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How much coverage do I need on an auto policy?

Thursday, April 8, 2010

In Florida, you are required to buy a minimum amount of liability coverage. Chances are that you will need more liability insurance than Florida requires because accidents cost more than the minimum limits. If you’re found legally responsible for bills that are more than your insurance covers, you will have to pay the difference out of your own pocket. These costs could wipe you out! 

You may want to talk to your agent or company representative about purchasing higher liability limits to reflect your personal needs. You may also consider purchasing an umbrella or excess liability policy. These policies pay when your underlying coverages are exhausted. Typically, these policies cost between $200 and $300 per year for a million dollars in coverage. If you have your homeowners and auto insurance with the same company, check out the cost of coverage with this company first. If you have coverage with different companies, it may be easier to buy it from your auto insurance company.

In addition to liability coverage, consider buying collision and comprehensive coverage. You don't decide how much to buy. Your coverage reflects the market value of your car and the cost of repairing it.

Decide on a deductible—the amount of money you pay on a claim before the insurance company reimburses you. Typically, deductibles are $500 or $1,000; the higher your deductible, the lower your premium.

What determines the price of my Insurance Policy?

Tuesday, April 6, 2010

There are many factors that influence the price you pay for auto insurance. The average American driver spends about $850 a year. Your premium may be higher or lower, depending on:

  1. Your driving record.
    The better your record, the lower your premium. If you've had accidents or serious traffic violations, you will pay more than if you have a clean driving record. You may also pay more if you haven't been insured for a number of years.
  2. The number of miles you drive each year.
    The more miles you drive, the more chance for accidents. If you drive a lower than average number of miles per year, less than 10,000, you will pay less. For instance, some companies will give discounts to policyholders who carpool.
  3. Where you live.
    Insurance companies look at local trends, such as the number of accidents, car thefts and lawsuits, as well as the cost of medical care and car repair.
  4. Your age.
    In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or young people below age 25 drive your car.
  5. The car you drive.
    Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car, the cost of repairs, and the overall safety record of the car.
  6. Your Credit. 
    For many insurers, credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim. Credit-based insurance scores are based on information like payment history, bankruptcies, collections, outstanding debt and length of credit history. For example, regular, on-time credit card and mortgage payments affect a score positively, while late payments affect a score negatively.
  7. The amount of coverage.
    Of course, like anything else, the more coverage you have, the more you pay. However, you may qualify for discounts.

How do I choose an Insurance Company?

Monday, April 5, 2010

There are many insurance companies, so choosing between them can be a challenge. Here are the main points to keep in mind when selecting an insurance company:

  • Licensing
    Not every company is licensed to operate in each state. As a general rule, you should buy from a company licensed in your state, because then can you rely on your state insurance department to help if there’s a problem. To find out which companies are licensed in your state, contact the state insurance department.
  • Price
    Many companies sell insurance policies and prices vary greatly from one to another, so it really pays to shop around. Get at least three price quotes from companies, agents and from the Internet. Yourstate insurance department may publish a guide that shows what insurers charge for different policies in various parts of your state.
  • Financial Solidity
    You buy insurance to protect you financially and provide peace of mind. Select a company that is likely to be financially sound for many years, by using ratings from independent rating agencies.
  • Service
    Your insurance company and its representatives should answer your questions and handle your claims fairly, efficiently and quickly. You can get a feel for whether this is the case by talking to other customers who have used a particular company or agent. You may also want to check a national claims database to see what complaint information it has on a company. Also, your state insurance department will be able to tell you if the insurance company you are considering doing business with had many consumer complaints about its service relative to the number of policies it sold.
  • Comfort
    You should feel comfortable with your insurance purchase, whether you buy it from a local agent, directly from the company over the phone, or over the Internet. Make sure that the agent or company will be easy to reach if you have a question or need to file a claim.

What Are my Health Insurance Options?

Friday, April 2, 2010

There are essentially two types of health insurance plans: indemnity plans (fee-for services) or managed care plans. The differences include the choice of providers, out-of-pocket costs for covered services and how bills are paid. There is no one “best” plan for everyone. Some plans are better than others for your or your family’s health care needs, but no one plan will pay for all the costs associated with your medical care. 

Here is a brief description of the types of available health insurance plans: Indemnity Plans; Managed Care Options; and Government-sponsored Health Insurance

A. Indemnity Plans

Cafeteria/Flexible Spending Plans are employer-sponsored plans that allow the employee to design his or her own employee benefit package, choosing between one or more employee benefits and cash. Several types of Flexible Benefits or Cafeteria Plans are used by employers, including a pre-tax conversion plan, multiple option pre-tax conversion plan, medical plans plus flexible spending accounts, and employer credit cafeteria plans. For more information about these choices, contact your employee benefits department.

Indemnity Health Plans allow you to choose your health care providers. You can go to any doctor, hospital or other provider for a set monthly premium. The plan reimburses you or your health care provider on the basis of services rendered. You may be required to meet a deductible and pay a percentage of each bill. However, there is also often an annual limit on out-of-pocket expenses, so that once an individual or family reaches the limit, the insurance covers the remaining eligible medical expenses in full. Indemnity plans sometimes impose restrictions on covered services and may require prior authorization for hospital care or other expensive services. 

“Basic and Essential” Health Plans provide limited health insurance benefits at a considerably lower cost. When buying such a plan, it is extremely important to read the policy description carefully because these plans don’t cover some basic treatments, such as chemotherapy, certain prescriptions and maternity care. Furthermore, rates vary considerably because, unlike indemnity plans or a managed care option, premiums are community rated and are based on age, gender, health status, occupation or geographic location.

Health Savings Accounts (HSA) are a recent alternative to traditional health insurance plans. HSAs are basically a savings product designed to offer individuals a different way to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. Instead of paying a premium, you establish a tax-free savings account that covers your out-of-pocket medical expenses. This means that you own and control the money in your HSA. You make all decisions about how to spend the money without relying on a third party or a health insurer. You also decide what types of investments to make with the money in the account in order to make it grow. However, if you sign up for an HSA, you are generally required to buy a High Deductible Health Plan as well.

High-Deductible Health Plans (HDHP) are sometimes referred to as catastrophic health insurance coverage. An HDHP is an inexpensive health insurance plan that kicks in only after a high deductible is met of at least $1,000 for an individual or $2,000 for a family.

B. Managed Care Options

Health Maintenance Organizations (HMOs) offer access to an extensive network of participating physicians, hospitals and other health care professionals and facilities. You choose a primary care doctor from a list provided by the HMO and this doctor coordinates your health care. You must contact your primary care doctor to be referred to a specialist. Generally, you pay fewer out-of-pocket expenses with an HMO, but you are often charged a fee or co-payment for services such as doctor visits or prescriptions.

Point-of-Service (POS) plans are an indemnity-type option in which the primary care doctors in the POS plan usually make referrals to other providers within the plan. If a doctor makes a referral out of the plan, the plan pays all or most of the bill. However, if you refer yourself to an outside provider, the service is covered by the plan, but you will be required to pay co-insurance. 

Preferred Provider Organizations (PPO) charge on a fee-for-service basis. The participating doctors, hospitals and health care providers are paid by the insurer on a negotiated, discounted fee schedule. Costs are lower if you use in-network healthcare services, but you have the option of going out-of-network. If you choose an out-of-network provider, you are generally required to pay the difference between what the provider charges and what the plan pays. 

C. Government-sponsored Health Insurance

Medicaid is a federal/state public assistance program created in 1965. It is administered by the states for people whose income and resources are insufficient to pay for health care or private insurance. All states have Medicaid programs, though eligibility levels and coverage benefits vary.

Medicare is a federal government program for people 65 and older, or those with certain disabilities, that pays part of the costs associated with hospitalization, surgery, doctors’ bills, home health care and skilled-nursing care.

State Children’s Health Insurance Program (SCHIP) is administered at the state level and provides health care to low-income children whose parents do not qualify for Medicaid. SCHIP may be known by different names in different states.

Military Health Care includes TRICARE/CHAMPUS (Civilian Health and Medical Program of the Uniformed Services) and CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs) as well as care provided by the Department of Veterans Affairs (VA).

State-specific Plans are available for low-income uninsured individuals. These plans are known by different names in different states.

Indian Health Service (IHS) is a Department of Health and Human Services program offering medical assistance to eligible American Indians at HIS facilities. In addition, the HIS helps pay the cost of selected health care services provided at non-HIS facilities.

National Study Finds Nearly 60% of Home-Based Businesses Have No Coverage

Wednesday, March 31, 2010

INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500; media@iii.org

With the national unemployment rate lingering around 10 percent, millions of Americans may be tempted to start a home-based businesses. But studies show that less than half of them have any type of insurance coverage for their new endeavor, and others wrongly believe a homeowners insurance policy is sufficient, according to the Insurance Information Institute (I.I.I.).

The Bureau of Labor Statistics notes that 22 million Americans did some work at home on an average day in 2008, up from 18 million in 2003, possibly reflecting increased telecommuting as well as job losses in the private sector. It is unclear how many people who are working from home have established home-based businesses; however the number of self-employed increased from 8.5 million in January 2009 to 9.0 million by the end of the year.

A common misconception is that homeowners insurance policies offer broad coverage for a home-based business, but in fact they usually provide no more than $2,500 to replace damaged or stolen business equipment.

“Just because a business is located in your home doesn't mean your homeowners insurance policy will cover you,” said Michael Barry, vice president, Media Relations, for the I.I.I.

In addition, standard homeowners insurance policies provide neither business liability nor business income (also known as business interruption) coverage for home-based businesses. These are essential forms of protection in the event an employee or customer is injured on the premises, or a loss prompts the extended closure of a home-based business. 

Depending upon the type of home-based business, separate professional liability coverage may also be necessary. Professional liability policies protect policyholders against financial losses derived from lawsuits filed against them by their clients. If liability is limited to acts of negligence, the professional liability insurance policy is known as an errors and omissions policy.

“No matter how industrious you are, one uninsured event relating specifically to your home-based business can deal a significant financial blow to the company. The key to protecting your home-based business is securing the appropriate coverage,” noted Barry.

The Independent Insurance Agents & Brokers of America (IIABA) commissioned a study in 2004 which found nearly 40 percent of home-based business owners had not purchased insurance because they thought they were protected by some other type of coverage; 30 percent said their businesses were too small to insure; and nearly 20 percent could not give a reason for not having the coverage.

Insurance companies differ considerably in the types of business coverages they offer. Some may meet the specific needs of your business, while others may not. So it is wise to shop around for coverage options as well as competitive pricing.

When insuring your home-based business, there are three basic choices, depending on the nature of your business and the insurance company you buy it from. They are as follows:

1. Homeowners Policy Endorsement
You may be able to add a simple endorsement or rider to your existing homeowners policy that doubles the $2,500 standard coverage for business equipment such as computers. For an additional premium charge, you can raise the policy limits for losses related to a home business to $5,000 or $10,000. 

Adding an endorsement to your homeowners policy is the least expensive option, but it might not be sufficient if you have a lot of expensive business equipment. It also does not provide business liability or business income coverage.

You can buy a homeowners liability endorsement that will protect you in case clients or delivery people get hurt on your premises and sue. The homeowners liability endorsement is typically available only to businesses that have few business-related visitors, such as writers. But some insurers will provide this kind of endorsement to piano teachers, for example, depending on the number of students. These endorsements are available in most states.

2. In-Home Business Policy 
An in-home business policy provides more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. Many insurance companies offer insurance policies specifically tailored to small business. The average home-business insurance policy can cost anywhere from $250-$500. The cost depends on the type of business you operate, the kinds of safety features that are in place and the amount of coverage you decide upon.

In addition to protection for your business property, most policies reimburse you for the loss of important papers and records, accounts receivable and off-site business property. Some will pay for the income you lose (business, or income, interruption coverage) in the event your home is so badly damaged by a fire or other disaster that it cannot be used for a certain period of time. Others will also pay for the extra expense of operating out of a temporary location.

Some in-home business policies cover a certain number of full-time employees, generally up to three. 

In-home business policies generally include broader liability insurance for higher amounts of coverage. They may offer protection against lawsuits for injuries caused by the products or services you offer, for example. 

In-home business policies are available from homeowners insurance companies, which offer business insurance bundled with a standard homeowners policy. Stand-alone in-home business policies are also sold by some specialty insurers; in this case you do not also have to purchase your homeowners insurance from the company.

3. Businessowners Policy (BOP)
The Businessowners Policy, known in the insurance industry as a BOP for short, is one of a number of package policies designed to meet the insurance needs of various kinds of businesses. The key to whether a business owner is eligible for a BOP is the size of the premises, the limits of liability required, the type of commercial operation it is and the extent of its off-premises servicing and processing activities. 

A BOP, like an in-home business policy, covers business property and equipment, loss of income, extra expense and liability; however, the BOP provides these coverages on a much broader scale.
 

A BOP doesn't include workers compensation, health or disability insurance. If you have employees, you will need separate policies for these coverages. If you are using your car for business activities—transporting supplies or products or visiting customers—you need to make certain that your automobile insurance will protect you from accidents that may occur while you are on business.

As is the case with any insurance policy, a safe work environment can help lower property premiums. Make sure you have fire detectors and a security alarm system. Also have a computer-data backup procedure, and store the data backup away from your home. If you have an effective system, it may not be necessary to pay an additional premium for loss of business data.

Maximize Your Insurance Dollars in 2010; Avoid the Five Biggest Insurance Mistakes

Tuesday, March 30, 2010

There are several ways to save money on insurance, but consumers should be careful about the ways in which they cut their insurance costs, according to the Insurance Information Institute (I.I.I.). 

“Money is tight right now and many people are looking for ways to cut costs,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “However, there are smart ways that savvy consumers can save on their home and auto insurance, and there are mistakes that can result in being dangerously underinsured.” 

Following are the five biggest insurance mistakes consumers should avoid: 

1. 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. 

2. 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. 

3. 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. 

4. 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. 

5. 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, such as renters, auto and life will generally provide savings. 

“By taking a few simple steps, it is possible to cut costs and still be protected should disaster strike,” pointed out Salvatore. “When money is tight, it extremely important to be financially protected with the right amount and type of insurance. 

The I.I.I. Web site has information has consumer information on insurance, as well as tips for saving money on homeowners and auto insurance.


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