What is auto insurance, and why do I need it?

    An auto insurance policy is a contract between you and an insurance company. You pay a premium, and in exchange, the insurance company promises to pay for specific car-related financial losses during the term of the policy.

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    In some states, to drive (get license plates) you must carry:

    Liability coverage to pay for losses you cause others, or No-fault coverage to pay you and your passengers for medical and related expenses caused by injuries from a car accident, regardless of fault, or both coverages.

    Even in states where coverage isn't required, drivers must, by law, be able to pay for losses they may cause others. Having insurance is the simplest way for most people to comply. Coverage for vehicle damage usually is necessary to finance a car.

    Without insurance, you risk paying for the full cost of:

    Any harm you cause others, or repairing or replacing your car if it's damaged or stolen.


    What are my options, especially with coverages and deductibles?

    The deductible is the portion of a covered loss that is your responsibility. The deductible, when applicable, applies to each covered loss. Although deductibles vary by state, they are typically available in amounts such as $100, $250, $500, or $1000.

    For example, if you had a $500 deductible, you would need to pay $500 of the covered loss.

    Generally speaking, higher deductibles lower your premium, but increase the amount you must pay out of your own pocket if a loss occurs. Ask yourself how much you are willing to pay in order to save on premium.

    Coverages are broken down, according to purpose, but are generally combined into one policy. Coverage descriptions are general information and not statements of contract because policy provisions, endorsements, limits and requirements vary by state. The most common coverage's are:



    When an insured is legally responsible, liability coverage pays for accidental bodily injury and property damages to others. Bodily injury damages include medical expenses, pain and suffering, lost wages, and other special damages. Property damage includes damaged property and may include loss of use. Liability coverage also pays defense and court costs. State laws usually determine the minimum amounts, but higher amounts are available.


    Medical Payments

    Available in most states. Pays medical and funeral expenses for covered persons, regardless of fault, when those expenses are related to an auto accident.



    Pays for damage to a covered vehicle caused by collision with another object or by upset of the car. A deductible is required.



    Pays for loss of or damage to a covered vehicle, except loss caused by collision or upset. Examples include loss caused by fire, wind, hail, flood, vandalism, theft or impact with an animal. A deductible may apply.


    Uninsured Motorist

    Pays damages when a covered person is injured in an auto accident caused by a driver who does not have liability insurance. In some states this coverage may also pay for property damage.


    Underinsured Motorist

    Pays damages when a covered person is injured in an auto accident caused by another driver who has insufficient liability insurance. Application of this coverage varies by state and depends upon policy provisions.


    Rental Reimbursement

    Pays expenses incurred for renting a car when your auto is disabled due to an auto accident. Daily allowances or limits vary by state or policy provisions.


    Emergency Road Service

    Pays expenses incurred for having your auto towed as a result of a breakdown. Towing limits vary by state or policy provisions. This information is only a general description of the available coverage's and is not a statement of contract./p>


    Who is covered under an auto policy?

    Your policy usually covers you, your spouse, and other relatives who live primarily in your household and others who have permission to drive one of your covered vehicles.

    What is Uninsured Motorist Coverage?

    Even though liability coverage is advisable and often required, there are many people who do not buy insurance. If an uninsured motorist causes an accident you may not be able to recover any damages that you sustain. If you purchase Uninsured Motorist Coverage, your auto insurance company will pay you for the property damage and bodily injury caused by an uninsured motorist. It will cover you, any family member, and anyone occupying a covered automobile. The limits for this coverage are usually the same limits that you selected for liability, although you can choose lower limits. There are also times when a person who causes an accident has liability insurance but your damages exceed the limits of that person's coverage. In some states Underinsured Motorist Coverage is included in your Uninsured Motorist Coverage. In other states, you can purchase underinsured motorist insurance, which covers your excess losses up to the limit set forth in the policy.

    What is Uninsured/Underinsured Motorists insurance?

    If you or your passengers are injured in an accident in which another driver is at fault, and that driver does not carry liability insurance (or does not carry enough insurance to cover your damages), this insurance covers your expenses up to the policy limits. The coverage provisions vary by state and the coverage is optional in some states.

    What does "no-fault" automobile insurance mean?

    No fault insurance permits automobile accident victims to be directly reimbursed for medical and hospital expenses and loss of income by their own insurance company, no matter who was at fault. No-fault insurance is available in certain states, as provided by law.


    Mexico Vehicle Insurance

    Whether you're going on a day trip to Baja California, soaking up culture in Mazatlan , or sun in Cancun, if you plan to drive in Mexico you'll need to buy additional auto insurance coverage.

    Mexican authorities do not recognize American property damage and bodily injury liability coverage's. Most collision and comprehensive coverage's issued by American auto insurance companies are considered invalid as well. Thus, the Mexican government requires Mexican auto insurance for all vehicles driven into Mexico and for all vehicles rented in Mexico.


    Choose the coverage you need, for as long as you need it:


    Daily Policies:

    For the exact length of your trip

    6 or 12 Month Policies:

    For longer stays or when you are frequently in and out of Mexico at unpredictable intervals


    What is Homeowner Insurance?

    Home insurance usually boils down to two crucial concerns - protection and price. Although regulated at the state level, home insurance is more of a national product than is auto insurance, meaning you will find fewer local variations.

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    Why should I buy homeowner's insurance?

    A home can require a tremendous investment of money, time, and energy. Homeowners insurance is designed to protect that investment by insuring the actual structure or structures and the personal possessions in and around them, as well as providing liability protection for the residents. Through homeowner's insurance, you can protect yourself and your family from enormous loss in the event of damage or destruction to your home and property. Most likely, if you have a mortgage on your home, you are required to carry homeowner's insurance.

    What is a deductible?

    Deductibles place responsibility for the initial cost of certain claims -- and some of the risk -- back on the insured. Basically, a deductible is the amount you must to pay out of pocket before the insurance company will step in and pay for the loss of your property. Your deductible has a direct effect on the amount of your premiums. The higher the deductible -- that is, the more you have to pay out of pocket -- the lower your premiums will be.

    What does the proper Homeowner insurance coverage consists of?

    The proper home insurance coverage consists of buying the right type of policy, having the proper levels of protection within that policy - including special provisions for jewelry, your computer stuff, and other particularly valuable possessions - and supplementing this coverage with special protection against natural disasters that are not covered in your basic policy.

    Homeowners with mortgages are required by their lenders to have home insurance. Many people may think that the policy terms required by their lenders represent "OK" levels of insurance, but this may not be true. Lenders want to make sure their exposure is covered, but that can happen without you being fully protected. Thus, it's important that you calculate your needs as well and make sure they are reflected in your coverage.


    Seven Basic Policies

    There are seven basic kinds of home insurance policies and they're pretty much the same regardless of where you live. They tend to be defined by the perils they cover:

    Basic homeowner

    Covers your dwelling and personal property against losses from 11 types of perils: fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism or malicious mischief; theft; damage by glass or safety glazing material that is part of a building; and, volcanic eruption.

    Basic homeowner plus

    Covers dwelling and personal property against 11 perils plus six more: falling objects; weight of ice, snow or sleet; three categories of water-related damage from home utilities or appliances; and electrical surge damage.

    Extended or special homeowner

    Covers 17 stated perils plus any other peril not specified in your policy, except for flood, earthquake, war, and nuclear accident.


    Renter's coverage

    Covers only personal property from 17 listed perils.

    All risk coverage for building and personal property

    This policy form isn't sold very often anymore.

    Condominium Owner coverage

    Covers personal property from 17 listed perils along with certain building items in which the unit owner might have an insurance interest.

    Basic older-home coverage

    Covers dwelling and personal property from 11 perils. Differs from HO-1 in that it covers repairs or actual cash values - not rebuilding costs. This is for homes where some historic or architectural aspects make the home's replacement cost significantly higher than its market value. There are variations on these policies as well. For example, landlords can buy coverage that insures only their dwelling and not its personal property (which is what a tenant's renter's policy would cover). And you can get special policies to cover mobile homes (a.k.a. manufactured housing). Most homes are covered by HO-2 and HO-3 type policies.


    Coverage Levels

    There are many special coverage provisions offered by insurers, but here are some basic questions that you should answer as part of the home insurance process:

    In the event of a serious loss - let's say it's a fire that destroys the house - how would I fare?

    In most cases, you want to insure your dwelling and its contents for their replacement values, which will likely differ from the dwelling's market value and your personal property's depreciated cash value. You also should probably get a policy with automatic inflation adjustments so that the replacement cost keeps pace with the general level of price increases. (Homes insured under HO-8 policies are only covered for repair costs or actual cash values, since replacing them would be so costly. Owners of such homes could always get replacement insurance under another type of policy, but they'd probably pay astronomical annual premiums.)

    Standard coverage normally insures your possessions at 50 percent of the value of your dwelling. Many people boost this coverage to 70 or 75 percent with additional protection. But there are still individual limits on certain types of personal property (see below).

    Free-standing structures on your property (garages, gazebos, tool sheds) are also covered, with standard protection equal to 10 percent of your dwelling. Trees and shrubbery normally can be replaced up to a limit of 5 percent of your dwelling coverage. As is the case with your personal property, you should assess your needs to determine if you want to pay extra amounts to increase these levels of protection.

    Also, pay attention to what might happen if you were to lose the use of your home for an extended period. Loss-of-use provisions are important elements of homeowners' policies, and coverage levels equal to 30 percent or more of your dwelling's insurance isn't unusual.


    What kinds of damage does a basic homeowner's policy cover?

    Most basic policies protect against damage from:

    Fire and lightning

    Windstorm and hail


    Riot and civil commotion




    Vandalism and malicious mischief


    Damage by glass or glazing material that is part of a building

    Volcanic eruption

    You can also step up coverage to include:

    Falling objects

    Weight of ice, snow, and sleet

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

    Electrical Surge Damage Protection is subject to policy limits and deductibles can vary.


    What damage to my house would not be covered by my homeowner's policy?

    It depends on the type of policy you own. But in general, unless you buy additional coverage, you won't be compensated for losses due to floods, earthquakes, nuclear accidents, wars, intentional damage, and normal wear and tear. Other exclusions may also apply.


    In today's society, it is absolutely mandatory to carry some form of it, regardless of size or location. Whether you have a business in the home, own a business, own rental property, or you are a self-employed contractor, you may need a special type of insurance coverage to meet your needs. The range of business insurance coverage is huge, with issues from lawsuits to disgruntled employees. Everyday practices can backfire with enough force to cause a disabling blow to the company.

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    What is Commercial Auto insurance?

    INo matter what mode of transportation your organization requires -- whether it's a large fleet of delivery trucks or a few executive limousines -- its critical to have adequate business auto insurance coverage. After all, the more vehicles you have on the road, the more lives you are responsible for. That translates into a greater risk for your business and your assets.

    What is BOP (Business Owners Policy)?

    Many insurance companies have bundled property and liability coverage into what's commonly called a business owners policy (BOP). It allows you to obtain broad coverage with affordable premiums. Even if you have a BOP, you'll want to consider adding coverages that might not otherwise be included. Property insurance can be tailored to fit your needs since no two businesses are the same.

    What is Business Property Insurance?

    Liability insurance will protect your business assets in the event you are sued. These days, with lawsuits clogging the courts, you'll want to maintain a proper amount of liability insurance to protect the business you've worked so hard to build. Your company can be sued for something it did - or even didn't do - that resulted in injury or property damage to someone else.
    Liability insurance will not only pay the cost of the damages but also the legal fees and other costs associated with your defense in a lawsuit. The expenses of defending yourself against such claims in court can be substantial, regardless of whether or not the lawsuit has merit. However, liability insurance will not protect you against claims arising from nonperformance of a contract, wrongful termination of employees, sexual harassment, or race and gender lawsuits.

    There are some guidelines to consider, but no standard formula. Determining the amount of liability insurance to buy is an important task, since the sky's the limit on lawsuits. You could use a recent liability settlement in an industry related to yours as a guide, or you could base the amount on your business' total assets. Either way, discuss it with your agent and check for recommendations from your trade association. Some occupational licenses might require a set amount of liability insurance. If you rent your business property, check your lease, as it could require a set amount of liability. Then buy what you can reasonably afford, because the cost of the insurance will be far less than the cost of a lawsuit.

    What is Errors and Omissions?

    Particularly critical for businesses that provide professional services, Errors & Omissions insurance protects you against liability for committing an error or omission in performance of professional duties. Generally, these policies are designed to cover financial losses rather than liability for bodily injury or property damage.

    What is General Liability Insurance?

    Liability exposures exist all over your company, at every location. General liability programs protect business owners and operators from liability exposures arising out of accidents on premise, business operations and contractual liability, and provide both defense costs and settlements.

    What is Workers' Compensation?

    Someone who provides any type of service for your business who are ill, injured, or die in the course of providing those services may attempt to claim an employment relationship with you, for the purpose of collecting workers' compensation benefits. It may not end there-often times, the worse off the situation, the more likely someone related to the victim will back them in their claim. If you maintain Workers' Comp-Employer's Liability insurance, your policy will usually cover you when anyone claims an employment related injury.

    What is a deductible?

    The deductible is the monetary portion of a claim which the policyholder is responsible for paying.

    What is a certificate of insurance?

    A certificate of insurance is a widely accepted form that provides evidence of insurance coverage to other people.

    What is an exclusion?

    An exclusion is a clause in the insurance policy that describes what is not covered. It is very important to always review the exclusions of a policy due to the coverage limitations.

    What does "Limits of Liability" or "Limits of coverage" mean?

    This is the amount of money that the insurance company will pay for claims. Insurance policies have different types of limits; some limits are for each event, some are for each claim, and some are the total aggregate of all claims during the policy period.

    Is a deductible paid only once?

    No, each claim usually has a separate deductible.

    Can I combine other entities on my policy as part of my named insured?

    Only entities that have more than 50% of the ownership in common may be combined on one policy.

    Property, General Liability & Umbrella What is an Occurrence Policy?

    A covered claim must occur during the policy period but it does not matter when the claim is reported or made.

    What does Bodily Injury mean in General Liability coverage?

    Bodily injury means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.

    What does Advertising Injury mean in General Liability coverage?

    Advertising injury means injury arising out of an offense committed during the policy period occurring in the course of the named insured's advertising activities if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright title or slogan.

    What does Personal Injury mean in General Liability coverage?

    Personal Injury means false arrest, wrongful detention or false imprisonment, or malicious prosecution; the publication or utterance of a libel or slander or of any defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy; wrongful entry or eviction, or other invasion of the right of private occupancy; which occurs during the period.

    What does Property Damage mean in General Liability coverage?

    Physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.

    What is professional liability insurance?

    In general, professional liability insurance protects against claims for damages the policyholder becomes legally obligated to pay to a client as a result of an error or omission in the work provided to the client.

    Why should I purchase professional liability coverage?

    Professional liability coverage provides protection against claims resulting from your professional services. Most general liability policies will exclude this coverage.

    Workers' Compensation Who/What are combinable on one policy?

    We can only combine insureds on one policy if the ownership of 51% or more of the business matches with the majority ownership of each other business asking to be named.

    Small Business Professional Liability What is professional liability insurance?

    In general, professional liability insurance protects against claims for damages the policyholder becomes legally obligated to pay to a client as a result of an error or omission in the work provided to the client.

    Why should I purchase professional liability coverage?

    Professional liability coverage provides protection against claims resulting from your professional services. Most general liability policies will exclude this coverage.