Umbrella Policy
Coverage for losses above the limit of an underlying
policy or policies such as homeowners and auto
insurance. While it applies to losses over the
dollar amount in the underlying policies, terms
of coverage are sometimes broader than those of
underlying policies.
Underwriting
Examining, accepting, or rejecting insurance risks
and classifying the ones that are accepted, in
order to charge appropriate premiums for them.
Unearned Premium
The portion of a premium already received by the
insurer under which protection has not yet been
provided. The entire premium is not earned until
the policy period expires, even though premiums
are typically paid in advance.
Auto Insurance
Terms
State law requires auto insurance, but the stipulated
coverage is often a "minimum" level. Below are
listed the most common terms as applied to vehicle
insurance policies for both basic coverage as
well as extended coverage.
General liability
Covers damage you cause to other people's property
and injuries to the people themselves.
Collision coverage
Covers damage to your own vehicle in an accident.
Comprehensive (i.e. other-than-collision
damage)
Covers fire damage to your vehicle, theft, break-ins,
vandalism, as well as natural disasters (earthquake,
hail, hurricane, flood, etc…unless the vehicle
is overturned, then it is considered a collision)..
Medical payments insurance/Bodily injury
Usually in the range of $5,000 to $10,000, covers
medical expenses for injuries. This "good-faith"
coverage guarantees immediate medical payments
for you, your passengers and other parties, regardless
of who is at fault. It also covers you and members
of your household in any accident involving an
automobile, whether you are on foot, on a bicycle,
in a friend's car.
Personal Injury Protection (PIP) Coverage Limits: $5K, 10K,
35K
For the treatment of injuries to the driver and
passengers of the policyholder's car. Similar to
Medical Payments Coverage, but also includes higher limits to
$35k, extra money for lost wages, losss of use and funeral
expenses.
Property damage liability
For damage the policyholder causes to someone
else's property.
Uninsured motorist (UM) and underinsured
motorist (UIM) coverage
Protects you if you are injured in an accident
with others who themselves carry insufficient
or no liability insurance.
Total Loss
The condition of an automobile or other property
when damage is so extensive that repair costs
would exceed the value of the vehicle or property.
Salvage
Damaged property an insurer takes over to reduce
its loss after paying a claim. Insurers receive
salvage rights over property on which they have
paid claims, such as badly-damaged cars.
Gap Insurance or Residual Debt coverage
An automobile insurance option that covers the
difference between a car's actual cash value when
it is stolen or wrecked and the amount the consumer
owes the leasing or finance company. This is mainly
used for leased or new cars.
Extra coverages
Include expenses for towing, labor, temporary
replacement vehicles, etc. These are generally
defined as add-ons or "endorsements" to your policy.
Homeowners
Insurance Terms
The typical homeowner's insurance policy covers
the house, the garage and other structures on
the property, as well as personal possessions
inside the house such as furniture, appliances
and clothing, against a wide variety of perils
including windstorms, fire and theft. The extent
of the perils covered depends on the type of policy.
An all-risk policy offers the broadest coverage.
This covers all perils except those specifically
excluded in the policy.
Homeowners insurance also covers additional
living expenses. Known as Loss of Use, this provision
in the policy reimburses the policyholder for
the extra cost of living elsewhere while the house
is being restored after a disaster. The liability
portion of the policy covers the homeowner for
accidental injuries caused to third parties and/or
their property, such as a guest slipping and falling
down improperly maintained stairs. Coverage for
flood and earthquake damage is excluded and must
be purchased separately.
Water Damage Insurance Coverage
Protection is provided in most homeowners insurance
policies against sudden and accidental water damage,
from burst pipes for example. This coverage does
not cover damage from problems resulting from
a lack of proper maintenance such as dripping
air conditioners or a leaking roof. Water damage
from floods is covered under separate flood insurance
policies issued by the federal government.
Note: Leaking pipes and other water damage issues can be covered by a Farmers Home Warranty Plan. Call or email us for details
Title Insurance
This insurance indemnifies the owner of real estate
in the event that his or her clear ownership of
property is challenged by the discovery of faults
in the title.
Additional Living Expenses
This is for extra charges covered by homeowner's
policies over and above the policyholder's customary
living expenses. They kick in when the insured
requires additional monies to live elsewhere (temporary
shelter such as apartment or rented home) due to damage caused by a covered peril
that makes the home temporarily uninhabitable.
Earthquake Coverage
Covers a building and its contents, but includes
a large percentage deductible on each. A special
policy or endorsement exists because standard
homeowners or most business policies do not cover
earthquakes.
Fire Insurance
Coverage protecting property against losses caused
by a fire or lightning that is usually included
in homeowners or commercial multiple peril policies.
Flood Insurance
Coverage for flood damage is available from the
federal government under the National Flood Insurance
Program but is sold by licensed insurance agents.
Flood coverage is excluded under homeowners policies
and many commercial property policies. However,
flood damage is covered under the comprehensive
portion of an auto insurance policy.
Guaranteed Replacement Cost Coverge
Homeowners policy that pays over and above the
stated policy limits (% above varies from company
to company) to restore your home.
Life Insurance
Terms
Life insurance is intended to protect those
left behind when the insured passes on. There
are a number of types of policies to accomplish
this. Which is best suited for your personal situation
is best determined by having one of our insurance
professionals review your needs and goals. Here
are the most common policy types and terms.
Whole Life Insurance
The oldest kind of cash value life insurance that
combines protection against premature death with
a savings account. Premiums are fixed and guaranteed
and remain level throughout the policy's lifetime.
Waiver
The surrender of a right or privilege. In life
insurance, a provision that sets certain conditions,
such as disablement, which allow coverage to remain
in force without payment of premiums.
Universal Life Insurance
A flexible premium policy that combines protection
against premature death with a type of savings
vehicle, known as a cash value account, that typically
earns a money market rate of interest. Death benefits
can be changed during the life of the policy within
limits, generally subject to a medical examination.
Once funds accumulate in the cash value account,
the premium can be paid at any time but the policy
will lapse if there isn't enough money to cover
annual mortality charges and administrative costs.
Term Insurance
A form of life insurance that covers the insured
person for a certain period of time, the "term"
that is specified in the policy. It pays a benefit
to a designated beneficiary only when the insured
dies within that specified period which can be
one, five, 10 or even 20 years. Term life policies
are renewable but premiums increase with age.
Annuity
A life insurance product that pays periodic income
benefits for a specific period of time or over
the course of the annuitant's lifetime. There
are two basic types of annuities: deferred and
immediate: Deferred annuities allow assets to
grow tax deferred over time before being converted
to payments to the annuitant. Immediate annuities
allow payments to begin within about a year of
purchase.
Business Insurance Terms
Businesses have unique, and sometimes complex,
insurance requirements. In the current litigious
environment there is a critical need to have coverage
that will help preserve the viability of the business
under a myriad of situations. Some of the basic
considerations and terms are listed here.
Liability protection
This will vary from business to business. A retail
business is more at risk for potential suits than
a business that is not open to the public. Also,
in some states, courts tend to respond more positively
to lawsuits, increasing both the likelihood of
successful lawsuits and the amount of damages
awarded. In today's lawsuit-conscious society,
higher liability limits are extremely important
and relatively inexpensive.
Property insurance can be purchased on the basis
of the property's actual value, on its replacement
cost, or on an agreed amount. The differences
among the three are:
Actual Cash Value
This is replacement cost of the item minus depreciation.
For example, a new desk may cost $500. If your
7-year-old desk gets damaged in a fire, it might
have depreciated 50%. Therefore, insurance would
pay you $250.
Replacement Coverage
This coverage pays the cost of replacing an item
without deducting for depreciation. So today's
cost for a desk of a size and construction similar
to the 7-year-old one damaged by fire would determine
the amount of compensation. If it costs $500 today,
that would be the replacement coverage.
Agreed Amount
Art objects, antiques and other unique items are
usually insured at an amount agreed upon when
the policy is being written. An appraiser values
the goods to be insured and the business owner
and the insurer agree upon an amount that the
insurer will pay if the goods are destroyed due
to a covered peril.
Check your policy. If you prefer replacement
coverage and do not already have it, this coverage
can be added to your policy. Inflation-guard coverage,
which automatically increases your insurance amount
a certain percentage, protects against rising
construction costs. Your Trusted Choice® agent
can advise you of the costs involved.
Business Property Considerations
Basic property insurance policies generally cover
losses caused by fire or lightning and the cost
of removing property to protect it from further
damage (e.g., removing inventory or equipment
from a damaged building so it won't be stolen).
"Extended perils," including windstorm, hail,
explosion, riot and civil commotion, and damage
caused by aircraft, automobiles or vandalism,
are usually covered in a standard policy. Other
important perils, often not covered and considered
"optional" in almost all standard policies, include
earthquake and flood damage, building collapse,
and glass breakage.
Property insurance can be written as either
"named peril" policies or so-called "all risk"
policies. A named peril policy provides coverage
for those perils specifically named in the policy.
An all risk policy covers loss by any perils not
specifically excluded in the policy. The term
"all risk" does not mean that all perils will
be covered and, to avoid confusion, is often replaced
with the term "special form" or "special causes
of loss" coverage.
The best thing to do is to take a complete inventory
of all your business property, determine all of
its value and decide if each is worth insuring.
Then check to see that the items on the inventory
list are included in the basic business property
policy and covered for the correct amount. If
not, ask your Trusted Choice® agent about the
cost of purchasing additional coverage to meet
your needs.
You also need to consider your business situation.
Are you planning a major expansion? Does your
inventory have a decidedly peak season (like a
toy store in December)? Or does it fluctuate throughout
the year (like a clothing store)? Is your liability
limit high enough in light of the new job contract
you just signed? Business policies are designed
to be added to or subtracted from to meet your
needs. Be sure to discuss changes to your business
with your Trusted Choice® agent so that he or
she can be sure your policy still provides adequate
coverage.
Some common additional coverages for business
property include (although this list is by no
means all-inclusive):
Boiler and Machinery Insurance
Even if you do not own a boiler, you may need
this coverage. The term "boiler and machinery
insurance" is gradually being replaced with terms
such as "equipment breakdown" or "mechanical breakdown"
coverage. This insurance provides coverage against
the sudden and accidental breakdown of boilers,
machinery or equipment, including computer systems
and telephones/communication systems. Coverage
usually includes reimbursement for property damage,
expediting expenses (e.g., express transportation
charges), and business interruption losses.
Builders Risk Coverage
This covers buildings in the course of construction.
Depending on the policy, this coverage can be
for either the building's value at the time of
loss or its full value at the time of completion.
Building Ordinance Coverage
Provides coverage when a community has a building
ordinance stating that when a building is damaged
to a specified extent (usually 50%), it must be
completely demolished and rebuilt in accordance
with current building codes rather than repaired.
Special attention is required when establishing
the amount of insurance.
Business Interruption Insurance
This covers the loss of earnings as a result of
damage or loss of business property. Reimbursement
for salaries, taxes, rents, and other expenses
plus net profits that would have been earned during
the period of interruption can be included.
Commercial Crime Coverages
This covers money and securities, stock and fixtures
against theft, burglary and robbery both on and
off the insured premises and from both employees
and outsiders.
Debris Removal Coverage
Covers the cost of removing debris after damage
from fire or other covered peril that requires
debris removal before reconstruction of the damaged
building can begin. This is not part of fire insurance
coverage and must be added as an endorsement.
Fidelity Bonds
This covers business owners for losses due to
dishonest acts by their employees.
Glass Coverage
This provides coverage for glass breakage such
as store windows and plate glass on office fronts.
Inland Marine Insurance
Primarily covers property in transit such as from
warehouse to warehouse or warehouse to retail
store, as well as other people's property left
on your business premises, such as clothes left
at a dry cleaning business or an employee's personal
effects left in the company locker room.
Insurance for Loss of Lease Income or Value
This covers the loss of income when rental property
is damaged or destroyed and the loss of value
when the owner of the rental property also used
some of its space for business. If the tenant
of the destroyed or damaged building is forced
to rent space elsewhere at a higher cost, this
is called loss of lease value.
Wrap-up Insurance
Broad policy coordinated to cover liability exposures
for a large group of businesses that have something
in common. Might be used to insure all businesses
working on a large construction project, such
as an apartment complex.
Key Person Insurance
Insurance on the life or health of a key individual
whose services are essential to the continuing
success of a business and whose death or disability
could cause the firm a substantial financial loss.
