Insurance Frequently Asked Questions

What is Auto Loan/Lease Coverage?

This optional coverage is available in most states, from a variety of insurance companies. The form provides coverage for the following:
Leased vehicles - Reimburses you for the difference between the amount due under the terms of the lease and the actual cash value of the auto in the event of the auto's total loss.
 Owned vehicles - Pays any outstanding indebtedness incurred by you for that financed new vehicle in the event that there is total loss or damage to the vehicle and the amount due under the finance agreement is greater than the actual cash value of the automobile.
Partial Losses - On partial losses, the company will normally pay to have the damages repaired or parts replaced, and the lease or loan gap coverage option is not a factor in the loss settlement.

 What Is Loss Prevention?

The process of identifying and acting upon situations that may lead to losses is called "loss prevention." Loss Prevention may involve both simple and complex ways to reduce the likelihood of facing a loss. Besides insurance, you can choose to use protective devices, oral or written contracts to shift the responsibility for a loss to someone else, avoid ownership of items that may cause a loss (such as large pets), avoid dangerous hobbies and activities, or change your environment. Let's look at some areas where you might exercise loss control.

 What is an SR-22 Financial Responsibility filing?

An SR-22 filing is a car insurance form, required by many state Departments of Motor Vehicles (DMV) in certain situations, that provides proof of state-mandated liability insurance.

  Is flooding covered under my homeowners policy?

Despite what you may think, your homeowners insurance policy doesn't cover damage from flooding. You can not simply buy flood insurance as an endorsement to your current policy. Instead, if you are eligible, you must purchase a separate flood insurance policy through an insurance company that participates in the National Flood Insurance Program.

  Will my auto insurance cover me when I rent a car?

That depends on the car you're renting, the type of policy you have, and on your insurance company. Under what is called a "family policy," your liability coverage (bodily injury and property damage) and, if you have it, your physical damage coverage (comprehensive and collision) will cover any damages to a rental car, even if you rent it for pleasure or vacation. Under a "personal policy," only your liability coverage will extend to a rental car, and then only if the rental car is needed to temporarily replace your car because of a breakdown, repair, servicing, loss or destruction. You should read your policy or check with your agent to confirm whether or not your insurance protects you when you're driving a rental car.

 Why should I buy renter's insurance?

It is inexpensive and covers personal property in your apartment. It also provides limited off premises coverage, motel costs in the event that you had to evacuate the building overnight, and court expenses if you were found liable for an accident in the apartment that resulted in someone else's injuries.



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Commonly Used Insurance Terms

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The basis of loss settlement in property insurance policies, which takes into consideration factors such as replacement value less depreciation, market value, rental value, the use of the building, the area in which it is located, obsolescence, assessed valuation, and any other factor that would have an effect upon the value. A working rule-of-thumb definition, however, is "replacement cost new at the time of loss, less depreciation. In a policy providing such an aggregate limit, the maximum amount the insurer will pay during the policy period, irrespective of the policy's limit of liability. An agreement made between the insurers and insured at policy inception confirming that both parties concur that the limit of insurance set forth in the schedule of property is that item's value, and that agreed upon value is the amount that will be paid by the insurer in the event of a total loss. Injury, sickness or disease sustained by a person, including death at any time resulting there from. Coverage for the loss resulting from the striking of another object by a moving vehicle. Comprehensive coverage refers to the part of an automobile insurance policy that covers damage to a vehicle caused by miscellaneous hazards other than collision, such as fire, theft, explosion, windstorm, hail, water or contact with an animal. In a policy providing a deductible clause, the amount which must first be subtracted from the total damage incurred before determining the insurance company's liability. A form of health insurance coverage which provides benefits in the form of income (usually weekly or monthly) to employees disabled by sickness or accident not related to employment. Coverage against the common law liability of an employer for injuries sustained by employees, as distinguished from liability imposed by a workers compensation law. Protection against loss from disruption of boilers and machinery by an insured peril: loss to the boiler and machinery itself, damage to other property, business interruption losses, or all three. It also can include refrigeration equipment, air conditioning equipment, various types of piping, turbines, engines, pumps, compressors, blowers, gearing, shafting, electric motors, generators, transformers and assorted other types of mechanical and electrical equipment. For auto insurance, refers to coverage against loss caused by the amount an insurer may pay for a vehicle that is lost/destroyed and the outstanding balance that is due under a loan or lease arrangement. Protection which pays sums that an insured is legally obligated to pay, or that the insurer has agreed to pay, as damages to others as a result of the insured's negligence. Usually provides coverage for bodily injury or damage to property of others. Sold either on a group or individual basis. Pays for nursing home or home health care costs including room, board and medical expenses. An optional type of private health insurance policy designed to supplement or pick up the costs of medical services not covered by Medicare. A type of gap coverage. A form of "third-party" protection covering the insured's legal liability for damage to property of others caused by the insured's negligence. When used in property insurance contracts, this is the amount it would take to replace the property with like property of the same quality and construction. No deduction is made for depreciation or obsolescence. A type of life insurance policy that is not whole life or written to cover the whole remainder of the insured's lifetime, but instead is written to cover only a period of time. Often that period of time is a set number of years, such as 1 year, 10 years or 20 years. At other times, the policy is written for a term that expires at a specified age. A form of liability insurance protecting policyholders for claims in excess of the limits of their primary automobile, general liability and workers compensation policies, and for some (few) claims excluded by their primary policies which are subject to a deductible, which may range from $250 for a personal umbrella to a minimum of $10,000 for a commercial umbrella. Coverage an insured may purchase to protect his or her own self from damage or injury caused by a negligent party who does not have adequate limits of insurance to cover the loss. Under an auto policy, protection for the insured against bodily injury or property damage (in some states) caused by the negligence of an uninsured or underinsured motorist. A common type of life insurance coverage providing a face value death benefit for the entire or whole life of the insured, unless the insured should cancel or not pay premiums. Protection which provides benefits to employees for any injury or contracted disease arising out of and in the course of employment. All states have laws which require such protection for workers and prescribe the length and amount of such benefits provided.