EXPLANATIONS AND RECOMMENDATIONSby STUART F. CUBBON
AUTO INSURANCEBodily Injury Liability (BI) coverage pays for personal injuries to others if you cause an accident and injure them. A minimum of 100K/300K is necessary, combined with umbrella coverage described below. (100KI300K means your insurance company could pay up to 100K per person and up to a total of 300K to everyone involved.) If you cause an accident and damages to the other party are greater than your limits, they can and will take a judgment against you, possibly forcing you into bankruptcy. Adequate BI limits will prevent this. Property Damage Liability (PD) coverage pays for property damage to others if you cause an accident. A minimum of 100K is necessary. It's hard to believe, but there are many 50-100K cars out there today and one accident could total out more than one!Medical Payments coverage pays for accident related medical bills, including physical therapy, prescriptions, equipment rentals, etc. for you and anyone in your car, regardless of who is at fault in an accident. A minimum of 50K is reasonable. Although you probably have health insurance, this will pay for things that are not otherwise covered such as co-pays, deductibles, prescriptions, dental and chiropractic care. It can bring in immediate cash reimbursement during a difficult time.Collision and Comprehensive (often called Deductible) coverage pays for damage to your car, regardless of cause, including accidents you might cause or "acts of God" such as tree limbs falling or rivers flooding. Limits simply need to be sufficient to cover replacement of your car if totaled. You will commonly elect a deductible which you will have to pay before your insurance kicks in, and it can range from zero to $1000. Higher deductibles will lead to lower premiums.Uninsured/Underinsured (UI/UIM) coverage pays for personal injuries to you and your passengers if injured in an accident caused by another driver who has too little or no BI liability coverage. A minimum of 100K is necessary, combined with umbrella coverage described below. While not presently legally required, UI/UIM coverage is absolutely necessary. For example, if an uninsured driver causes an accident that puts you in the hospital for a week, off work for a month and permanently scarred, you may not be able to collect a penny unless you have UI/UIM. If instead a driver with only state minimum limits of 12.5K causes these injuries, your recovery will be limited to that paltry sum if you have no UM/UIM coverage.Gap Insurance will pay off a loan or lease in the event that your car is totaled and you owe more on it than it is worth. If you have a loan or lease, you need this.Other coverages, such as rental reimbursement, towing or trip interruption coverages are valuable, desirable, and generally very inexpensive, but you won't go bankrupt if you don't have them. Your agent may be able to include these without even increasing your rates so ask for them.
HOMEOWNERS INSURANCEHomeowners coverage protects from fire, theft, and other damages or losses to your home and personal property. Your limits should be adequate to completely replace your home and its contents in the event of a total loss due to a fire, tornado or other catastrophe. It should be adequate to replace all your possessions, and valuable jewelry should be scheduled with an appraisal to ensure that it is completely covered. Homeowners Coverage will also include some medical payments coverage for visitors if they fall or are somehow injured on your premises. Flood coverage may or may not be included so discuss this with your agent if flooding is a possibility.
UMBRELLA INSURANCE COVERAGEDo Not Leave Home Without This--In Fact Don 't Even Stay Home Without This!!!!Umbrella or Optional Excess Protection coverage will increase the limits all of your basic coverages discussed above. It is the mainstay of protecting yourself, your loved ones and others. Umbrella Coverage increases your BI and UM/UIM coverage limits. If you have 100K underlying limits and a one million dollar umbrella, you will have effective limits of one million one hundred thousand dollars coverage. If, for example, you caused an accident and the injured person obtained a 750K judgment against you, your BI coverage would pay out your 100K limits and then your Umbrella Coverage would pay the remaining 650K judgment. If someone injured you to this extent, you could recover on top of their BI coverage through your Umbrella up to the full amount of your damages.Limits should be a minimum of one million dollars but I would recommend two to five million dollar Umbrella limits. Fortunately, it is much less expensive than your other coverages, so it doesn't significantly increase your rates. In a catastrophe, this coverage allows people to continue to live, so this is the most important coverage you can buy!Agent's Recommendation on Umbrella Coverage is important, but if your insurance agent has not already insisted that you have umbrella coverage, you should find a new agent because he or she has let you drive and live without adequate protection! Review these recommendations with your agent as a road map for the coverages you need and make sure you have them.
OTHER CONSIDERATIONSBundle Your Insurance to receive discounts and reduce premiums. With rare exception, you will get the best overall coverage and best overall price by purchasing Auto, Homeowners and Umbrella Insurance coverages from the same company and same agent.Cost does add up, but remember that the basic protections are the expensive ones and once you have them, adding adequate protection through adequate limits is not expensive.State Minimum Insurance Limits are the minimum limits you need to avoid being illegally on the road. They are not adequate for anyone and usually cost more than adequate limits.Multiple Quotes from various insurance companies allow you to make an informed decision and make sure you see the full picture. Do not assume that a five million dollar umbrella is out of your reach it is not! Make sure your agent is giving you comparative quotes from various companies for various limits.Annual Review between your agent and you is necessary-speeding tickets, claims, claim-free years, teen agers getting a license or growing up, and replacement cars can all alter your needs and perhaps price, so shop around with good quality companies.Advertising should not affect your insurance purchases. Good ads are, well, good ads. They are not a refection of good insurance companies. Some of the best or most entertaining ads come from companies that have horrible claims practices! Feel free to call with questions on particular companies and our experience with their claims offices. Saving a few premium dollars and ending up with a claims nightmare is just not worth the grief.Online Purchasing leaves you vulnerable at best. What you get may not be what you expect, and you really don't know if it's going to be adequate until you have a need to use it. You need to have an agent that is looking out for your interests and not someone two continents away when you are dealing with a claim!Driver's License Expiration May Void Your Coverage so renew before your birthday. Many of us know that the BMV has a 90 day grace period after our license expires before we have to retake our driver's examination. Many insurance companies today are including provisions that require the insured to have a "valid" license and they do not extend coverage where a license is expired, even within the grace period. So go renew your license before it expires. And if it does expire, don't drive until it is renewed because you may not be insured!