person who will receive the policy’s death benefit proceeds upon your death. The designation of your beneficiary is an important decision, enabling you to control the disposition of the insurance money. While you may designate yourself as beneficiary under certain types of retirement income policies, the beneficiary under a traditional policy will generally be either your estate or an individual. It’s usually not advisable to name your estate, however, because then the proceeds will have to pass through probate and payment of them will be held up. If you name a specific individual, the proceeds will be paid directly to him or her upon your death without delay. A beneficiary designation may be revocable (can be changed by you at any time) or irrevocable (can’t be changed). In addition, a beneficiary may be primary or contingent. Basically, the primary beneficiary is the person first entitled to the policy proceeds at your death. If the primary beneficiary dies before you (and thus before any proceeds are paid), the contingent beneficiary takes his or her place.

Incontestable clause
This is an clause that is required in most life insurance policies. Typically, it states that the validity of the contract cannot be questioned or challenged for any reason whatsoever after the policy has been in force for a period of two years during your (the insured’s) lifetime. The reason for this clause lies in the long-term nature of the life insurance contract. Its purpose is to give the insurer ample time to review the contract while providing you and your beneficiary with some assurance that you will not be harassed by lawsuits long after the policy was originally bought.

Misstatement of age clause

This is somewhat of an exception to the incontestable clause. The incontestable clause does not apply when you, the insured, misrepresent your age. The reason is simple. Because age is a key factor in determining whether a company offers you life insurance and in setting premiums, some applicants are tempted to understate their age in order to pay a lower premium. Understandably, insurers wish to avoid this. The misstatement of age clause provides that if you have misrepresented your age, the insurer will lower the face amount of the policy to the amount of insurance that the premium paid would have purchased at the correct age.

Grace period
Your policy specifies the due date for premiums (e.g., monthly, quarterly, semiannually). Whatever the due date, you generally must pay your premiums on or before that date. If you fail to do so, you will be in default and technically the policy will lapse. This rule is subject to a disclaimer, however, in the form of a grace period during which the policy still remains in force if a premium hasn’t been paid on time. For example, if you have a premium due on January 1 and don’t pay it by that date, you might have until February 1 to make the payment before the policy would lapse. If you died on January 15, the death benefit proceeds would still be paid, but minus the amount of the premium in default.

Reinstatement clause
Many life insurance contracts contain a clause allowing you to reinstate or reactivate a lapsed policy (i.e., one for which you stopped paying the premiums). However, reinstatement is not your unconditional right. If available, it will be subject to a number of very specific requirements on your part. First, if it’s a cash value policy, reinstatement will be possible only if at the time of the policy’s lapse you did not withdraw its cash surrender value. Second, reinstatement must be accomplished within a specified time period, normally five years after the lapse. Third, you must resubmit proper evidence of your insurability. Not only must your health still be satisfactory to the insurer, but other factors such as your income and personal habits must not have changed greatly either. Finally, an insurer will generally only permit reinstatement if you pay all the overdue premiums (plus interest) and if you pay (again, with interest) or reinstate any indebtedness from loans that may have existed at the time of lapse.

Suicide clause

Almost all life insurance policies exclude suicide during a specified period after the policy is issued. Under this clause, the typical period during which coverage for suicide will be denied is two years (although some policies limit it to one year). Assuming you are the insured, this means that if you commit suicide (whether by insanity or not) within two years after purchasing your policy, the insurer will not pay any death benefits to your beneficiary. The insurer would be responsible for refunding the premiums paid by you, but that would be the extent of their financial obligation under these circumstances.

Aviation exclusion

At one time, almost all life insurance policies excluded death resulting from aviation. Today, most policies will provide coverage if you die in an airplane accident, although you may have to pay an extra premium to cover the heightened risk if you’re a private or commercial pilot (or a crewmember).

War clause

During war time or when a war seems likely to occur, insurance companies may insert a war clause into their policies. This clause usually states that if you (the insured) die in a war, the insurer does not have to pay the death benefit proceeds that would ordinarily be payable under the policy. Instead, all they have to do is return the premiums you paid plus interest.

Special provisions, riders and options
Note that the provisions described here are only the ones that are more or less common to all life insurance contracts. In most cases, you have the choice of purchasing riders and optional coverages that allow you to expand your coverage and tailor the policy to your needs. In addition, certain types of policies may have special provisions of their own. Cash value policies, for example, generally include provisions relating to policy loans and the surrender of all or part of the cash value.

LIFE PLANNING

Estate Planning & Life Insurance

Life insurance has come a long way since the days when it was known as burial insurance and used mainly to pay for funeral expenses. Today, life insurance is a crucial part of many estate plans. It can:

provide much-needed income that is immediately accessible to your survivors
allow you to replace wealth lost due to estate shrinkage (i.e., the estate taxes and expenses associated with your death) and
allow you to give money to your favorite charity.

What are the estate planning benefits of life insurance?

Life insurance can protect your survivors financially:

You can buy life insurance to help ensure that your survivors don’t suffer financially when you die. You can protect their long-term financial needs by planning so that they will have enough money to pay their bills and live comfortably for years to come. You can also use life insurance to protect your survivors’ short-term financial needs. Because life insurance proceeds normally don’t pass through probate, your loved ones will have enough money to pay their bills right away–they won’t have to wait until your estate is settled.

Life insurance can replace wealth that is lost due to estate shrinkage:

Life insurance may be the number one method of replacing wealth that is lost due to estate shrinkage. To ensure that the estate (money and assets) you leave to your survivors isn’t less than you intended, you can buy enough life insurance to cover the expenses associated with your death, such as taxes, fees, and other debts that your survivors will have to pay.

Life insurance can be given to charity:

If you want to leave money to charity when you die, consider using life insurance. Not only does life insurance allow you to make a substantial gift to charity at relatively little cost to you, but there are certain tax benefits as well. For instance, depending on how you structure your gift, you may be able to take an income tax deduction equal to your basis in the policy or its fair market value. Or, you may be able to deduct the premiums that you pay for the policy. In addition, gifts to charity may reduce estate taxes owed when you die.

Plan carefully if you expect to leave behind a substantial estate
Your survivors generally won’t owe income tax on any life insurance proceeds that you leave to them. However, they may owe estate taxes if you leave behind a large enough estate but don’t plan ahead. In general, if you’re leaving behind a taxable estate worth less than a certain amount, your survivors won’t owe estate taxes on a life insurance policy that you leave them. But, if you intend to leave an estate larger than that amount, you may want to consider the estate tax consequences of owning life insurance.

In general, to avoid life insurance-related estate taxes, make sure that you don’t:

Own the policy or have any incidents of ownership in the policy
Make the proceeds payable to your estate
Make the proceeds payable to your personal representative (executor)
Make the proceeds payable to a beneficiary to satisfy a debt or to pay alimony or support
Pay the premiums

Taxes & Life Insurance

How is life insurance taxed?

Historically, life insurance has been accorded liberal tax treatment. As insurance products have become more sophisticated, however, the line separating insurance products from investment products has become a bit more complicated, depending on the type of policy(s) you own. As a result, a mix of complex rules and exceptions now govern the taxation of insurance products. Familiarity with these rules will help you avoid an unwary consequences and help you plan accordingly.

Tax considerations

Taxes are typically levied whenever cash changes hands. During the term of any life insurance policy, there are a number of occasions when money can and does change hands. The only question is whether the transaction amounts to a taxable event that triggers current income tax liability. For instance, in most cases, premiums are paid with after-tax dollars. To the extent they are deemed a return of premiums, benefits paid out during your lifetime are usually paid out tax free. Typically, death benefits are received tax free by your beneficiaries after your death. But, the sale or surrender of your policy during your lifetime triggers a tax on the realized gain.

Premiums may be paid with pre-tax dollars:
If your company offers the option to purchase life insurance through a qualified retirement plan, then your pre-tax contributions to the plan (and/or your company’s contributions) can be used to buy a life insurance policy. However, not many companies offer their employees the option to purchase life insurance through their qualified retirement plan. If you do not purchase the insurance policy through a qualified retirement plan, then the premiums have to be paid with after-tax dollars.

Cash value accumulates tax deferred:

As the investment element of your policy grows, you realize gains. Generally, you are allowed to defer taxes on those gains provided you don’t sell or surrender the policy. There are a few rare–but important–exceptions.

Dividends are typically not taxable:

Dividends are paid out of the insurer’s surplus earnings for the year. Regardless of whether you take them in cash, or keep them on deposit with the insurer, they are considered a return of premiums. As long as you don’t get back more than you paid in, you are merely recouping your costs and no tax is due.

Cash withdrawals in excess of basis are taxable income:
When you begin to withdraw cash from a cash value life insurance policy, the amount of withdrawals up to your basis in the policy will be tax free. Your basis is the amount of premiums you have paid into the policy. Any withdrawals in excess of your basis will be taxed as income. If the policy is classified as a “modified endowment contract,” then untaxed earnings must be withdrawn first and taxed. Keep in mind, though, that only certain types of cash value policies even allow withdrawals in the first place.

Policy loans usually not taxable:
If you take out a loan against the cash value of your insurance policy, the amount of the loan is not taxable (except in the case of a modified endowment contract). This result is the case even if the loan is larger than the amount of the premiums you have paid in. Such a loan is not taxed as long as the policy is in place.

Interest on policy loans usually not tax deductible:
The interest on any loans you take out against the cash value of your life insurance is usually not tax-deductible.

Surrender of policy may result in taxable gain:
If you surrender your cash value life insurance policy, any gain on the policy may be subject to federal (and possibly state) income tax. The gain on the surrender of a cash value policy is the difference between the net cash value and loan forgiveness amounts and your basis in the policy. Your basis is the total premiums you paid in cash, minus any policy dividends and tax free withdrawals that you made.

Policy exchanges are typically not taxable:

The tax code allows you to exchange one life insurance policy for another without triggering current tax liability. However, you must follow the IRS’s rules when making the exchange.

Death benefits usually not subject to federal income tax:
Whoever receives the death benefits from your insurance policy (at the time of your death) usually does not have to pay federal income tax on those proceeds. Thus, if you die owning a cash value life insurance policy with a $500,000 death benefit, then the beneficiaries under the policy will generally not have to pay any federal income tax on the receipt of the $500,000. In addition, the payment of death benefit proceeds from a cash value life insurance policy to a beneficiary is usually not considered a taxable gift.

Insurance proceeds may be included in your taxable estate:
If you hold any incidents of ownership in an insurance policy, the proceeds from that insurance policy will be included in your taxable estate. Furthermore, if you gift away an insurance policy within three years of your death, then the proceeds from that policy will be pulled back into your taxable estate. Incidents of ownership include the right to change the beneficiary, the right to take out policy loans, and the right to surrender the policy for cash.

Savings & Life Insurance

Cash value life insurance provides both death benefits and a savings feature. When you buy a permanent or cash value policy, part of your premium pays for the life insurance protection and part goes toward the savings component. As you pay your premiums the savings portion is invested, and the principal and earnings accumulate as your cash value.

You aren’t required to leave the funds in the policy, however. You can sometimes withdraw from or borrow against the accumulated cash value. You can then use the withdrawn or borrowed funds to finance your retirement, pay a child’s college tuition, or assist a child with a down payment on a house, among other things. This type of insurance can be a valuable asset, both as an investment and for life insurance purposes.

Types of life insurance policies you can use to save

Whole life:

With a whole life policy, insurers generally invest the funds primarily in long-term fixed-rate securities (bonds, for example) that typically provide the policyholder with modest returns of perhaps 3 to 5 percent. Additional returns may also be achieved through dividend distributions (if applicable). Yet, because whole life premiums don’t vary in frequency or amount as they might with universal life, whole life is a more predictable product.

Variable life:

With a variable life policy, you choose how to invest the premiums from the investment choices available in the policy. You can place them in potentially higher-yielding stock and bond funds if you desire. The funds are invested at a variable rate of return. Since you control how the funds are invested, you can choose more aggressive investments if the markets are flourishing. Over the last 20 years, the return on variable life policies has far exceeded the return on most whole life policies. A variable life policy is an appropriate choice if you can tolerate the higher degree of risk. However, variable life returns depend on market conditions. Therefore, while you’ll receive strong returns when the market is soaring, your returns will drop when the market falls.

Universal life:
With universal life, the insurer invests the savings portion of your premium in a fixed-rate account that is subject to change at regular intervals. You have no control over how the funds are invested. These investments can yield fairly attractive returns when rates on fixed investments are rising. However, while you generally receive interest at close to market rates, you can’t easily predict the long-term return. Since universal life policies typically allow you to raise or lower your premiums on an annual basis, you can increase your contribution when the insurer is offering a higher return. This flexibility with premium payments is one of the primary advantages of universal life.

Variable universal life (VUL)
With variable universal life, you choose how to invest the premiums. You are given a number of investment accounts to choose from, ranging from conservative to aggressive portfolios. A VUL policy is a viable choice to consider if you can tolerate the higher degree of risk involved. However, VUL returns depend on market conditions. Therefore, when the market falls, so will your returns. VUL typically allows you to raise or lower your premiums on an annual basis. This flexibility with premium payments is a key advantage of VUL.

Advantages of using life insurance as a savings vehicle

It provides life insurance protection for your family.
You can earn money on your premium payments (depending on investment performance).
The cash value grows tax deferred until withdrawn or surrendered.
Sometimes you can withdraw from the cash value (generally up to a certain percentage).
You can borrow from the cash value at a relatively low interest rate (the amount you can borrow will vary by policy type).
You may be able to combine a policy loan with a policy withdrawal.
You may have a number of investment choices (depending on policy type).

NOTE: Depending on the specific type of cash value policy, some of these advantages may apply in varying degrees or not at all.

OTHER CONSIDERATIONS

Self Employment

Life insurance is meant to provide proceeds that will help to replace your income and/or pay off liabilities in the event of your death. If you are self-employed, you may have an even greater-than-average need for life insurance. Not only will you want to protect your family after you die, but you’ll want to protect the financial needs of your business as well.

Why life insurance is important

Like most people, you probably get your money by working. As long as you are alive, your income-producing capability is relatively secure, and you and your family can enjoy the lifestyle you have established. Even in hard economic times, most people are industrious enough to produce an income or manage to get by until the situation improves. When an income earner dies, however, the surviving family could face economic hard times that won’t end. The financial needs for the surviving family may include:

final expenses, such as burial and funeral costs
unpaid medical bills
income replacement for survivors
mortgage balance
education fund for children
unplanned emergency expenses

Why life insurance may be even more important for the self-employed
When the income earner is a self-employed individual, there may be an even greater need for insurance. As a sole proprietor, you are personally liable for all the debts of your business. There is no legal distinction between personal and business assets. By legal definition, a sole proprietorship terminates when the owner dies. Any losses or financial obligations at the death of the sole proprietor become the responsibility of the estate. It is possible that personal assets may have to be sold or transferred to settle business debts. Business debts may include:

business loans
mortgage or lease payments on business location
accrued payments due to suppliers, vendors, consultants, employees, etc.
taxes due to local, state, and federal taxing authorities
fees to lawyers, accountants and other advisors to settle business affairs

Life insurance can be used to cover these financial responsibilities, as well as to provide for the ongoing needs of your family after your death.

What to do about it
Talk to us and we will help you assess your need for life insurance and design a program to fit your specific situation.

Insuring Children

The topic of Life insurance for children is understandably a difficult issue for many parents. If your child dies, it would be a serious tragedy. But a child’s death does not normally create a unrealistic financial hardship for the child’s family. After all, the general purpose of life insurance is to replace income after a death. Unless the child is a substantial wage earner (like an entertainment star), no income is lost if the child dies. Although a child’s death does create one immediate financial problem: funeral expenses.

Isn’t it smart to buy insurance now, while the rates are low?
It’s true: life insurance policies for young children are very inexpensive. But there’s a reason for that. Children’s insurance policies are usually for smaller amounts, like $10,000 and are typically added to the parents policy in the form of a rider.

Insurance policies for teenagers and young adults are pretty inexpensive, too. In terms of insurance costs. As your child ages and you take on added financial responsibilities in order to provide for their needs and education your need to have this type of insurance on your child may also increase.

Isn’t it smart to buy insurance now, in case my child develops a medical condition?
It’s a common sentiment: you want to protect your child now, in case he or she develops a medical condition and can’t buy insurance later. If you believe your child is at risk to develop a medical condition, buying life insurance now might ease your mind. If you lose sleep over the possibility that your child will become uninsurable, then by all means purchase a life insurance policy now.

What you can do instead
If purchasing Life insurance on your child is something you are uncomfortable with, consider this:

To protect your child, you may want to purchase additional coverage on your own life and/or on your spouse’s life. As wage earners, your death would profoundly affect your child’s financial future. Make sure the coverage on both parents’ lives ensures there will be enough money for day-to-day living as well as college expenses, even if something happens to one of you.

Charity & Life Insurance

Life insurance can be an excellent tool for charitable giving. Not only does life insurance allow you to make a substantial gift to charity at relatively little cost to you, but you and the charity may benefit from tax rules that apply to gifts of life insurance.

Why use life insurance for charitable giving?
There are several advantages to giving life insurance to charity:

Life insurance allows you to make a much larger gift to charity than you might otherwise be able to afford:

Although the cost to you (your premiums) is relatively small, the amount the charity will receive (the death benefit) can be quite substantial.

The charity is guaranteed to receive the proceeds of the policy when you die:

As long as you continue to pay the premiums on the life insurance policy, the charity is guaranteed to receive the proceeds of the policy when you die. The amount of the death benefit is fixed (or in the case of cash value insurance, perhaps even increasing), and is not subject to market fluctuations or loss of principal. Since life insurance proceeds paid to a charity are not subject to income and estate taxes, probate costs, and other expenses, the charity can count on receiving 100 percent of your gift.

Giving life insurance to charity has certain income tax benefits:
Depending on how you structure your gift, you may be able to take an income tax deduction equal to your basis in the policy or its fair market value, and you may be able to deduct the premiums you pay for the policy. In addition, an outright gift of life insurance is typically sheltered from gift tax by the charitable gift tax deduction, as long as you’re giving a complete interest in the policy.

Giving life insurance to charity has certain estate tax benefits:

If you’re worried about estate taxes, you can structure your charitable gift of life insurance to meet your needs. For instance, you can structure your gift so that the proceeds of the policy are not included in your gross estate. Or, you can structure your policy so that the amount of the proceeds payable to the charity can be deducted from your gross estate.

What are the disadvantages of using life insurance for charitable giving?

Donating a life insurance policy to charity (or naming the charity as beneficiary on the policy) means that you have less wealth to distribute among your heirs when you die. This may discourage you from making gifts to charity. However, this problem is relatively simple to solve. Buy another life insurance policy that will benefit your heirs instead of a charity.

Ways to give life insurance to charity
Name a charity as beneficiary on your life insurance policy:

This is the simplest way to use life insurance to give to charity. You, as owner of the policy, simply designate the charity as beneficiary. Designating the charity as beneficiary may allow you to make a larger gift than you could otherwise afford. If the policy is a form of cash value life insurance, you still have access to the cash value of the policy during your lifetime. However, this type of charitable gift does not provide many of the other tax benefits of charitable giving because you retain control of the policy during your life. Upon your death, the proceeds are included in your gross estate, although the full amount of the proceeds payable to the charity can be deducted from your gross estate.

Name a charity as the recipient of dividends:

Another simple way of making a charitable gift is to assign the dividends on your existing policy to charity. You, as owner of the policy, simply make this designation at the time of application, or at any other time while you own the policy. By assigning your dividends to charity you are able to make a charitable gift. You retain control over the policy and its cash value during your life. You also receive an income tax deduction as dividends are paid to the charity. However, this type of charitable gift does not provide many of the other tax benefits of charitable giving because you retain total control of the policy. Proceeds are included in your gross estate, and there’s no offsetting estate tax deduction because the proceeds do not go to charity.

Donate an existing life insurance policy to charity:

In order to donate an existing life insurance policy to charity, you must assign all rights in the policy to the charity. You must also deliver the policy itself to the charity. By doing this, you give up all control of the life insurance policy forever. This strategy provides the full tax advantages of charitable giving because the transfer of ownership is irrevocable. You may be able to take an income tax deduction equal to your basis or its fair market value. The policy is not included in your gross estate when you die, unless you die within three years of the transfer. In this case, your estate would get an offsetting charitable deduction.

Donate a new life insurance policy to charity:

In order to use this strategy, you would purchase an insurance policy, and immediately assign all rights in the policy to the charity. You would also deliver the policy itself to the charity. You would pay the premiums and if structured properly, be able take a charitable deduction for those premiums. The IRS may treat this transaction as if the charity itself had purchased the policy on your life. Most states require the purchaser of a policy to have an insurable interest in the life of the insured. Since it would be difficult to prove that a charity has an insurable interest in your life, your estate could recover the proceeds from the charity, and any tax benefits you had received would be reversed. However, if the transfer were allowed to stand, and the proceeds pass to the charity as intended, you would be entitled to the full tax advantages of charitable giving.

Commercial Insurance Knowledge Center:

Click any of the following general topics to reveal all the helpful details.

DISCLAIMER: Statements on this website provide general information only as it relates to policies and coverages. All coverages are subject to the terms, conditions and exclusions of the actual policy issued so contact one of our licensed agents for questions regarding your specific needs and policy.

INLAND MARINE

Inland Marine Insurance For Your Business

If you move goods or equipment from one location to another, or have an off-premises exposure, you need the special protection of Inland Marine coverage. Inland Marine can protect many types of property including property at your location, in transit, at a customer’s location, or property of others in your care. We have numerous coverages designed to provide you with the specific protection your business needs.

The following is a list of only some of the coverages available:

Accounts Receivable
Boat Dealers and Marina Operators
Builders Risk and Installation
Camera and Musical Instrument Dealers
Contractors Equipment and Tools
Electronic Data Processing Equipment
Equipment Dealers
Exhibition
Fine Arts
Merchants Property
Mobile Communication Equipment such as cellular phones, CBs, etc.
Motor Truck Cargo Carriers
Physicians and Surgeons Equipment
Radio and TV Towers
Salespersons Samples
Signs
Transportation
Valuable Papers

PROPERTY INSURANCE

Property Insurance For Your Business

We offer a variety of excellent property coverages for your business’ buildings, personal property, and income. Most property policies include additional coverage at no charge that provides higher coverage limits than most standard policies, in addition to extra coverages normally not found. Some coverages even offer you the option to purchase higher limits.

The following list only highlights some of the coverages included:

Newly Acquired Property and Business Personal Property
Property Off-Premises
Outdoor Property and Outdoor Signs attached to Buildings
Lawn Coverage on which your property is located
Arson Reward information leading to an arrest
Extra Expenses incurred to keep your business running after an insured loss
Water Back-up and Overflow from sewers, drains or sumps
Money and Securities

LIABILITY

General Liability Insurance For Your Business

You must protect your customers from potential injury – your financial security can be put at risk if you are legally liable for damage to someone’s property or if someone is injured as a result of your business operation. No matter how thoroughly you have been trained in your line of business, you are not fully protected unless you have liability insurance.

Liability coverages often include:

coverage for tenants’ property damage liability
Medical Payments
Expanded Fire Damage – coverage is extended to apply not only as a result of fire, but also explosion, release of smoke from an unfriendly fire, or sprinkler leakage incidents
coverage is provided for additional insureds when required by written contract
Extended Property Damage – coverage is provided for bodily injury and property damage resulting from the use of reasonable force to protect persons or property
additional insured status is extended to employees who provide professional health services when this exposure is incidental

Umbrella Liability Insurance For Your Business

Umbrella policies offer additional protection for catastrophes, unusual exposures, and additional liability limits beyond underlying insurance coverages.

High limits – Affordable protection of $1,000,000 or more for each occurrence in excess of the underlying insurance.
Broad coverage – Protection goes beyond the scope of coverage provided by the underlying insurance.
Legal costs in addition to limits – Legal defense costs are covered in addition to the umbrella limits of liability.
Legal defense from the first dollar – If the underlying policy does not provide this protection, legal defense and settlement costs are covered from the first dollar.

Our umbrella policy is designed to meet clients’ needs for a well-rounded business insurance program.

Homeowners Insurance Knowledge Center:

Click any of the following general topics to reveal all the helpful details.

DISCLAIMER: Statements on this website provide general information only as it relates to policies and coverages. All coverages are subject to the terms, conditions and exclusions of the actual policy issued so contact one of our licensed agents for questions regarding your specific needs and policy.

THE BASICS

UNDERSTANDING THE BASICS

Insuring Your Home

What is homeowners insurance?

Homeowners insurance is a policy covering your home (the structure) and its contents (personal belongings). It can save you from severe financial loss if your home is damaged or destroyed. It covers your family’s possessions and can provide you with compensation for liability claims, medical expenses, and other amounts that result from property damage and personal injury suffered by others. Most lenders require homeowners insurance in order to obtain a mortgage.

For example, a homeowners insurance policy can protect you against the following scenarios:

A tornado or storm shattering your home’s windows or scattering your roofing shingles across the neighborhood
A burglar breaking into your home and stealing that figurine you inherited from your grandmother
Your dog biting a neighbor or delivery person
Physical therapy costs for a guest injured by a fall in your home
A successful personal injury lawsuit brought by a neighbor the last time you practiced your chip shot in the backyard
Damage from a vehicle crashing into your house

Homeowners insurance is also a way for condominium and cooperative unit owners, mobile home owners, and renters to protect their possessions from damage or theft, and to obtain liability coverage for property damage and personal injury suffered by others.

Who is covered?

Homeowners insurance protects more than just the owner of the house, condominium, or other property. Depending on your living situation, the following individuals are covered under your homeowners policy:

Named insured
The insurance policy identifies the “Named Insured” (meaning the individual who is primarily insured under the policy), who is usually the same person named on a deed or lease as the owner or tenant, respectively. You, as the named insured, receive the most extensive coverage under your homeowners policy, for you are covered by property insurance on your dwelling and other structures, in addition to personal property and liability insurance. Named insured condominium owners and renters do not receive such extensive coverage because they do not, on an individual basis, own their dwelling or other structures.
Spouse
If your spouse resides in your dwelling, then he or she is covered by personal property and liability insurance, even if he/she isn’t identified on the Declarations Page as a named insured.
Residents
Individuals who reside in your dwelling are covered by personal property and liability insurance if they are your relatives (e.g., your children) or if they are under 21 years of age and in the care of any member of your family.
Employees
Housekeepers, au pairs, or gardeners, for example, are covered by personal property insurance.
Guests and other visitors
Your guests and other invited visitors can typically be covered by personal property insurance so long as you contact the insurance company or your agent to request coverage.

What is covered?

The property insurance section of your homeowners policy protects more than just your actual home or dwelling. In most cases, your insurance company will reimburse you for damage or theft affecting:

Your dwelling, any structures attached to the dwelling, and building materials and supplies that are stored near the dwelling and are used to construct, alter, or repair the dwelling or other structures on your property
Structures on your premises that are not attached to the dwelling, such as a tool shed or detached garage
Personal property such as the contents of your house like furniture, clothing, and stereo equipment, as well as outdoor items like sporting equipment and gardening tools

Generally, the coverage limit for other structures and personal property coverage is a set percentage of the dwelling coverage amount. If you wish, you can increase a policy’s preset coverage amount by endorsement (see below).

Condominium or cooperative unit coverage

If you own a condominium or cooperative unit, your homeowners insurance does not cover you for your entire dwelling space because you do not individually own the structure you live in. Instead, you are covered for your personal property and any portion of the unit you own under the terms of the condominium or cooperative documents. Renters are covered for personal property only because renters do not own any portion of the property.

Specific coverage In most cases, whether you own or rent a home, the homeowners insurance company will reimburse you for costs, expenses, and other amounts related to:

Loss of use
If your dwelling is not fit to live in because of damage covered by the policy, you should receive reimbursement for your family’s or household’s living expenses while you wait to permanently relocate or wait for the dwelling to be repaired. A set coverage limit is always applied to a policy’s standard loss-of-use coverage, but it can be increased by endorsement.
Liability
If you or another insured are found responsible for personal injury or property damage suffered by another person, your insurance company will offer a settlement amount owed to that person. This is only true if carelessness or negligence, rather than intentional misconduct, caused the injury or damage. If an injured or damaged person brings a lawsuit, your insurance company should pay to defend you or any other insured named in the lawsuit. For example, you may be found negligent if a meter reader was injured by falling off your tricky cellar stairs because the railing was broken (and you knew about the situation but failed to repair it). You may be found liable for intentional misconduct if you cut down a tree on your neighbor’s property to improve your view.
Medical payments to others
If a nonresident requires medical assistance as a result of an injury suffered on or near your premises, your insurance company should pay his or her medical expenses. Injuries that take place away from your premises are also covered, as long as you, another insured, a household employee, or your pet caused the injury.

Open perils vs named perils
Your policy can also cover either open perils or named perils. A named perils policy specifies which perils are covered as well as which perils are not. Rather than covering a number of listed or named perils, an open perils policy covers you broadly against risk of direct loss to your dwelling and other structures, and also includes an extensive list of perils which are not covered.

What is not covered?

There is a wide variety of damages, conditions, and costs that are not covered by homeowners insurance. Your insurance policy describes a number of situations that are specifically excepted or excluded from coverage (called exclusions). Some policies contain more exclusions than others. Your policy also describes certain conditions you must meet, and duties you must perform, in order for you to be covered. Terms and limitations that were originally included in your policy can be changed by a document called an “endorsement.” For these reasons, you should carefully read your homeowners policy to learn the limitations and exclusions that apply to your specific situation. Here are just a few examples of situations when you may not be covered by a standard homeowners insurance policy:

Land
Although the structures and possessions that lie upon a parcel of land are usually covered by a homeowners policy, the land itself is not. This means, for example, you’re not covered by your policy if your neighbor’s pool overflows and contaminates your untilled garden.
Coverage Limitations
The Declarations Page of your policy recites maximum coverage amounts that limit what the insurance company must pay. Separate limits are set for the dwelling, other structures, personal property, loss of use, personal liability, and medical payments to others. This means that even if you suffer a loss to your personal property in the amount of, let’s say, $50,000, the insurance company will pay you no more than the policy’s stated limitation recited on the Declarations Page. If this figure within your policy is $100,000 then you’re covered for all of it. On the other hand, if it’s only $30,000 then you’ll have a $20,000 deficit.
Flooding
Your homeowners policy will not cover you for damage that results from floods, waves, sewer overflows, or water seeping into your basement.
Business
If you’re involved in a business activity, your homeowners policy will not cover you for liability or medical payments due other persons, even if the damage or injury occurred in your home. Other structures located on your premises that are used for business purposes are also not covered by the policy. This means your standard homeowners policy will not reimburse you for medical care required by a client who slips and falls in your home office as he’s putting his coat on the rack.
Your tenantsYour standard homeowners policy will not cover you for damages or injuries suffered by the tenants who rent any part of your home.
Other insurance
If an injury or damage is covered by other insurance in addition to your homeowners policy, your homeowners insurance company will only pay its proportionate share of the amount due.
Theft by another insured
Your homeowners insurance will not cover you for a loss caused by a theft committed by another insured person under the policy. This means your policy will not cover you if your nephew (who lives with you) steals a valuable baseball card from the family room.
One or two family dwellings
Structures that have more than two family dwelling units cannot be covered by homeowners insurance
Cars
Registered motor vehicles are specifically excluded from personal property coverage. Only vehicles like motorized wheelchairs and lawn mowers, which are not usually registered with the state, are covered by personal property insurance. Your car is also not covered under the “Personal Liability and Medical Payments to Others” sections of your homeowners policy because insurance companies prefer you to insure vehicles with an automobile insurance policy.

How much coverage is needed?

Your home can be insured for either:

Replacement Cost–pays you the cost of replacing damaged property, with no deduction for depreciation, but with a maximum dollar amount
Guaranteed Replacement Cost–pays the full cost of replacing damaged property, with no deduction for depreciation and no dollar limit. This coverage is not available in all states. Some insurance companies may limit coverage to 120 percent of the cost of rebuilding your home.
Actual Cash Value–pays you an amount equal to the replacement value of damaged property minus a depreciation allowance.

Unless a policy specifically states that property is covered for its replacement value, coverage is for actual cash value.

It is important that your policy should cover 100% of the replacement cost of your home. That way, the insurance company will pay you the full replacement cost for any damage up to the coverage limit. If you fear inflation will decrease the value of your policy, an inflation guard endorsement, which is built-in to many homeowners policies these days, ensures that your coverage amount increases a bit every year to keep up with inflation. What this means, for example, is if your house increases in value next year by 5% your policy’s replacement limit will also increase, according to some predetermined index of local home values.

Additions to your home
If you add improvements to your home, you should increase your coverage. Don’t wait until the addition is completed to increase your coverage, contact your insurance agent or representative shortly before or after construction begins. Otherwise, if the new addition is damaged or destroyed before you have increased your coverage, you may be responsible for the cost of repairing or rebuilding the addition.

Also, make sure that contractors and subcontractors working on your addition have workers compensation by requesting copies of their insurance certificates. If the coverage is insufficient you may need to extend the liability limits portion of your homeowners policy, or simply find a company whose insurance meets your requirements. The reason for this is relatively simple to understand… Workers injured while working on your addition could sue you if the contractor doesn’t have the proper insurance coverage.

Insuring Property

Why insure your property?

Property insurance covers risk from loss or damage to your personal property. Even the smallest residence can contain property worth thousands of dollars–for instance, an entertainment or sound system, home computer, or jewelry. If a catastrophe struck tomorrow, and you could afford to replace everything you own, then you may not need property insurance. If that isn’t the case, then it’s likely you need it.

Homeowner policies cover personal property to some extent
In addition to your home, a standard homeowners policy also covers personal property, meaning articles you own other than land and buildings. Your personal property consists of the contents of your house (like furniture, clothing, and stereo equipment, as well as outdoor items like sporting equipment and gardening tools). Generally, the limit for personal property coverage is stated as a percentage of the dwelling coverage amount listed within the policy.

If you own a condominium or cooperative unit, your homeowners insurance provides coverage for your personal property and any portion of the unit you own under the terms of the condominium or cooperative documents. Similar to a homeowner, you must choose a specific amount of coverage for the building. It is crucial to determine how much responsibility you have under the condominium or cooperative documents. In these types of situations one should never guess what these amounts or percentages are. It is advisable to find out for sure and if possible receive this information in writing. Then keep it in a safe place in case you need it in the future.

Homeowners policies have set limits

Homeowners policies set specific dollar limits for particular categories of personal property in a section entitled Special Limits of Liability. Note that for some categories, the policy specifies a limit only for theft, not for damage or destruction. The reason is that items such as jewelry, firearms, and furs are especially susceptible to theft, and insurance companies want to limit their exposure to these fairly common incidents. The damage or destruction of these items is less common, and insurance companies are willing to cover them up to their actual cash value.

Below are some examples of the standardlimits for particular categories of personal property:

$200 for money, bank notes, bullion, gold, silver, coins, and metals
$1,000 for securities, accounts, deeds, letters of credit, notes other than bank notes, manuscripts, personal records, passports, tickets, and some other related items
$1,000 for the theft of jewelry, furs, watches, and precious and semi-precious stones
$2,000 for the theft of firearms
$2,500 for the theft of silverware, silver-plated ware, goldware, gold-plated ware, and pewterware
$2,500 for property at the residence used for business purposes
$250 for property used away from the residence for business purposes

*Of course, depending on your policy’s type, limits and endorsements these figures may or may not be accurate.

Additional coverage

Chances are, the value of many of your personal belongings may exceed the limits in your homeowners policy. Only you know for certain. That’s why you have the option of increasing these specific limits by purchasing either a Scheduled Personal Property endorsement or a floater. You may need an increased jewelry limit, for instance, for covering engagement or wedding rings. If you buy a personal property rider, you must be able to verify the cost and condition of the item. Photos or a video can be used to inventory your property. However, you should be sure to keep the inventory away from the premises (i.e., safe deposit box). Professional appraisals are needed for certain items, such as jewelry, antiques, or camera equipment (beyond a basic camera).

Renters need property insurance, too
Many renters are under the mistaken belief that they are covered under their landlord’s homeowners insurance policy. This is not true. Your landlord’s policy covers the building itself, not the personal belongings of you or other tenants. The fact that you pay rent instead of a mortgage payment doesn’t make your personal possessions any less valuable. By taking out a renters insurance policy, you can cover your personal property from loss or damage that results from broken pipes, fire, theft or any other event specified in the policy. In fact, renters may even be more likely to suffer from a loss of personal belongings because they live in close proximity to other individuals and families.

Renters insurance also protects you from liability claims against you if someone suffers an injury or property damage because of something you did or didn’t do. For example, if you forget to turn your stove off, and your apartment catches fire and destroys the building, you could be held liable by the landlord. Your renters insurance policy provides a set amount of liability protection.

In addition to protecting you from property loss or damage and liability claims, renters insurance (HO4) is very reasonably priced.

Protect your possessions wherever they are

Property insurance may protect your possessions wherever they are. For example, if you are on vacation and lose a valuable item, as long as the loss is by a covered peril or event, in most cases the location doesn’t matter. Your policy will specify covered perils and events.

How much property coverage do you need?

To determine how much property insurance coverage you need, make an inventory of all your home’s contents. Don’t forget to include furniture, appliances, jewelry, artwork, and the contents of your closets, cabinets and the toy chest. When possible, list the serial number, date and cost of purchase. Include receipts if possible. An easy way to inventory your possessions is to use a video camera or take photos. When using a video camera, you can talk about the specific items, their cost, and when you bought them. Ideally, you would want enough insurance coverage to replace your possessions if they were destroyed.

Keep a copy of your inventory in a location away from your home, like a safety deposit box, or maybe at a close friend or relative’s house. This way, if your home is destroyed, your inventory list will be safe at another location. When you make major purchases, remember to add them to your inventory and check with your insurer–you may need to increase your coverage levels.

Two methods to determine value

Insurance companies use one of two methods to determine the value of property:

Replacement cost–pays you the cost of replacing damaged property, with no deduction for depreciation, but with a maximum dollar amount.
Actual Cash Value–pays you an amount equal to the replacement value of damaged property minus a depreciation allowance.

Unless a policy specifically states that property is covered for its replacement value, coverage is for the lower, actual cash value. Check your policy, or ask your insurance agent or representative if you are not sure what level of coverage you have.

Periodically review your existing coverage

Review your existing homeowners or renters policy to make sure you have enough coverage for all valuable possessions. Periodically review your coverage to make sure it is keeping pace with new purchases and/or gifts you have received.

HOW MUCH IS ENOUGH

How Much Should It Cost?

One question insurance customers never fail to ask is, “What’s it going to cost me?” The cost of homeowners insurance is influenced by a broad range of market factors:

From rising construction costs to the
Increasing number of liability lawsuits.
But it’s also affected by the customer’s needs, policy choices and habits.
We are dedicated in helping our clients control their insurance costs.

Homeowners insurance is one of the most important investments you’ll make. You should keep in mind the difference between market value and replacement value, and make certain your home is insured “to value.” In many cases, it costs more to reconstruct a house than the house would bring on the open market. Talk with us to make sure you have the right amount of coverage.

You can take steps to lower the cost of your premiums. Our companies offer special discounts and credits for such features as fire extinguishers, sprinkler systems, and burglar alarms. These are factors in loss prevention, which ultimately help control insurance costs.

You can also lower your home insurance costs can by raising your deductible. Small claims are expensive for insurance companies to handle. You can reduce your premiums by as much as 10 percent if you increase your deductible from $250 to $500. Increasing the deductible to $1,000 can lower premiums by almost a third.

In addition, the price you pay is influenced by how you pay. Our companies offer different payment plans, so you can pay your premiums in a way that best fits your lifestyle.

Finally, you can save money by placing all your home and auto policies with us because we offer discounts if you have more than one policy with us.

Do I Have Enough Home Insurance?

If your home is completely destroyed, you want to be able to rebuild it to its original condition. This requires having enough insurance to replace your home, which may cost more than its value on the open market. The cost of rebuilding is usually more expensive than new construction, especially if your home was destroyed along with many others in a single neighborhood or town. In the wake of a flood, for example, simple supply and demand can drive the cost of materials and labor up and cause the price of rebuilding to skyrocket.

Our companies will work with you to determine your home’s replacement cost. Normally using data from the E.H. Boeckh Company, the U.S. authority on replacement value, the insurance company will consider the construction costs of homes in your area that are of similar size and quality.
Typically, a homeowners policy covers possessions whose total value equals 70 or 75 percent of the homeowners coverage. In simple terms, that translates to $70,000 to $75,000 worth of coverage for your personal possessions if you have $100,000 in coverage on your home.
If you collect art, have valuable jewelry or keep other things of special value, consider expanding your coverage to protect those items.
When the value of the things you own exceeds the 70 to 75 percent coverage included in a typical policy, additional coverage can be critical.
In addition, many policies have sub-limits on specific categories of valuables. If the value of those items exceeds the policy sub-limit, extra coverage is probably in order.

A standard policy will probably insure your possessions at actual cash value, which is the value of an item at the time of a loss. To make sure you can fully replace lost or stolen items, you may want to add an endorsement for replacement cost coverage, which will replace the item with one of similar make and model, regardless of the stolen or damaged item’s actual cash value. In many of our companies homeowners policies, replacement coverage is included at no extra cost. Check with us, about your policy, to be sure.

Finally, we suggest that you take the time to inventory your possessions.

In the wake of a catastrophe such as a fire, it can be very difficult to create a list of all the things you owned.
Now is the time to walk through your house and make an inventory of your possessions.
One easy way to do this is to videotape the contents of your home.
When you’re done, place a copy of the tape in a safe deposit box. Or make a copy of your tape or inventoried documents, and store them at a family members home. Then, if the worst ever does happen, you’ll have a record that can help us to help you in the replacement of your possessions.

COVERAGE AMOUNTS

Understanding The Benefits of Home Insurance

Why You Need Homeowners Insurance

Your home is your castle, so the saying goes. In order to protect it, people purchase homeowners insurance, one of the most popular forms of insurance today. Of course, if you have an outstanding mortgage on your home, chances are you had no choice–your lender required you to secure homeowners insurance before the loan was approved. But if the choice is up to you, remember that homeowners insurance provides important benefits. A few hundred dollars a year can buy you a hundred times that in peace of mind.

The three benefits of homeowners insurance include:

protecting your home,
protecting your personal property, and
providing liability coverage.

Your house
The main purpose of homeowners insurance is to protect your home (and other structures, like a shed or detached garage). This coverage is the bread and butter of any homeowners policy. Your house is often the most important investment you’ll ever make, and even a relatively small amount of damage may set you back financially if you don’t have insurance, or don’t have enough insurance.

Take the following scenarios:

Lighting strikes a power line leading into your house, causing a fire.
A delivery truck careens off the road into your house.
Your hot water heater explodes.
A tree falls through your roof during a storm.

With the typical homeowners policy, you are covered in each of these situations. You don’t have to worry about the unpredictable. The financial problems created by random accidents and perils will not force you out of your home.

Not only will your policy cover the cost of the damage (exactly how much depends on your policy), but also it will cover (up to a limit) your living expenses in makeshift quarters while you wait for your home to be repaired.

Personal property

In addition to protecting your home, the typical homeowners policy covers your personal property as well. Your personal property consists of the contents inside your home–for example, furniture, clothing, stereo, computer equipment, jewelry, and sentimental items–as well as outdoor items like sporting equipment and lawn tools. So if a fire damages both your kitchen walls and your appliances, your appliances will be covered.

An important aspect of homeowners insurance is that its coverage is not limited to property damaged on your premises, but applies to your personal property anywhere in the world. This is known as “off-premise protection”. If you travel now or ever intend to travel, this protection can be invaluable. In sum, if you value your personal possessions, the personal property coverage of a homeowners policy can be very important.

Liability coverage

In addition to insuring your property, the typical homeowners policy includes a specific level of liability protection that covers you for damage you cause inside or outside of your home. Unlike the random perils that govern your property (e.g., fire, explosion, theft), the trigger for this coverage is your negligence and, unfortunately, the “I’ll see you in court” mentality. Included here are medical payments to third parties, and your legal costs for any lawsuits brought against you. The importance of this coverage may not be as obvious as that of property coverage. Nevertheless, it may protect you against potentially troubling personal injury lawsuits. For example: you invite your neighbor over for coffee, and she trips and breaks her leg on a pair of shoes you left in the middle of your floor. Your insurance will cover her medical bills and other costs (the ceramic vase she was carrying) if you’re held responsible. Or, away from home, suppose you run over someone’s foot with your golf cart on the way to the clubhouse. Your insurance will cover the injured person’s medical bills if you’re found liable.

What is covered?
The most typical homeowners insurance policy in the United States is referred to as the “HO-3” policy. Among other things, it commonly provides coverage for damage resulting from:

Fire and lighting
Windstorm and hail
Explosion
Theft, vandalism, or malicious mischief
Damage from vehicles
Sudden and accidental damage from smoke
Objects falling from sky (meteorite, airplane etc.)
Weight of ice, snow, and sleet
Accidental discharge or overflow of water from your plumbing
Freezing of plumbing
Sudden and accidental tearing, cracking, burning, or bulging of a steam or hot water heating system
Your personal property
Your negligent and unintentional act, whether on or off your premises

In fact, with the HO-3, every calamity is covered except those that are specifically excluded in the policy. The standard exclusions in the HO-3 policy are:

The land under your house
Floods (this insurance must be purchased separately)
Earthquakes (this insurance must be purchased separately)
War
Nuclear accident
Intentional damage
Sewer backup or overflow
Structures used for a business (this insurance must be purchased separately) wear and tear on a home, including deterioration, insect and rodent infestation, settling, cracking, bulging, or expansion of pavement, walls, or foundations, or damage from domestic animals
Cars, trucks, vans, motorcycles, aircraft, and boats with anything more than a small motor
Theft from a house under construction (this insurance must be purchased separately)
Freezing of pipes in an unoccupied, vacant, or under-construction house
Vandalism and malicious mischief if the house has been vacant for more than 30 days
Freezing, thawing, pressure, or weight of water or ice to a fence, pavement, patio, swimming pool, or dock
property belonging to tenants
animals, birds, and fish
losses resulting from the failure to protect property after a loss

Keep in mind that you can always add available additional endorsements to complement standard coverages.

Determining Coverage Levels

Insuring Your Home

Homeowners insurance provides three basic coverages.

First, the policy covers damage to your home–the dwelling itself.
Second, it provides coverage for the contents of your home.
Third, it provides a level of liability protection for claims arising from the actions of you and your family.

Two methods to determine value

Insurance companies use one of two methods to determine the value of property:

Replacement cost–pays you the cost of replacing damaged property, with no deduction for depreciation.
Actual Cash Value–pays you an amount equal to the replacement value of damaged property minus a depreciation allowance.

Unless a policy specifically states that property is covered for its replacement value, coverage is for the lower, actual cash value. If you are not sure which type you have, first check your policy, or ask your insurance agent or representative if you are not sure what level of coverage you have.

Assessing your need
Certain factors can affect the appropriate level of homeowners coverage. If, in the event your house is destroyed, you want to rebuild your home with materials of like kind and quality, and replace the contents, you should insure your home for an amount which may be considerably larger than your mortgage balance. On the other hand, if you just want to be able to pay off your mortgage and walk away, then your level of coverage should match the balance of your mortgage. Be careful, however, because this is where some consumers slip up by thinking that “cheaper” is “better”. Without sufficient insurance coverage, the insurance company may pay only a portion of the cost to replace or repair your home and its contents.

In most cases, policy holders want to insure their possessions for replacement values. But make no assumptions. The replacement value is probably different than the market value of your home and the depreciated cash value of its contents.

Determining your level of coverage–the building
If you have a mortgage, your lender may require you to maintain a certain level of insurance, and the lender will be named on your policy as an insured party or copayee. While the level of coverage required by the lender may be enough to cover its exposure, that actual level may not be sufficient to fully protect you. The reason for this is easy to explain… Lenders want to know that the mortgage balance will be paid if the home is destroyed. They have no specific interest in seeing that your home is built back to its former level of glory.

To decide how much homeowners coverage you should have, determine the cost to rebuild your home. As a licensed independent agent we can help you calculate the current cost of construction for a house like yours, or you can hire a professional appraiser. You may or may not be surprised to discover that it would could cost more today to rebuild your home than the price you initially paid for it. This is not something you want to discover after your home has been destroyed and you need to rebuild it.

Often, consumers mistake market value or taxable value for the amount at which they should be insuring their home, but this could result in being horribly underinsured. For example, assume your home is a 2,000-square-foot-home, has a taxable value of $75,000, and would cost $45 per square foot to rebuild. The total cost to rebuild this home would be $90,000. If you were insured for the taxable value, you would be trying to rebuild a your home while facing a $20,000 deficit. Plus you don’t want include the value of the land your home is on when calculating your coverage; land is not at risk from theft, fire, windstorm, and other perils covered in your homeowners policy.

Determining your level of coverage–your home’s contents
In a standard policy, possessions are usually covered at stated percentage of the value of the structure coverage, and there are listed limits for certain items. This level may not be sufficient to cover the replacement of all your property. To determine how much property insurance coverage you need, make an inventory of all your home’s contents. Don’t forget to include furniture, appliances, draperies, jewelry, artwork, and the contents of your closets, cabinets and the toy chest. When possible, list the serial number, date and cost of purchase. Include receipts if possible. An easy way to inventory your possessions is to use a video camera or take photos. When using a video camera, you can talk about the specific items, their cost, and when you bought them. Ideally, you would want enough insurance coverage to replace your possessions if they were destroyed. If the value of your possessions is larger than the stated percentage of your structural coverage, don’t panic–you can buy additional coverage for your possessions.

Keep a copy of your inventory in a location away from your home–like a safety deposit box, or with a trusted friend or family member. This way, if your home is destroyed, your inventory list will be safe at another location. When you make major purchases, remember to add them to your inventory and check your policy–you may need to increase your coverage levels.

Determining your level of coverage–liability protection
The standard amount of liability coverage in a homeowners policy is $100,000, which covers personal liability, medical payments, and property damage for damage, or personal injury caused to others. If you feel you need more coverage, talk to us about the availability of a higher level of coverage or the possibility of purchasing a separate liability umbrella policy.

Periodically review your existing coverage

At least once a year, review your homeowners coverage to make sure it is keeping pace with any major purchases or additions to your home. In addition, if you fear inflation will decrease the value of your policy, an inflation guard endorsement, which is built-in to many homeowners policies these days, ensures that your coverage amount increases a bit every year to keep up with inflation. What this means, for example, is if your house increases in value next year by 5% your policy’s replacement limit will also increase, according to some predetermined index of local home values.

Common Policy Exclusions

Homeowners insurance policies not only state what perils are covered, they also can list which perils are excluded from coverage. Neither the named perils policy types (HO-1, HO-2, HO-4, HO-6, HO-8) nor the open perils policy form (HO-3) cover the following events:

Enforcement of building codes and similar laws
Earthquakes
Flooding
Power failures
Neglect (meaning your failure to take reasonable steps to protect your property)
War
Nuclear hazard
Intentional acts

Flood insurance and earthquake insurance are only available as separate policies.

Additional exculsions–open peril policies
In addition to the above-named exclusions, the following perils are excluded from coverage if you have an open perils (HO-3) policy:

Freezing pipes and systems in vacant dwellings
Damage to foundations or pavements from ice and water weight
Theft from a dwelling under construction
Vandalism to vacant dwellings
Latent defects, corrosion, industrial smoke, pollution
Settling, wear, and tear
Pets, other animals, and pests
Weather conditions that aggravate other excluded causes of loss
Government and association actions
Defective construction, design, and maintenance

While HO-3 does not cover you for the above exclusions, it does cover you for ensuing losses that result from excluded events (as long as the ensuing loss is not itself excluded from coverage). For example, if your fireplace is defective or was improperly installed so that smoke and flames are blown out into your living room, you’re not covered for the replacement of the fireplace, but you are covered for the smoke and fire damage that your house had to endure the first time you used the fireplace.

While the list of exclusions is longer with open perils policies, you are usually covered for everything not specified on the list of exclusions. With a named perils policy, your coverage is only for the perils named within the policy. Remember also that under HO-3 policies, the open perils list applies to the dwelling and related structures. Your personal possessions are covered for the more restrictive broad named perils.

Apartment tenants

Tenants in rental buildings don’t own the building or the unit in which they live, so the policy coverage and exclusions apply only to personal possessions.

SAVINGS & PLANNING

Saving Money

Because the cost of your homeowners insurance can vary by hundreds of dollars depending on the size of your home, where you live, the type of home you live in, construction and feature types, etc.. Because every penny counts, here are some possible steps to help you save money on your homeowners insurance:

Raising your deductible–A deductible is the amount of money you must pay up front out of pocket for a loss before the insurance company will pay for anything. The typical minimum deductible for a homeowners policy starts at $250. But look at the following chart:

If you increase your deductible to…You may save on your homeowners policy…$500up to 12%$1,000up to 24%$2,500up to 30%$5,000up to 37%

Obtain home insurance and auto insurance from the same insurer–These days companies will commonly give you a discount of 5% to 15% off your total premium if you purchase two or more policies from them.

Avoid flood areas–According to the National Flood Insurance Program’s statistics, the average cost of flood insurance is slightly more than $400 a year.

Don’t insure your land–Don’t include the value of your land in deciding how much homeowners insurance to buy. The reason is the land under your house is not prone to theft, fire, or other weather extremes that are covered in your homeowners policy.

Improve your home security–We typically offer a discount if you have a smoke detector, burglar alarm, or dead-bolt locks. In addition, we may be able to reduce your premium if you install a sprinkler system and burglar alarm that is monitored by the police. However, these systems can be costly. Before installing them, check with us to find out what is specifically required to qualify for a discount.
Stay with an insurer–Loyalty may have its advantages and translate into real money savings.
Look for private insurance first–The cost of private insurance is often equal to or less than that of government-sponsored insurance, especially if you live in a high-risk area (plagued by storms, fires, or crime).

Cash Value & Replacement Costs

There are several different methods by which your insurance company may calculate the amount it will pay you for a loss. Payment based on the replacement cost of damaged or stolen property is usually the most favorable figure from your point of view, because it compensates you for the actual cost of replacing property. If your camera is stolen, a replacement cost policy will reimburse you the full cost of replacing it with a new camera of like kind. The insurer will not take into consideration the fact that you ran three rolls of film through the camera every day for the last two years, causing a considerable amount of wear and tear.

In contrast, actual cash value (ACV), also known as market value, is the standard that insurance companies arguably prefer when reimbursing policyholders for their losses. Actual cash value is equal to the replacement cost minus any depreciation (ACV = replacement cost – depreciation). It represents the dollar amount you could expect to receive for the item if you sold it in the marketplace. The insurance company determines the depreciation based on a combination of objective criteria (using a formula that takes into account the category and age of the property) and subjective assessment (the insurance adjuster’s visual observations of the property or a photograph of it). In the case of the stolen camera, the insurance company would deduct from its replacement cost an amount for all the wear and tear it endured prior to the time it was stolen.

How to get replacement cost coverage
Personal property generally loses value over time due to ordinary wear and tear. Accordingly, you are arguably better off with a replacement cost policy. If you prefer such coverage, then read your policy and check with your insurance agent. There are certain requirements you typically need to meet before you are entitled to receive replacement cost for your house and possessions. Remembering, you will most likely need to replace the item and provide a receipt to get the “replacement” dollar amount.

When is actual cash value better?
Although actual cash value is a smaller figure than replacement cost, you may prefer ACV in certain situations. If you don’t intend to repair or replace the damaged or destroyed property, you may just want cash as soon as possible. You can receive ACV compensation more quickly than replacement cost compensation, and thus have the cash in hand at an earlier date.

FILING A CLAIM

Filing General Claims

If a covered loss does occur, the claims process is completed by:

First filing your claim,
and then settling your claim.

Filing your claim
Filing your claim is a seven step procedure:

Report burglaries, thefts, and other crimes to the police.
Telephone your insurance agent and formerly report the loss. You’ll receive any additional information you need at this time.
Take any steps necessary to prevent further damage. For example, repair any windows broken during a burglary. Save your receipts so that you can submit them to the insurance company for reimbursement.
Take an accurate inventory of all lost property.
Save receipts for living expenses if you must make temporary living arrangements while damage is being repaired.
Obtain claims forms. Once received, complete and return them as soon as possible as this greatly helps in speeding things along.
Make sure that an adjuster inspects any & all damage.

Settling your claim
You and your insurance company must come to an agreement on the terms of settlement; that is, how much you will be compensated for your loss. Generally, the insurance company will make an offer. If it is acceptable to you, the insurance company must send the payment to you promptly. If you are unsatisfied with the offer, follow these simple steps:

Discuss the matter directly with your insurance company or agent. Explain why you think the offer is not fair. Send copies of all supporting bills, receipts, and other documents.
Before resorting to any formal dispute resolution procedures, you may find it worthwhile to attempt more informal negotiations. In particular, you may save valuable time and money this way if the amount in dispute is relatively small.
If, on the other hand, the amount in dispute is considerable, or you have unsuccessfully attempted to negotiate, you can follow the more formal procedures outlined in your policy. The appraisal and arbitration clauses in your homeowners policy govern disagreements over the compensation paid on a claim.

Filing a Claim After a Disaster, Fire, Etc.

If you have a homeowners insurance policy, you should review it very carefully, and understand exactly what is covered and what is not in the event of a disaster, such as a fire or storm. This is important because if a loss should occur, you will certainly want to know whether or not you can make a successful claim. It may be a good idea to reevaluate your current coverage to make sure that you have adequate protection.

Remember, homeowners policies don’t cover flood damage, but do cover other kinds of water damage. For example, damage caused by rain that comes in through a window or roof broken during a storm is covered. You will need separate flood insurance to cover damage caused by flooding.

What should you do after a disaster has struck?
Of course we’re all human and therefore susceptible to the emotional toll if a disaster strikes, but keeping a clear head can help us to do certain things right away.

Make temporary repairs. You will need to make whatever repairs are necessary in order to make your home habitable and prevent further damage. For example, you may need to put plastic coverings over windows or holes in the roof, and replace electrical appliances damaged by water. Be very careful if you are not used to this kind of work and get professional help if you need it. But, be careful not to make extensive repairs at this time. An adjuster must appraise the damage first. Save any and all receipts so that you can be reimbursed by the insurance company later.
Call your insurance agent to report the loss. By doing so, you’ll be provided with any additional information you need at this time. If the disaster is widespread, your agent may be very busy. Be patient, and keep trying.
Save receipts for living expenses if temporary living arrangements are needed. Such expenses may include temporary housing costs, storage expenses, and furniture rentals.
Make a list of all the damaged property. Try to include makes, models, and serial numbers. If you had previously made a complete home inventory list, then now is the time to retrieve it. Take pictures of the damaged items, if you can. Organize old bills and receipts, if they are available, to establish value and age. Work from memory, if necessary. Remember to include clothing, personal items, kitchenware, china, sporting goods, garden equipment and tools, toys and games, outdoor furniture, towels and linens, curtains, wall hangings, and decorations. Don’t throw anything away no matter how bad the damage until the adjuster has a chance to inspect and appraise it.
Identify structural damage. Don’t enter the property if “good-sense” judgment tells you it’s unstable. Don’t forget the garage, sheds, and pool areas. Look for cracks, and missing shingles or roof tiles. You may want to hire a licensed engineer to identify damage you can’t see. Have an electrician inspect the electrical system, and a plumber inspect the plumbing system. Get bids for the repair work. Never hire the first person who comes along and tells you they can fix your property right away without first checking them out, and never sign a work contract until you are satisfied with their professional credentials and abilities.
Have an adjuster appraise the damage. Your insurance agent or company will arrange this, and there should be no charge. Again, remember if the disaster is widespread, adjusters will be busy. Be patient. When your adjuster comes, he or she should do a complete inspection and appraisal. If not, make sure he or she comes back for a second look. Be sure to point out all damaged areas.
Complete the “proof of loss” forms which will be sent to you by your insurance company. Return them as soon as possible. Keep copies of all forms you send back. Send copies of lists and other documents as needed to prove your losses. Make sure to keep the originals.

How is the settlement amount determined?
You and your insurance company will have to reach an agreement as to the amount of compensation you will receive. The settlement amount will depend on the type of policy you have, including all listed endorsements and exclusions.

Cash value vs. replacement cost
A cash value policy pays only the actual cash value of the property that is damaged or destroyed. Replacement cost pays the full dollar amount needed to replace the property.

Extended replacement cost
This kind of coverage replaces your entire house if it is completely destroyed. A typical policy will pay up to the limit of the policy.

Guaranteed replacement cost
Guaranteed replacement cost coverage pays whatever it costs to rebuild your home as it was before the disaster.

How do you receive payment?
You may receive as many as four separate checks. The first may be an advance, not a final payment. This is so you can pay for temporary living expenses, if needed. If you suffer both structural damage and loss of personal property, you will get a separate check for each. You may also get a separate check for temporary living expenses (minus the advance).

If you’re offered a settlement right away, and you accept it, you may get just one check. If you find more damage later, you can reopen the claim, and receive a second check. You typically may have up to one year to file or reopen a claim.

What if your home is mortgaged?
If your home is mortgaged, the check you receive for structural damage may be made payable to both you and your lender. The lender gets equal rights to this payment so that it can make sure that repairs are suitably completed. The lender will probably endorse the check, and put it in an escrow account. The lender will inspect the final repairs, and then release the funds.

Funds in excess of the mortgage, in payment for personal property, and in payment for additional living expenses should be made payable to you alone, and not to your lender.

Claims & Your Premiums

Will Your Insurance Go Up After a Claim?

The answer typically is no. A single claim, no matter how large, won’t raise premiums, especially if it is the result of an act of God (meaning forces of nature). That’s the good news.

What if it is a claim for a dog bite?
Here’s the one exception. If the claim is for a dog bite, and you do nothing to improve the situation, rates are sure to increase.

Okay, you’ve filed two claims under your homeowners insurance policy. Will your premiums go up now?
It depends upon the type of claim, and how much time has passed between the two claims. Say, for example, you have one claim for a slip and fall in one year, and another claim for damage due to faulty plumbing three years later. Your premium will probably increase. But, if a wild fire damages your house one year, and a storm rips through it the next year, chances are you won’t have to worry about your premiums going up.

The difference is whether or not you, the homeowner, could have done something to prevent the loss. In cases of natural disasters, there is almost nothing you can do to prevent damage, and you won’t be penalized. But, if it seems that you don’t maintain your home properly, or it is unsafe in some way, or you make multiple similar claims, red flags go up at the insurance company, and you’ll pay with increased premiums or nonrenewals.

PLANNING CONCERNS

Insuring a New Home During Construction

You should definitely consider insuring your new home during construction. If you don’t, you’re exposing yourself to a great deal of risk if a fire, theft, or other event damages or destroys your partially-completed home.

How can you insure your new home during construction?
One way to cover your new home during construction is to purchase a standard builders risk policy. This will cover any damage to the building as it’s being built, and may also provide some coverage for the theft of building supplies. It also provides liability coverage, which may come in handy if one of your friends trips during a “tour” of your dream house, and decides to sue you. However, the policy will not cover your personal property until the building is made secure or “lockable.”

Another option is to purchase a “dwelling and fire” policy. This type of policy covers damage to the physical structure, but provides no theft coverage. A dwelling and fire policy may be an appropriate choice if you are living in your old house during construction because the homeowners policy on that house will cover the theft of items from the construction site. Dwelling and fire policies also provide liability coverage, just like a standard homeowners policy.

What happens once the building is complete?
Once the building is complete, you should re-evaluate your coverage. If you opted for dwelling and fire coverage, you will need to purchase a full homeowners policy right away. If you bought standard homeowners insurance, make sure that you have purchased the right amount, especially if you have made alterations to the original building plan.

Insuring Your Home During Remodeling

If you are adding an extra room or improving your home in some way, you will likely need to update your homeowners insurance policy so that the new addition or improvements will be covered. You should do this before you start any work, because if you don’t and the new addition or improvement is damaged or destroyed while being built, you may have to pay for the loss.

It’s always advisable to contact your insurance agent before construction begins to increase your coverage to reflect the new changes in your home.

Make sure contractors and subcontractors carry the proper insurance coverage

When you have contractors and subcontractors on your property to do work on your house, you run the risk of one of them being injured on the job and suing you. You need to do two things to adequately protect yourself from this potential liability:

Make sure that all contractors and subcontractors carry adequate workers’ compensation coverage. Don’t be bashful. Demand to see a copy of their policies beforework begins.
If the workers’ compensation coverage is not adequate, you may need to extend the limits of the liability portion of your homeowners policy or find a contractor whose policy limits are acceptable.

Insuring Your Property During a Move

Whether you are moving across the country or just down the street, you will likely need to insure your property. Just think of all your belongings being picked up and set down at least twice, carried up and down stairs, around sharp corners, and being tossed about in the back of a truck or van. Something is bound to be dropped, scraped, chipped, broken, damaged, or destroyed. Or, worse yet, the truck or van may be stolen with all your property still stowed onboard.

Most moving companies limit their liability. And if you’re moving yourself, your moving helpers probably won’t take responsibility. You will end up paying for the loss.

The answer to this problem is to insure your belongings during transit. This type of insurance is called moving insurance, and is part of an insurance line called inland marine insurance.

Where can you get inland marine?

You can get inland marine insurance in several ways:

Your own homeowners insurance policy might cover moves. Check your policy to find out if it does, and what the limits are.
If you are having a moving company move you, they may offer moving insurance. All commercial moving carriers must provide a basic moving insurance policy to you at no charge. This covers both local and interstate moves but generally pays only 60 cents per pound.
If you are moving yourself, you may be able to buy a policy from a move-it-yourself company.

What kind of coverage is available?

Basically, three kinds of coverage are available:

Basic coverage (which pays 60 cents per pound) at no cost to you,
Coverage based upon the value of the item less depreciation, and
Coverage based upon total replacement cost.

The third choice provides you with the best coverage but it will be slightly more expensive.

Is there a deductible?

That depends on the policy, too. Typically, a policy that provides total replacement cost allows you to choose a deductible (e.g., $250 or $500).

How much does moving insurance cost?

Moving insurance is affordable. If you choose the basic moving insurance policy that the carriers must offer you, the cost is zero because it’s added into their quote. If you choose a policy based upon the value of your property less depreciation, the cost will be added. Coverage based on total replacement cost depends on the value of the shipment.

Insuring A Home Based Business

Generally speaking, homeowners insurance does not cover your home business. Some standard homeowners policies cover a maximum of $2,500 for business equipment in the home, but none cover business-related liability or other losses.

If you run a business from your home (and there are about 12 million Americans who do), it is likely that you need both property insurance to cover fire and theft and liability insurance to cover anyone who gets hurt by using your product or who gets hurt on your property.

What kind of losses do you need insurance protection for?

As a business owner, you will need insurance to cover the following types of losses:

Property and equipment damage or loss from fire or theft
Customer or supplier injuries on your property, or caused by your product
Advertising liability
Inability to collect accounts receivable
Business record damage or loss
Lost income due to damage to your home

What kind of policies are available?

If you operate a home day-care service or if your company is “incidental” (which means it grosses less than $5,000 per year), you may be able to simply add an endorsement to your existing homeowners policy.

Perhaps a package policy for your small home-based businesses is the key. This package usually covers loss or destruction of business property on or off the premises, loss of valuable papers, personal injury and advertising liability, and accounts receivable protection.

Typically, if you purchase a package policy, you’ll also want to purchase homeowners and auto policies from the same company. This way, the package plan extends the property and liability coverage on your home and car to your business. This prevents gaps or duplication of coverage.

If the package policy is not available to you (not all states allow them), you will have to buy individual policies, such as business property, general liability, and business income insurance.

What other types of insurance policies might you need?

Car insuranceYour existing personal car insurance policy may cover some of the business tasks you use your car for. However, depending on the type of vehicle and what it’s used for, you may need a separate business automobile policy.
Health and disability insuranceYou need health insurance in case you become sick and incur medical expenses, and disability insurance if in case you become unable to work because of illness or injury. If you have employees, you may want to consider offering a group policy, if your business is eligible.
Workers’ compensationYou are required by law to have a workers’ compensation insurance policy in place if you have employees working for you on the premises. These laws vary from state to state, so check with your insurance agent or your state’s insurance department to find out exactly what you need.

TIPS & SAFETY

Creating A Household Inventory

A household inventory is a complete and detailed written list of all the personal property located in your dwelling, or stored in other structures like garages and tool sheds. Your inventory should include your possessions as well as items owned by individuals who are also insured under your homeowners policy, such as family members, other household residents, and domestic employees. You should prepare an inventory whenever you move into a new dwelling and update it periodically (say once every six months) to keep track of new and discarded items.

Create a home inventory by downloading our Personal Organizer

Why do it?

Total recall of all the contents of any one room is quite an accomplishment for any of us, even at the calmest of moments. Remembering all the contents of your house and garage after a fire, theft, or other calamity is practically impossible. Yet that’s what you’ll be asked to do when you submit a claim on your homeowners insurance, unless you previously prepared a written inventory of your household possessions and property. Omitting or failing to include an adequate description of an item may prevent you from receiving compensation from your insurance company. Considering that the whole point of buying homeowners insurance is to obtain compensation for financial loss, why bet the farm (or your house and its contents) on your memory, or add to the emotional loss and stress which comes from any type of loss?

You’ll also find that a detailed inventory helps when filing a police report, or when trying to prove a loss to the Internal Revenue Service.

What should the inventory contain?

Under the terms of your homeowners policy, your claim for damaged or stolen personal property should show the quantity, description, actual cash value (if different from the purchase price), and amount of loss associated with each item. Copies of bills, receipts, and other documents that justify the figures in your claim are also typically requested. It makes sense for your inventory to include that information, as well as the purchase price and purchase date of every item. It’s a good idea to note serial numbers for appliances and electrical equipment. Listing the contents of each room and building separately helps organize the inventory and promotes completeness. Make sure you include all the contents of every room, excluding only the four walls, ceiling, and floor. Include rugs and carpets, wall hangings, curtains, blinds, and draperies. Be descriptive and refer to colors, dimensions, manufacturers, and composite materials whenever you can. Make sure you include component parts and the contents of drawers, shelves, closets, storage boxes, and built-in cabinets. For instance, describe not only the bed but the headboard, mattress, and bedding. Try to identify every item that you would have to box or carry out, if you were to move out of the house or apartment.

For clothing, make sure you give a full description of any expensive items, such as leather or wool coats, boots, suits, or formal wear. If you’d rather not describe every item of clothing, at least list quantities (e.g., six wool sweaters, two pairs of sneakers, two pairs of corduroy trousers), and the family member these items belonged to which in most cases can be associated with the room you are inventorying.

Make sure to include the items stored in your attic, basement, garage, or outbuildings. Sports equipment tends to be expensive and should be described in as much detail as possible. Don’t forget tools and outdoor equipment like lawn furniture and barbecue grills.

Just do it

You won’t be graded on your inventory for accuracy, completeness, or legibility. If you can’t stand the soup-to-nuts approach, at least take the time to jot down any items valued at $50 or more. Since a picture’s worth a thousand words, consider taking a photograph or videotape of each room, with separate photos for big-ticket items. If you use a camera, make sure you label each photo with notes about the items shown. If you use a video camera, provide a running commentary describing every item (date of purchase, price, etc.) that comes into view. Hopefully, you’ll never have to use your inventory, but if worst comes to worst, and you have to deal with a calamity, you’ll be happy you took the time to make a permanent record of all your possessions.

Now is the time to inventory.

Where should you store your inventory?
Remember the purpose of the inventory. In the case of a fire or catastrophic event, your inventory will do you no good if it got burned up in the fire, or washed away with the flood. Regardless of whether the inventory is stored on film, video cassette, computer software, a sketchpad or a the back of an envelope, keep a copy of it stored somewhere safe–like a safety deposit box at a bank or at a trusted friend or relative’s house. But don’t store your inventories copy at their home if they live next door or just down the street. A strong storm or fire could sweep through your area and do extensive and broad range damage.

HOME SAFETY TIPS

Home Fire Safety

Fire: Nothing is more terrifying. The thought of flames racing through your home is probably your worst nightmare. Unfortunately, it is an all-too-frequent occurrence in this country. Every year, 4,000 Americans die in fires. The vast majority of those deaths occur at home-each year, 100,000 homes are destroyed, 40,000 family pets are killed and uncounted irreplaceable family treasures are lost forever.

Tragically, most fires are preventable. The leading cause of fires in the home is faulty heating equipment. A couple of simple measures can ensure that your home heating system is safe. For example,

Changing your air filter regularly will ensure that your furnace isn’t overtaxed.
Don’t leave piles of newspaper or other combustibles within two feet of your furnace.

While home heating systems are the No. 1 cause of fires in the home, cigarettes are the No. 1 factor in home fire fatalities.

If you do smoke, be sensible.
Don’t smoke in bed.
Use a large metal or glass ashtray.
Put that cigarette out with water before you drop it in the trash.

The No. 2 cause of fire-related deaths is arson. Intentionally set fires claim the lives of more people each year than all natural disasters including floods, hurricanes, tornadoes and earthquakes combined.

Most arson fires are fueled with combustible material found nearby.
A little diligence around the house, along with a watchful eye for strangers, can make a world of difference.

In fact, a little diligence is the key to home safety in general. It may go without saying, but:

Smoke detectors that work,
fire extinguishers that are well-charged and quickly accessible,
and a ladder for the upper floors can easily save lives.

How To Handle A Kitchen Fire:

Many household fires start in the kitchen. Untended cooking and human error account for most of these. Not mechanical failure of stoves or ovens. Here’s how to handle a kitchen fire…

Call 911 immediately. Prepare for the worst and don’t hesitate to call.
Smother frying-pan fires by covering with a lid, then turn off heat with lid in place until the pan cools. Do not try to carry the pan outside because this could seriously burn you should the contents spill out.
Other food fires may be extinguished with baking soda, so try to keep an extra box stored in an upper cabinet location. Never use water or flour on cooking fires.
Turn off the heat to smother oven or broiler fires and keep the door shut.
Well prepared homeowners keep a fire extinguisher in the kitchen and know how to use it. The National Fire Protection Association recommends extinguishers classified 2A:10B:C. Make sure the one your choose is always UL (Underwriters Laboratories) approved.

Theft Prevention

Did you know that every day in this country, more than 16,000 homes and apartments are broken into and ransacked by thieves? That makes burglary a very big business. Break-ins cost Americans about $3 billion every year.

The good news is that 9 out of 10 burglaries could be prevented with some basic precautions.

Begin with a little common sense:

Make it harder for thieves to gain entrance to your home. You can start by making doors more secure.
Standard, spring-catch locks can be opened easily by a crook with a credit card.
A single-cylinder deadbolt lock is enough to discourage many thieves. And you might be able to lower your insurance premiums in the bargain.

Burglars like unprotected windows, too.

Key-locks on windows add an extra measure of security;
so do steel or wooden rods in the channels of sliding-glass doors.
A dark house is an invitation to a thief. Install timers on your home’s lighting systems, indoors and out.
And don’t provide cover, camouflage or encouragement for the burglar who’s casing your neighborhood. Prune the shrubbery around doors and windows, and keep ladders and tools locked up.

One of the most satisfying ways to foil burglars is to organize a neighborhood blockwatch. Keeping an eye on each other’s homes not only prevents crime, it promotes a sense of community. Let your neighbors know when you leave town (as long as you know them personally), and ask them to do the same. Most police and sheriff’s departments will gladly help you start a neighborhood watch program.

And one more thing:

Don’t “hide” spare keys under doormats or flower pots or in the mailbox. And forget about ordering one of those fake rocks used for hiding keys…burglars have seen those catalogs, too!

Winter Weather

A lot of homeowners don’t know what ice dams are — until it’s too late.

Ice dams are most common in northern climates. They occur when heavy snow buildup melts during the day and then refreezes when temperatures drop overnight.

After several days of melting-freezing cycles, it’s common for the melted water and ice to work up under the shingles until water enters the attic and eventually does damage to the ceilings, wall and contents. In cases where the ice dam goes unnoticed for an extended period of time, it can do significant damage to the building and its contents.

There’s no way to guarantee an ice dam won’t damage your home, but you can take steps to cut the chances of an ice dam forming in the first place:

If you haven’t already, thoroughly clean all leaves, sticks and other debris from your home’s gutters and down spouts. This lets melting roof snow flow into gutters and through down spouts, just as they were designed.
Make every effort to keep snow on your roof to a minimum. Long-handled devices on the market called “roof rakes” let you stand on the ground and pull the snow off the roof. Keeping heavy snow loads off your roof reduces the chances for both ice dam formation and roof failure due to the weight.
All winter long, keep gutters and down spouts clear of snow and icicles.
Evaluate the insulation and ventilation in your attic. Most experts agree the R-value of attic insulation should be at least R-30 (R-38 is preferable in northern climates). In addition, good airflow from under the eaves or soffit area along the underside of the roof and out through the roof vents is essential to a cool, dry attic. Consult a reputable roofing and/or insulation contractor about these improvements.

Prevent Frozen Pipes

If you think turning the heat down in your home while you’re away on vacation will save you a few dollars, think again. If your home’s pipes should freeze and burst, it could end up costing thousands of dollars to repair floors and replace furniture and keepsakes. The damage could be so severe that you and your family would have to relocate while repairs are made.

By taking a few simple precautions, you can save yourself a ton of aggravation.

Here are a few simple steps to protect your home or apartment:

Insulate pipes in your home’s crawl spaces and attic. Exposed pipes are most susceptible to freezing.
Heat tape or thermostatically controlled heat cables can be used to wrap pipes. Be sure to use products approved by an independent testing organization, such as Underwriters Laboratories Inc., and only for the use intended (exterior or interior).
Seal leaks that allow cold air inside. Look for air leaks around electrical wiring, dryer vents and pipes. Use caulk or insulation to keep the cold out and the heat in.
Disconnect garden hoses and, if practical, use an indoor valve to shut off and drain water from pipes leading to outside faucets.
When you’re away from home, set the thermostat in your house no lower than 55 degrees. Ask a friend to stop by your house daily to make sure it’s warm enough to prevent freezing, or shut off and drain the water system.

Here are a few additional helpful tips from the National Association of Remodelers:

Make sure your furnace is in good working order for the cold spurts. Check that the furnace filter is clean and replace it if it’s not. Ensure that the thermostat and pilot light are working properly and that the pipe bringing fuel to your furnace isn’t leaking or loose.
Have your heating ducts cleaned. It’s recommended that the ducts be vacuumed every five years.
Check the caulking around doors and windows to make sure there’s no cracking or peeling. Recaulking if needed prevents cold air from entering your home. Why pay a higher heating bill if you don’t have to?
Keep snow and ice from building up around the bottom of the garage door so it closes completely and doesn’t warp.
Frozen water pipes can quickly crack followed by gallons of water all over your home. Prevent this by draining your pipe’s hose bibs and by keeping your heat on even when you’re away from home.
Safely drain and properly dispose of the gasoline from lawnmowers, weedwackers, and other engines that won’t be used until summer.

Tornado Safety

Long before you see the black clouds on the horizon, your family should designate a place in your home to go if a tornado approaches. A place away from windows is best. In case you don’t have time to make it to the basement, an interior hallway is a wise place to go.

When a tornado watch is issued, the American Red Cross advises people to listen to local television and radio stations for updates on the weather. A tornado watch is issued when conditions are favorable for the formation of a tornado. The Red Cross stresses the importance of keeping aware of the changing weather situation; the more time you have to move to safety, the more likely you and your family are to survive unharmed.

A tornado warningpresents an immediate threat. A tornado warning is issued when a tornado is spotted visually or on weather radar. In case of a tornado warning, the Federal Emergency Management Agency (FEMA) advises people to:

Go at once to the basement, storm cellar, or the lowest level of the building
If there is no basement, go to an inner hallway or a smaller inner room without windows, such as a bathroom or closet
Get away from the windows
Go to the center of the room. Stay away from corners because they tend to attract debris
Get under a piece of sturdy furniture such as a workbench or heavy table or desk and hold on to it
Use your arms to protect your head and neck
If in a mobile home, get out and find shelter elsewhere.

FEMA stresses the last point, especially. It is very easy for a mobile home to be overturned in high winds. FEMA suggests arranging for a safe place to go well ahead of time, such as with a friend, family member, or a neighbor.

Myths Debunked

There are many myths about what to do during a tornado. The American Red Cross is hoping to put to rest these fallacies.

One popular belief is that opening a building’s windows allows the air pressure to equalize as a tornado passes overhead. Air pressure can equalize itself through normal openings within a building and opening windows doesn’t particularly help, especially given the likelihood of glass breaking due to flying debris. The American Red Cross stresses that it is much more important to get to safety than to open windows.

Another persistent myth says that the southwest corner of a building is the safest. Studies have shown that the safest place in a building is away from all of the windows regardless of what corner of the building you’re in.

If you’re caught outdoors during a tornado, don’t try to outrun it in your car. A tornado can change directions quickly. You should seek shelter indoors. If that isn’t possible, get out of your car and duck down in the lowest spot you can find, such as a ditch or gully. Because a tornado doesn’t suck objects up, but rather blows them around at speeds which can easily exceed 300mph, a highway underpass is not safe since it leaves you exposed to flying debris. During these devastating storms even the smallest of item caught in its furry such as small roof shingle parts, glass fragments, wood splinters and the like are bullets in the wind causing serious or even fatal injuries. Staying low to avoid this debris is the key to survival if caught outdoors.

Here Comes The Sun Keep your radio tuned to a local station, too. It may be possible that the tornado that has passed overhead is one of many tornadoes in your area.

After the storm has blown over, carefully inspect your home for damage. The sooner you start the claims process for any damage that did occur, the quicker you can get started on repairs.

When inspecting your home, be sure to avoid downed power lines. FEMA warns that just because a power line is down doesn’t mean it can’t give you a serious shock.

The American Red Cross mentions that flashlights, not candles, should be used for inspecting your home because of the possibility of gas leaks.

Disaster Planning Made Simple

Of course to be deeply affected by a disaster you don’t have to be directly hit by it. Lengthy interruptions in basic services can catch you off guard. Downed power lines, broken water and gas mains can threaten your safety even when your home was untouched and survived an ordeal. For many people, a little preparation could make a big difference in coping with the aftermath of a severe earthquake or storm. Disaster-planning experts say people should be prepared to go without power and most other basic services for up to 72 hours. That means no electricity, water, fire fighters or police.

With a few simple additions, the average household already has many of the resources needed to deal with a disaster. Here are a few suggestions and hints on how best to use what’s already on hand.

Water. The water heater (30-40 gallons) should contain enough water to last a four-person household four days. (Turn off power before draining and be careful of sediments that can accumulate at the bottom of the tank.) Ice cubes in the freezer and liquid from canned food can be used. If you’d rather not store extra bottles of water, consider keeping purification tablets on hand. Household chlorine bleach will disinfect water, too. Use one-eighth of a teaspoon per gallon of water and let stand for 30 minutes before drinking. Do not use bleach with added soaps or fragrances.
Food. Most houses have ample food for several days. Use food in the refrigerator first, then the freezer. Frozen food will keep up to three days in an unopened freezer. Keeping a few extra canned goods in the back of the cupboard is always smart.
First Aid. Most homes have the necessary items to handle routine accidents. A basic first-aid kit and a book on first aid should be kept in a central location. It’s a good idea to take a first-aid and CPR course from the Red Cross.
Fire Extinguishers. Have one or more fire extinguishers and learn how to use them. Have the extinguisher serviced according to the manufacturer’s instructions.
Other essentials. Identify your home’s utility shut-off valves and learn how to turn them off. Have at least one flashlight and a battery-powered radio. Make an evacuation plan so all family members know several escape routes and where to meet outside.

Flood Survival Tips

Heavy rains can quickly lead to flooding. Floods have a different set of challenges to prepare for than other severe weather events.

A homeowners policy doesn’t automatically cover damage from flooding, and you can’t simply purchase flood insurance as an endorsement to your policy like you might expect. Instead, you must purchase a separate flood insurance policy through an insurance company that participates in the National Flood Insurance Program. Or contact us for details.

Well in advance of flooding conditions, assess your chances of being affected by a flood. A call to the town or county clerk is a good way to find out if you live in a flood plain.

Before a flood arrives, you should have an evacuation route planned; know how long it will take to evacuate your area and build in time to account for others evacuating at the same time.

You should carefully examine your need for flood insurance according to the flood threat as determined by the Federal Emergency Management Agency (FEMA) for your area. Generally, homeowners insurance does not cover damage done by flooding. It’s a mistake to believe that flood insurance isn’t necessary because of federal disaster aid. Often, federal aid comes in the form of a loan that has to be paid back.

FEMA points out that $50,000 worth of damage done to a home worth $100,000 can be financially devastating. While paying the typical flood premium of $324 a year may seem steep, not having the insurance after a flood is more costly. FEMA estimates that getting a loan to repair $50,000 damage can cost you $3,732 a year for 20 years as you repay the loan.

Getting your house in order Prior to evacuation, you can prepare your home. Moving furniture and other valuables to an upper floor can help protect them from water damage.

Never cross a road flooded in water If you live near a river or creek, be alert during any heavy rain. It is not uncommon for a flash flood to sweep down a river and catch nearby residents by surprise.

When the time comes to evacuate, it is paramount that you never cross a road covered in water. People die every year during floods because they attempt to cross washed-out roads and are swept away by the current. According to the Ohio Committee for Severe Weather Awareness, even if you drive a sport utility vehicle, you shouldn’t attempt to cross because it’s difficult to gauge the water depth as well as the current.

Auto Insurance Knowledge Center:

Click any of the following general topics to reveal all the helpful details.

DISCLAIMER: Statements on this website provide general information only as it relates to policies and coverages. All coverages are subject to the terms, conditions and exclusions of the actual policy issued so contact one of our licensed agents for questions regarding your specific needs and policy.

THE BASICS OF AUTO INSURANCE

What is auto insurance?
Owning a car involves several risks. When a car accident occurs, people may be injured and vehicles (or other property) may be damaged. Damage can also occur through theft, vandalism, or natural disasters. Auto insurance can protect you against the financial loss associated with these risks. Insurance companies provide auto insurance through personal auto policies (PAPs). A PAP is a contract between you and your insurer, specifying each party’s rights and obligations. Essentially, your insurer promises to provide specific coverage for you. In return, you pay a premium.

Why do you need it?
State law (and/or your car’s lender) often requires you to purchase at least a minimum amount of auto insurance. You may find it sensible to purchase greater coverage, however, in order to protect your auto investment, pay for necessary medical expenses, cover your legal liability, and cover any additional losses related to driving. Consider the following: if you cause an accident and the other driver suffers damages over and above your insurance policy’s limits, your personal assets and future earnings may be put at risk.

What do you need to know?
First of all, it’s important for you to know how to read and understand an auto insurance policy. Next, you’ll want to carefully balance cost against desired coverage. Finally, you should allow us the opportunity to evaluate and compare the various car insurance products you want or have, to ensure that you get the best value for your insurance dollar.

Understanding your personal auto policy (PAP)

Your policy is broken into simplistic and logical sections. It discusses types of coverage, rights, and obligations under the policy, as well as exclusions or limitations. Types of coverage include liability coverage (injuries/damage you cause to other people and other property), medical payments coverage (medical expenses that will be paid–up to a specified limit–regardless of fault), uninsured/underinsured motorist coverage (losses caused by a driver who is uninsured or has inadequate insurance), and coverage for damage to your auto (accident damage and other damage or loss).

What is a deductible?
Regarding damage to your own auto, collision and comprehensive coverages may each include a deductible. A deductible is basically a risk that is self-insured. It’s an amount of money that you are required to pay before your insurance kicks in. Deductibles can come in any dollar amount, but are generally $100, $250, $500, or $1000.
Coverage vs. cost
You will always want to balance coverage against cost. Choosing the appropriate level of coverage depends on a number of factors, including the value of your vehicle, the value of assets you must protect, the amount of money you can afford to pay out-of-pocket, and your tolerance for risk. If a claim against you exceeds your coverage limits, you will be personally responsible for the amount that exceeds the coverage. As a licensed independent agency we can tailor the policy to fit your needs. To arrive at the cost of your premium, the insurer will consider the coverage levels you select and will use statistical information about you, the area you live in, and your car.
Evaluating and comparing policies
Compare policies in terms of coverage, exclusions, the reputation of insurer and then price. If you ever find yourself shopping for different quotes, make sure you are comparing extremely similar policies. Also, weigh the policy cost against both coverage and the quality of service provided.

When to get it
You may need to purchase auto insurance whenever you buy a new or used car. You may also need to reconsider your present policy if your family situation changes. Because marital status, number of children, and asset levels may change over time, you should try to review your existing policies from time to time to ensure adequate coverage is always maintained.

Common Coverages

The following information briefly explains the components of the personal auto policy (PAP), as well as the persons and events typically covered under such a policy.

Anatomy of the personal automobile policy (PAP)

Declarations page: Your PAP is a written contract between you and your insurance company. The policy’s declarations page contains accurate information concerning you (as the owner of the policy), the vehicles covered by the policy, and other identifying features.

Part A–liability coverage: Liability coverage insures you against injuries you cause to other people and damage you cause to other people’s property in an automobile accident. Liability claims for pain and suffering can be virtually limitless, so this is one area in which you definitely do not want to be underinsured. The PAP separates liability coverage into two parts: bodily injury coverage and property damage coverage.

Part B–medical payments coverage: Medical payments coverage (med pay) pays medical expenses resulting from an automobile accident up to a specified dollar limit. The purpose of “med pay” is to provide payment for immediate medical treatment for passengers of your car who are injured in an auto accident. Because of this, there’s no need to wait and find out who is at fault and ultimately liable.

Part C–uninsured/underinsured motorist coverage: This coverage insures you against losses caused by someone who is completely uninsured or who has less than adequate insurance to cover the loss (underinsured).

Part D–coverage for damage to your auto: Part D coverage actually consists of two separate parts: collision coverage and comprehensive coverage. You can purchase either one or both of these coverages for each vehicle you own. In general, collision coverage insures you against damage to your vehicle caused in an accident. Comprehensive coverage insures you against all other physical damage to your car caused by such events as fire, theft, flood, and vandalism. These coverages can be written with or without a deductible (generally, anywhere from $100 to $1,000). The higher the deductible, the lower the premium, and vice-versa.

Part E–duties after an accident or loss: This part of the PAP deals with the specific procedures that must be follow in order to have your claim covered by the insurer. It contains a list of general and specific duties that must be complied with. It’s essential to follow these procedures carefully, since timely payment of your claim may depend on your doing so.

Part F–personal auto policy provision: Part F of the PAP contains various provisions that limit and qualify the coverage provided in other sections of the PAP. Such provisions are commonly referred to as disclaimers. If the conditions set forth in this section are not met, the insurer may be able to deny coverage of a claim.

In addition to these basic parts included in every policy, there are certain optional coverages which can be purchased at an additional cost.

What’s not covered

Exclusions: Your PAP identifies a number of events and situations that are specifically omitted or excepted from coverage. These are called exclusions. An example would be property damage and personal injury that you intentionally caused, or damage to a vehicle from normal wear and tear or mechanical breakdown.

Limitations: Your PAP also specifies certain caps on the dollar amounts of coverage you are entitled to receive under the policy. These are called limitations. Separate limits are generally set for liability, medical payments, uninsured motorists, collision, and comprehensive coverages.

It’s important to read your PAP so that you’re aware of all the applicable exclusions and limitations.

Individuals typically covered under a PAP

Named insured: One section of the declarations page identifies you as the named insured, meaning you are the individual who is primarily insured under the policy. As the named insured, you and your vehicles receive the most extensive coverage under your policy.

Spouses: Your spouse is generally entitled to receive the same coverage as you (the named insured) under your policy if he or she lives with you, even if he or she is not identified as a named insured on the declarations page of your policy.

Family members: Family members (as defined in your policy) are insured by your PAP as long as they own, use, or maintain the vehicle covered by the policy. In fact, family members generally receive almost the same extensive coverage that you do.

Other people: If your covered auto is involved in an accident, other people are insured under certain sections of the policy if:

they were using the covered auto (liability coverage),
they were occupying the covered auto (uninsured motorists and medical payments coverages),
they are legally responsible for the actions of any other person insured under the policy (liability coverage), or
they are entitled to recover due to any bodily injury suffered by you, your resident spouse, family member, or anyone using the covered auto (uninsured motorists coverage).

If a vehicle other than a covered auto is involved, other people are insured under your policy as long as:

they are not the vehicle’s owner and they are legally responsible for the actions of any other person insured under the policy (liability coverage), or
they are entitled to recover due to any bodily injury suffered by you, your resident spouse, or relative (uninsured motorists coverage).

Policy Options

The coverage that your personal auto policy (PAP) provides can be tailored to meet your specific needs. Aside from any required minimum coverages that may apply (and subject to financial concerns), you can select the coverages and amounts you’d like. In addition to the various coverage options, there are also general policy options. Within certain parameters, you can make decisions here as well.

Choosing the policy period

Your PAP is only in effect during the policy period. This period of time is determined when you enter into the contract with the insurer. Typically, auto policies are in effect for one year. You may also be able to purchase auto insurance for longer or shorter periods of time.

Generally speaking, your premiums should be slightly lower when you purchase a policy with a longer period. With longer policies, the insurer can spread out the administrative costs of writing the policy over a longer period of time.

Canceling the policy

Although you can cancel your PAP at any time before the expiration date of the policy, insurers have procedures that must be followed in order to do so. If you ever cancel before the end of the policy agreement there may also be a cancellation fee or penalty. Therefore, it’s advisable to check first if you ever find yourself considering early cancellation.

Paying your premium

Insurers typically give you three general options for paying your insurance premium:

Pay the entire annual premium up front,
Make a down payment on the premium and then divide the remainder into monthly installments, or
Pay an equal monthly amount for 10 or 12 months.

Each method has pros and cons. Paying the entire amount up front might be financially impossible for you, but if you can afford it, you can expect to receive some savings. A payment plan, for most, is the preferred approach, but you can expect to pay an additional small service fee in order to enjoy this convenience.

Towing and labor coverage

Optional towing and labor insurance provides coverage for emergency road service and towing. Under this coverage, the insurer will pay towing and labor costs incurred each time your “covered auto” or any “non-owned auto” is disabled, up to the policy limit. This coverage is available any time your vehicle breaks down and is not limited to accidents covered under your physical damage coverage.

The insurer will typically only pay for labor (such as changing a tire or jump-starting your car) performed at the place where your vehicle is disabled, not the repair work done at a service station.

Covered auto: This term includes all vehicles listed on the Declarations page of your policy. It also includes any passenger vehicles that you purchase during the policy period, assuming you give notice to your insurer typically within 30 days after you become the owner.
Non-owned auto: A non-owned auto is a vehicle that either you borrow or use as a substitute for your “covered auto.” A borrowed vehicle is covered as long as it is not furnished or available for your regular use. (If a vehicle is furnished for your regular use, you should be listed on that owner’s policy.) Substitute vehicles are covered when your “covered auto” is out of normal use because of breakdown, repair, servicing, loss, or destruction.

Transportation expense (rental car) coverage

This optional coverage pays a set amount per day for transportation expenses (including a rental car) if your car is being repaired because of an accident. This coverage is often limited, and does have a maximum amount of coverage stated in the policy. For an additional premium, the per-day and maximum limits can usually be increased.

Typically, the coverage applies only if your vehicle is unusable for more than 24 hours. The payment is further limited to the period of time reasonably required to repair your vehicle.

In order for the rental benefit to take effect, the theft or accident has to be one that is covered under the physical damage section of your policy. Depending on your policies specific details, this coverage may or may not apply to stolen vehicles.

Reading Policies

Let’s be honest: reading an auto insurance policy is not a popular pastime. After all, an insurance policy is really a legal contract. It contains a lot of dry, technical legal language as well as jargon specific to the auto insurance industry–not exactly Saturday afternoon leisure reading. Nonetheless, it’s probably a good idea to sit down and thoroughly read your policy.

Ideally, you did this when you bought the policy. It only makes sense to read a contract before entering into it so that you’re fully aware of your rights and obligations, among other things. If you didn’t, you really should read your policy at some point, and then contact us with any questions or concerns.

Declarations page

Like other insurance contracts, your policy begins with a declarations page. This page identifies the policy number and provides important information including the policy term, coverage limits, and information about the insured. If you bought the policy for your car, you are probably the named insured. If so, the declarations page will contain your full name, and may also contain the names of family members and other drivers in your household. Also included here is your complete legal address, which may differ from the address where the covered auto is principally kept. The address where the car is kept helps determine your premium, but it is your legal address to which all correspondence about the policy will be sent.

If you got a loan to purchase your car and there is still an outstanding balance, the lender will be listed as “loss payee” on the declarations page. Because your lender has a financial interest in your car, they are entitled to receive payment under your auto policy if the car is damaged or destroyed. Consequently, information about your lender must be listed in the “loss payee” section of the declarations page.

The declarations page also contains a description of the vehicle(s) covered under the policy. This description includes each vehicle’s year, make, model, serial number, address where garaged, etc. The declarations page also indicates how each vehicle is used (i.e., for pleasure, business purposes, commuting to work, etc.). Your premium will be partly based on this information about your car.

If you elected to purchase one or more “endorsements” to expand and/or restrict the coverage your policy offers, these will be identified on the declarations page by name, form number, and date. The endorsements must be listed here in order for your insurer to provide that particular coverage. Finally, the declarations page shows the annual policy premium–the amount you’re paying your insurer for the insurance coverage. The total premium is a figure that results from adding up the separate premiums charged for each specific type of coverage.

Insuring agreement

Your policy contains a general insuring agreement, which is basically a broad statement listing the perils and risks covered under the contract. The insuring agreement also identifies exclusions, which are specific events and circumstances the policy will not cover. These noncovered situations are spelled out explicitly so as to minimize the policyholder’s confusion about what’s covered and what’s not. Definitions of terms commonly used throughout the policy are included in the insuring agreement, as are certain special provisions. The purpose of these special provisions is to prevent policyholders from taking unfair advantage of their auto insurance. For example, one special provision requires you to notify the insurance company if you want to add new vehicles to your policy. Otherwise, you could insure multiple vehicles under the same policy without informing your insurer, and obtain coverage for all of them with no premium increase.

The ISO Policy Form

The auto policy is completed with the attachment of the ISO Personal Auto Policy Form to the declarations page. This form spells out in detail the six main auto insurance coverages provided under the policy.

Part A–Liability Coverage: This provides protection against losses to an insured, caused by bodily injury or property damage to someone else that arises out of the use of an insured vehicle.

Part B–Medical Payments Coverage: This provides coverage for various medical expenses incurred by the insured and others as a result of an accident, regardless of negligence or liability on the part of the insured.

Part C–Uninsured/Underinsured Motorists Coverage: This provides coverage for losses the insured and others sustain when injured through the negligence of an uninsured, underinsured, or unidentified “hit-and-run” motorist.

Part D–Coverage for Damage to Your Auto: This provides coverage for losses the insured suffers as a result of damage to his or her covered vehicle (and/or its contents). This coverage consists of two parts: collision (for collision-related damage) and comprehensive (for damage not caused by a collision).

Part E–Duties after an Accident or Loss: This section imposes various requirements on the insured in the event of an accident or other loss. If you do not comply with the duties spelled out in this section, you may forfeit your contractual rights under the policy.

Part F–General Provisions: This section specifies certain conditions that apply to the entire policy or insuring arrangement. These include provisions for fraud, bankruptcy of the insured, and cancellation of the policy, among other things.

Comparing Policies

Before purchasing auto insurance, you are encouraged to always evaluate and compare the various products offered to ensure you get the coverage you need at an acceptable level of value. Additionally, because your personal and financial obligations change over time, you will occasionally need to review your personal auto policy (PAP) to confirm that it adequately meets your current needs. If it doesn’t, you may choose to increase or replace your policy.

Evaluate the coverage you already have

Before buying new or additional coverage, first review and understand the coverage you already have. It’s a good idea to discuss with us, or your financial advisor, your auto policy when reviewing or updating coverage levels. Talk about your current and future insurance needs. You may be able to increase your liability coverage or make limited changes to an existing policy if you find that the coverage you have is inadequate. On the other hand, there may be occasions when you need to purchase an entirely new policy.

The following is a list of some common events that should trigger a review of your personal auto policy:

Your annual policy is up for renewal: review it and make necessary changes. Usually a month or so before renewal is an ideal time to consider modifications.
Your family status changes (married, divorced, kids): You may become more concerned about protecting assets after you get married, or you may wish to purchase more liability or collision coverage after your son or daughter gets a driver’s license.
Your property increases in value: Your home is one of your most valuable assets. Without adequate auto liability protection, your home could be lost to pay a judgment against you.
Your net worth increases: As your net worth increases, you will have more assets (and more valuable assets) to protect.
You buy a new (or additional) car: When you buy a car, you’ll need to change your automobile policy to insure it. Take a few minutes to review your liability coverage under that policy, and make sure that your liability limits are still adequate.

Comparing policy terms and conditions

Although automobile insurance policies are standardized to a certain extent, it’s still important to compare specific policies in terms of coverage, exclusions, the reputation of the insurance company and value. Some points to consider:

When comparing policies, always make sure you are comparing very similar policies. You can’t fairly weigh one policy against another unless you are comparing similar provisions and exclusions. Think about deductibles and limits of liability, as well as price. To do this means you will want to spend time carefully reviewing each policy’s general language and details.
Weigh the policy cost against coverage and the service you’ll receive.
Evaluate the strength and reputation of the insurance company. It’s important to buy auto insurance from a financially sound, reputable insurance company. You can check the ratings published by one of several companies, such as A.M. Best, Moody’s, Standard & Poor’s, or Duff & Phelps.

SAVING MONEY

Saving Money On Auto Insurance

If you own a car and drive it, going without insurance is generally not an option. In most states, you may be required by law to purchase a minimum amount of liability coverage. And you should probably have more than just the bare minimum if you want to provide yourself with adequate protection. There are steps you can take, however, to reduce your auto insurance costs without having to go to extremes. Some or all of these steps may be appropriate for you, depending on your circumstances.

Specific ways to save money on auto insurance

Increase your deductible: For many people, raising the deductible on their auto insurance is a good way to cut the cost of the policy. Sometimes you can reduce your annual premium by 10 percent or more if you increase your deductible from, say, $250 to $500. If you do this, however, make sure you have the financial resources to handle the larger deductible if and when, the time comes.

Narrow the scope of your coverage: If you drive an older car worth less than $1,000, it may be cost-effective to drop collision and comprehensive coverage. The rationale is that even if the vehicle were severely damaged in an accident, the amount the insurer would pay for its repair or replacement would be relatively small.

You might also consider dropping any options you may have added to your policy (special provisions for items like towing and labor, car rental, and loss of income). Removal of these items may reduce your premium somewhat, but will also expose you to the costs in question.

Lower coverage amounts: You can also reduce the amounts of certain coverages. Again, be careful. You don’t want to be inadequately insured, especially in the area of liability. You should almost always keep your liability coverage at as high a level as possible because this is where you can have the greatest losses. You may be able to lower your coverage amounts in other areas (such as collision and comprehensive), but don’t rush into such a decision just to save a few bucks. Talk it over with us first.

Drive less: If you drive less than a certain number of miles in a year, you may qualify for a low-mileage discount. If the insurer offers this discount, try to limit your driving as much as possible. If you commute to work, use public transportation instead of driving. When you go away on vacation, fly, rent a car, or take a train.

Don’t use car for business purposes: Since work-related driving generally subjects you to a higher premium than pleasure driving, it may be in your best interest to stop using your car for business purposes if saving money is one of your goals.

Drive more safely: You may be eligible for a price break on your policy if you maintain a clean driving record for a specified period of time. A clean driving record generally means no accidents, moving violations, driving convictions, etc., during that period. The best way to qualify for the applicable discount is to drive carefully and defensively at all times.

Buy a low-profile car: Cars are rated on a risk scale for auto insurance purposes. In general, sports cars and other high-performance, flashy vehicles are classified as higher risks because they are common targets for thieves and vandals, and because statistically, the people who own them tend to drive more aggressively. If you own such a vehicle, you will likely pay a higher premium than if you owned a 4-door sedan, minivan, station wagon, or other low-risk vehicle.

Move: If you live in a rural community with little crime and traffic congestion, your premium will generally be lower than if you live in an urban area where your car is more likely to be stolen, vandalized, or involved in an accident. Granted, you shouldn’t move just to cut your auto insurance costs. However, this may be one of many factors in your decision if you’re thinking about relocating from the country or suburbs to the city.

Keep your car in a garage: Cars parked in garages are less likely to be stolen, vandalized, or struck by other vehicles.

Have safety/antitheft devices installed: You may receive discounts on your insurance if your car is equipped with one or more of the following options: anti-lock brakes, automatic seat belts, and airbags. Similarly, antitheft devices such as car alarms and tracking systems (e.g., Lojack) may also get you a discount because they reduce the chances of your car being stolen or vandalized.

Inquire about multipolicy discounts: You may be eligible to receive a discount from the insurer if you buy more than one type of policy through that same company (e.g., auto and homeowner’s). A discount may also apply to your auto insurance if you insure multiple cars under the same policy or with the same company.

Other discounts: Other discounts may be available if you meet certain criteria, so be sure to ask us about this very important topic when reviewing your policy with us.

REVIEWING OPTIONS & COST FACTORS

Auto Insurance Coverage Options

Auto insurance isn’t a “should I or shouldn’t I?” proposition. Most states have laws requiring you to purchase at least some minimum level of auto insurance, and lenders require it.

In reality, though, there is often a large gap between the insurance you’re required to carry and what you should consider carrying. As you review your auto insurance needs it is advisable:

that you have a broader scope of coverage (i.e., more types) than the state or lender mandates, and
that your coverage limits in most areas of coverage exceed the required minimums. The point is that you should ideally have an appropriate amount of auto insurance based on your unique needs and tolerance for risk and the possibility for financial loss.

Personal factors

Aside from finances, other personal considerations will enter the picture as well. Such factors as your location, how much driving you do, the way you drive (i.e., aggressively or defensively), and the size of your assets should all play a part in determining the range and amount of coverage you need. You should try to tailor your coverage to your unique situation, but there are some general guidelines you can work with as well.

General guidelines

Since auto insurance coverage is typically broken down into component parts, each of which provides a different type of protection, it’s best to look at each part individually.

Liability coverage

Liability coverage consists of two separate parts:

bodily injury liability, which covers you for losses that result when you or certain other people injure or kill someone with your car; and
property damage liability, which covers you for losses that result when you or certain other people damage someone else’s property with your car.

The bodily injury portion of this coverage is the most crucial aspect of your auto insurance. The reason: liability claims against you for medical bills, lost income, and pain and suffering if you should ever seriously injure someone in an accident can easily mount to hundreds of thousands of dollars. This is one area where you definitely don’t want to be underinsured. Property damage claims can also be huge, especially if you were to ever cause severe damage to someone else’s expensive, brand-new car. Among other things, you could also strike and damage a power pole, resulting in losses to the companies (phone, electric, etc.) serviced by that pole.

In most states, the required minimum liability coverage doesn’t come close to covering the costs associated with a serious accident. That means if you took to the road with the minimums, you could expect to pay the majority of the claim out of your own pocket if you’re sued. This is particularly dangerous if you have a home and other large assets worth protecting. Consequently, it may be advisable to carry both bodily injury and property damage liability coverages well beyond state minimums.

Medical payments coverage
If you or your family members are involved in an accident, whether in your insured car or in someone else’s insured car, medical payments coverage will pay medical expenses incurred as a result of the accident. Your non-family passengers may also qualify for this coverage if they’re injured in your car.

Since the other driver’s insurance should cover these costs if he or she is at fault (and has proper levels of insurance themselves), medical payments coverage comes into play when the accident is your fault.

If you have extensive health insurance coverage for yourself and your family, you might think that medical payments coverage is redundant and unnecessary. Be aware, though, that your health insurance won’t cover passengers who aren’t related to you if they’re hurt in an accident in your car. Medical payments coverage often will.

Uninsured/underinsured motorist coverage
This provides coverage for losses you and others suffer as a result of an accident that is the fault of another driver who either doesn’t have adequate auto insurance, or has no insurance at all.

In no-fault states, this type of coverage may not be essential because your auto insurance will have to cover your losses even if the other driver was at fault. In other states, however, this coverage is very important. If you were in an accident caused by a driver who had no insurance and no assets to compensate you, you might have no recourse. Uninsured/underinsured motorist coverage ensures that your insurance company will cover whatever expenses the driver can’t meet through insurance and other resources. It may also cover your losses if you’re hurt by an unidentified hit-and-run driver.

The number of uninsured, underinsured, and hit-and-run motorists on the road makes this coverage extremely important. Although the cost of this coverage is generally low, it often pays only for losses arising from bodily injuries, and not for property damage.

Collision/comprehensive coverage

Collision and comprehensive are actually two separate types of coverage. Collision covers you for losses you suffer when your vehicle is damaged in an at-fault collision with another vehicle or other object. Comprehensive covers you for losses suffered when your vehicle is damaged by fire, vandalism, flood, and a variety of other events.

In virtually every state, both are optional coverages that you can purchase for an additional premium. So should you buy them or not? In general, the answer is yes. If you don’t buy them and your vehicle is damaged, you will have to pay for the vehicle’s repair or replacement out of your own pocket (unless the accident was caused by another driver). Keep in mind, however, both types of coverage are subject to deductibles. They also generally only cover you up to the actual cash value of your vehicle. For this reason, it is generally not cost effective to have collision and comprehensive on much older, virtually valueless vehicles. With more expensive vehicles, the need for these coverages is much greater. You will have to weigh the cost against the potential benefits. Bottom line: if you drop your damage protection coverage, you could be responsible for the entire cost of repairing or replacing your vehicle and for this reason we do not recommend it.

Endorsements

Endorsements are optional provisions you can add to your auto insurance policy for an extra premium, to expand your coverage. Typical endorsements include coverage for items such as towing and labor, car rental costs, extraordinary medical expenses, and certain recreational vehicles. The number and type of endorsements will determine the size of your premium increase. Endorsements are not necessary in most cases, but may be highly advantageous if your situation, needs and lifestyle necessitate them.

DO I HAVE ENOUGH

Do I Have Enough Auto Insurance?

Here’s a piece of advice to consider when you buy auto insurance: Ask a lot of questions. Auto insurance often seems fraught with weighty terminology. If you’re unclear about the difference between comprehensive and collision, don’t fret; you’re not alone. It’s smart to ask us to explain the differences, much as you might ask your doctor to demystify medical terms.

Auto insurance blends several types of coverage into one policy. Typically, your policy will include some combination of comprehensive, collision, medical, liability and uninsured motorist coverage. Throw in the deductible amount, the vehicle’s value and personal data such as your age to arrive at the policy’s cost. Reduce the coverage amounts or raise the deductible and the cost of the policy goes down.

So what do you need? It depends on, well, your needs.

Liability:

Pays for the damage you cause to others if your car is involved in an accident. It also protects you from being cleaned out if you are sued following an accident.
The greater your assets, the more you stand to lose.
If you have substantial financial resources, you may need liability coverage that exceeds the coverage that you’ll get from an auto insurance policy.
In that case, our personal umbrella policies can provide the extra liability protection you need.

Collision:

Covers damage to your car in an accident, should reflect the value of your vehicle.
We can help you find the balance between the cost of collision insurance and the value of your car.
It might not be worth paying $200 a year for collision insurance on a car that’s worth only $1,000.
But if the car is worth a bit more, you probably want this coverage.

Comprehensive:

Comprehensive coverage pays for your car if it is stolen, vandalized or damaged in some way other than in a collision.

Medical:

Provides for medical expenses to you and your passengers that are the result of an accident.
The way you use your car may make a difference in the amount of medical coverage you need.
For example, we might suggest more coverage for a parent who regularly takes a carload of kids to soccer practice than for a driver who expects to drive mostly solo.

Uninsured Motorist:

Pays when you’re in a wreck with someone who has no insurance. This last type of coverage is essential.

Gap Coverage

A type of insurance coverage that covers the difference between the payoff of a leased vehicle and the amount covered by other insurance coverage, when a vehicle is damaged or stolen during the term of the lease. Most gap coverage requires that the lessee not be in default under the terms of the lease.

True protection comes from understanding your unique situation, and applying coverage accordingly. Consider these factors as you speak with us. Once you understand the language, you’ll be able to apply the best policy for your needs, and maybe even impress your friends with your mastery of the lingo.

How Much Should Auto Insurance Cost?

It’s a question we hear almost every day. How much you pay for car insurance depends on many factors: where you live, your age, what sort of car you drive, your driving record. But you can reduce the cost of insuring your car in several ways.

First, take into account the price of insurance when choosing a vehicle.

More expensive cars cost more to repair, maintain and insure.
Performance cars cost more to insure than family sedans-a lot more.
Safer cars may also insure for less.
We offer discounts for vehicles with anti-lock brakes on all four wheels.
Insure all your cars with one company-multi-car discounts can be substantial.
Consider increasing your deductible. By raising the amount you pay out-of-pocket for losses, you can save 20 percent or more on your auto policy.
Also consider reducing collision insurance if you’re driving a vehicle that’s more than eight years old.

Try to weed out overlapping insurance. For example, if you have an excellent medical and disability plan at work, you might wish to reduce medical or personal injury coverage on your auto policy, and save the difference. Ask us to explain the trade-offs.

And drive safely. A clean driving record can help lower your insurance rates through safe-driver discounts.

We also offer discounts for low-mileage drivers,
Car-poolers,
Good students and
Seniors who take drivers’ refresher courses.

The price you pay is also influenced by how you pay. Ask us about your various payment options!

OTHER CONSIDERATIONS & NEEDS

Insurance For Motorcycles

Buying motorcycle insurance is very similar to buying automobile insurance. Typically, you will need the following coverage:

Liability insurance to cover you for bodily injury or property damage resulting from an accident with your motorcycle. Be sure to ask us whether your policy covers injuries to your passengers. Some states require it, while others don’t. Also ask us about the amount of coverage you think you’ll need. Some states have a minimum required level of coverage, but you may need more to protect you and your assets from the risk of financial loss.
Collision insurance to cover you for the value of damage to your bike, after deductibles, that results from an accident. If you are making monthly payments for your motorcycle, your lender will require collision coverage.
Comprehensive insurance to cover you for loss due to fire, theft, vandalism, and other events not resulting from an accident. Comprehensive coverage also carries a deductible.
Uninsured motorist coverage to pay your medical bills and other damages if a driver without insurance hits you. It may also cover damage to your bike. Be sure check with us to see if property damage is included in your uninsured motorist coverage. If it doesn’t, you can purchase it separately.
Underinsured motorist coverage to pay your medical bills and other damages, if you are hit by a driver with minimal insurance coverage and your damages exceed the value of that driver’s coverage. The underinsured motorist coverage will pick up any excess not covered by the underinsured driver’s policy.

How to minimize motorcycle insurance costs
Perhaps the best way to minimize motorcycle insurance costs is to maintain a safe driving record and try to attend a certified motorcycle safety class or if you have multiple vehicles covered under one policy you may be eligible for a multi-policy discount.

Eliminating collision and comprehensive coverage or increasing your deductibles will also lower your premiums (however, if there is a lien on the bike, you may not be permitted to do so). Special safety or antitheft equipment may also be a way to reduce your premiums. The number of miles you drive, the place where you store the bike, the size and style of the bike, the horsepower and age of the bike, may all affect your policy premiums as well.

If you are having difficulty with the price of motorcycle insurance, we invite you to discuss these issues with us. You may be able to make some changes to lower your premiums without taking on unacceptable additional risk.

Consider motorcycle insurance as a cost of ownership
If you are in the process of purchasing a motorcycle, it is always advisable to have looked into the availability and price of motorcycle insurance before you buy. It could be a factor in your decision making process.

Insuring Your Rental Car

The best way to protect yourself when using a rental car is to purchase a regular automobile insurance policy that explicitly extends collision and comprehensive coverage to rental cars in any state or country. If you don’t own a car and you rent on a regular basis, you might want to purchase a “nonowner” policy that will give you the same type of coverage. Unless you have an individual policy that explicitly extends coverage to rental cars, you should be cautious if you wish to avoid exposure to liability when renting a car.

Doesn’t my credit card issuer automatically insure me when I rent a car?
Many major credit card companies commonly claim to provide you with insurance coverage when you use their card to rent an automobile. However, you should read the fine print or get written verification from the company, because the coverage provided by your credit card is not always full coverage.

Some cards only offer coverage if you rent your car from a particular agency. Some limit the days for which coverage is available. Some will only provide coverage for certain types and/or classes of cars. With some cards, the coverage is not automatic and you must enroll in a program to get coverage. Some cards that advertise automatic rental insurance really only reimburse you for the deductible that you would have to pay under your regular insurance policy. Still others may provide only collision and comprehensive coverage, leaving you exposed for personal injury or property damage to others.

This is not to say that all credit cards fail to provide the coverage you need when you rent a car. It merely illustrates that you shouldn’t unknowingly rely on your credit card issuer to protect you. Carefully examine the terms of your credit card agreement, then act accordingly.

What about coverage offered by the rental agency?
The insurance packages that you purchase from a rental car agency (typically called “loss damage waivers”) may or may not provide the protection you need. In your rush to get out of the airport, you may not realize that the loss damage waiver you purchased insures the rental car against theft, but not the contents. That could be a big surprise if your laptop computer and expensive camera are stolen from the rental car along with your luggage, and the rental agency rejects your claim. (Check your homeowners insurance policy in this case–you may be covered.) Similarly, you may discover that the loss damage waiver you purchased for liability only provides limited coverage. Further, many loss damage waivers exclude certain items and/or situations from coverage.

Again, this is not to say that rental car agencies are unable to provide you with the protection you need. It is merely to illustrate that you should read the fine print, or get verification from a rental agent in writing if you have any doubts.

What if I have a regular policy, but it isn’t full coverage?
It is possible that you have insurance on your personal car, but you don’t carry collision and comprehensive, or sufficient liability coverage. It may not be necessary to call your agent and add all that additional coverage just so that you will be protected when you rent a car during your upcoming vacation. You can probably close the gaps in your coverage using loss damage waivers and coverage offered by your credit card insurer or rental car company. However, as discussed above, you need to be cautious. You want to be sure you are getting the coverage you need or expected to receive.

Other sources of coverage
If you have suffered a loss that isn’t covered under your auto policy, don’t forget to check your other insurance policies. For example, if personal property has been stolen from your rental car, it may be covered under your homeowners or renters policy. Similarly, certain medical policies may cover costs of injuries not covered under your regular automobile plan.

Towing Coverage

Towing and Labor coverage provides a large measure of additional security. If you add this option to your auto’s policy. When you have this coverage the insurer will pay reasonable expenses incurred for:

towing your car to the nearest place where necessary repairs can be made during regular business hours
towing your car out if it is stuck on or next to a public street or highway
mechanical labor up to one hour at the place of its breakdown
change of a tire
delivery of gasoline, oil or loaned battery, but typically not the cost of these items

SAFETY & TIPS

Safety & Important Tips

What To Do In Case Of An Auto Accident

If you’ve ever been involved in an accident, you know how stressful it can be. Most people are flooded with a mix of emotions and worries. You’ll be concerned about everyone’s safety and anxious about your vehicle. You might be angry at the other driver. Then there’s the fear about what impact the accident will have on your driving record and your insurance. All those things can make it hard to think clearly and respond properly. And if there are injuries, the stress can be amplified. But that’s when a clear head and quick action are really crucial.

Here are some tips for getting through an accident with a minimum of hassle and headaches.

After an accident, getting help for the injured is always the first priority.

Regardless of the circumstances, report the accident to the police.

Record the name, address and phone number of the other driver. Write down the make and license number of all vehicles involved. You’ll want to get as much information as you can about the other driver’s insurance agent, policy and insurance company.

Don’t forget to collect the names, addresses and phone numbers of passengers and witnesses. Since many cases end up with the parties blaming each other, third-party witnesses can be important. Don’t hesitate to approach anyone who may have seen the crash.

Be careful of what you say. Don’t talk about fault; even casual remarks can be used in court.

Notify your insurance agent immediately. The faster we get information, the faster we can act. Discuss the accident only with your agent and, of course, with the police.

Examine the damage carefully. Take photos if possible, particularly if the accident occurred on private property, such as a parking lot.

Without being overly suspicious, observe the other driver’s actions. If the other driver later claims to have a serious injury, what you notice could be important.
Stay calm.

Remember, these incidents are the reason you have insurance in the first place. We realize no auto accident is ever minor when you’re involved. We’re here so you can relax a little, doing everything possible to ease your stress and provide you with peace of mind.

Safe Driving Tips

Paying Attention Will Save Your Life

If someone else is in the car you should refrain from talking with your hands, and realize that you are doing something that could, in one instant, become life threatening. When speaking with someone else in your car don’t feel as if you need to look at them when carrying on a conversation. Keep your eyes on the road, and save those social graces for the dinner table. ALWAYS PAY ATTENTION TO THE ROADWAY.
Remember that cell phones and all other distractions increase your chances of having an accident. If you must use your cell phone while driving on a regular basis consider reducing your risk by purchasing a miniature headset or hands-free device at your local electronics store.
The left lane of any interstate highway is for passing. By staying out of the left lane (and in one of the right lanes) when not passing, greatly reduces social stress on the highways which makes it safer for everyone.
Always remember to buckle your seatbelt. Even if the ride is just around the corner.
Keep your children in proper restraint seats, or properly adjusted safety belts if they are older. (Using the phrase “OK everybody… buckle up!” works well before starting the car.)
Keep your rear view, and side mirrors adjusted for maximum visibility.
If you wish to be seen more easily in daily traffic consider using your headlights during the daytime as well as at night, and always remember to use your headlights when traveling on 2-Lane highways regardless of the time of day.

Driving Around Trucks & Busses: (Sharing the road with confidence)

When passing trucks and busses, always do so quickly. When you are approaching these vehicles from the rear always judge your passing speed and don’t begin the passing process only to find yourself stuck behind another vehicle… trapped beside the truck or bus. Always wait to let the vehicle in front of you complete their pass before beginning yours.
Be aware that most large commercial vehicles these days have 500 horsepower or more, and are equipped with cruise control. Yet their companies have limited their top speed through their engines computer system to ensure safe driving & better insurance rates. If you notice one of these vehicles seems to keep creeping up on you then make a decision to speed up and pull away, or slow down and let them pass. (Chances are your just driving across town, and they are most likely nearing the end of a 600 mile drive… realizing this, will change your perspective and help you to make better decisions about what to do.)
Trucks & Busses try to maintain a safe distance between themselves and the vehicle in front of them. Yet many automobile drivers commonly invade this “Safety Zone” to increase their position on the road. When passing a truck or bus always leave at least 50 feet (or 5 car lengths) of space between you & them before merging back into the lane in front of them.
Never zoom around a truck or bus only to pull directly in front of them. Drivers that do this have no control over what might happen in front of them… placing their lives at risk, as well as the lives of others. The larger vehicle will never be able to stop in time should the car need to hit its’ breaks.
Remember that: If you can’t see a truck or bus’ rear view mirrors, then they cannot see you. Let this simple fact be a gauge as to how close behind them you should be. Always stay back far enough so that you can see their mirrors.
Always be aware that busses carry lots of people, and at any given moment these people could be standing up or moving about the cabin. No one wants to do something that could possibly injure 10 to 50 people. Give busses, and their passengers, the courtesy they require.

On Ice or Snow

It’s always a good idea to head over to a large empty parking lot in your neighborhood (i.e. mall or superstore parking lot) when the seasons first snowfall hits. The reason for this is to give you a little time to re-acquaint yourself with your winter driving abilities in an empty parking lot, and the feel of your car on the slippery road.
Bridges and overpasses freeze first. Slow down and avoid sudden changes in speed or direction.
Keep windows clear of snow and ice.
Keep your speed steady and slow — but not too slow. In deeper snow, it’s often necessary to use the car’s momentum to keep moving.
Use brakes very cautiously. Abrupt braking can cause brake lock-up, which causes you to lose steering control.
Antilock brakes are designed to overcome a loss of steering control on wet or slippery roads. Yet they have little or no effect on ice. To make antilock brakes work correctly, or work at all, you should apply constant, firm pressure to the pedal. During an emergency stop, try to push the brake pedal all the way to the floor.There is an old saying… “If the roads are wet, then drive like it’s snowing. If the roads have snow, then drive like they’re icy. If the roads are icy, then don’t drive.”
If you get stuck in snow, straighten the wheels and accelerate slowly. Avoid spinning the tires, because the heat friction caused by spinning tires melts the snow and creates a thin layer of ice. Use sand or cinders under the drive wheels to increase traction if you get a little stuck. Never stand in traffic to push a car that’s stuck. Someone else could loose control and seriously injure or even kill you.

In High Winds

Use extra care and consider if a trailer, van or other “high-profile” vehicle should be operated at all.

When it Rains

The road becomes slippery as water mixes with road oils, grease and dirt. Also, your car’s tires tend to ride on the surface water, reducing traction… Slow down.
Visibility is often impaired. Turn on your head lights at the first sign of rain. Use the defroster or air conditioner to keep windows and mirrors clear.

When It’s Foggy

Stay to the right of the roadway.
Turn on your headlights — day or night — to low beam.
If fog thickens — run your hazard flashers to aid others coming up from behind you, increasing the ability for others to see you better.
If your having difficulty seeing the road’s edge, pull off at the next exit — well out of the traffic lane — turn on the emergency flashers and leave your headlights on, and vehicle running.

In Severe Weather

High Winds–use extra care and consider if a trailer, van or other “high-profile” vehicle should be operated at all
Hailstorms–find shelter by driving under an overpass or bridge.
Severe thunderstorms–listen to your car radio and be alert. If you spot a tornado, don’t try to outrun it. Get out of the car, find shelter in a ditch or low-lying area and lie face down to protect yourself from flying debris.
Hurricanes–avoid low areas and move inland while there’s still plenty of time.

This information highlights examples of safety precautions you can consider to help protect yourself, others, and your personal property. This list is not meant to be all encompassing. Moreover, a particular precaution may not be effective in all circumstances.

Understanding Windshield Repair

Should You Repair It or Replace It?

WHACK! A rock just bounced off your windshield, leaving a dime-sized chip right in front of your nose. Not only does it obstruct your view, but if it’s like other rock chips you’ve received, it’ll soon sprout cracks that spread like wildfire.

There was a time when a chip or crack in your windshield meant certain replacement. That’s no longer the case. Modern technology makes it possible to repair windshields that would have previously been scrapped. Not only does this save your windshield, it also saves you money.

But be aware that even the most advanced glass repair techniques have their limits. So if your windshield is severely damaged, new glass may still be in your future.

Do I have to replace my windshield or can it be repaired?

Windshield repair or replacement depends on the size, location and severity of the damage. The majority of windshield repair shops can repair quarter-sized rock chips and cracks up to three inches long. Anything bigger and most places will recommend replacement.

However, some facilities use a special technique that allows them to repair cracks up to 12 inches long. So it pays to check around before committing to a new windshield.

Location of the damage also plays an important role in determining your windshield’s fate. Cracks at the edge of the windshield tend to spread very quickly and can compromise the structural integrity of the glass. If they’re caught in time, they can be repaired. But in most cases, it’s usually advisable to replace the windshield.

Also be aware that some facilities may not repair a chip that appears directly in the driver’s line of vision. Because the repair process leaves minor distortions in the glass, some shops prefer to replace the windshield rather than compromise the driver’s vision.

Regardless of the size and location of a chip or crack, it’s always advisable to have it repaired quickly. If you wait some time to repair it, dirt can work its way into the damaged area, affecting the effectiveness and clarity of the repair.

Finally, bear in mind that if your windshield took a big enough hit, it may simply be beyond saving. Major impacts (BIG objects) or accident damage go beyond what any repair facility can fix. In these severe cases, replacement is a must.

How much will this cost?

The cost to repair a windshield is pretty standard across the country. A recent survey of windshield repair facilities across the country found that costs are fairly consistent. Repairing a single rock chip costs around $40-$50 for the first chip, then usually $10 extra for each additional chip.

The cost to repair most cracks is about the same. However, if the crack is longer than three inches, it may require special treatment. Long-crack specialists typically charges about $70 to repair a six- to twelve-inch windshield crack.

Windshield replacement costs considerably more and varies greatly depending on the vehicle. In addition to the cost of the windshield itself, a windshield molding kit and installation labor must be factored into the overall replacement cost.

The difference in cost between a dealer price and an independent glass shop is usually due to the actual glass used. Dealers often charge more because they’re using an Original Equipment Manufacturer (OEM) windshield, which is exactly the same as the one that originally came with the car.

Meanwhile, local automotive glass shops typically use windshields from non-OEM suppliers. This glass is usually less expensive, but offers quality, safety and clarity similar to the more-expensive OEM windshield. Non-OEM glass is required to meet or exceed the same safety standards as OEM glass.

However, all the glass shops surveyed strongly advised that only OEM-recommended sealers and adhesives be used during windshield replacement. Use of inferior quality urethane could result in the windshield leaking or even becoming dislodged in an accident.

Where do I get the work done?

When it comes to repairing or replacing your windshield, you have a number of possible options. It all depends on your specific needs.

Automotive glass specialist. These facilities specialize in the repair and replacement of automotive glass. This includes not only windshields, but also side and rear windows. Most usually attempt to repair a windshield before recommending replacement.
Windshield repair facility. These independent and nationally franchised shops usually specialize in windshield repairs only. They fix chips and cracks, but do not install new windshields.
New car dealer. Your local dealer can replace your windshield with an original equipment manufacturer (OEM) windshield. Many dealers sub-contract to mobile glass services, who come to the dealership and replace windshields on-site. Sometimes non-OEM windshields are also available through dealers.
Mobile glass repair and replacement service. Rather than go somewhere to have work performed on your car, these services come to you and repair or replace your windshield wherever your car is located-at home, or even at work.
General glass service. In addition to replacing automotive glass, these facilities also handle sales and installation of commercial and residential glass.

The windshield services listed above can be found in your Yellow Pages under Glass-Auto or Windshield Repair.

Is this covered by my insurance?

Windshields are covered by all of our automotive insurance companies. But because the cost to replace a windshield is so much higher than repairing it (four to ten times higher), coverage is handled differently for replacement vs. repair.

If you’re replacing a windshield, your insurance company will ask you to pay your deductible and they’ll pay for the complete replacement.

However, if you’re repairing the windshield, the deal is a little sweeter. Having recognized that it’s more economical to repair a windshield than replace it, our insurance companies may waive your deductible and pay for the entire repair.

This arrangement encourages customers to repair their windshields rather than replace them every time they’re chipped. It also represents a substantial savings to both you and your insurance company over the lifetime of your policy.

On the other hand, if your windshield is in genuine need of replacement we don’t skimp, and replace it. A heavily damaged windshield is not only difficult to look through, it’s also unsafe. The structural integrity may have been compromised and could weaken further if it isn’t replaced quickly.

Have a qualified glass specialist carefully examine your windshield to determine whether a repair will suffice or if it should indeed be replaced. Also remember to check with us to confirm the terms of your coverage before committing to any windshield work.

How does windshield repair work?

Windshield repair involves injection of a special resin into the damaged area using a tool that attaches directly to the glass. Once injected, this resin is then cured and polished to restore the clarity and strength to the glass.

When a chip or crack occurs, it often spreads into the windshield’s inner layer of plastic, which is sandwiched between two layers of glass. In some instances, a drill is used to make a clean passageway to the plastic, where the resin is injected to repair the damage.

Think of a windshield repair as first-aid that prevents the damage from getting worse. In some cases, it may look nearly perfect, while in others, it could still appear slightly blemished. But in either case, a proper repair prevents the damage from spreading.

And since every chip is unique, some will respond more effectively to repair than others.

Child Seat Safety

Parents may feel that by buying a child seat and putting it in a car that their child is safe, but in reality there’s a lot more to it than that.

A federal government study reported 80 percent of child safety seats are not used properly. National Safe Kids, which checked more than 17,000 child safety seats at nationwide checkups, said it found the figure to be closer to 85 percent.

Common child seat mistakes

A government study found the biggest problem with child seats was improper use of locking clips. Follow instructions that come with the child seat, as well as those that come with your vehicle, to see if you need to use the clips and that you’re using them correctly.

NHTSA (National Highway Traffic & Safety Administration) also found that more than half of child seats had harness retainer clips that weren’t used correctly. Again, follow instructions that accompany the child seat. In general, harness retainer clips should be placed at the level of your child’s armpits, according to National Safe Kids.

More mistakes

Ranking third in the NHTSA study of problems was use of harness straps. They should not be loose. According to National Safe Kids, you shouldn’t be able to fit more than one of your fingers between a harness strap and your child’s collarbone.

In addition, the harness straps should not be twisted. And make sure they’re routed correctly through the proper slots on the seat.

Another problem cited by NHTSA was use of the vehicle safety belts. The owner’s manual for your vehicle details proper seat belt use. Be sure the belt used with the child seat is firmly locked in its connection, routed correctly with the child seat and holds the seat firmly in place. You should not be able to wiggle the child seat from side to side or pull it forward.

Further down in the list of problems, but still accounting for ten percent of the child seat mistakes reported by NHTSA is positioning of a child seat in the wrong direction inside the car. Rear-facing child seats should only be positioned to face rearward; forward-facing seats should only face forward.

In addition, National Safe Kids notes you should be sure to keep a rear-facing child seat reclined at a 45-degree angle, so it cradles the baby’s head.

Consequences of improper child seat use

Some child seat mistakes clearly are dangerous-for example, positioning a child seat the wrong way inside a car or putting a child seat of any sort in front of an active frontal airbag.

But studies haven’t yet pinpointed how dangerous some of the other child seat misuses are, things like not using a locking clip correctly or not having the child seat secured as tightly as it could be with the vehicle safety belt. Because we don’t know, as a society, which of these problems will be life-threatening, it’s important that we make an effort to learn proper child seat use.

Lots to learn

It’s not that parents and caregivers aren’t paying attention or don’t care. They’re dealing with more complicated child seats today. Many child seats have recalls, too, that often can go unnoticed by child seat owners. One source for recall and other child seat information is the Internet; many private organizations as well as government agencies have Web pages to help parents wade through the daunting amount of data in circulation.

Below are a few of the important Internet sites dedicated to promoting child safety in automobiles via child seats. Packed with press releases, recalls, safety news and more, these sites are great places to begin gathering information about providing the children in your charge with the safest ride possible.

National Highway Traffic Safety Administration

This site includes links to the new Federal Motor Vehicle Safety Standards for child seats, a form for reporting problems with a safety seat, a list of safety training programs, and even a state-by state list of individuals who have attended the programs and may be of help.

National SAFE KIDS Campaign

The National SAFE KIDS Campaign is the first and only national organization dedicated to the prevention of unintentional childhood injury-the number-one killer of children ages 14 and under. The site is the home of the SAFE KIDS BUCKLE UP, a national campaign to increase awareness about child seat safety. This site is updated frequently and includes a calendar of Car Seat Check Up events around the U.S.

National Safety Council

This site contains a wealth of information on child seats, child safety, and safety in general.

Safe Ride Helpline Online

The online site of SafetyBeltSafe U.S.A., a nonprofit organization dedicated to child safety. The site includes recalls (including ways to identify your seat, with photos), classes, technical information on seats, frequently asked questions, and links to other sites.

The vehicles in which the seats are installed aren’t standardized, either. Some have flat seat cushions, for example, that help make a child seat stable while others have contoured bucket seats that make child seat stability more difficult. Where the seat belt connectors are in a vehicle can help or hinder proper child seat positioning.

Safety falls off as children age

Efforts by child safety advocates seem to be working to get the nation’s youngest children into child seats. But statistics show that use of proper restraints declines as a child ages. And you’d be surprised to learn how few laws govern auto safety for children once they leave child safety seats-or how much the laws vary from state to state.

According to a NHTSA phone survey of U.S. parents, 96 percent of newborns travel in child seats all the time, but by age 3, the figure is down to 75 percent. By age 5, just 17 percent of children are in child seats all the time, the survey indicated.

Still, child seats-be they for newborns, toddlers or older children-continue to be the most effective way to protect a child in a vehicle crash. And it almost goes without saying that once a youngster is out of child seats, he or she should always wear seat belts and sit in the back seat, where it is much safer. One of the main problems is keeping kids buckled up as they get older.

Be aware of recalls
Register your child seat: Note that manufacturers of child seats provide a registration form with their child seats built as of March 1993. By completing and returning the form, typically soon after purchase, a buyer provides contact information for the manufacturer to use in the event of a recall. Manufacturers also have agreed to maintain names and addresses of child seat purchasers that they had in their files from before March 1993.

Other ways to stay in touch

In case you missed out on those registration opportunities, NHTSA’s Web site also provides a child seat safety registration form you can fill out and submit to NHTSA that allows the agency to provide your contact information to the seat manufacturer.

NHTSA maintains a toll-free number for further questions. 1-800-424-9393.

And don’t hesitate to inform NHTSA if you have noticed a problem with your child seats. The Web site includes a child seat questionnaire form where you can report defects.

How To Help Both You & Your Teen Driver

Choose any topic from the following menu, or scroll down the page:

Creating Guidelines for Your Teen Driver
Insuring a New Driver
Tips For Driving with Your Teen
Set a Good Example
Safe Driving Contract

Creating Guidelines for Your Teen Driver

Many teens pass their driving test around their sixteenth birthday. Although it’s the legal age to receive a driver’s license in many states, it is not a magic number which means teens are experienced behind the wheel. Only you can decide when your teen is ready to drive without adult supervision.

After they have a license, teens are still gaining experience as new drivers. While they’re learning, you can help keep them safe by setting rules about when, where, how and with whom they may drive.

Put a limit on the number of passengers in the car.
Teens are likely to have more trouble focusing on the road with laughter, music, food and other distractions, all of which increase with the number of passengers.
Establish and enforce a house curfew.
Check with your local police department to see if your town has a curfew for minors. If not, set your own.
Insist that your teen and his or her passengers always use safety belts.
Teens tend to use their safety belts less often than other drivers. Remind teens that the presence of air bags does not mean they can ignore safety belts. These two safety devices are meant to work together to reduce injuries and fatalities.
Limit or supervise your teen’s driving during times of high risk.
The highest number of driving crashes occur on Friday and Saturday night and early Saturday and Sunday morning.
Set driving area limits.
If your teen wants to travel outside your geographic area, require that he or she request special permission.
Prohibit driving or riding with others under the influence of drugs or alcohol.
Driving while under the influence of drugs and alcohol are life threatening issues as well as being illegal. In addition to the possibility of legal punishment, tell your teen you will revoke driving privileges for a given amount of time if found to be driving or riding with others under the influence. We recommend discussing and signing a Safe Driving Contract with your teen as a way to create a mutual understanding between both you and them.

Insuring a New Driver

When your new driver is named on an existing auto insurance policy or obtains his or her own insurance, the company providing the coverage is assuming an additional risk. In order to cover that new risk, there is an additional cost for insuring the young driver.

To determine the appropriate cost of providing coverage to each insured, insurance industry professionals use something called rating factors. Because inexperienced drivers drive differently than experienced drivers, being new to the road is a rating factor. Examples of other rating factors include:

Gender
Make/Model/Year of car
Miles driven
Driving record (tickets and accidents)
Driving experience

Don’t worry – teens will naturally gain the confidence and judgment they need as drivers as they gain experience over time. Until they reach that level, though, there are things you and your teen can do to help maintain their auto insurance rates.

Help keep auto insurance rates as low as possible:

Keep a clean driving record.
Drive safe cars that are affordable to insure.
Consider raising deductible limits.
If appropriate to your situation, drop coverages such as collision coverage for older cars with relatively low cash values.

Parents: Tips For Driving with Your Teen

Supervised practice over an extended period of time makes teens better, safer drivers. That’s why it’s important for you to spend time in the car with your teen behind the wheel. Give your teen opportunities to practice what he or she may have learned in Driver Education, and encourage him or her to develop safe habits and skills. Patient practice, as well as following the same rules when you’re behind the wheel, will help your teen learn the do’s and don’ts of the road. Rule #1 for parents: set a good example.

While your teen is driving:

Give simple and clear directions, such as “brake,” “slow,” and “cover” (lightly cover the brake with your foot, in preparation to stop).
Use a calm tone of voice.
Watch your teen’s arms – if they are not relaxed, the situation may be too hard for your teen to handle, or he or she may be experiencing levels of anxiety or fatigue.

If your teen does something incorrectly:

Ask him or her to safely move the car off the road and then discuss the mistake calmly.
Plan routes that allow your teen to practice different skills. Driving to and from the same grocery store every week will not adequately prepare your teen to be a skilled, licensed driver.
Take your teen out for driving practice under as many different conditions as possible. Safe drivers are experienced in responding to changing weather, visibility, traffic volume and speed.
Encourage your teen to talk aloud about what he or she sees and plans to do while driving. This makes it much easier for you to know if your teen is observing and thinking ahead like a good driver.

After the practice session:

Evaluate the session together. Give your teen a chance to point out his or her mistakes before you do.
Praise your teen for what he or she did correctly and also mention how your teen can improve.
Record your session in a self imposed Driving Log.

Parents: Set a Good Example

Set a good example when you drive.

Your teen is much more likely to be a calm and courteous driver, use a safety belt, and obey the speed limit, if you do it first.

Provide a safe motor vehicle for practice sessions.

If your car needs a tune-up, take your teen along for a lesson in car maintenance. Now is the time to talk about the costs of maintaining and insuring a car, and if your teen needs to contribute.

Work with your teen’s Driver Education Instructor.

Ask for a copy of the Driver Education curriculum. Find out how your teen is performing in class and which skills he or she needs to work on.

Take your teen to get a license only when YOU feel the time is right.

You must take responsibility for making this decision – – your teen’s life depends on it.

Share your insurance costs.

Research shows that teens who pay for a portion of the maintenance and insurance of the family car as they learn how to drive are more likely to be safe drivers.

Safe Driving Contract

Teen Driver

I promise not to drive under the influence of alcohol or drugs, nor will I get in a car where the driver has had alcohol to drink or has used drugs. If I am ever in a situation where I need a ride home for my safety, I will call a cab, ask a designated driver to drive me, or call you or another family member to come and get me.

_________________________________________________

Signature of Teen Driver

Parent(s)/Guardian(s)

I promise to pick you up if you ever call me for a ride. If I do not have a car, I will pay for a cab to bring you home. I further promise not to start a conversation about the incident at that time. I also agree to use safe driving practices, not to drive under the influence of drugs or alcohol myself, and find an alternate means home if I am ever in a situation where the driver is under the influence of alcohol or drugs.

_________________________________________________

Signature of Parent(s)/Guardian(s)

You can PRINT A COPY of our Safe Driving Contract using Adobe Acrobat Reader.

Defensive Driving WORKS!

The Collision Prevention Formula:

Recognize the hazards: Continuously scan the road ahead and behind checking your mirror every 3 to 5 seconds.
Understand the defense: Continuously scan the road for possible hazards. Play the “what if” game by thinking “what if” the driver in front of me stops suddenly? “What if” someone runs a red light at the next intersection? “What if” that driver in the oncoming lane…
Act correctly in time: Think ahead, try to anticipate what other drivers around you might do, avoid hazardous or dangerous situations before it’s too late.

Help avoid collisions through proper vehicle maintenance. Remember, from clean windows to properly adjusted mirrors to regular engine servicing and much more, you can be held responsible for the little, as well as the big defects in your car.

Know, Show, Slow, Go

Know the rules for intersections and know which way you plan on going before you arrive at the intersection. Show your intentions with signals and proper lane position before entering it. Slow down as you approach the intersection, have your foot over the break. Go only after you’ve checked to make sure the coast is clear. Don’t assume that the other driver knows what to do at the intersection or that the driver will follow the rules.

The weight of your car is the major determining factor in how long it takes you to stop. The heavier the car, the longer it takes to stop. On average, at 65 miles per hour it will take you the length of a football field to stop — that’s completely stop — your car. Remember, automatic breaking systems (ABS) only help to stop without swerving in a skid stop, not in a shorter distance.

The Two Second Rule

Follow the Two Second Rule. Watch the vehicle ahead of you pass a fixed object or point, like a pole or mile marker. Begin counting: “One thousand and one, one thousand and two.” If your car reaches that marker before you finish counting you are following too closely. Ease up and check again.

In adverse conditions, use The Two Second Plus Rule: add one second following distance for each adverse condition. Adverse conditions include:

Driving at night, in fog, rain or snow. (Plus 1)
Driving behind a truck or vehicle making it difficult for you to see ahead. (Plus 1)
Driving behind a motor cycle. (Plus 1)
Driving through an intersection. (Plus 1)

If you can’t see a truck driver in the truck’s side mirror, then that driver can’t see you or your car — you’re in the vehicle’s blind spot and should pull out of it as soon as it is possible and safe.

Practice the 4 Rs

Head-on collisions are the most violent type of auto accident. Practice the 4 Rs:

Read the road ahead.
Reduce your speed.
Drive to the Right.
Ride off the road if necessary.

A driver who’s coming head-on toward you in your lane may “wake-up” and realize they’ve crossed into your lane, and then correct their error by heading to your left, or back into their proper lane. So, drive RIGHT and off the road if necessary. Don’t swerve left.

This information includes material from the National Safety Council’s Defensive Driving Course and their annual publication Accident Facts. This information highlights examples of safety precautions you can consider to help protect yourself, others, and your personal property. This list is not meant to be all encompassing. Moreover, a particular precaution may not be effective in all circumstances.

CLAIMS & ACCIDENTS

Filing An Insurance Claim

You’ve just had an accident. It may be a minor fender bender or a more serious collision resulting in injuries or extensive damage to one or more cars. Perhaps another motorist was clearly to blame. Regardless of the severity of the accident or who was at fault, there are a number of basic steps you’ll need to follow once the initial turmoil subsides. You need to be aware of procedures to file the claim. This can sometimes seem like a complicated and stressful process yet the more you know, the smoother it will be and the greater your chances of being happy with the outcome.

Report the accident immediately
The first thing you should do is to promptly contact your insurance agent and the insurance company to notify them that you’ve been in an accident. Do this as soon as possible, even if you’re far from home.

You should always notify your insurance company of the accident even if it was minor and not your fault. The insurer should always be informed, regardless of the circumstances. Secondly, always have the police come to the scene and file a report. Letting the other person involved in the accident talk you out of your privilege to file the incident with the police is never a good idea.

Find out how to proceed
Ask us or the insurance company claims representative what you need to do, and what forms or documents you need to support your claim. The insurer may require a “proof of loss” form, as well as medical and auto repair bills, a copy of the police report, and other documents relating to your claim. Supply all the materials and information your insurer needs, and do it in a timely manner because this helps to put the claims process in “high-gear”.

Read your policy

Although your auto policy isn’t exactly a leisurely Saturday read, the days immediately following an accident are probably a good time to look it over. Knowing exactly what your policy covers can help prevent surprises later on.

Keep records of your expenses and other paperwork
Potential out-of-pocket expenses might include medical and hospital bills, car repair bills, rental car costs, and lost wages. Since you will probably need receipts in order to be reimbursed, it’s wise to keep copies of these and other important documents in a safe and organized location.

Don’t forget your other insurance
Don’t forget that other types of insurance (e.g., health, homeowner’s, etc.) may cover certain losses resulting from an auto accident, depending on the type of loss and other circumstances.

Accidents & Your Insurance Policy

How Much Will Your Auto Insurance Go Up After an Accident
Well, it finally happened. You’ve been in a car accident. Fortunately, you have auto insurance to cover the damage, even though you may have been at fault. Now comes the big question: how much will your premiums go up as a result of this accident? If you weren’t at fault, you’ll be happy to know that your premium probably won’t increase much, if at all. If you were at fault, the following information may help you to understand and anticipate the premium increase you might see.

Why does the premium go up?

Before considering how much your premium might go up, it’s helpful to understand why an accident can cause your premium to increase. Very simply, actuarial tables indicate that people who have had at-fault accidents in the past are more likely to have them again. Insurance companies use this information to charge the premium that most accurately reflects your chances of having another accident in the future. People who are at greater risk for accidents should reasonably be expected to pay higher premiums. So if the rate does go up, it’s nothing personal against you.

How is the premium increase determined?

In a nutshell, here are a few ways insurers commonly figure out the amount by which they’ll raise a premium following an at-fault accident.

Percentage of base rate
Insurers typically follow the Insurance Services Office (ISO) standard of increasing your premium by 40 percent of their “base rate” after your first at-fault accident. A base rate is the average amount of all claims paid, plus the insurance company’s processing fee. For example, if the insurer’s base rate is $400, your premium after the accident will go up by $160. This means that if the premium was $300 before the accident, it will be $460 after the accident. Subsequent accidents would result in greater premium increases.

Percentage of your rate
Some insurers use a variation on this method. Instead of using a “base rate,” they calculate the premium increase based on the premium you were paying before the accident occurred. Again, for the first at-fault accident, the increase would probably be 40 percent. Under this system, if the annual premium before the accident was $300, it would go up to $420 after the accident. Subsequent accidents would result in greater premium increases.

Safe Driver Insurance Plan
Both of the systems described above are based on the ISO’s Safe Driver Insurance Plan, which is typically followed by insurers. The Safe Driver Insurance Plan lists different types of auto accidents and moving violations, and assigns a ‘point’ value (from 0 to 4) to each type based on the severity of the incident. These points are different than the points that the state department of motor vehicles charges against your driver’s license to track your driving record. Under the Plan, as you accumulate points, you are assessed surcharges that generally result in higher insurance rates. The number of points charged determines a premium increase. For example, typically 3 points are charged if you’re convicted of drunk driving, triggering a hefty increase. On the other hand, accidents that weren’t your fault or for which you covered the losses out of your own pocket (i.e. deductible) generally don’t result in any points. Such accidents usually won’t make the premium go up at all.

Other factors

Other factors may also affect premium increases after an accident. These might include, among others, your location, your age, the kind of car you drive, and the “loss experience” of drivers similar to you (meaning total claims made by the group of similar individuals). Most of these factors are independent of the accident itself. The premium might also go up at renewal time if you buy a flashier car that’s more expensive to insure in the same policy year that the accident appended.

These same factors can also work to your advantage in some cases. If you turn 40 during the same policy year as the accident, you enter the lowest-risk age group (between 40 and 55) and may be eligible for a discount that will help offset the premium increase caused by the accident. The same is true if you get married during the same policy year, since married persons are considered a lower risk factor.

REQUEST YOUR INSURANCE QUOTE

Briefly working together, we’ll get you the protection you request at a great price

Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

Get Insurance Quote

Briefly working together, we’ll get you the protection you need at a great price

Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

PERSONAL INSURANCE

COMMERCIAL INSURANCE

FOUND US HOW?

INFORM US OF YOUR NEEDS

Get Insurance Quote

Briefly working together, we’ll get you the protection you need at a great price

Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

PERSONAL INSURANCE

COMMERCIAL INSURANCE

FOUND US HOW?

INFORM US OF YOUR NEEDS

Insurance Companies We Represent

Other Types Of Insurance

Please contact us for assistance if you don’t see a quote for the type of insurance you need. We offer a full range of insurance solutions, but don’t have online quote forms for every type because having a conversation is more appropriate for some insurance scenarios.

We are Professionally Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

Quote Help By Phone: Call (281) 494-6400

Office Hours: M-F 8am-5pm

TRYING TO SAVE MONEY? AVOID THE FIVE BIGGEST INSURANCE MISTAKES.

With far too many Americans out of work, and others forced to make ends meet with less money, many people are looking for ways to cut costs. There are smart ways to save on home and auto insurance; however, there are also mistakes that can result in being significantly underinsured.

When money is tight, it is extremely important to be financially protected against a catastrophe with the right amount and type of insurance by taking a few simple steps, it is possible to cut costs and still be protected should disaster strike.

Following are five of the biggest insurance mistakes that consumers should look out for:

Insuring a home for its real estate value rather than for the cost of rebuilding. When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings.

A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your premium payments.

Selecting an insurance company by price alone. It is important to choose a company with competitive prices, but also one that is financially sound and provides good customer service.

A better way to save: Check the financial health of a company with independent rating agencies and ask friends and family for recommendations. You should select an insurance company that will respond to your needs and handle claims fairly and efficiently.

Dropping flood insurance. Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. Many homeowners are unaware they are at risk for flooding, but in fact 25 percent of all flood losses occur in low risk areas.

A better way to save: Before purchasing a home, check with the NFIP to check whether it is in a flood zone; if so, consider a less risky area. If you are already living in a flood zone area, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance.

Only purchasing the legally required amount of liability for your car. In today’s litigious society, buying only the minimum amount of liability means you are likely to pay more out-of-pocket—and those costs may be steep

A better way to save: Consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

If you don’t own your home, neglecting to buy renters insurance. A renters policy covers your possessions and additional living expenses if you have to move out due to a disaster. Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.

A better way to save: Look into multi-policy discounts. Buying several policies with the same insurer will generally provide surmountable savings.

FREQUENTLY ASKED QUESTIONS ABOUT INSURANCE

Click tab to view related information:

DISCLAIMER: Statements on this website provide general information only as it relates to policies and coverages. All coverages are subject to the terms, conditions and exclusions of the actual policy issued so contact one of our licensed agents for questions regarding your specific needs and policy.

Auto Insurance

QUOTE ME NOW

FAQ: Auto Insurance

What should I consider when purchasing automobile insurance?

There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when purchasing automobile insurance.

Don’t base your decision on price alone. Base your decision on a measure of value, which is what you get for your money. Consider the quality of the company’s claims service and consumer education.
Purchase the amount of liability coverage which makes sense for you.
You should decide which optional coverages you want. For example, do you want optional physical damage coverages or is the market value of your car too low to warrant purchasing them.
Once you have decided what you want in your automobile insurance policy, you can now decide who you would like to purchase the insurance from. For example, you may decide you like the idea of purchasing insurance from a mutual company rather than a stock company.

What are some practical things I can do to lower my automobile insurance rates?

If you do shop around, be careful to make sure each insurer is offering the same coverage. Many insurers use the ISO policy forms, but this is not always the case. While other insurers will lessen certain protections in order to make the policy cheaper, so you’ll buy it. It’s in these times where we need to remind ourselves that cheaper does not mean better. The best advice is not to buy insurance based on anyone’s quote, but wait until any new policy is issued before comparing your new policy to your old one… and make sure you received the coverage you wanted before canceling your old policy.

Look for any discounts you may qualify for. For example, many insurers will offer you a discount if you insure multiple cars under the same policy, or if you have had a driver education class in the last five years. Be sure to ask us about discount plans.

Another easy way to lower the cost of your automobile insurance is to increase the deductible. Simply raising your deductible from $250 to $500 can lower your premium sometimes by as much as five or ten percent. However, you should be careful to make sure that you have the financial resources necessary to handle the larger deductible.

I have an older car whose current market value is very low – do I really need to purchase automobile insurance?

Most states have enacted compulsory insurance laws that require drivers to have at least some automobile liability insurance. These laws were enacted to ensure that victims of automobile accidents receive compensation when their losses are caused by the actions of another individual who was negligent.

Except for the minimum liability coverages that you may be required to purchase, many people with older cars decide not to purchase any of the physical damage coverages. It is often the case that the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just “total” the car and give you a check for the car’s market value less the deductible.

Suppose I lend my car to a friend, is he/she covered under my automobile insurance policy?

Whenever you knowingly loan your car to a friend or an associate, he or she most-likely will be covered under your automobile insurance policy. In fact, even if you do not give explicit permission each time a person borrows your car, they most-likely are covered under your automobile insurance policy as long they had a reasonable belief that you would have given them permission to drive the car. If your not sure what your policy’s exact responsibilities are under these conditions, you will want to review the “definitions” section of your policy.

What is the difference between collision physical damage coverage and comprehensive physical damage coverage?

Collision is defined as losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.

Comprehensive provides coverage for most other direct physical damage losses you could incur. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.

It is important to know the differences between the collision and comprehensive coverages for a couple of reasons.

In order to make an informed purchasing decision about these optional coverages, you need to know the difference between them.
The deductibles under the collision and comprehensive coverages are often different in amount.

What factors can affect the cost of my automobile insurance?

A number of factors can affect the cost of your automobile insurance – some of which you can control and some which are beyond your control.

The type of car you drive, the purpose the car serves, your driving record, and where you live all affect how much your automobile insurance will cost you.

Even your marital status can affect your cost of insurance. Statistics show that married people tend to have fewer and less costly accidents than do single people.

I lease my car. Do I need GAP insurance?

Whether you lease your car or have an outstanding auto loan, GAP insurance can provide valuable protection during the early years of your car’s life. As we all know, a new car’s value drops the minute you drive it off the lot. And unfortunately, if a bus plows into the side of your new car five minutes after you drive it off the lot, your insurance only covers the actual cash value of the car. At this point, there’s a good chance the insurance payoff isn’t enough to pay off your outstanding lease (or loan) balance.

GAP insurance was created for just such a situation. If a loss occurs (theft, total loss in a collision, etc.), GAP insurance will pay the difference between the actual cash value of the vehicle and the current outstanding balance on your loan or lease. Some lenders and lessors actually require you to carry GAP coverage until the outstanding loan/lease amount drops below the value of the vehicle.

GAP insurance is typically not very expensive, since the coverage amount is relatively small. However, the cost will vary depending on the type and value of the vehicle you purchase.

Home Insurance

QUOTE ME NOW

FAQ: Homeowners Insurance

What is homeowners insurance and who should buy this type of coverage?

Homeowners insurance is one of the most popular forms of personal lines insurance on the market today. The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage to the insured. Almost anyone who owns or leases property has a need for this type of insurance. And most often, homeowners insurance is required by the lender as part of the requirements in obtaining a mortgage.

What is the difference between “actual cash value” and “replacement cost”?

Covered losses under a homeowners policy can be paid on either an actual cash value basis or on a replacement cost basis. When “actual cash value” is used, the policy owner is entitled to the depreciated value of the damaged property. Under the “replacement cost” coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices. The choice of which policy best suits your needs or desires is up to you when purchasing a homeowners policy, although if you currently have an actual cash value policy we can upgrade your protection to replacement cost for additional premium.

What factors should I consider when purchasing homeowners insurance?

There are a number of factors you should consider when purchasing any product or service, and insurance is no different.

Here is a short list of things you should consider when you purchase homeowners insurance.

First and foremost, purchase the amount and type of insurance that you need. Remember that if your policy limit is less than 80% of the replacement cost of your home, any loss payment from your insurance company will be subject to a coinsurance penalty. Also, determine the amount of personal property insurance and personal liability coverage that you need.
Second, determine which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement, the earthquake endorsement, etc..?

What are some practical things I can do to lower the cost of my homeowners insurance?

There are a number of things you can do to lower the cost of your homeowners insurance.

One way to lower the cost of your homeowners insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowners insurance with the them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask us about any discounts you may qualify for.

Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent. However, be careful to make sure that you have the financial resources necessary to handle the larger deductible.

What are the policy limits (i.e., coverage limits) in the standard homeowners policy?

[Note: this answer is based on the Insurance Services Office’s HO-3 policy.]

Coverages A and B provide protection to the dwelling and other structures on the premises on an all risks basis up to the policy limits. The policy limit for Coverage A is set by the policyowner at the time the insurance is purchased. The policy limit for Coverage B is usually equal to 10% of the policy limit on Coverage A. Coverage C covers losses to the insured’s personal property on a named perils basis. The policy limit on Coverage C is equal to 50% of the policy limit on Coverage A. Coverage D covers the additional expenses that the policyowner may incur when the residence cannot be used because of an insured loss. The policy limit for Coverage D is equal to 20% of the policy limit on Coverage A. The coverage limit on Coverage E – Personal Liability – is determined by the policyowner at the time the policy is issued. The coverage limit on Coverage F – Medical Payments to Others – is usually set at $1000 per injured person.

Where and when is my personal property covered?

Coverage C, which provides named perils coverage, applies to all your personal property (except property that is specifically excluded) anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowners policy would provide coverage for the named perils while the dresser is in transit – even though the dresser has never been in your home before.

Do I need earthquake coverage? How can I get it?

Direct damages due to earthquakes are not covered under the standard homeowners insurance policy. However, unless you consider yourself living in an area that is prone to earthquakes, you may not want this coverage. If you do live in a part of the country with high earthquake activity you may want to consider adding an earthquake endorsement to your homeowners insurance policy. This endorsement will cover damages due to earthquakes, landslides, volcanic eruptions and other earth movements.

Will my homeowners policy cover me for losses that occur outside of my home?

There is only one way to find out the answer to this question, and that is to check your policy. Homeowners policies regularly provide protection for off-premise destruction or theft, which covers your possessions while they are outside your home. For example, if your luggage were stolen while you’re on vacation, a homeowner’s policy containing off-premise protection would cover the loss. This type of protection can also protect your kids’ stereo equipment and other possessions when they go off to college – if they live in a dormitory. Once a child moves to an off-campus apartment, he or she will typically need to purchase a separate renters insurance policy to cover their personal property.

If your homeowners policy does not contain off-premise protection as part of your standard coverage, you may be able to purchase this coverage for an additional charge.

You should check the liability portion of your policy to determine your level of coverage for accidents that occur outside your home. Homeowners policies typically cover accidents that occur on your property – if the mailman slips on your sidewalk, or if a neighbor is injured in your backyard. Many policies will even cover you for accidents that occur away from your property. For example, if you run a shopping cart over someone’s foot at the grocery store, many policies will cover the medical bills. But once again, the only way to know whether you’re covered is to carefully read your homeowners insurance policy.

How much of the exterior of my property is covered by homeowners insurance–fencing, driveway, etc.?

Many people don’t realize it, but homeowners insurance covers a lot more than just your house. A standard homeowners insurance policy provides broad protection for personal property and other structures located in and around your home.

Several different types of coverage are included in every standard homeowners insurance policy (HO-1, HO-2, and HO-3–the three standard policy types available for most homes). Coverage A is strictly for the physical structure of your home, including additions permanently attached to the structure (such as an attached garage). Coverage B insures other structures on the premises, including detached garages, fences, swimming pools, driveways, and sidewalks. The limit on this coverage is typically 10 percent of the Coverage A amount. Coverage C insures your personal property, including all of your household possessions and other items such as awnings, outdoor antennas, and carpeting. The limit on Coverage C protection is typically 50 percent of the Coverage A amount. Additionally, all standard homeowners policies include various “additional coverages” for items such as debris removal, trees, and shrubs. Each of these coverages has its own dollar limit.

While homeowners insurance coverage is very broad, there are certain items which are not covered. For example, motorized vehicles (e.g., cars, motorcycles, go carts, golf carts, and snowmobiles) are not covered by your homeowners insurance. Animals, birds, and fish are not protected under homeowners insurance, either.

Keep in mind, too, that your homeowners insurance policy only covers the above-listed property if it is damaged or destroyed by an insured peril. Personal property is only protected against the perils listed in your policy, while your dwelling may be insured against named perils (HO-1 and HO-2) or open perils (HO-3).

My neighbor’s tree fell across my fence. Will their insurance cover the damage?

In most cases, your insurance will be the one to cover the damage. Although the tree fell from your neighbor’s property, the damage affected your property. Your homeowners insurance covers damage to your property, so you should make a claim under your policy. Your policy probably also provides coverage to remove the debris from your property (typically up to $500).

There are a few exceptions to this general rule, however. For example, say you notice that your neighbor’s tree has a large, dead branch hanging precariously over your property. You notify your neighbor in writing of this hazard and ask him to address the problem, but he chooses to ignore it. Two weeks later, the branch comes crashing down and destroys your fence. In this case, you may have some recourse against your neighbor’s insurer, because your neighbor had notice of a potential hazard and did nothing to improve the situation. Make sure you keep records of all correspondence and actions regarding the situation, so that you have something to back up your story if you have to contact your neighbor’s insurer.

Complications may also arise depending on what actually caused the tree to fall. If the tree fell in a windstorm, or if it was struck by lightning, there is little question that the damage will be covered. However, certain perils such as floods and earthquakes are not covered under standard homeowners policies. If the tree fell as a result of such an event, the damage may not be covered at all. To find out for sure, you’ll have to contact your insurer.

Renters Insurance

QUOTE ME NOW

FAQ: Renters Insurance

Why would I want to buy renters insurance?

If you live in an apartment or a rented house, renters insurance provides important coverage for both you and your possessions. A standard renters policy protects your personal property in many certain cases of theft or damage and may pay for temporary living expenses if your rental is damaged. (including loss of use). It can also shield you from personal liability. Anyone who leases a house or apartment needs should consider this type of coverage.

How does a renters policy protect my personal property?

A renters policy provides named perils coverage. This means your property is protected from all the perils that are specifically listed on your policy. These usually include:

Fire or lightning
Windstorm or hail
Explosions
Riots
Aircraft
Vehicles
Smoke
Vandalism or malicious mischief
Theft
Falling objects
Weight of ice, snow, or sleet
Accidental discharge or overflow of water or steam
Sudden and accidental tearing apart, cracking, burning, or bulging
Freezing
Sudden and accidental damage from artificially generated electrical current
Volcanic eruptions (but this doesn’t include earthquake or tremors)

Renters coverage applies to your personal property no matter where you are in the world. This means you’re covered when you are on vacation as well as at home.

Why do some apartment complexes require tenants to have renters insurance?

The owners of these apartment complexes require their tenants to have renters insurance to ensure that they have personal liability coverage. Owners of apartment complexes carry property insurance to protect themselves in the event that the apartment building is damaged. However, if a negligent tenant causes damage, the owner’s insurer will sue the responsible tenant for the amount of damage they caused. The owner wants to make sure that the tenant has insurance coverage that will protect him or her in this event.

What if I share my apartment with a roommate? Do we both need to have renters insurance?

Standard renters policies cover only you and relatives that live with you. If your roommate is not a relative, each of you will need your own renters policy to cover your own property and to provide you liability coverage for your own actions.

Life Insurance

QUOTE ME NOW

FAQ: Life Insurance

How much life insurance should an individual own?

Rough “rules of thumb” suggest an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account in determining a more precise estimate of the amount of life insurance needed.

Important factors include:

Income sources (and amounts) other than salary/earnings
Whether or not the individual is married and, if so, what is the spouse’s earning capacity
The number of individuals who are financially dependent on the insured
The amount of death benefits payable from Social Security and from an employer sponsored life insurance plan
Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need), etc.

It is recommended that a person’s insurance adviser be contacted for a precise calculation of how much life insurance is needed.

What about purchasing life insurance on a spouse and on children?

In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). It is of utmost importance that the income earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance before contemplating the purchase of life insurance on children or on a non-wage earning spouse. In a dual-earning household, it is important to protect the income earning capacity of both spouses. Life insurance on a non-wage earning spouse is often recommended for the purpose of paying for household services lost at this individual’s death.

Should term insurance or cash value life insurance be purchased?

Although a difficult question–one whose answer will vary depending on circumstances–several principles should be followed in addressing this issue.

It must first be recognized that in any life insurance purchasing decision, there are at least two basic questions that must be answered:

“How much life insurance should I buy?” and
“What type of life insurance policy should I buy?”

The question contained in (1) involves an “insurance” decision and the question contained in (2) requires a “financial” decision.

The “insurance” question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way in which this needed amount of insurance can be afforded is through the purchase of term insurance with its lower premium requirements.

If your ability (and willingness) to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the “financial” decision–which type of policy to buy. Important factors affecting the “financial” decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.

How does mortgage protection term insurance differ from other types of term life insurance?

The face amount under mortgage protection term insurance decreases over time, consistent with the projected annual decreases in the outstanding balance of a mortgage loan. Mortgage protection policies are generally available to cover a range of mortgage repayment periods, e.g., 15, 20, 25 or 30 years. Although the face amount decreases over time, the premium is usually level in amount. Further, the premium payment period often is shorter than the maximum period of insurance coverage–for example, a 20-year mortgage protection policy might require that level premiums be paid over the first 17 years.

Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage loan?

Yes; the purchase of a new mortgage protection term insurance policy is usually not required by the lender. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured’s death.

Credit life insurance is frequently recommended in conjunction with the taking out of an installment loan when purchasing expensive appliances or a new car, or for debt consolidation.

Is credit life insurance a good buy?

Credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost. Therefore when purchasing Term Life Insurance, it’s always good advice if you consider purchasing enough to cover more than your current debts and needs. The reason being, should you require Credit Life in the future you would be more likely to have the additional coverage built in to your current level of protection. Which could easily save you the cost on additional short-term (high cost) additional coverages.

I’m single. Do I need life insurance?

Single people often think they don’t need life insurance, and in many cases, they are right. However, there are many factors that determine your need for life insurance; marital status is just one.

First of all, do you have any dependents? Just because you aren’t married doesn’t mean you have no financial responsibilities. If you have children, or if you provide support for a parent or grandparent, your death could create a serious financial hardship for these dependents. Life insurance can provide a continued stream of income for your loved ones if you die prematurely. It can also provide peace of mind for you, knowing that they will be taken care of when you’re gone.

Do you have a mortgage or other loans that are jointly held with a cosigner? If so, your death would leave the cosigner responsible for the entire debt. You might want to consider purchasing at least enough life insurance to cover these debts in the event of your death. If you have debts for which you alone are responsible, your creditors can make a claim for payment against any assets in your estate.

Are you at risk for any serious medical conditions? If, for example, your family medical history includes certain genetic conditions (diabetes, certain types of cancer, etc.), it may make sense to purchase life insurance while you are young and healthy. Purchasing life insurance after you develop such a condition could be difficult, or even impossible. If you choose to buy insurance for this reason, consider adding a guaranteed insurability rider to your policy. This rider guarantees you the right to purchase additional insurance at specified times, without having to provide proof of insurability.

If you died tomorrow, would you leave enough to cover your funeral expenses? If not, who would be responsible for paying? For many families, even a relatively simple funeral can create a major financial burden. For this reason alone, you might consider purchasing a small life insurance policy, or even a simple burial policy. As an alternative, you could invest the premiums you would spend on such a policy, and make sure your family knows this investment is earmarked for your final expenses, should the need arise.

Even if you determine that you don’t need life insurance, make sure your other insurance needs are covered. You may not realize it, but disability insurance is just as important as life insurance. Statistically speaking, you are much more likely to become disabled than to die prematurely. Disability insurance can replace lost income if you are unable to work due to serious illness or injury.

I applied for a life insurance policy and was told that I would have to take a medical exam. What should I expect at this exam, and is there anything I should do to prepare for it?

Generally, you won’t have to take a complete medical exam if you’re under age 40 and applying for life insurance coverage of less than $100,000. However, the older you are, the less life insurance you can buy without a medical exam. Of course, these figures also depend on your health history and the underwriting guidelines of the insurance company.

A typical medical exam may include a basic physical, blood work, and urine tests. Some insurers also require EKGs and/or treadmill EKGs (stress tests), especially for large life insurance policies. You’ll also have to provide information on your medical history, including the names of doctors you’ve seen, dates you saw them, and any treatment recommended. A nurse or doctor (often an independent contractor) who is paid by the insurance company will normally conduct the exam.

If you have a medical condition, there’s really nothing you can do to hide it. In fact, you shouldn’t try. Insurers have access to an amazing amount of medical information through the Medical Information Bureau, so even if you attempt to obscure the facts, there’s a good chance an insurance company will find the information it needs. In addition, if the insurance company discovers you have withheld information, it will look at everything else much more closely.

There are a number of simple steps you can take to make sure you get the best possible results at your medical exam:

Get a good night’s sleep the night before the exam
Fast for eight hours before the exam if possible to ensure the most accurate results
Don’t smoke for at least one hour before the exam
Avoid caffeine for at least one hour before the exam
Avoid alcohol for at least eight hours before the exam
Don’t engage in strenuous exercise for 24 hours before the exam
Limit your consumption of salt and cholesterol for 24 hours before the exam
Cancel the exam if you get sick–even a minor infection can distort the results

Personal Liability

QUOTE ME NOW

What is a personal umbrella liability policy?

The personal umbrella liability policy is an insurance contract designed to accomplish two goals.

First, it increases the liability protection beyond what the policy owner already has in his or her homeowners and automobile insurance policies.
Second, the personal umbrella policy is designed to fill in the gaps in a policy owner’s liability coverage since several types of liability exposures exist that are not covered by automobile and homeowners policies.

Together with homeowners and automobile insurance policies, broad personnel liability protection is attained through the purchase of a personal umbrella policy.

How do I know if I need a personal umbrella liability policy?

It used to be that the only people who needed personal umbrella liability policies were wealthy individuals who had sizable amounts of personal assets that would be at risk in a lawsuit.

However, in our very litigious society, many people are realizing that they have a need for more liability insurance than what is provided under their homeowners and automobile insurance policies. The personal umbrella policy is ideally suited to provide this protection at extremely affordable rates.

General Questions

QUOTE ME NOW

FAQ: General Questions About Insurance

What kinds of questions should I be expected to answer when I am applying for an insurance policy? Why do insurers ask all of these questions?

When you apply for an insurance policy, you will be asked a number of questions. For example, your name, age, sex, address, etc. In addition, you will be asked a number of other questions which will be used to determine what type of risk you are.

For example, when an insurance company is deciding whether or not to supply automobile insurance to a potential policy owner, it will want to know about the person’s previous driving record, whether there have any recent accidents or tickets and what type of car is to be insured.

All of this information will be used for two purposes.

Based upon the responses to these questions, the insurance company will decide whether the profile of the applicant is consistent with the type of risks the insurer is trying to attract. Some insurers specialize in offering insurance to only very safe drivers and therefore will only accept applications from people who fit the profile of a safe driver. While others may base their policies on those who are considered a higher risk, and charge accordingly.
Once the insurer has decided that your risk profile is consistent with the types of risks it accepts, the answers to the questions will be used to determine which rate catagory should be applied. For example, the insurance company will decide whether you should be offered insurance at the high risk driver rate or the low risk driver rate.

Collectively, this entire process is known as the underwriting process and every insurance company has one. The primary function of the underwriting department in an insurance company is to decide whether or not to offer insurance to a person who has completed an application.

If the answer is yes, then the underwriting department seeks to determine the “quality” of that risk so that the proper premium can be charged. That is, high risk people should pay more than low risk people because of the greater possibility of experiencing a loss.

My child is heading off to college this fall. What insurance issues does this raise?

As you send your children off to college, you probably have a lot of things on your mind – whether they’ll eat right and get enough sleep, how to pay the tuition bills, what to do with that empty bedroom, etc. For most people, insurance concerns are pretty low on the priority list. But there are some important issues you should consider.

Issue #1: Health insurance – make sure your child is covered.
Your medical plan probably covers your children until they’re somewhere between 20 and 24 years of age, regardless of whether or not they live at home. But if the plan is an HMO and your child’s college is far from home, accessing an approved provider may prove difficult. As an alternative, consider purchasing health insurance coverage through your child’s college. Many colleges and universities offer low-cost health insurance for students. Cost and level of coverage vary greatly from one school to the next, but school-subsidized health insurance is often less expensive than continuing coverage through your existing health plan. And since health care is typically provided on-campus, it may be easier for the student to access.

Issue #2: Homeowner’s/Renters insurance – make sure your child’s possessions are covered.
If your child lives in a dorm or other university housing, their personal property is typically covered under your homeowners insurance policy. Check your policy for coverage limitations on computers and stereos, if your child can’t live without these. Once a student moves out of the dorms and into an apartment, they are usually no longer covered under your policy. Off-campus students should purchase a renters insurance policy to cover their possessions.

Issue #3: Auto insurance – make sure the car is covered.
If your child will be taking a car to school, make sure the car is properly insured. If the child owns the car, then the insurance policy must be in the child’s name as well. If the child is “borrowing” a car from Mom and Dad, the child must be listed on the insurance policy. Some insurance companies may require the child to be listed as the primary operator, since the car is in the child’s possession and not the parents’.

How often should I check my Social Security earnings record? Is there much of a chance that an error may occur?

You should check your Social Security earnings record at least once every three years. Errors in your earnings record are more likely to occur if you change jobs frequently or have more than one employer.

To check your earnings record, you should complete and return an SSA-7004, Request for Earnings and Benefit Estimate Statement. You may complete and transmit the SSA-7004 online. Or, if you prefer, you may download the SSA-7004 from the Social Security Web site server and mail it to them. Within four weeks after submitting the request, you’ll receive a statement from them showing your earnings as reported to Social Security by your employer(s).

What do I give up by not using an agent to purchase insurance?

The disadvantage of not using an agent to purchase insurance is that the policyholder does not receive as much, or often any, personal service. A licensed agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim. Without an agent to act as your personal advocate during the claims process, you are left to take care of the details on your own… not sure who to contact at the insurance company or who you can really trust to help you during the times in life when you need help the most. Without an agent you are on your own to absorb the frustration and expense of resolving your problems.

Am I at risk if I don’t use a licensed agent?

Many “direct writing” insurance companies/providers fail to tell you that the “call center personnel” who will take your information and issue the policy ARE NOT licensed to sell insurance, therefore lacking the professional knowledge to guide you toward an acceptable level of protection. These companies are conducting business using a loophole within the law which allows the company to have 1 license while everyone else works without it. Going this route can place your financial future at risk because unlicensed personnel are trained to simply sell you a policy without being aware of what “real” protection means.

For instance, imagine you own a $150,000 home and your auto insurance policy’s liability limits are $50,000. When you purchased the policy you were told this was plenty of protection considering your state’s minimum requirement for liability is $20,000. Yet if you have an accident and are sued for $200,000 your policy is only going to pay out $50k, leaving you responsible for the remaining $150k. Since your home would cover the difference, a court judgment could force you into selling your home as a way to settle the suit. If your policy’s liability limits had protected you at a minimum of $200,000, the policy would be paying for the total suit.

Because direct writers are typically located hundreds (if not thousands) of miles from where you live, many won’t hesitate to sell you a policy with low liability limits as a way to simply make the policy cheaper while convincing you to buy it. Leaving you extremely vulnerable to financial disaster.

Insurance & Credit Scoring

QUOTE ME NOW

FAQ: Credit Scoring

Why do insurers use credit?

Insurance companies use financial history along with other factors (such as, in the case of auto insurance, years of driving experience) to properly classify an insured according to his/her potential risk. Studies have shown a correlation between a consumer’s financial history and his/her future insurance loss potential. Thus, some insurance companies believe the use of credit helps to underwrite an applicant at a cost that reflects their specific risk.

What information is in a credit report?

Identifying Information- Name, Current and Previous Addresses, Social Security Number, Telephone Number, Date of Birth
Credit History- History of satisfying obligations to retail stores, banks, finance companies and mortgage companies
Public Records- Judgments, Foreclosures, Bankruptcies, Collections, Tax Liens, Garnishments
Inquiries- Identifies credit grantors or other authorized parties that have received a copy of the consumer’s credit report, typically during the past 2 years. Also, lists companies who received consumer information for the purpose of offering credit or other promotions.

Why do insurance companies use scored credit reports?

Scores provide an objective and consistent tool that some insurers use along with other applicant information to better predict the likelihood of a consumer filing future claims. Scores also help streamline the decision process, so policies can be issued more efficiently. By predicting the likelihood of future claims, insurers can control risk, thereby enabling them to offer insurance coverage to more consumers at a fair cost.

What is an insurance score? How does it differ from a financial credit score?

An insurance score is a credit-based statistical analysis of a consumer’s likelihood of filing an insurance claim within a given period of time in the future. This data can help underwriters better assess risk exposure prior to granting insurance coverage.

A financial credit score is a credit-based statistical analysis of a consumer’s likelihood of paying an installment loan (mortgage, auto loan, etc.) or revolving debt (credit card, etc.) when due. Creditors use the score to help determine whether to grant credit.

Using statistical programs, a consumer’s credit information is compared to the performance of consumers with profiles similar to the subject consumer. A credit scoring system awards or subtracts points for various factors or variables in the credit report to determine the score. The score predicts the likelihood of certain events occurring.

Most scoring systems generate “reason codes” in addition to the numeric score. The reason codes will identify up to four principal factors that influenced the score.

What variables (data elements in a credit report) are used in calculating an insurance score?

Some credit variables that are used include: outstanding debt, length of credit history, late payments, new applications for credit, types of credit used, payment patterns, available credit, public records, and past due amounts. A credit report can contain both positive and negative information. Different scoring models may use different credit variables. All variables in a model are considered together to produce the best prediction.

What variables are NOT used in calculating an insurance score?

Race, color, religion, national origin, gender, marital status, sexual orientation, age, address, salary, disability, occupation, title, employer, date employed or employment history are not used for scoring purposes. Inquiries made for account reviews, promotions or insurance purposes are not used in calculating an insurance score. Also, other variables that, by law, may not be considered are disregarded.

What are the different types of scores delivered by ChoicePoint for insurance purposes?

Insurance companies use a variety of score models. Some companies use generic insurance scores that have been developed by ChoicePoint or other third parties. A growing number of insurance carriers use custom scores that have been developed to meet that company’s specific underwriting criteria.

There are different types of insurance scores. Some are used for auto insurance purposes, and others are used for homeowner’s insurance purposes.

The scores usually incorporate credit data, but some models also consider other data, such as claims history.

Different insurance score models will/may calculate a different numeric score and reason codes.

What is ChoicePoint’s role in supplying the credit report and/or insurance score to the insurance company?

ChoicePoint is a reseller of credit information. ChoicePoint provides a system for the carrier’s home office or insurance agent to access credit bureaus in order to receive an individual’s credit report. Once the report is obtained by ChoicePoint, a score may be systematically calculated and returned to the insurance company to assess the risk and assist in making an underwriting decision.

The data returned to the insurance company or agent can include the full credit report, a subset of the credit report, an insurance score, reason codes, a customized message based on the credit data and the carrier’s underwriting guidelines, or a combination of these information products.

ChoicePoint is considered a Consumer Reporting Agency under the Federal Fair Credit Reporting Act and its state analogues (“FCRA”), but ChoicePoint is not a credit bureau or insurance company. ChoicePoint does not make credit decisions or determine insurance underwriting guidelines. ChoicePoint’s role is to supply information to the insurance carriers, which the carriers can review in order to assist them in making an underwriting decision.

Who makes the decision to grant or deny insurance coverage or to charge a particular rate or premium?

Decisions about insurance coverage and/or rates are made by the insurance companies.

Each insurer develops underwriting decisions based on their own business requirements. Insurance companies evaluate credit reports and/or insurance scores according to their own proprietary strategies. Other information, such as application data, prior claims/loss data or motor vehicle records, may also be evaluated as part of the insurance underwriting process.

Many insurance companies have automated the evaluation process. The decision may be delivered to an agent via a ChoicePoint system, but the guidelines used to make that decision are determined by the insurance company.

What is the Fair Credit Reporting Act (FCRA)?

The Fair Credit Reporting Act is a federal law designed to promote the accuracy, fairness, and permissible use of information contained in the files of Consumer Reporting Agencies. In general, the FCRA requires that:

Access to a consumer’s file is limited to those with a permissible purpose.
Generally, adverse information that is more than seven years old may not be reported, except in certain circumstances.
A consumer must be told if information in a credit report has had an adverse impact on him/her.
A consumer can find out what is in his/her consumer reporting file.
A consumer can dispute inaccurate items with the source of the information. (In the case of credit information, this is the credit bureau, not ChoicePoint.)
Inaccurate information must be corrected.

Section 604(f) of the FCRA prohibits any person or company from obtaining a consumer report from a Consumer Reporting Agency unless the person has certified to the Consumer Reporting Agency (by a general or specific certification, as appropriate) the permissible purpose(s) for which the report is being obtained and certifies that the report will not be used for any other purpose.

Section 607(e) of the FCRA requires any person or company who obtains a consumer report for resale, as ChoicePoint does, to disclose the identity of the end user to the Consumer Reporting Agency (in our case, this is one of the credit bureaus) from which such report is obtained and to identify to such Consumer Reporting Agency each permissible purpose for which the reports are resold.

Are insurance companies authorized to obtain a copy of the consumer’s credit report?

The protection of personal privacy and the responsible use of information are cornerstones of ChoicePoint’s business practices. Only businesses or individuals with a “permissible purpose” can access a consumer’s credit report. ChoicePoint complies with the guidelines of the FCRA which was approved by Congress in 1970 and amended effective 1997.

Per the FCRA, ChoicePoint (as a Consumer Reporting Agency) may furnish a consumer report for the following insurance related purposes:

To a person or company which ChoicePoint has reason to believe intends to use the information in connection with the underwriting of insurance involving the consumer. This includes situations where the consumer asks for an insurance quote or applies for insurance.
To a person or company which ChoicePoint has reason to believe intends to use the information to review an account to determine whether the consumer continues to meet the terms of the account. This may be done periodically by the insurance company where a consumer already has coverage.

In both circumstances, the transaction to ChoicePoint ordering the credit report is initiated by and at the request of the insurance company or agent.

How can I find out what my insurance score is?

Per the FCRA, a Consumer Reporting Agency shall, upon request, clearly and accurately disclose to the consumer all information in the consumer’s file at the time of the request. The federal FCRA does not require a Consumer Reporting Agency to disclose to a consumer any information concerning credit scores or any other risk scores or predictors relating to the consumer.

However, ChoicePoint feels this information is valuable for a consumer to know. Thus, ChoicePoint is currently designing a mechanism to disclose insurance scores to consumers in the near future.

What are the different types of inquiries on my credit report and do they affect my score?

An inquiry is posted to a consumer’s credit report every time an individual or a business reviews or obtains a copy of the credit report.

Inquiry types of “AR” (Account Review) and “PRM” (Promotional) appear only on credit reports received directly by the consumer from the credit bureau itself. These types of inquiries do not appear on credit reports sold to a commercial user (any entity that buys a credit report for a permissible purpose) or on credit reports ordered via the ChoiceTrust web site.

Account Review (AR) inquires result from the purchase of a credit report by a company reviewing the credit report of its accountholders.
Promotional (PRM) inquiries result from the purchase of a credit report by a company that reviews the consumer’s credit file in order to make firm offers of credit or insurance. In such a case, the company does not view the credit report. Rather, it receives the name and address of the consumer only if such consumer meets the company’s predefined criteria, which has been conveyed from the company to the credit bureau.

Only commercial inquiries initiated at the consumer’s request are used in scoring models. Additionally, certain types of inquiries may not be used in some insurance or financial scoring models (such as inquiries made by insurance agents or companies). Other inquiries (such as auto loan inquiries) may be counted only once if multiple inquiries appear over a given period of time.

The insurance models supported by ChoicePoint do not consider the presence of insurance inquiries as an adverse characteristic. Furthermore, they believe the predominant scoring models in the marketplace also do not consider insurance inquiries to be an adverse characteristic; however, some institutions may.

A consumer may obtain insurance quotes from an agent representing multiple insurance companies, or directly from several insurance companies. In this case, if these companies use credit as part of their underwriting criteria, there may be multiple inquiries posted on the consumer credit file – one for each insurance company.

If a credit report is obtained via ChoicePoint, the name of the ordering entity posted on the inquiry may be shown as ChoicePoint (which orders the report as a reseller), the name of the insurance company on whose behalf ChoicePoint places the order, the name of the insurance agent/agency on whose behalf ChoicePoint places the order, or some combination of these names.

For how long may a Consumer Reporting Agency report adverse information about me?

Generally, no Consumer Reporting Agency may make any consumer report containing any of the following information:

Cases under Title 11 or under the Bankruptcy Act that, from the date of the entry of the order for relief or the date of adjudication, as the case may be, pre-date the report by more than 10 years
Civil suits, civil judgments, and records of arrest that, from the date of entry, pre-date the report by more than 7 years or until the governing statue of limitations has expired, whichever is longer
Paid tax liens which, from date of payment, pre-date the report by more than 7 years
Accounts placed for collection or charged to profit and loss which pre-date the report by more than 7 years
Any other adverse item of information, other than records of convictions of crimes, which pre-date the report by more than 7 years.

How do I obtain a copy of my credit report?

If adverse action was taken against the consumer, based in whole or in part on the consumer’s credit information, within the 60 days preceding the consumer’s request for disclosure, the FCRA requires credit bureaus to provide a copy of the credit report to the requesting consumer free of charge. For insurance purposes, adverse action can include, among other things, a consumer being denied insurance or being charged a higher premium. It is the responsibility of the insurance company to notify the consumer of the adverse action.

If an Experian or Equifax credit report was obtained via ChoicePoint, the insurance company should include the ChoicePoint Consumer Disclosure Center contact information and NCF Reference Number in this notification. The consumer may contact ChoicePoint, and ChoicePoint will order a copy of the credit report from the credit bureau on the consumer’s behalf. The credit bureau will then send a copy of the credit report directly to the consumer’s address.

If the credit report was obtained from Trans Union via ChoicePoint, the insurance company should include the Trans Union contact information in the notification. The consumer will need to deal directly with Trans Union.

Since ChoicePoint is a reseller for the credit bureaus, ChoicePoint does not have access to the consumer’s credit file and is unable to change any data contained therein. Therefore, once a copy of the credit report is obtained by the consumer, he/she should contact the credit bureaus directly to question or dispute any information contained in the credit file. By law, the credit bureau must investigate and respond to the request within 30 days.

Consumers who wish to receive a copy of his/her credit reports should contact the credit bureaus directly:

Equifax: 800-997-2493
Experian: 888-397-3742
TransUnion: 800-888-4213

How do I get more information?

If the consumer has been affected by a product delivered by ChoicePoint, please visit their web site www.consumerdisclosure.com

For more information about LexisNexis, please visit the web site www.lexisnexis.com

Homebuyers Glossary of Terminology

A

acceleration clause
A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.
acceptance
An offeree’s consent to enter into a contract and be bound by the terms of the offer.
additional principal payment
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
adjustable-rate mortgage (ARM)
A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index.
adjusted basis
The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
adjustment period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
administrator
A person appointed by a probate court to administer the estate of a person who died intestate.
affordability analysis
A detailed analysis of your ability to afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that you might expect to pay.
amenity
A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
amortization
The gradual repayment of a mortgage loan by installments.
amortization schedule
A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.
amortization term
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.
amortize
To repay a mortgage with regular payments that cover both principal and interest.
annual mortgagor statement
A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.
annual percentage rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).
annuity
An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis.
application
A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security.
appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.
appraised value
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property.
appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property.
appreciation
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
assessed value
The valuation placed on property by a public tax assessor for purposes of taxation.
assessment
The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.
assessment rolls
The public record of taxable property.
assessor
A public official who establishes the value of a property for taxation purposes.
asset
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
assignment
The transfer of a mortgage from one person to another.
assumable mortgage
A mortgage that can be taken over (“assumed”) by the buyer when a home is sold.
assumption
The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage.
assumption clause
A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.
assumption fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.
attorney-in-fact
One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

B

balance sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.
balloon mortgage
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.
balloon payment
The final lump sum payment that is made at the maturity date of a balloon mortgage.
bankrupt
A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.
bankruptcy
A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
before-tax income
Income before taxes are deducted.
beneficiary
The person designated to receive the income from a trust, estate, or a deed of trust.
bequeath
To transfer personal property through a will.
betterment
An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.
bill of sale
A written document that transfers title to personal property.
binder
A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.
biweekly payment mortgage
A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower’s bank account. The result for the borrower is a substantial savings in interest.
blanket insurance policy
A single policy that covers more than one piece of property (or more than one person).
blanket mortgage
The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.
bona fide
In good faith, without fraud.
breach
A violation of any legal obligation.
bridge loan
A form of second trust that is collateralized by the borrower’s present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as “swing loan.”
broker
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. See mortgage broker.
budget
A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.
budget category
A category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. “Rent” is an example of an expense category. “Salary” is a typical income category.
building code
Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.
buydown account
An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.
buydown mortgage
A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower’s monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.

C

call option
A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.
cap
A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, periodic payment cap, and periodic rate cap.
capital
(1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities.
capital expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.
capital improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.
cash-out refinance
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.
certificate of deposit
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer’s promise to return the deposit plus earnings at a specified interest rate within a specified time period.
certificate of deposit index
An index that is used to determine interest rate changes for certain ARM plans. It represents the weekly average of secondary market interest rates on six-month negotiable certificates of deposit. See adjustable-rate mortgage (ARM).
Certificate of Eligibility
A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) mortgage.
Certificate of Reasonable Value (CRV)
A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
certificate of title
A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.
chain of title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
change frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
chattel
Another name for personal property.
clear title
A title that is free of liens or legal questions as to ownership of the property.
closing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called “settlement.”
closing cost item
A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney’s fees. Many closing cost items are included as numbered items on the HUD-1 statement.
closing costs
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney’s fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or realtors® often provide estimates of closing costs to prospective homebuyers.
closing statement
See HUD-1 statement.
cloud on title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.
coinsurance
A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.
coinsurance clause
A provision in a hazard insurance policy that states the amount of coverage that must be maintained — as a percentage of the total value of the property — for the insured to collect the full amount of a loss.
collateral
An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
collection
The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.
co-maker
A person who signs a promissory note along with the borrower. A co-maker’s signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. See endorser.
commission
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.
commitment letter
A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a “loan commitment.”
common area assessments
Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners’ association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.
common areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
common law
An unwritten body of law based on general custom in England and used to an extent in the United States.
Community Home Improvement Mortgage Loan
An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value.
Community Land Trust Mortgage Loan
An alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.
community property
In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.
Community Seconds®
An alternative financing option for low- and moderate-income households under which an investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit organization. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate at all). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.
comparables
An abbreviation for “comparable properties”; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location , and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.
compound interest
Interest paid on the original principal balance and on the accrued and unpaid interest.
condemnation
The determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain.
condominium
A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.
condominium conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
condominium hotel
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.
construction loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
consumer reporting agency (or bureau)
An organization that prepares reports that are used by lenders to determine a potential borrower’s credit history. The agency obtains data for these reports from a credit repository as well as from other sources.
contingency
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
contract
An oral or written agreement to do or not to do a certain thing.
conventional mortgage
A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage.
convertibility clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.
cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
cooperative corporation
A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.
cooperative mortgages
Mortgages related to a cooperative project. This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units.
cooperative project
A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.
corporate relocation
Arrangements under which an employer moves an employee to another area as part of the employer’s normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.
cost of funds index (COFI)
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. See adjustable-rate mortgage (ARM).
covenant
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
credit history
A record of an individual’s open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.
credit life insurance
A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.
creditor
A person to whom money is owed.
credit report
A report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness. See merged credit report.
credit repository
An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.

D

debt
An amount owed to another. See installment loan and revolving liability.
deed
The legal document conveying title to a property.
deed-in-lieu
A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a “voluntary conveyance.”
deed of trust
The document used in some states instead of a mortgage; title is conveyed to a trustee.
default
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
delinquency
Failure to make mortgage payments when mortgage payments are due.
deposit
A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.
depreciation
A decline in the value of property; the opposite of appreciation.
discount points
See point.
dower
The rights of a widow in the property of her husband at his death.
down payment
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
due-on-sale provision
A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
due-on-transfer provision
This terminology is usually used for second mortgages. See due-on-sale provision.

E

earnest money deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.
easement
A right of way giving persons other than the owner access to or over a property.
effective age
An appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
effective gross income
Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.
eminent domain
The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
Employer-assisted housing
A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.
encroachment
An improvement that intrudes illegally on another’s property.
encumbrance
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
endorser
A person who signs ownership interest over to another party. Contrast with co-maker.
Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
equity
A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.
escrow
An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.
escrow account
The account in which a mortgage servicer holds the borrower’s escrow payments prior to paying property expenses.
escrow analysis
The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.
escrow collections
Funds collected by the servicer and set aside in an escrow account to pay the borrower’s property taxes, mortgage insurance, and hazard insurance.
escrow disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
escrow payment
The portion of a mortgagor’s monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as “impounds” or “reserves” in some states.
estate
The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
eviction
The lawful expulsion of an occupant from real property.
examination of title
The report on the title of a property from the public records or an abstract of the title.
exclusive listing
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.
executor
A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. “Executrix” is the feminine form.

F

Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.
fair market value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae
Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation’s largest source of financing for home mortgages. Over the past 30 years, Fannie Mae has provided nearly $2.5 trillion of mortgage financing for over 30 million families.
Fannie Mae’s Community Home Buyer’s Program^SM
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family’s buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
fee simple
The greatest possible interest a person can have in real estate.
fee simple estate
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.
FHA coinsured mortgage
A mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor’s default.
FHA mortgage
A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.
finder’s fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
firm commitment
A lender’s agreement to make a loan to a specific borrower on a specific property.
first mortgage
A mortgage that is the primary lien against a property.
fixed installment
The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.
fixed-rate mortgage (FRM)
A mortgage in which the interest rate does not change during the entire term of the loan.
fixture
Personal property that becomes real property when attached in a permanent manner to real estate.
flood insurance
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
foreclosure
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mrotgage debt.
forfeiture
The loss of money, property, rights, or privileges due to a breach of legal obligation.
401(k)/403(b)
An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not for profit organizations.
401(k)/403(b) loan
Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans — monies must be repaid to avoid serious penalty charges.
fully amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.

G

government mortgage
A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Contrast with conventional mortgage.
Government National Mortgage Association
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA assumed responsibility for the special assistance loan program formerly administered by Fannie Mae. Popularly known as Ginnie Mae.
grantee
The person to whom an interest in real property is conveyed.
grantor
The person conveying an interest in real property.
ground rent
The amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate.
group home
A single-family residential structure designed or adapted for occupancy by unrelated developmentally disabled persons. The structure provides long-term housing and support services that are residential in nature.
growing-equity mortgage (GEM)
A fixed-rate mortgage that provides scheduled payment increases over an established period of time, with the increased amount of the monthly payment applied directly toward reducing the remaining balance of the mortgage.
guarantee mortgage
A mortgage that is guaranteed by a third party.
guaranteed loan
Also known as a government mortgage.

H

hazard insurance
Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.
Home Equity Conversion Mortgage (HECM)
A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Sometimes called a reverse mortgage.
home equity line of credit
A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower’s equity in a property.
home inspection
A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.
HomeKeeper^SM
Fannie Mae’s adjustable-rate conventional reverse mortgage, which allows older homeowners to borrow against the value of their homes and receive the proceeds according to the payment option they select. The amount available is based on the number of borrowers and their ages and the adjusted property value. Anyone 62 years or older who either owns his or her own home free and clear or has very low mortgage debt is eligible.
homeowners’ association
A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
homeowner’s insurance
An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
homeowner’s warranty (HOW)
A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale.
HomeStyle^� Mortgage Loan
A mortgage that enables eligible borrowers to obtain financing to remodel, repair, and upgrade their existing homes or homes that they are purchasing. The financing takes the form of a conventional second mortgage or a Federal Housing Administration (FHA) Section 203(k) first mortgage.
housing expense ratio
The percentage of gross monthly income that goes toward paying housing expenses.
HUD median income
Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).
HUD-1 statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller’s net proceeds and the buyer’s net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the “closing statement” or “settlement sheet.”

I

income property
Real estate developed or improved to produce income.
index
A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM.. This interest rate is subject to any caps that are associated with the mortgage.
in-file credit report
An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.
inflation
An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less.
initial interest rate
The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes known as “start rate” or “teaser.”
installment
The regular periodic payment that a borrower agrees to make to a lender.
installment loan
Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan.
insurable title
A property title that a title insurance company agrees to insure against defects and disputes.
insurance
A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.
insurance binder
A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.
insured mortgage
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.
interest
The fee charged for borrowing money.
interest accrual rate
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.
interest rate
The rate of interest in effect for the monthly payment due.
interest rate buydown plan
An arrangement wherein the property seller (or any other party) deposits money to an account so that it can be released each month to reduce the mortgagor’s monthly payments during the early years of a mortgage. During the specified period, the mortgagor’s effective interest rate is “bought down” below the actual interest rate.
interest rate ceiling
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.
interest rate floor
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.
investment property
A property that is not occupied by the owner.
IRA (Individual Retirement Account)
A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund.

J

joint tenancy
A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of survivorship.
judgment
A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.
judgment lien
A lien on the property of a debtor resulting from the decree of a court.
judicial foreclosure
A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court.
jumbo loan
A loan that exceeds Fannie Mae’s legislated mortgage amount limits. Also called a nonconforming loan.

K

L

late charge
The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.
lease
A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.
leasehold estate
A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.
lease-purchase mortgage loan
An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month’s rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate.
legal description
A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.
liabilities
A person’s financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.
liability insurance
Insurance coverage that offers protection against claims alleging that a property owner’s negligence or inappropriate action resulted in bodily injury or property damage to another party.
lien
A legal claim against a property that must be paid off when the property is sold.
lifetime payment cap
For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage. See cap.
lifetime rate cap
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap.
line of credit
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. See home equity line of credit.
liquid asset
A cash asset or an asset that is easily converted into cash.
loan
A sum of borrowed money (principal) that is generally repaid with interest.
loan commitment
See commitment letter.
loan origination
The process by which a mortgage lender brings into existence a mortgage secured by real property.
loan-to-value (LTV) percentage
The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.
lock-in
A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.
lock-in period
The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.

M

margin
For an adjustable-rate mortgage (ARM), the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change.
master association
A homeowners’ association in a large condominium or planned unit development (PUD) project that is made up of representatives from associations covering specific areas within the project. In effect, it is a “second-level” association that handles matters affecting the entire development, while the “first-level” associations handle matters affecting their particular portions of the project.
maturity
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
maximum financing
A mortgage amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product. Thus, maximum financing on a fixed-rate mortgage would be 90 percent or higher, because 95 percent is the maximum allowable LTV percentage for that product.
merged credit report
A credit report that contains information from three credit repositories. When the report is created, the information is compared for duplicate entries. Any duplicates are combined to provide a summary of a your credit.
modification
The act of changing any of the terms of the mortgage.
money market account
A savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions apply to the withdrawal of funds from a money market account.
monthly fixed installment
That portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction.
monthly payment mortgage
A mortgage that requires payments to reduce the debt once a month.
mortgage
A legal document that pledges a property to the lender as security for payment of a debt.
mortgage banker
A company that originates mortgages exclusively for resale in the secondary mortgage market.
mortgage broker
An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services.
mortgagee
The lender in a mortgage agreement.
mortgage insurance
A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan. See private mortgage insurance (MI).
mortgage insurance premium (MIP)
The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
mortgage life insurance
A type of term life insurance often bought by mortgagors. The amount of coverage decreases as the principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds.
mortgagor
The borrower in a mortgage agreement.
multidwelling units
Properties that provide separate housing units for more than one family, although they secure only a single mortgage.
multifamily mortgage
A residential mortgage on a dwelling that is designed to house more than four families, such as a high-rise apartment complex.

N

negative amortization
A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create “negative” amortization.
net cash flow
The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners’ association dues, leasehold payments, and subordinate financing payments.
net worth
The value of all of a person’s assets, including cash, minus all liabilities.
no cash-out refinance
A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower’s use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage).
nonliquid asset
An asset that cannot easily be converted into cash.
note
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
note rate
The interest rate stated on a mortgage note.
notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

O

original principal balance
The total amount of principal owed on a mortgage before any payments are made.
origination fee
A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount.
owner financing
A property purchase transaction in which the property seller provides all or part of the financing.

P

partial payment
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan.
payment change date
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date.
periodic payment cap
For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease during any one adjustment period. See cap.
periodic rate cap
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be. See cap.
personal property
Any property that is not real property.
PITI
See principal, interest, taxes, and insurance (PITI).
PITI reserves
A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
planned unit development
See PUD.
point
A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage.
power of attorney
A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
prearranged refinancing agreement
A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in the costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.
preforeclosure sale
A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the investor.
prepayment
Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner’s decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.
prepayment penalty
A fee that may be charged to a borrower who pays off a loan before it is due.
pre-qualification
The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.
prime rate
The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.
principal
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
principal balance
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.
principal, interest, taxes, and insurance (PITI)
The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.
private mortgage insurance (MI)
Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
promissory note
A written promise to repay a specified amount over a specified period of time.
public auction
A meeting in an announced public location to sell property to repay a mortgage that is in default.
Planned Unit Development (PUD)
A project or subdivision that includes common property that is owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.
purchase and sale agreement
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
purchase money transaction
The acquisition of property through the payment of money or its equivalent.

Q

qualifying ratios
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
quitclaim deed
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

R

radon
A radioactive gas found in some homes that in sufficient concentrations can cause health problems.
rate-improvement mortgage
A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.
rate lock
A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time. See lock-in.
real estate agent
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
real property
Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.
REALTOR®
A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS©.
recission
The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.
recorder
The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”
recording
The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
refinance transaction
The process of paying off one loan with the proceeds from a new loan using the same property as security.
rehabilitation mortgage
A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.
remaining balance
The amount of principal that has not yet been repaid. See principal balance.
remaining term
The original amortization term minus the number of payments that have been applied.
rent loss insurance
Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
rent with option to buy
See lease-purchase mortgage loan.
repayment plan
An arrangement made to repay delinquent installments or advances. Lenders’ formal repayment plans are called “relief provisions.”
replacement reserve fund
A fund set aside for replacement of common property in a condominium, PUD, or cooperative project — particularly that which has a short life expectancy, such as carpeting, furniture, etc.
revolving liability
A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
right of first refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
right of ingress or egress
The right to enter or leave designated premises.
right of survivorship
In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.
Rural Housing Service (RHS)
An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.

S

sale-leaseback
A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
second mortgage
A mortgage that has a lien position subordinate to the first mortgage.
secondary mortgage market
The buying and selling of existing mortgages.
secured loan
A loan that is backed by collateral.
security
The property that will be pledged as collateral for a loan.
seller take-back
An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.
servicer
An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
servicing
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
settlement
See closing.
settlement sheet
See HUD-1 statement.
special deposit account
An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.
standard payment calculation
The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
step-rate mortgage
A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.
subdivision
A housing development that is created by dividing a tract of land into individual lots for sale or lease.
subordinate financing
Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
subsidized second mortgage
An alternative financing option known as the Community Seconds® mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.
survey
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
sweat equity
Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.

T

tenancy by the entirety
A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. Contrast with tenancy in common.
tenancy in common
A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenacy.
tenant-stockholder
The obligee for a cooperative share loan, who is both a stockholder in a cooperative corporation and a tenant of the unit under a proprietary lease or occupancy agreement.
third-party origination
A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market. See mortgage broker.
title
A legal document evidencing a person’s right to or ownership of a property.
title company
A company that specializes in examining and insuring titles to real estate.
title insurance
Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of a property.
title search
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
total expense ratio
Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts.
trade equity
Equity that results from a property purchaser giving his or her existing property (or an asset other than real estate) as trade as all or part of the down payment for the property that is being purchased.
transfer of ownership
Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property “subject to” the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device. In cases in which an inter vivos revocable trust is the borrower, lenders also consider any transfer of a beneficial interest in the trust to be a transfer of ownership.
transfer tax
State or local tax payable when title passes from one owner to another.
Truth-in-Lending
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
two-step mortgage
An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
two- to four-family property
A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.
trustee
A fiduciary who holds or controls property for the benefit of another.

U

underwriting
The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower’s creditworthiness and the quality of the property itself.
unsecured loan
A loan that is not backed by collateral.

V

VA mortgage
A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.
vested
Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.
Department of Veterans Affairs (VA)
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

W

what-if analysis
An affordability analysis that is based on a what-if scenario. A what-if analysis is useful if you do not have complete data or if you want to explore the effect of various changes to your income, liabilities, or available funds or to the qualifying ratios or down payment expenses that are used in the analysis.
what-if scenario
A change in the amounts that is used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or down payment funds or to the qualifying ratios or down payment expenses that are used in the analysis. You can use a what-if scenario to explore different ways to improve your ability to afford a house.
wraparound mortgage
A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

X

Y

Z

REQUEST YOUR INSURANCE QUOTE

Briefly working together, we’ll get you the protection you request at a great price

Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

Get Insurance Quote

Briefly working together, we’ll get you the protection you need at a great price

Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

PERSONAL INSURANCE

COMMERCIAL INSURANCE

FOUND US HOW?

INFORM US OF YOUR NEEDS

Get Insurance Quote

Briefly working together, we’ll get you the protection you need at a great price

Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

PERSONAL INSURANCE

COMMERCIAL INSURANCE

FOUND US HOW?

INFORM US OF YOUR NEEDS

Insurance Companies We Represent

Other Types Of Insurance

Please contact us for assistance if you don’t see a quote for the type of insurance you need. We offer a full range of insurance solutions, but don’t have online quote forms for every type because having a conversation is more appropriate for some insurance scenarios.

We are Professionally Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent.

Quote Help By Phone: Call (281) 494-6400

Office Hours: M-F 8am-5pm

LONG-TERM CARE INSURANCE

Long-Term Care Insurance helps you protect your assets and maintain your financial security should you need long-term care later in life. While no one likes to think about the escalating costs of nursing homes and other elder care expenses, planning now can provide you – and your family – peace of mind now and in the future.

What is long-term care?

The phrase “long-term care” refers to a broad range of medical and personal services. Long-term care goes beyond standard hospitalization and nursing care, and includes all the assistance you could need if you are unable to care for yourself for an extended period of time. The need for such care could be the result of a chronic illness or disability, or it could arise because of physical or mental impairments that prevent you from performing basic activities of daily living (feeding and dressing yourself, bathing, etc.).

Benefits Of Long-Term Care Insurance

A look at the statistics

The longer you live, the greater the chances you’ll need some form of long-term care. If you are concerned about protecting your assets and maintaining your financial security in your later years, long-term care insurance may be appropriate for you.

This year alone, seven million seniors are expected to need long-term care. Most long-term care is provided in the home, with family and friends as the primary caregivers. While only a fraction of all long-term care is provided in nursing homes, recent studies indicate that 40 percent of Americans over age 65 will need nursing home care at some point during their lives. Ten percent will stay in a nursing home for five years or more. Looking at it another way, about 54 percent of women and 30 percent of men will spend some time in a nursing home. With life expectancies increasing at a steady rate, these figures are expected to grow in the years to come.

The national average cost of one year in a nursing home is estimated at $55,000; in some regions the cost is more than twice this amount. Medicare may cover some of your nursing home expenses, but the extent of Medicare coverage is very limited.

Home care may be less expensive, but it is still a significant expense. Having a home aide come to your house three times a week to help with dressing, bathing, preparing meals, and the like (2-3 hours per visit) will cost an average of $1,000 per month or $12,000 per year. If you need additional help (physical therapy, respiratory therapy, etc.) the cost can be much greater, and may actually exceed the cost of nursing home care.

Should you consider long-term care?

Following are some rules of thumb to help you decide whether or not to purchase long-term care insurance. They have been compiled from several experts in senior affairs, to help you make this decision. Long-term care insurance might be appropriate if you meet all of the following criteria:

You are between the ages of 40 and 84. (Most insurance companies do not sell long-term care policies to individuals younger than 40 or older than 84, although a few companies do make policies available to those as young as 18 years of age.)

Your household assets average more than $75,000 per person.

Your annual income averages at least $30,000 per person.

The cost of monthly premiums for long-term care insurance is no more than five percent of your income, and you can afford this cost without making significant changes in your lifestyle.

You could still afford the premiums if they increase 20 to 30 percent in the future.

Once you purchase long-term care insurance, you’ll always pay the same rate as someone who is currently as old as you were when you purchased the policy. The insurance company can increase your premiums, but only if they raise the rates for an entire class of policyholders. For example, if you purchase a long-term care insurance policy when you’re 55, you’ll always pay the same rate as a 55-year-old buying a new policy.

Keep in mind, these are only guidelines, not hard-and-fast rules. Each individual situation requires careful consideration. Medical history and estate planning issues may also play a part in your decision. And even if you decide that long-term care insurance is right for you, your task is not complete. You’ll still need to decide how much coverage to purchase.

QUOTE ME NOW

Personal Disability Insurance Throughout Texas

Disability insurance helps protect you from an interruption of your income due to an accident or medical emergency. Naturally, no one expects an accident to take them out of commission, even for a short time. But a good disability policy provides protection just in case.

This section provides what you’ll need to know to protect you, from the basics of coverage to filing a claim.

THE BASICS

What is disability insurance?

Disability insurance pays benefits when you are unable to earn a living because you are sick or injured. Like all insurance, disability insurance is designed to protect you against financial disaster. Most disability policies pay you a benefit that replaces part of your earned income (usually 50 to 70 percent) when you can’t work.

Why would you need disability insurance?

Your chances of being disabled for longer than three months are much greater than your chances of dying prematurely. One reason for this is that medicine has made many illnesses and injuries treatable and life sustaining which previously had life ending consequences. Although this is great news for us all, it increases your need to protect your income with disability insurance.

While you are working

Everyone who works and earns a living should consider purchasing disability insurance. What would happen if you suffered an injury or illness, and couldn’t work for days, months, or even years? If you’re single, you may have no other means of support. If you’re married, you may be able to rely on your spouse for income, but you probably also have many financial obligations, such as supporting your children and paying your mortgage. Could your spouse’s income support your whole family? In addition, remember that you don’t have to be working in a hazardous position to need disability insurance. Accidents happen not only on the job but also at home, and illness can strike anyone.

If you’re a business owner

If you own a business, disability insurance can protect you in several ways. First, you can purchase an individual policy that will protect your own income. You can also purchase key person insurance designed to protect you from the impact that losing an important employee would have on your business. Business overhead expense insurance ensures that if you get sick, your business will stay healthy. Finally, you can purchase a disability insurance policy that will enable you to buy your partner’s business interest in the event that he or she becomes disabled.

What do you need to know about disability insurance?

Once you become disabled and apply for benefits, you have to wait for a certain amount of time after the onset of your disability before you receive benefits. If you are applying for benefits under a private insurance policy, this amount of time (called the elimination period) ranges from 30 to 720 days, although the most common period is 90 days. If you are applying for benefits under a type of social insurance, your waiting period may be as long as five months (for Social Security).

You can purchase private disability insurance policies that guarantee lifetime coverage, but they are very expensive. Most people buy either short-term policies (benefits are paid for up to two years) or long-term policies (benefits are paid for a few years or up until age 65). In fact, many injuries or illnesses do not disable you permanently. After a rehabilitation period, you may be able to return to work full- or part-time. Most private and social insurance programs encourage you to go back to work either by paying you partial or full benefits while you try to work or by continually reevaluating your disability. In addition, they usually pay for any training or rehabilitation you might need to help you get back to work.

Both private and government disability insurance are complex because the needs of each individual are complex. In addition, injury or illness is unpredictable. As a result, private and government disability insurance programs are designed with many restrictions and–in the case of individual disability insurance, at least–many options. When you purchase a disability policy, you may have to spend a lot of time evaluating your future needs and weighing what coverage you can afford to buy against what coverage you’d like to have. Then, you’ll have to compare individual policies and determine what coverage you are already entitled to through your employer or through the government.

Where can you get disability insurance?

In general, disability insurance can be split into two types: private insurance (individual or group policies purchased from an insurance company), and government insurance (social insurance provided through state or federal governments).

Private disability insurance refers to disability insurance that you purchase through an insurance company. Many types of private disability insurance exist, including individual policies, group policies, group association policies, specialized group policies, and riders attached to life insurance policies. Depending on the type of policy chosen, private disability policies usually offer more comprehensive benefits to insured individuals than social insurance. Individually-owned policies may offer the most coverage (at a greater cost), followed by group policies offered by an employer or association.

Workers’ compensation and Social Security are two well-known government disability insurance programs. In addition, five states (California, Hawaii, New Jersey, New York, and Rhode Island) have mandatory disability insurance programs that provide disability benefits to residents. If you are a civil service worker, a military service member, or other federal, state, or local government employee, there are many disability programs set up to benefit you. In general, however, government disability insurance programs are designed to provide limited benefits under restrictive terms, and you should not rely upon them (as many people mistakenly do) as your main source of income if you are disabled.

Although government disability insurance programs are generally inflexible because they are designed to meet the needs of the masses, private individual policies can be tailored to meet your needs.

QUOTE ME NOW

PRIVACY POLICY STATEMENT

As a part of our normal operations Assurance One of Texas, LLC collects, and in some cases, discloses information about you. We encourage you to read the following Privacy Statement that contains information about policies regarding the collection, use, disclosure, and protection of your information. If you are not comfortable with any of the terms or policies described in this Statement, we encourage you to send confidential correspondence through the postal service.

What information do we collect?

Personal, Financial and Product Information We collect personally identifiable information in order to identify and register you as a customer. In addition, we collect personal, financial and product information in order to provide you with services for your particular needs. By learning about you, we can deliver more relevant protection and product offerings and thus offer you better insurance services and options. The information we collect will vary depending upon the function or processes you select or request. Depending upon the function, product or process you select (for example, quote, request for proposal, e-mail, purchase), you may be required to provide information such as:

Name
Address
Birthdate
Phone number
E-mail address
Policy(ies) Type(s) & Number(s)
Social Security Number
Driver’s License Number, accident/violation history, information about vehicle operators, lien/lease holders, vehicle information, etc.

Who Should Use Our Web Site?

Our Web site is for insurance and financial products and services and is not intended for children. We offer insurance and financial products and services and thus do not market any products or services to children under the age of eighteen or knowingly collect any information from children under the age of eighteen. If we become aware that information is or has been submitted by or collected from a child under the age of eighteen, we will destroy this information.

What kind of customer information do we have, and where did we get it?

Much of the customer information we collect comes directly from you. When submitting your application or request for insurance or other products and services we offer, or in requesting an insurance quote, you may give us information such as your name, address, and Social Security number. We also keep information about your transactions with our affiliates, others, or us – for example, the types of products and services you purchase from us, premiums, policy account balances and payment history. We also may collect information from outside sources, including consumer reporting agencies and/or health care providers or reporting agencies such as the Medical Information Bureau (MIB). This information includes loss information reports, motor vehicle reports, credit reports, and medical information.

Who collects this information?

In order to better serve your particular needs, the information noted above is collected by Assurance One of Texas, LLC, its agents, and other companies working on behalf of Assurance One of Texas, LLC. In addition to collecting information from you, you should also know that, depending on the nature of your transaction, we may collect information from outside sources, such as loss information reports, motor vehicle reports, and credit reports. For property insurance, we may send someone to inspect your property and verify information about the value and condition of your property.

How is this information used?

The information you submit to us via our on-line forms and e-mail is used to provide you with the response or service you have requested. We may also use this information to contact you about our products and services. If you do not wish to receive these communications, you can write us, e-mail us or simply reply to any e-mails you receive from our employees informing us of your desire to be removed from our mailing lists.

Who has access to this information?

In order to better serve your particular needs, our company, its employees, and certain companies working on our behalf have access to this information. This information may also be disclosed to third parties without your consent if disclosure is necessary to comply with legal processes or to protect the rights, property, or personal safety of Assurance One of Texas, LLC, its users or the public. We may also provide limited information about you to third parties without your permission when necessary or appropriate to service an insurance policy we have issued (e.g., inquiries from lien holders or additional insureds listed on the policy) or to address claims submitted under a policy we have issued. In addition, we may, as permitted by law, provide information about you without your permission to certain persons or organizations, such as: your agent or broker; insurance support organizations; other insurance companies in order to perform their function in regard to an insurance transaction involving you (i.e. a claim); independent claim adjusters; businesses that conduct actuarial or research studies; regulatory and law enforcement authorities; or our affiliated companies, if any.

What are your options regarding collection, use, and distribution of your information?

Any information you submit to us via written applications, our Web site’s on-line forms or e-mail is done so on a voluntary basis. When you access our site in this manner, the collection, use, and distribution of your information will be handled according to the terms and policies outlined in this Privacy Statement. If you object to the collection, use, and distribution policies outlined in this Privacy Statement, we ask that you do not submit information. What are your options regarding correction or storage of your information? You may either personally see, or obtain from us by mail, the information about you in our files. If you believe the information we have about you in our records or files is incomplete or inaccurate, you may request via telephone or a postal mail letter that we make any necessary additions or corrections or, to the extent that it is feasible, that we delete this information from our files.

Links and Co-Branded Sites

This Web site contains links to other sites. Assurance One of Texas, LLC provides links to other sites as a convenience to persons who visit the web site. If you choose to use the services provided by those sites, you may be asked by those sites to provide certain personally identifiable information (some of which may, on an individual or aggregated basis, be shared with Assurance One of Texas, LLC. Please be aware that Assurance One of Texas, LLC is not responsible for the privacy practices of those sites, even though the name or logo of Assurance One of Texas, LLC may appear on those sites. We encourage you to be aware when you leave our site and to read the Privacy Statements of each and every Web site that you visit, as the privacy policy of those sites may differ from ours.

Have Additional Questions Regarding Your Privacy?

Contact our offices at:

Assurance One of Texas, LLC
245 Commerce Green Blvd, Ste 110
Sugar Land, TX 77478-3758

Tel: (281) 494-6400
Toll Free: (800) 985-4393
Fax: (281) 494-6414
Email: Send Email

Office Hours: M-F 8am-5pm

Life Insurance Throughout Texas

Life insurance is simply protection to ensure that your family will have financial security when you pass away. If something should happen to you, how will they be able to continue doing the things they take for granted, such as live in a nice home, continue their education, or create a retirement nest egg without you? Life insurance can help to provide the answer. In this section, we’ll help you begin to think about Life insurance. We’ll take a look at the two basic types of Life insurance, how to achieve an appropriate level of Life insurance, how to read your policy, and how to address typical planning concerns. All designed to provide you with a framework for considering how much life insurance you need.

There are many reasons for purchasing life insurance:

Family protection to provide financial security to surviving family members on the death of the insured person.
To pay for children’s education.
Insurance to cover a particular need such as paying off a mortgage or consumer debt upon the insured’s death.
Business insurance to compensate a company on the death of a key employee or to provide a surviving partner the resources to buy out the deceased partner’s share of the business.
To provide funds to pay estate taxes or other final obligations necessary to settle a deceased person’s estate.
To provide the funds necessary for the deceased person’s burial expenses.
Accumulation of funds to supplement retirement income.

QUOTE ME NOW

Understanding The Basics

What is life insurance?

Life insurance is an agreement between you (the insured) and an insurance company (the insurer). Under the terms of a life insurance contract, the insurer promises to pay a certain sum to someone (a beneficiary) when you die, in exchange for your premium payments.

Why would you need life insurance?

The most common reason for buying life insurance is to replace the income lost when you die. For example, say that you work, and your income is used to support yourself and your family. When you die, and your paychecks stop, the life insurance proceeds can be used to continue to support the family members you’ve left behind.

Another common use of life insurance proceeds is to pay off any debts you leave behind. For example, mortgages, car loans, medical bills, and credit card debts are often left unpaid when someone dies. These obligations must be paid from the assets left behind. This can deplete the resources that your family needs. Life insurance can be used to pay off these debts, leaving your other assets intact for your family to use.

Life insurance provides liquidity to your estate. When you die, you may leave some liquid assets (such as cash, CDs, and savings bonds), and some illiquid assets (such as real estate, an automobile, and stocks). Your liquid assets may not be enough to pay all the debts that you leave behind, plus all the expenses that arise because of your death (such as funeral expenses and estate taxes). Your illiquid assets may have to be sold in order to meet these obligations when they come due. This may cause a financial loss if the assets must be sold cheaply in order to get the money on time. Life insurance can avert this situation, because the proceeds are available almost immediately upon your death.

Life insurance creates an estate for your heirs. After your debts and expenses are paid, there may not be much left over for your family. Life insurance can automatically provide assets for them after your death. Life insurance is also a great way to give to charity when you die. You may have always had a great philanthropic desire, but not the means to make it a reality. Life insurance can do that for you.

Life insurance can even be a key element for specialized business applications, such as funding a buy-sell agreement. Under a buy-sell agreement, life insurance can be used to provide cash for the purchase of a deceased owner’s interest in the business. Finally, life insurance can be an investment vehicle. Some types of life insurance policies may actually make money for you, as well as provide the benefits described above. This can help you with long-term financial goals and strategies. What do you need to know about life insurance?

There are several kinds of policies that may be available to you. Term life insurance policies provide life insurance protection for a specific period of time or term. If you die during the coverage period, the beneficiary named in your policy receives the policy death benefit. If you don’t die during the term, your beneficiary receives nothing. Common term policies last for 10, 15, 20 and even 30 years. Permanent insurance policies provide insurance protection for your entire life as long as the policy remains in force. In addition to the insurance protection provided, this type of policy also builds internal cash values, often described as a savings account within the policy.

The different kinds of permanent insurance policies:

Whole life
Ordinary level premium whole life
Limited-pay whole life
Current assumption whole life
Adjustable life
Universal life
Joint life (first to die)
Survivorship (second to die)

You also need to know that the cost of life insurance will depend upon the type of policy, your age, and your health at the point in time when the policy is issued.

A life insurance contract is made up of provisions, options, and riders. Provisions describe or explain features, benefits, conditions, or requirements of the contract. Options are features of the agreement that require you to make a choice regarding some aspect of coverage. Riders are additional coverage (or endorsements) offered by the insurer at the time of application and added to the standard agreement in return for an additional premium. Finally, you need to know the tax consequences of owning life insurance.

Life insurance premium payments are not tax-deductible expenses.
In general, the death benefit paid to the beneficiary is not included in gross income for federal income tax purposes, because it is paid with after-tax dollars.
You must be very careful about who owns the policy and who the beneficiaries are, in order to avoid estate taxes on the proceeds when you die.

Want to Learn More About Life Insurance?

Visit our site’s knowledge center, where you’ll find tips and information about insurance and how it benefits you. Everything is categorized and easy to find.

View Knowledge Center

Personal Umbrella Policy Throughout Texas

Liability insurance protects your assets in the event that you (or a member of your household) accidentally injure another person or damage someone’s property. It’s known as “third-party insurance,” because it protects you if a third party files a claim against you. Liability insurance can pay for a legal defense in the event of a lawsuit, and pay medical and/or property claims for which you are found legally liable, up to the limits of the policy. Personal liability insurance can be purchased as part of a package policy (such as homeowners, renters, or auto insurance), or as a separate policy (such as a personal umbrella liability policy).

Personal umbrella liability insurance is designed to protect you against a catastrophic lawsuit or judgment. It provides expanded coverage and increases the amount of your liability protection beyond the basic coverage provided under your homeowners/renters and auto insurance policies. Unlike other types of liability coverage personal umbrella liability insurance can be purchased as a separate policy. However, your insurer will require that you have underlying basic liability coverage (homeowners/renters insurance, auto insurance, or both) before you can purchase an umbrella liability policy. If you are found to be legally responsible for injuring someone or damaging someone’s property the umbrella policy will either pay the part of the claim in excess of the limits of your basic liability coverage or pay for certain losses not covered by your basic personal liability insurance. Naturally, no one expects to be sued. But a good personal liability policy can definitely help to protect both your family and your future.

QUOTE ME NOW

Understanding The Basics of Liability Insurance

Why do you need it?

Standard homeowners policies usually provide $100,000 to $300,000 worth of liability coverage. As well as the fact that most states now require you to carry auto insurance with minimum liability coverage (which varies from state to state). It is possible to purchase additional liability coverage under these policies, but amounts may be limited. In today’s society, it’s not unusual to hear of $1-million, $2-million, and even $10-million liability judgments against individuals. If someone is injured in your home, or if you cause a serious auto accident, you could be hit with such a judgment. Without a personal umbrella liability policy, anything beyond the liability coverage limits of your homeowners/renters or auto insurance policy will have to come out of your pockets.

How does it work?

Personal umbrella liability insurance supplements the basic liability coverage provided by your other insurance–it’s designed to kick in when your other liability coverage is tapped out. Depending on the type of claim against you, your homeowners, renters, auto, or boat insurance coverage would be utilized first. Once the basic liability limit under the applicable policy is reached, your personal umbrella liability policy covers the remaining costs, up to the policy limits. For this reason, umbrella liability insurance usually carries a high deductible. Insurance companies typically require you to have homeowners/renters and auto liability insurance equal to the amount of your personal umbrella deductible.

When should you get it?

Your homeowners, renters, and/or auto insurance policies include some liability coverage. So the question is, when should you consider purchasing additional liability coverage (typically in the form of a personal umbrella liability policy)? There is no hard-and-fast answer, but there’s no time like the present because almost anyone can be the target of a huge liability lawsuit. Certain events increase your liability exposure–such as starting a home-based business, or having a teenaged child who gets his or her drivers license–so you should definitely re-examine your liability coverage at these times.

While it is possible to be overinsured, it’s much more likely that you’re underinsured for liability purposes. Don’t learn the hard way that you need more liability insurance. Accidents and injuries don’t happen on a schedule, and once you’re the target of a liability suit it’s too late to increase your coverage.

What does it cover?

A typical personal umbrella liability policy provides the following protection, up to the coverage limits specified in the policy:

Protection for claims of personal injuries or property damage caused by you, members of your family/household, or hazards on your property, for which you are found legally liable
Personal liability coverage for incidents which occur on or off your property
Additional protection above your basic auto policy for auto-related liabilities
Protection against non-business-related personal injury claims, such as slander, libel, wrongful eviction, and false arrest
Legal defense costs for a covered loss, including lawyers’ fees and associated court costs

What doesn’t it cover?

Personal umbrella liability insurance typically provides extremely broad coverage. Furthermore, if something is not expressly excluded from coverage, it is covered. Although exclusions can vary, the following are some items typically excluded from coverage:

Intentional damage caused by you or a member of your family/household
Damages arising out of business or professional pursuits
Liability which you accept under the terms of a contract or agreement
Liability related to the ownership, maintenance, and use of aircraft, nontraditional watercraft (jet skis, air boats, etc.), and most recreational vehicles
Damage to property owned, used, or maintained by you (the insured)
Damage covered under a workers compensation policy
Liability arising as a result of war or insurrection

So, how much is enough?

There is no exact science when it comes to determining the appropriate level of personal liability insurance coverage. You might think that you only need enough liability insurance to protect your assets, but this figure is practically irrelevant when deciding how much liability coverage you need. A large judgment against you could easily wipe out your assets and put your future earnings in jeopardy. Instead, consider factors such as the following:

Do you entertain often? (Having guests in your home, serving alcohol, etc., can open the door to potential liability claims.)
Do you operate a home-based business that is covered under your homeowners policy?
Do you have a long commute to work? Do you take frequent auto trips?
Do you have teenage children? Do they drive?
Does your lifestyle make you a likely target for a lawsuit (i.e., do you give the appearance of having “deep pockets”)?

Home Insurance

Protect your home and your belongings with Homeowners, Condo, or Renters coverage with Assurance One of Texas, LLC.

Have Questions or Need Our Advice? Call (281) 494-6400

Homeowners Insurance Throughout Texas

Roof-line gable of traditional home against a blue cloudless sky

Owning a home is one of the biggest investments you might make in your entire life. It has been part of the “American Dream” for decades and continues to be a goal for many people. That’s why working with one of our experienced agents can be so important when you take this big step! Home insurance can be daunting. Buying a policy “off the shelf” without a plan or advice can result in the difference between what you really needed and what you ended up paying for being vastly different. Your homeowner’s insurance policy should reflect the reality of your home’s uniqueness, your lifestyle and your financial assets.

Texas Homeowners, Condominium Insurance, Co-op and Renters Insurance

There are important differences in condominium insurance, renters insurance and homeowners insurance but one factor ties them all together: Assurance One of Texas, LLC has worked hard to put together homeowners, renters and condominium insurance plans that are some of the highest rated in the country. Above all, we believe the coverage for your home should provide you with the security that comes only from the knowledge that your home is insured.

For this reason the companies we represent continue to receive the highest ratings from the insurance industry’s leading analysts and rating authorities.

We can offer you:

Many coverages to protect both you and your property.
Responsive and caring Claims service.
Property insurance at an affordable price.

We’re always pleased to provide prompt and friendly consultations regarding Homeowners, Condominium, and Renters insurance to help you understand the importance of insurance protection you can truly be comfortable with.

QUOTE ME NOW

Want to Learn More About Insurance for Your Home?

Visit our site’s knowledge center, where you’ll find tips and information about insurance and how it benefits you. Everything is categorized and easy to find.

View Knowledge Center

Auto Insurance

When your auto insurance is from Assurance One of Texas, LLC, it’s the coverage, service and professional advice you can truly count on to keep your best interests at heart.

Have Questions or Need Our Advice? Call (281) 494-6400

Auto Insurance Throughout Texas

Person standing in front of vehicle holding key fob in their hand

The ability to jump into a car and go wherever you want is woven into the fabric of America. Ever since the creation of the automobile, the freedom it afforded has been part of the American dream. Unfortunately, cars on the roads also means car accidents.

With just a glance it’s easy to see the significant advances made to automobiles over the past decade how much the automobile continues to change. The artisic approach towards style and brand has evolved in numerous safety advances ranging from full interior wrap-around air bags, crash avoidance, autonomous control systems, navigational and auto-parking technologies just to name a few. Each of these systems are complex and require more serious considerations for today’s vehicle owner. The real value available in a solid auto insurance policy is something more and more consumers now require given the level of expense they’ve alloted for their transportational needs.

Assurance One of Texas, LLC is ready to help you protect this portion of your lifestyle and dreams with our car insurance and recreational vehicle insurance for your motorcycles, campers, trailers, motor homes or ATVs and snowmobiles. We understand the need for different types of auto insurance coverage and we understand you might not know all your car insurance or recreational vehicle insurance coverage needs.

QUOTE ME NOW

Our licensed professionals will take the time to review your unique needs and present you with options to receive the coverage to match those needs.

With different Liability Limits, Comprehensive, Collision, Personal Injury Protection, and Medical coverages to choose from, it’s easy for most consumers to make simple mistakes that could quickly become a drastic consequence towards their financial stability and well-being. This is no different when it comes to recreational vehicle insurance. You don’t want to be on vacation in your motor home, out on the open road on your motorcycle, or cruising through the backwoods on an ATV and end up not only in an accident but unable to come back from it financially. With Assurance One of Texas, LLC, you can rest assured you are protected.

Don’t wait to keep yourself and your assets protected. We never think about car insurance until we need it. Let us help you find the peace of mind knowing your dream is protected with the right auto insurance or recreational vehicle insurance.

Car, Truck, RV, and ATV Insurance Throughout Texas

At Assurance One of Texas, LLC we offer competitive premiums and complete coverage for all your vehicles.

Coverages can include:

Preferred and standard auto insurance.
High risk auto insurance.
Motorcycle.
Motor homes.
Camping trailers, travel trailers, utility trailers.
Recreational vehicles: all-terrain vehicles, trail bikes, golf carts, mini bikes, dune buggies, jet skis and wet bikes.
Antique, classic or special-interest cars.

Assurance One of Texas, LLC is an independent insurance agency and we consistently work to provide the individual coverage you need. When it comes to protecting your auto(s), don’t leave it up to chance. Speak to one of our professional agents today.

Want to Learn More About Auto Insurance?

Visit our site’s knowledge center, where you’ll find tips and information about insurance and how it benefits you. Everything is categorized and easy to find.

View Knowledge Center

Complete Glossary of Insurance Terminology

Click on the first letter of the Term you are looking for:

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

AAI
Accredited Adviser in Insurance, a designation awarded by the Insurance Institute of America to people who have completed a three-semester educational program designed for insurance producers.
accelerated benefits
Benefits available in some life insurance policies before death, usually triggered by long-term, catastrophic or terminal illness. Also known as living benefits.
accident
An event that is unforeseen, unexpected, and unintended.
accidental bodily injury
Physical injury sustained as the result of an accident.
accident report form
An accident report form is used to record key information about the accident.
accidental death benefits
A provision added to a life insurance policy for payment of an additional benefit in case of death that results from an accident. This provision is often called “double indemnity.”
account analyst
See Administrative Assistant.
account current
An account current is the billing statement an insurance company sends to its producer.
account selling
Account selling is trying to handle all of a client’s insurance needs, rather than providing for only a portion of those needs.
accounts receivable insurance
Pays for the cost of reconstructing accounts receivable records that have been damaged or destroyed by a covered peril. Even more important, it covers any payments that cannot be collected because records cannot be reconstructed.
accredited adviser in insurance
See AAI.
actual cash value (ACV)
The value of property as figured by determining what it would cost to replace the property (see Replacement Cost) and then adjusting this replacement cost by subtracting an amount that reflects depreciation.
ACV
See Actual Cash Value.
accumulation period
The time during which a person pays money into an annuity contract and builds up a fund to provide a deferred annuity.
actuary
Someone professionally trained in the technical aspects of insurance and related fields, particularly in the mathematics of insurance (the calculation of premiums, reserves and other values). An actuary uses complex mathematical methods, often with the aid of computers, to analyze past loss data and other statistics and develop systems for determining future premiums.
adjuster
See Claims Adjuster.
adjustable life insurance
A type of insurance that allows the policyholder to change the plan of insurance, raise or lower the face amount of the policy, increase or decrease the premium and lengthen or shorten the protection period.
administrative assistant
The administrative assistant supports the sales efforts of the producer. Other titles for this position include agency underwriter, insurance placer, customer service representative, marketing specialist, account analyst, and office manager.
administrative services only (ASO) agreement
Contract between an insurer (or its subsidiary) and a group employer, eligible group, trustee, or other party, in which the insurer provides certain administrative services. These services may include actuarial support, plan design, claims processing, data recovery and analysis, benefits communications, financial advice, medical care conversions, data preparation for governmental reports, and stop-loss coverage.
adverse selection
When people with a very high probability of loss purchase insurance to a greater extent that people with average or below average probabilities of loss. Underwriters’ major goal is to avoid adverse selection.
age limits
Ages below and above which an insurance company will not accept applications or renew policies.
agency billing
See Producer Billing.
agency underwriter
See Administrative Assistant.
agent
An authorized representative of an insurance company who sells and services insurance contracts. See Producer, Exclusive Agent, Independent Agent.
aggregate indemnity
The maximum amount that may be collected for any disability, or period of disability, under an insurance policy.
allocated benefits
Maximum amount for specific services as itemized in an insurance contract.
“all-risks”
“All Risks” property policies, often called “special” policies, cover any loss unless it is caused by an excluded peril listed in the policy.
alternate delivery system
Health services that are more cost-effective than inpatient, acute-care hospitals, such as skilled and intermediary nursing facilities, hospice programs, and in-home services.
ambulatory care
Medical services provided on an outpatient (non-hospitalized) basis. Services may include diagnosis, treatment, surgery, and rehabilitation.
amendment
Document changing the provisions of an insurance contract signed jointly by the insurer and the policyholder.
annuitant
The person entitled to receive annuity payments or who now receives them.
annuities
Annuities are contracts sold by life insurance companies (the seller must be a licensed insurance entity in your state). In their simplest form, you pay a sum of money (either a lump sum or a series of payments) and the insurance company makes periodic payments to you, beginning on the date in your contract and continuing for the rest of your life. The earnings on your annuity payments are not taxable during the accumulation phase of your agreement; the annuity payments are taxable as income when you receive them.
annuity certain
A contract that provides an income for a specified number of years, regardless of life or death.
annuity consideration
The payment, or one of the regular periodic payments, an annuitant makes for an annuity.
application
A statement of information made by someone applying for life insurance. The information gathered helps the life insurance company assess whether the risk presented by the applicant is acceptable to underwriters.
approval
Signifies the legal acceptance of forms by a state when policy information is filed;

Signifies the insurer’s acceptance of risks as set forth in an application for insurance (as originally made or modified by the insurer); or

Signifies the acceptance of a request from an applicant or policyholder for new insurance, reinstatement of a terminated policy, a policy loan, or other request.
assigned risk plans
See Automobile Insurance Plans.
assignment
The legal transfer of one person’s interest in an insurance policy to another person.
association group
A group formed from members of a trade or professional association for insurance under one master health insurance contract.
audit
During an audit, members of the home office staff underwriting department examine files to see whether the underwriting guidelines are being followed. Also see Premium Auditor.
audited premium
See Premium Auditor.
auto liability
Pays for damages that you cause to other people and their property. If you cause an accident and you bang up your car or yourself, your auto liability insurance will not pay for your medical bills or the repairs to your car. (Auto medical payments coverage would.) But it will pay for the other guy’s, up to the limits of your policy. Without the coverage, your assets would be subject to seizure to pay the medical bills, car repairs and other damages that you caused in an accident. Once the insurance company pays out the limits of your policy, you’re liable for the rest, which is why it’s advisable to purchase higher limits than what your state requires. Auto liability coverage has three parts: bodily injury per person, bodily injury per accident, and property damage. Limits for liability are usually written like “20/40/10.” That means a policy will pay bodily injury losses up to $20,000 per person, and up to $40,000 per accident (if more than one person was hurt). It will also pay property damage losses up to $10,000 per accident.
automatic premium loan
A provision in a life insurance policy that any premium not paid by the end of the grace period (usually 31 days) is automatically paid by a policy loan if there is sufficient cash value.
automobile insurance plans
Formerly known as assigned risk plans–are residual market programs providing
auto insurance. See Residual Market.
auto medical payments
If you cause an accident, the coverage works like this: Auto liability coverage pays the bodily injury and property damage losses of the other person. Collision coverage pays for repairs to your own vehicle. Auto medical payments coverage pays medical and funeral expenses for you and your passengers. If you already have health and disability insurance, the coverage may be redundant.
auto physical damage coverage
Insures against loss resulting from damage to an auto owned by the insured; also provides coverage if the car is stolen.

B

beneficiary
The person or financial instrument (for example, a trust fund), named in the policy as the recipient of insurance money in the event of the policyholder’s death.
benefit
Amount payable by the insurance company to a claimant, assignee, or beneficiary when the insured suffers a loss.
binding receipt
A receipt given for the payment which accompanies an application for insurance. If the policy is approved, the payment “binds” the company to make the policy effective from date of receipt.
blanket contract
Contract for health insurance that covers a class of persons. It is used for groups such as athletic teams and for employee travel.
blanket medical expense
A provision that entitles the insured person to collect up to a maximum for all hospital and medical expenses, without limitations on specific types of medical expenses.
blue cross
Nonprofit corporation providing protection to its members against the cost of hospital care in a limited geographic area.
blue shield
Nonprofit corporation providing protection to its members against the cost of surgery and other items of medical care in a limited geographic area.
broker
A sales and service representative who handles insurance for clients, generally selling insurance of various kinds and for several companies. Brokers resemble agents, except for the fact that, in a legal sense, brokers represent the party seeking insurance rather than the insurance company. See Agent, Producer.
business insurance
A policy that provides coverage to a business. It is often purchased to indemnify a business for the loss of services if a key employee (such as a partner) becomes disabled.
business life insurance
Life insurance purchased by a business enterprise on the life of a member of the firm. It is often bought by partnerships to protect the surviving partners against loss caused by the death of a partner, or by a corporation to reimburse it for loss caused by the death of a key employee. (Also known as key person insurance.)

C

cancer insurance
A very narrow form of health insurance that covers the policyholder in the event he or she contracts cancer. Policies often exclude skin cancer. Some policies won’t pay for cancer treatments until several years after the policy was purchased. Consumer groups and insurance regulators have said cancer insurance policies are more expensive than they’re worth, since the insurance companies pay out a rather small percentage of the premiums they collect.
capitation
Method of payment whereby a physician or hospital is paid a fixed amount for each person in a particular plan regardless of the frequency or type of service provided.
cash value
The amount available in cash upon surrender of a policy before it becomes payable upon death or maturity.
certificate
A statement issued to individuals insured under a group policy, setting forth the essential provisions relating to their coverage.
claim
Notification to an insurance company that payment of an amount is due under the terms of the policy. A claim is a demand by a person or business who is seeking to recover for a loss. A claim may be made against an individual. A claim may also be made against an insurance company, when an insured asks the insurance company to pay for a loss that may be covered by an insurance policy.
co-insurance
Arrangement by which the insurer and the insured share, in a specific ratio, payment for losses covered by the policy, after the deductible is met.
combination plans
Life insurance policies that combine features of term and whole life policies.
comprehensive medical expense insurance
Insurance that provides coverage, in one policy, for basic hospital expense and major medical expense.
computer insurance
Covers computer equipment and peripherals beyond the normal coverage provided in homeowner’s insurance policies. Usually, homeowner’s policies only cover up to between $1,000 and $3,000 in computer equipment. With more people owning expensive computers and peripherals, and even using them for home-based businesses, riders and separate policies are becoming more popular. Some policies are also designed to cover damage and/or theft of portable equipment, such as laptop computers, and even the costs of data recovery.
consolidate omnibus budget reconciliation act (COBRA)
Requires employers with more than 20 employees to make group health care coverage available for 18 months, at the employee’s expense, to employees who leave the employer for any reason other than gross misconduct.
consideration clause
Stipulation that states the basis on which an insurer issues an insurance contract.
contributory plan
Group plan under which the insured shares in the cost of the plan with the policyholder.
conventional health plan
Plan that provides all benefits and issues certificates containing the insurance company’s guarantees.
conversion privilege
Right given to an insured person under a group insurance contract to change coverage, without evidence of medical insurability, to an individual policy upon termination of the group coverage. The conditions under which conversion can be made are defined in the master policy.
convertible term insurance
Term insurance that offers the policyholder the option of exchanging it for a permanent plan of insurance without evidence of insurability.
coordination of benefits (COB)
Method of integrating benefits payable under more than one health insurance plan so that the insured’s benefits from all sources do not exceed 100 percent of allowable medical expenses or eliminate incentives to contain costs.
cost containment
Reduction of inefficiencies in the consumption, allocation, or production of health care services. Inefficiencies can occur when health services are used inappropriately; when health services could be delivered in less costly settings; and when the costs could be reduced by using a different combination of resources.
cost index
A way to compare the costs of similar plans of life insurance. A policy with a smaller index number is generally a better buy than a comparable policy with a larger index number.
covered expenses
Health care charges that an insurer will consider paying under the terms of a health insurance policy.
cost-of-living rider
An option that permits the policyholder to purchase increasing term insurance coverage. The death proceeds increase by a stated amount each year to coincide with an estimated increase in the cost of living.
credit insurance
Optional coverage that pays off the balance of an outstanding loan in the event you become disabled, unemployed or die. Exact coverage depends on the particular policy. Variations include credit life (pays if you die), credit health or disability (pays if you get sick or become disabled) and credit unemployment insurance (pays if you involuntarily lose your job). Usually offered with credit cards, auto loans and mortgages.
credit life insurance
Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase or other obligation, in case of death.
current assumption whole life insurance
A variation of universal life insurance, this product involves fixed premiums and fixed death benefits. Its cash value growth depends on market conditions. If they are favorable and if premiums paid in the policy’s first year are large enough, premiums for one or more years may be reduced to zero.

D

deductible
Amount that must be paid by the insured before benefits will be paid by the
insurer.
declination
The rejection by a life insurance company of an application for life insurance, usually for reasons of health or occupation.
deferred annuity
Annuity payments that will begin at some future date.
deferred group annuity
A type of group annuity providing for the purchase each year of a paid-up deferred annuity for each member of the group, the total amount received by the member at retirement being the sum of these deferred annuities.
deposit administration group annuity
A type of group annuity providing for the accumulation of contributions in an undivided fund out of which annuities are purchased as the members of the group retire.
deposit term insurance
A form of term insurance, not really involving a “deposit,” in which the first-year premium is larger than subsequent premiums. Typically, a partial endowment is paid at the end of the term period. In many cases the partial endowment can be applied toward the purchase of a new term policy or, perhaps, a whole life policy.
diagnosis-related groups (DRG)
System of determining reimbursement fees based on the medical diagnosis of a patient.
disability
Physical or mental condition that prevents a person from performing one or more occupational duties temporarily (short-term), long-term, or totally (total disability).
disability benefit
A feature added to some life insurance policies providing for waiver of premium, and sometimes payment of monthly income, if the policyholder becomes totally and permanently disabled.
disability income insurance
Insurance that provides periodic payments when an insured person is unable to work as a result of illness or injury.
disability insurance
A form of health insurance that pays the policyholder in place of his or her usual income if the policyholder can’t work because of illness or accident. Usually, policies begin paying after a waiting period stipulated in the policy, and pay a certain percentage of the policyholder’s usual income. Sometimes this is provided by employers, but it’s also available as a separate coverage.
dismemberment
Accidental loss of limb or sight.
disposable personal income
Personal income less personal tax and nontax payments; the income available to people for spending and saving.
dividend
An amount of money returned to the holder of a participating policy. The money is a partial refund of the premium paid. It results from actual mortality, interest and expenses that were more favorable than expected when the premiums were set.
dividend addition
An amount of paid up insurance purchased with a policy dividend and added to the face amount of the policy.
double indemnity
Payment of twice the policy normal benefit for specific kinds of losses under certain conditions.
dual life insurance
Another name for second-to-die insurance.
duplication of coverage
Coverage under two or more policies for the same potential loss.

E

earned premium
Portion of a premium for which protection has already been provided by the insurer.
earthquake insurance
Earthquake policies are similar to regular homeowner’s policies but without the liability coverage. You choose a dollar ceiling for the dwelling coverage, and a percentage of this ceiling is then applied to coverages for personal property and additional living expenses (hotel expenses if your home becomes uninhabitable). Premiums for these policies are usually rather steep in the places where you would need to buy one. Until recently, the only place Californians could buy the coverage was from the California Earthquake Authority, which offered skimpy coverage. But the market is opening up again and some other companies are offering old-fashioned policies with better coverage (at higher rates, of course).
effective date
Date when insurance coverage begins.
eligible employees
Employees who meet the eligibility requirements for insurance set forth in a group policy.
eligibility date
Date when a member of an insured group applies for insurance.
eligibility period
Time following the eligibility date (usually 31 days) during which a member of a group may apply for insurance without evidence of insurability.
elimination period
Days at the beginning of a period of disability when no benefits are paid.
employee retirement income security act of 1974 (ERISA)
Federal law that affects pension and profit-sharing plans. Among other provisions, this law specifies a published summary plan must be distributed to participants within 120 days after adoption of the plan and within 90 days after an employee becomes a participant. The law requires that a summary plan description be issued every 5 years.
endowment
Life insurance payable to the policyholder if living, on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date.
enrollment card
Document signed by an eligible person indicating a desire to participate in a group insurance plan. The document or card authorizes an employer to deduct contributions from an employee’s pay. If life and accidental death and dismemberment coverage are involved, the card usually includes the beneficiary’s name and relationship.
evidence of insurability
A statement or proof of physical condition and/or other factual information affecting a person’s eligibility for insurance. In group insurance, evidence of insurability is required only in specific situations: when a person fails to enroll during the open enrollment period; when a person applies for reinstatement after having previously withdrawn from the plan when receiving an overall maximum benefit; or when a person applies for excess amounts of group life or disability insurance.
exclusions (exceptions)
Conditions or circumstances, listed in the policy, for which the insurer will not provide benefits.
exclusive provider organizations (EPO)
Form of managed care in which participants are reimbursed only for care received from affiliated providers.
expectation of life
See life expectancy.
experience
Relationship, usually expressed as a percent or ratio, of claims to premiums for a stated period.
experience rating
Process of determining the premium rate for a group based wholly or partially on that risk’s experience.
experience refund
Amount returned by an insurer to a group policyholder when the financial experience of a particular group (or class to which the group belongs) has been more favorable than anticipated.
extended term insurance
A form of insurance available as a non-forfeiture option. It provides the original amount of insurance for a limited period of time.

F

face amount
The amount stated on the face of the insurance policy that will be paid in case of death or at maturity. It does not include dividend additions or additional amounts payable under accidental death or other special provisions.
family policy
A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the other spouse and children, including those born after the policy is issued.
flat schedule
A type of group insurance schedule under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.
flexible premium deferred annuity
An annuity contract that permits varying premium payments from year to year and is often used for individual retirement accounts.
flexible premium policy or annuity
A life insurance policy or annuity under which the policyholder or contract holder may vary the amounts or timing of premium payments.
flood insurance
A regular homeowner’s policy will not pay for damages caused by flooding. In order to get the coverage, you’ll have to go to some outfit that writes for the National Flood Insurance Program. Outside of fire, flooding is the most widespread natural disaster. If your community participates in NFIP’s floodplain management program, you should be eligible to buy the coverage. The only people who may have trouble finding flood coverage are residents of “coastal barrier resource system” areas and communities that do not participate in NFIP’s programs. Flood insurance is also available to renters, condominium owners, and co-op owners.
franchise insurance
Insurance contracts issued to members of a specific group (such as employees of a common employer or members of an association) under a group-like arrangement in which the employer or the association collects and remits premiums.
fraternal life insurance
Life insurance provided by fraternal orders or societies to their members.

G

grace period
A period (usually 31 days) following each premium due date, other than the first due date, during which an overdue premium may be paid. All provisions of the policy remain in force throughout this period.
group annuity
A pension plan providing annuities at retirement to a group of people under a master contract. It is usually issued to an employer for the benefit of employees. The individual members of the group hold certificates as evidence of their annuities.
group life insurance
Life insurance that usually does not require medical examinations, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example, a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
guaranteed insurability
An option that permits the policyholder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.
guaranteed renewable contract
Contract under which an insured has the right, commonly up to a certain age, to continue the policy by the timely payment of premiums. Under renewable contracts, the insurer reserves the right to change premium rates by policy class.

H

health insurance
Coverage that provides benefits as a result of sickness or injury. Policies include insurance for losses from accident, medical expense, disability, or accidental death and dismemberment.
health maintenance organization (HMO)
Organization that provides a wide range of comprehensive health care services for a specified group for a fixed periodic prepayment.
hospice
Care provided to terminally ill patients and their families that emphasizes emotional needs and coping with pain and death rather than cure.
hospital indemnity insurance
Health insurance that provides a stipulated daily, weekly, or monthly payment to an insured person during hospital confinement, without regard to the actual confinement expense.
hospital medical insurance
Coverage that provides benefits for the cost of any or all hospital services normally covered under various health care plans.

I

incurred claims
Claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.
indemnity
Benefits of a predetermined amount paid for a loss.
individual insurance
A policy that provides protection to a policyholder and/or his or her family; sometimes called personal insurance as distinct from group and blanket insurance.
individual policy pension trust
A type of pension plan, frequently used for small groups, administered by trustees who are authorized to purchase individual level premium policies or annuity contracts for each member of the plan. The policies usually provide both life insurance and retirement benefits.
individual retirement account (IRA)
An account set up by an individual that in some cases allows contributions to be deducted from income and permits earnings on contributions to accumulate tax-deferred until retirement, regardless of whether the contributions are deductible. Under the 1986 tax law, only those who do not participate in a pension plan at work or who do participate and meet certain income guidelines can make tax-deductible contributions to an IRA. All others can make contributions to an IRA on a non-deductible basis.
industrial life insurance
Life insurance issued in small amounts, usually less than $1,000, with premiums payable on a weekly or monthly basis. The premiums are generally collected at the home by an agent of the company. Sometimes referred to as debit insurance.
injury independent of all other means
An injury resulting from an accident that was not caused by an illness.
inland marine insurance
A broad type of insurance, generally covering articles that may be transported from one place to another as well as bridges, tunnels and other means of transportation. It includes goods in transit (generally excepting transoceanic) as well as numerous “floater” policies such as personal effects, personal property, jewelry, furs, fine arts and other such items.
insurability
Acceptability to the company of an applicant for insurance.
insurable risk
The conditions that make a risk insurable are
(1) the peril insured against must produce a definite loss not under the control of the insured,
(2) there must be a large number of homogeneous exposures subject to the same perils,
(3) the loss must be calculable and the cost of insuring it must be economically
feasible,
(4) the peril must be unlikely to affect all insureds simultaneously,
and
(5) the loss produced by a risk must be definite and have a potential
to be financially serious.
insurance
Risk management plan that, for a price, offers the insured an opportunity to share the costs of possible financial loss through an insurer.
insuring clause
Stipulation in an insurance policy that states the type of loss the policy covers and lists the parties to the contract.
insurance examiner
The representative of a state insurance department assigned to participate in the official audit and examination of the affairs of an insurance company.
insured
The person on whose life the policy is issued.
integration
The combining of two or more benefit plans to prevent duplication of payments.

J

K

Keogh plan
A type of tax-favored retirement plan for self-employed people.
key-person insurance
Insurance designed to protect a business against the loss of income resulting from the disability or death of an employee in a significant position.

L

lapse
Termination of coverage because of nonpayment within a specified time period.
lapsed policy
A policy terminated at the end of the grace period because of non-payment of premiums.
legal reserve
The minimum reserve, as calculated under the state insurance code, which a company must keep to meet future claims and obligations.
legal reserve life insurance company
A life insurance company operating under state insurance laws specifying the minimum basis for the reserves the company must maintain on its policies.
level premium
Rating structure under which the premium level remains the same throughout the life of the policy.
level premium insurance
Insurance for which the cost is distributed evenly over the premium payment period. The premium remains the same from year to year and is more than the actual cost of protection in the earlier years of the policy and less than the actual cost in the later years. The excess paid in the early years builds up a reserve to cover the higher cost in the later years.
life annuity
A contract that provides an income for life.
lifetime disability benefit
A provision making benefits payable for an insured’s lifetime as long as the insured person is totally disabled.
life expectancy
The average number of years of life remaining for a group of people of a given age according to a particular mortality table.
life insurance in force
The sum of the face amounts, plus dividend additions, of life insurance policies outstanding at a given time. Additional amounts payable under accidental death or other special provisions are not included.
limited payment life insurance
Whole life insurance on which premiums are payable for a specified number of years or until death, if death occurs before the end of the specified period.
limited policy
Policy that covers only specified accidents or sicknesses.
living benefits
Another name for accelerated death benefits.
load
Any sales fees or charges paid in purchasing an annuity contract.
long-term care
A continuum of maintenance, custodial, and health services for the chronically ill or disabled. Such services may be provided on an inpatient (rehabilitation facility, nursing home, mental hospital) or outpatient basis, or at home.
Long term care insurance
A health-insurance variation designed to cover the costs of long term care at home or in a nursing home. These policies offer a specified nursing home benefit and home-care benefit. Some policies also account for inflation. The popularity of long term care insurance has grown as federal laws have changed, making it less likely that Medicaid will pick up the tab for long term care. These policies are usually rather expensive, and grow even more costly as the policyholder ages.
long-term disability income insurance (LTD)
Plan that helps replace income lost through inability to work because of disability caused by an accident or illness.

M

major medical expense insurance
Insurance that provides benefits for most types of medical expenses up to a high maximum benefit. Such contracts often contain internal limits and usually are subject to deductibles and co-insurance.
managed care
Systems that integrate the financing and delivery of appropriate health care services by means of arrangements with selected providers to furnish a comprehensive set of health-care services to members; explicit criteria for the selection of health-care providers; formal programs for ongoing quality assurance and utilization review; and significant financial incentives for members to use providers and procedures associated with the plan.
manual premium rate
Premium for a group developed from the insurer’s standard rate tables; it is the cost usually quoted in an insurer’s underwriting manual.
Medicaid
Simply put, Medicaid is health insurance for the poor. It was created in 1965 as a joint federal/state public assistance program for those too poor to afford health care. Since the program is administered by the individual states under federal guidelines, the benefits offered and eligibility requirements vary widely. About 36 million people around the U.S., including children, the elderly, the blind and the disabled, are currently covered by Medicaid. Usually, Medicaid recipients pay no part of costs for covered medical expenses, although a co-payment is sometimes required.
Medicare
Medicare is a federal insurance program which primarily serves those over 65 years old and younger, disabled people and dialysis patients. It currently covers about 37 million Americans. Medicare is divided into Part A, which covers inpatient hospital services, nursing home care, home health care and hospice care; and Part B, which helps pay the cost of doctors’ services, outpatient hospital services, medical equipment and supplies, and other health services and supplies. Recipients pay some part of the costs through deductibles. Since Medicare doesn’t cover all expenses, recipients often supplement their coverage through separate Medigap policies.
medsup (aka: medigap)
Private insurance that can be purchased to supplement Medicare.
minimum group
The fewest number of employees permitted under a state law to constitute a group for insurance purposes; the purpose of establishing minimums is to maintain a distinction between individual and group insurance.
minimum premium plan
The employer self-funds a fixed percentage (e.g. 90 percent) of the estimated monthly claims, and the insurer covers the remainder. This self-funded approach avoids payment of a premium tax required in most states.
miscellaneous expense
Expenses connected with hospital insurance; hospital charges other than room and board such as x-rays, drugs, laboratory fees, and other charges.
modified life insurance
A type of whole life policy with a premium that is relatively low in the first several years but that increases in later years.
morbidity
Frequency and severity of sicknesses and accidents in a well-defined class or classes of persons.
mortality table
A statistical table showing the death rate (probability of death) at each
age.
mortgage insurance
There are actually two types of mortgage insurance. Usually, people mean private mortgage insurance, or PMI, which protects a mortgage company against a defaulted loan. PMI does not benefit the homeowner. If you bought your home with a down payment of less than 20 percent of its value, your bank probably made you take out PMI. At some point, you won’t have to pay for PMI any more, but don’t expect the bank to let you know when that is. Mortgage insurance can also mean a type of life insurance, which pays off the balance of a mortgage when the policyholder dies or, in some cases, becomes disabled. As a homeowner, you want to get rid of the first type as soon as you can. You might want to consider the second type.
multiple employer trust (MET)
A trust established by a sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self-funded basis.
mutual life insurance company
A life insurance company owned by policyholders who share in the company’s surplus earnings.

N

national association of insurance commissioners (NAIC)
National organization of state officials charged with regulating insurance. It has no official power but wields significant influence. NAIC was formed to provide national uniformity in insurance regulations.
no-fault insurance
No-fault insurance (sometimes known as PIP or PPI) is designed to pay for the financial losses associated with minor accidents as quickly as possible. Under a no-fault system, your own insurance company will pay medical expenses and lost wages caused by an accident, regardless of who was at fault. In the long run, this system saves time and money that would otherwise be spent litigating petty claims. Usually, that means less expensive auto insurance. In exchange, no-fault systems limit the right to sue under certain circumstances. Not every state has no-fault, and systems vary quite a bit from state to state. In Michigan, there is no limit to the amount that you can collect under no-fault. In other states, you may only be able to collect $5,000. Once no-fault runs out, motorists can turn to their uninsured motorist/underinsured motorist coverage to make up the difference.
noncancellable policy
A policy that can be maintained through timely payment of the premiums until the policyholder is at least age 50 or, in the case of a policy issued after age 44, for at least five years from the date of issue. The insurer may not unilaterally change any provision of the in-force policy, including premium rates.
noncontributory plan
Group insurance plan under which the employer does not require employees to share in its cost.
nondisabling injury
Any injury that may require medical care but does not result in the loss of working time or income.
non-forfeiture option
One of the choices available if the policyholder discontinues payments on a policy with a cash value. This may be taken in cash as extended term insurance or as reduced paid-up insurance.
non-forfeiture values
The value of the policy if canceled, either in cash or in another form of insurance. Also available to the policyholder if required premium payments are not paid.
non-medical limit
The maximum face value of a policy that a given company will issue without the applicant taking a medical examination.
nonoccupational policy
Policy that covers only non-job-related accidents or sicknesses not covered under any workers’ compensation law.
non-participating insurance
Insurance on which no dividends are paid.
nonparticipating policy
Policy that does not provide for payment of a dividend.
nonprofit insurers
Corporations organized under special state laws to provide medical benefits on a not-for-profit basis (for example, Blue Cross Blue Shield and Dental Service Corporations).

O

occupational hazards
Factors inherent in the insured person’s occupation that expose him or her to greater-than-normal physical danger.
optional renewable policy
Contract that grants the insurer the right to terminate a policy on any anniversary, or, in some cases, on a premium date.
ordinary life insurance
Life insurance usually issued in amounts of $1,000 or more with premiums payable on an annual, semi-annual, quarterly or monthly basis.
overhead expense insurance
Insurance for Businesses owners to help offset continuing business expenses if the owner is disabled.

P

paid-up insurance
Insurance on which all required premiums have been paid.
partial disability
A disability that prevents a person from performing one or more functions of his or her regular job.
participating insurance
Insurance on which the policyholder is entitled to share in the surplus earnings of the company through policy dividends that reflect the difference between the premium charged and the cost to the company of providing the insurance.
participating policy
Policy under which the policyholder is eligible to receive dividends.
payout period
The period during which you receive the income from your annuity contract.
permanent life insurance
A phrase used to cover any form of life insurance except term; generally insurance that accrues cash value, such as whole life or endowment.
personal injury protection (no-fault)
This coverage provides medical expenses as well as work loss, funeral expenses, essential services expenses and survivor’s loss coverage as outlined in your state’s statutory No-Fault laws.
physician’s expense insurance
Coverage that provides benefits toward the cost of doctor’s fees – for surgical care in the hospital, at home, or in a physician’s office, and for x-rays or laboratory tests performed outside of a hospital. (Also called Regular Medical Expense Insurance).
point of service plan (POS)
Plan that offers a full range of health services through a combination of HMO and PPO features. Members can choose to either use the defined managed care program (with 100 percent coverage) or go out-of-plan for services (with 80 percent coverage).
policy
The printed document issued to the policyholder by the company stating the terms of the insurance contract.
policy loan
Under an insurance policy, the amount that can be borrowed at a specified rate of interest from the issuing company by the policyholder, who uses the value of the policy as collateral for the loan. In the event the policyholder dies with the debt partially or fully unpaid, the insurance company deducts the amount borrowed, plus any accumulated interest, from the amount payable.
policy reserves
The measure of the funds that a life insurance company holds specifically for fulfillment of its policy obligations. Reserves are required by law to be calculated so that, together with future premium payments and anticipated interest earnings, they will enable the company to pay all future claims.
policyholder
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation.
policy term
The period for which an insurance policy provides coverage.
precertification
A utilization management program that requires the insured or the health care provider to notify the insurer prior to a hospitalization or surgical procedure. The notification allows the insurer to authorize payment, as well as to recommend alternate courses of action.
preexisting condition
Any physical and/or mental condition or conditions that exist prior to the effective date of health insurance coverage.
preferred provider organization (PPO)
Plan through which a sponsoring group negotiates price discounts with providers in exchange for patients. The sponsor may be an insurer, employer, or third-party administrator.
premium
The payment, or one of the regular periodic payments, that a policyholder makes to own an insurance policy.
premium loan
A policy loan made for the purpose of paying premiums.
prepaid group practice plan
A plan under which specified health services are rendered by participating physicians to an enrolled group of persons, with a fixed periodic payment made in advance by (or on behalf of) each person or family. If a health insurance carrier is involved, a contract to pay in advance for the full range of health services to which the insured is entitled under the terms of the health insurance contract. An HMO is an example of a prepaid group practice plan.
principal
The amount you pay into your annuity contract as distinguished from the interest that is credited to it.
principal sum
Amount payable in a lump sum in the event of accidental death and, in some cases, accidental dismemberment.
professional standards review organization (PSRO)
Organization responsible for determining whether care and services provided are necessary and meet standards for reimbursement under the Medicare and Medicaid programs.
proration
Modification of policy benefits because of changes in the insured’s occupation or the purchase of other insurance.
prospective payment
Payment of a lump-sum to an institution for care of an insured person based on a predetermined amount correlated with a diagnosis.

Q

qualified annuity
An annuity that is sold as part of a tax-qualified Keogh plan or company pension plan.
qualified impairment insurance
A form of substandard or special class insurance that restricts benefits for an insured person’s particular condition.

R

rated policy
Sometimes called an “extra-risk” policy, an insurance policy issued at a higher-than-standard premium rate to cover the extra risk where, for example, an insured has impaired health or a hazardous occupation.
reasonable and customary charge (R & C)
Amounts charged by health care providers that are consistent with charges from similar providers for identical or similar services in a given locale.
recurring claim provision
A provision in some health insurance policies that specifies a length of time during which the recurrence of a condition is considered to be a continuation of a previous period of disability or hospital confinement.
reduced paid-up insurance
A form of insurance available as a non-forfeiture option. It provides for continuation of the original insurance plan but for a reduced amount.
rehabilitation
Process and goal of restoring disabled persons to maximum physical, mental, and vocational independence and productivity (commensurate with their limitations). Rehabilitation is achieved by identifying and developing residual capabilities, job modification, or retraining. A “rehabilitation provision” appears in some long-term disability policies; this provides for continuation of benefits or other financial assistance during the rehabilitation period.
reinstatement
The restoration of a lapsed policy to full force and effect. The company requires evidence of insurability and payment of past due premiums plus interest.
reinsurance
Acceptance by one insurer (the reinsurer) of all or part of the risk or loss underwritten by another insurer (the ceding insurer).
renewal
Continuance of coverage beyond original terms signified by acceptance of a premium payment for a new term.
renewable term insurance
Term insurance providing the right to renew at the end of the term for another term or terms, without evidence of insurability. The premium rates increase at each renewal as the age of the insured increases.
replacement vs. actual cash value
The actual cash value of an item can be depressingly small after only a brief period of ownership. And, if your homeowner’s coverage entitles you to only the actual cash value of any damaged property, you could be out of luck when you go to replace the property with only your claim check as payment. Replacement-cost coverage permits you to claim the cost of replacing an insured item. Its most important use is on your home and, secondly, the personal property in your home.
reserve
The amount required to be carried as a liability in the financial statement of an insurer to provide for future commitments under policies outstanding.
residual disability benefits
A provision that provides benefits in proportion to a reduction of earnings as a result of disability, as opposed to the inability to work full-time.
rider
An amendment to an insurance policy that modifies the policy by expanding or restricting its benefits or excluding certain conditions from coverage.
risk
The probable amount of loss foreseen by an insurer in issuing a contract. The term sometimes applies to the person insured or to the hazard insured against.
risk classification
The process by which a company decides how its premium rates for life insurance should differ according to the risk characteristics of individuals insured (for example, age, occupation, sex, state of health) and then applies the resulting rules to individual applications. (See underwriting.)

S

second-to-die life insurance
A form of insurance, traditionally used as an estate planning tool, that pays a death benefit only upon the death of the insured who survives the longest. Its main purpose is to pay estate taxes upon the death of the second insured. Because it is based on joint life expectancy, its premium is less than the total premiums for individual policies on the same lives. This type of insurance is available in many forms, including policies with interest-rate features and flexible premiums.
self administration
Maintenance of all records and assumption of responsibility, by a group policyholder, for those covered under its insurance plan. Responsibilities include preparing the premium statement for each payment date and submitting it with a check to the insurer. The insurance company, in most instances, has the contractual prerogative to audit the policyholder’s records.
self insurance
A program financed entirely by the employer for insuring employees instead of purchasing coverage from a commercial carrier.
senior citizens policies
Policies insuring persons 65 years of age or older; in most cases, these policies supplement the coverage provided under Medicare.
separate account
An asset account established by a life insurance company separate from other funds.
settlement options
One of several ways, other than immediate payment in a lump sum, in which the insured or beneficiary may choose to have policy proceeds paid.
short-term disability income insurance
Insurance that provides benefits only for loss from illness or disease and excludes loss from accident or injury.
single-premium whole life insurance
A whole life policy that provides protection for the duration of the insured’s life in exchange for the payment of the total premium in one lump sum at the time of application.
social security freeze
A long-term disability provision that guarantees that Social Security benefits will not be changed regardless of changes in the Social Security law.
special risk insurance
Coverage for risks or hazards of a special or unusual nature.
specified disease insurance
Insurance providing an unallocated benefit, subject to a maximum amount, for expenses in connection with the treatment of specified diseases, such as cancer, poliomyelitis, encephalitis, and spinal meningitis. These policies are designed to supplement major medical policies.
state regulation of insurance
The complexity and cost variations of insurance stems directly from state regulation of the industry. Unlike the securities and banking industries, the insurance industry does not have a strong federal oversight role. Instead, through the 1945 McCarran-Ferguson Act, the domestic industry faces 55 sets of overseers (the 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam and American Samoa). With so many different sites of regulation, and so many sources of local sales outlets for insurance policies, it’s not surprising that insurance policies are hardly the standardized commodities that you find when trading stocks or opening a bank account. This is particularly true in property/casualty coverage and less so in life insurance. Added to the maze of different products is the fact that state-based regulation means that insurers may base their rates in each state on their business profile in that state. Auto rates, for example, reflect accident and theft trends in local territories. The up hot is that there is great pricing variation along with lots of different types of policies. Lastly, insurers have increasing freedom to price their policies for whatever the market will bear. Even if an insurer has to file its rates in your state, you shouldn’t assume that state regulators are poring over the rates to review their fairness.
standard insurance
Insurance written on the basis of regular morbidity underwriting assumptions and issued at normal rates.
standard provisions
Provisions setting forth the rights and obligations of and insurers and insured persons under health insurance policies. Originally introduced in 1912, these provisions were replaced by the Uniform Policy Provisions Law (UPPL).
standard risk
Person who, according to an insurer’s underwriting standards, is entitled to purchase insurance without paying an extra premium or special restrictions.
state (compulsory) disability plan
Plan of short-term income replacement required by some states to cover eligible persons employed within that state.
state insurance department
An administrative agency that implements state insurance laws and supervises (within the scope of these laws) the activities of insurers operating within the state.
stock life insurance company
A life insurance company owned by stockholders who share in the company’s surplus earnings.
stop-loss insurance
Protection purchased by self-funded buyers against the risk of large losses or a severe adverse claim experience.
straight life annuity
An annuity whose periodic payments stop when the annuitant dies.
straight life insurance
Whole life insurance on which premiums are payable for life.
substandard insurance
Insurance issued with an extra premium or special restriction to persons who do not qualify for insurance at standard rates.
substandard risk
Persons who cannot meet the health requirements of a standard health insurance policy.
supplementary contract
An agreement between a life insurance company and a policyholder or beneficiary by which the company retains the cash sum payable under an insurance policy and makes payments in accordance with the settlement option chosen.
surgical expense insurance
Insurance policies that provide benefits toward physicians’ or surgeons’ operating fees. Benefits may consist of scheduled amounts for each procedure.
surgical schedule
List of maximum amounts payable for various types of surgery; amounts are based on the complexity of the operation.
survivorship insurance
Another name for second-to-die insurance.

T

tax treatment of life insurance payments
The death benefits of a life insurance policy are exempt from taxes. Even with recent tax-rate reductions and a phased-in increase in the amount of a person’s estate that is exempt from estate taxes, the tax-free nature of life insurance benefits makes them a powerful financial planning and wealth-preservation tool. Annuity payments are not tax exempt, although these products may include insurance “wrappers” with exempt benefits.
term insurance
A plan of insurance that covers the insured for only a certain period of time (term), not for his or her entire life. The policy pays death benefits only if the insured dies during the term.
term rider
Term insurance that is added to a whole life policy at the time of purchase or that may be added in the future.
third-party administration (TPA)
An outside person or firm (not a party to a contract) that maintains all records of persons covered under an insurance plan. The TPA also may pay claims using the draft book system.
time limit
A specified number of days in which a notice of claim or proof of a loss must be filed.
title insurance
Title insurance protects against the various financial losses associated with having the title on your home challenged, including court costs and loss of the property. For a one-time fee, most title insurers will investigate public records to make sure that your property is free of title defects. This coverage can benefit either the homeowner or the mortgage company, so you should know which kind you’re paying for.
total disability
A disability that prevents a person from performing all occupational duties. The exact definition varies among policies.
travel accident policies
Limited contracts covering accidents that occur only while an insured person is traveling on business for an employer, away from the usual place of business, and on named conveyances.

U

umbrella liability
If your auto and home are insured with the same carrier, you probably can get supplemental liability coverage from your insurer. This is generally a very good and affordable idea, but only if you have underlying wealth that needs to be shielded from lawsuits. By insuring your car and home, it is cost-effective for your insurer to extend bigger-dollar liability coverage to both areas (hence the “umbrella” concept). If, for example, you have 100/300 auto liability ($100,000 liability for each person insured in an accident; $300,000 total liability for the accident) and $100,000 liability on your homeowner’s insurance, you can extend this to $1 million for a few hundred bucks a year.
unallocated benefits
Benefits with a maximum amount but without specific limits on the extent of benefit for each service rendered.
underwriter
(1) A company that receives the premiums and accepts responsibility for the fulfillment of the policy contract

(2) The company employee who decides whether or not the company should assume a particular risk

(3) The agent who sells the policy
underwriting
The underwriting process evaluates the likelihood an insured event will occur, determines its likely cost and develops an appropriate premium for the coverage that is competitive in the marketplace and remunerative to the insurance company writing the policy. For some standardized coverages that are highly competitive, underwriting may be somewhat besides the point — the policy has to be priced according to marketplace pressures if the insurer wishes to remain in that line of coverage. Underwriting still plays a substantial role for many coverages, however, even those in the increasingly competitive businesses of auto, home and term life insurance. Insurance companies don’t all target the same slice of the market in the same states, and thus often have different objectives in their underwriting efforts as well as different cost structures that determine operating profit margins in their underwriting calculations. Underwriting differences account in part for the substantial differences in insurance premiums or comparable coverages.
unearned premium
That portion of a premium already received by the insurer for which protection has not yet been provided.
uninsured/underinsured motorists coverage
In the best of all possible worlds, everyone would have adequate auto liability coverage. But there are people who drive around (often illegally) with no insurance or not enough insurance. If one of these folks happens to cause an accident, you might not be able to collect damages. Uninsured/underinsured motorists coverage — usually called UM/UIM coverage — will pay bodily injury costs caused by an uninsured or underinsured motorist. It’s a required coverage in some states, and a prudent coverage anywhere. Usually, the limits are the same as the bodily injury portion of your auto liability coverage. UM/UIM coverage can supplement the benefits you can receive under a no-fault system.
uninsurables
High-risk persons who do not have health care coverage through private insurance and who fall outside the parameters of risks of standard health underwriting practices.
universal life insurance
Unlike traditional cash-value policies (known as “whole life”), universal life policy returns were freed from long-term, fixed-rate contracts and replaced with policies whose returns were tied to short-term interest rates and periodically adjusted. In addition, premiums and death benefits can be changed by the policyholder.

V

W

waiting period
The time a person must wait from the date of acceptance into an eligible class (or from application) to the date the insurance becomes effective. While similar to elimination periods, waiting periods are often paid retroactively.
waiver (exclusion endorsement)
An agreement, attached to the policy and accepted by the insured, to eliminate a specified preexisting physical condition or specified hazard.
waiver of premium
A provision that sets certain conditions under which an insurance policy will be kept in full force by the company without the payment of premiums. It is used most frequently for those policyholders who become totally and permanently disabled but may be available in certain other cases.
whole life insurance
A plan of insurance for life, with premiums payable for a person’s entire life.
windstorm insurance
Windstorm coverage pays for losses to your property that result from a windstorm. The coverage acts like a flood or earthquake policy in that it pays for damage to the dwelling, and, in some cases, for damage to your personal property and for living expenses if your home becomes uninhabitable. If you live in a coastal area, you’ll probably need to purchase separate windstorm coverage on your house. In areas where coverage is scarce, states sometime offer market assistance programs or joint underwriting associations to help homeowners find a carrier.
workers’ compensation
Liability insurance requiring certain employers to pay benefits and furnish medical care to employees for on-the-job injuries, and to pay benefits to dependents of employees killed by occupational accidents.
written premiums
The entire amount in premiums due in a year for all policies issued by an insurance company.

X

Y

Z

The following links are provided in our effort to offer a few helpful website extras regarding a number of specific needs you may have from time to time.

DISCLAIMER: Statements on this website provide general information only as it relates to policies and coverages. All coverages are subject to the terms, conditions and exclusions of the actual policy issued so contact one of our licensed agents for questions regarding your specific needs and policy.

Mortgage Payment Calculator: Length of loan, interest rate, the amount you borrow plus taxes and insurance. Use our Mortgage Calculator to explore your dreams of owning a new home.

Life Insurance Calculator: How much life insurance might you really need to provide for your family? Quickly explore your figures using our Life Insurance Calculator.

FAQ: Topically organized, our Frequently Asked Questions provide answers to many of the things we’re asked most often.

Insurance Glossary: Increase your policy comprehension with our complete glossary of insurance terminology.

Homebuyers Glossary of Terminology: Buying or selling a home? Protect yourself and your investment by understanding the terms used throughout the Real Estate industry.

Auto Accident Self Help Guide: If you’re ever in an auto accident, you’ll want items in your vehicle to assist you in obtaining certain types of information from other drivers, passengers and witnesses. Print this Self Help Guide and then store it in your glove box. If you’re ever involved in an accident, you’ll be glad you have this.

Parent-Teen “Safe Driving” Contract: Parents want their youthful drivers to act responsibly. Using this Safe Driving Contract prompts you and your teen to discuss personal driver safety and the decisions both of you are willing to make in order to preserve their safety.

Get Your Free Annual Credit Report – The Fair and Accurate Credit Transactions Act means you can review your credit score once a year for free.

Product Recalls: The U.S. Consumer Product Safety Commission is charged with protecting the public from unreasonable risks of serious injury or death from more than 15,000 types of consumer products. You can find information on over 4,000 product recalls using the various searches on this page, including quick links to the most recent list of recalls.

Online Vehicle Value Estimators

How much is your used vehicle worth? The following can give you a good answer to this question.

Assurance One of Texas, LLC

We are pleased to be Licensed In the Following State: Texas

Insurance coverage cannot be bound or changed via submission of any online form/application provided on this site. No binder, insurance policy, change, addition, and/or deletion to insurance coverage goes into effect unless and until confirmed directly by a licensed agent..

Since our beginnings in 1993, Assurance One of Texas, LLC has become a leader in providing quality protection for thousands of individuals & families throughout our region. Our basic belief in providing only the best in coverage and personal service is just one of the many reasons why today, more than ever, people are moving up to the difference of quality insurance protection Assurance One of Texas, LLC can uniquely provide.

We’re A Full-Coverage Agency
There’s no need to deal with one agent for business and professional coverages, another for auto and homeowners and yet another for life insurance and estate planning. Assurance One of Texas makes it easy for you to obtain all your coverages through one convenient source.

Personal Auto & Homeowner Insurance
All auto and homeowner policies are not the same. For example, some insurance companies offer a better deal on certain types of cars than others; some are a better choice for condo or renter’s insurance but not for single family homes. Some offer more convenience, such as easy monthly payments.

We can explain the many options and their advantages and disadvantages – in plain language, so you know exactly what you’re buying.

Business Insurance
Whether you need a comprehensive business protection plan or only one or two specific coverages, we have the expertise and experience to help make sure that doing business isn’t hazardous to your financial health.

Life Insurance & Financial Planning
There’s more to being financially prepared these days than just buying ordinary life insurance. For example, ask us about plans, combining the best features of life insurance and investment, that also pay off if you live long and prosper.

Other Types of Insurance
We can provide personal liability umbrella, dwelling fire, boat, recreational vehicle, scheduled property, annuity, retirement or almost any other kind of insurance or financial plan. Whatever you need, check with us first.

A Company, Coverage & Price For Every Insurance Need
Assurance One of Texas is proud to represent a diversified group of insurance companies. The companies we represent are leaders in the American Insurance Industry. Each is rated by A.M. Best Company, The leading U.S. Insurance rating authority.

We invite you to Contact Us concerning your specific insurance needs.

First Name
Email Address
Message Title
Star Rating
Message Content

Full Name	Date Of Birth	Driver Lic#	Social Sec #

Full Name	Date Of Birth	Driver Lic#	Relationship To Primary

Full Name	Date Of Birth	Driver Lic#	Social Sec #

Full Name	Date Of Birth	Driver Lic#	Relationship To Primary

America First Insurance
	Company:	Website
	Bill Pay:	Payments
	Online Claims:	Claims
	Claims/Service:	877-263-7890

Chubb
	Company:	Website
	Bill Pay:	Payments
	Online Claims:	Claims
	Claims/Service:	800-252-4670

CNA Surety
	Company:	Website
	Bill Pay:	Payments
	Online Claims:	Claims
	Claims/Service:	877-672-6115

Encompass
	Company:	Website
	Bill Pay:	Payments
	Online Claims:	Claims
	Claims/Service:	800-588-7400

START A CONVERSATION

Get Started

Client Tools

Lastest News

Identifying and Avoiding Phone Scams

Privacy Policy Statement

Mini-Storage Insurance Packages

MiniPak Gold Policy Highlights

NEW SITE QUICK CONFIG

COMMERCIAL INSURANCE

Insurance That's Friendly, Fast & Easy

What do I give up by not using a licensed independent agent to purchase insurance?

Is Gap Insurance for Everyone?

We’re Here to Help

What is Cyber Liability Insurance?

Cyber Liability Insurance Coverage

Why Your Business Needs a Cyber Security Policy

Collison Insurance – Know the Value of Your Car

Summer Water Safety Refresher

Recent Reviews:

Highly Recommend

★★★★★

Easy

★★★★★

Dedicated To Us

★★★★★

Nothing But Satisfied

★★★★★

Great Service

★★★★★

A Pleasure

★★★★★

Excellent

★★★★★

Happy, Happy

★★★★★

Impeccable All Around

★★★★★

RATE US WITH YOUR REVIEW, COMMENT, OR TESTIMONIAL

Current Rating – All Reviews:

reviews Our Clients Give Us: ★★★★★ 5 [Based on 9 Reviews] 5 1 .stars, .rr_star { color: #ffaf00; }

Recent Reviews:

Highly Recommend

★★★★★

Easy

★★★★★

Dedicated To Us

★★★★★

Nothing But Satisfied

★★★★★

Great Service

★★★★★

A Pleasure

★★★★★

Excellent

★★★★★

Happy, Happy

★★★★★

Impeccable All Around

★★★★★

HOMEOWNERS INSURANCE

Insurance That's Friendly, Fast & Easy

AUTO INSURANCE

Insurance That's Friendly, Fast & Easy

AUTO INSURANCE

Insurance That's Friendly, Fast & Easy

Business Management Liability

Directors and Officers

Fiduciary Liability

Professional Liability

Cyber Liability

Employment Practices Liability

Auto Insurance for Business

Why Is General Liability Insurance Important To Your Business?

What does general liability insurance cover?

Why should my business get general liability insurance?

How do I get a general liability policy if my business needs one?

Workers Comp Insurance

INSURANCE 101

Protect Your College Grad With the Right Insurance

reviews Our Clients Give Us: ★★★★★ 5
[Based on 9 Reviews]
5 1