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Basics of Auto Insurance and Coverage

Auto Insurance Basics

car insurance basics

Auto Insurance covers cars, trucks, buses, taxis, motorcycles, and anything else that requires a driver’s license to operate. Auto Insurance pays the owner of the vehicle in case of theft and to cover the cost of medical treatment or damages to the car. Insurance policies for autos are broken down into 3 types of coverage: bodily injury, liability, and property damage. This is why you are given 3 figures when requesting for an Auto Insurance quote. Go here if you are in the market to compare.

For example, in Wyoming, the auto insurance is based on the minimum state requirements of 25/50/20 or 25,000/50,000/20,000. The first two numbers represent bodily injury and liability limits while the third figure is the amount for property damage.

All autos that are not fully paid are required by the lenders to get full to almost full (or comprehensive) coverage. As the loan is paid gradually, the lender can agree to lower the requirement on Auto Insurance. For autos that are loan free, the amount of insurance will depend on the legal minimum and personal preference of the owner.

For instance if the minimum state requirement is 25/50/20 a car owner can choose this coverage or get something more comprehensive. He just cannot go any lower than what the state requires.

Auto Insurance Basics

Every Auto Insurance policy is a legal and binding contract between the vehicle owner and the insurance company. The insurance company agrees to pay for damages and other expenses related to a road accident or property damage caused by the vehicle. The vehicle owner promises to pay an agreed monthly premium to cover part of the claim. Furthermore, the vehicle owner will have to shoulder a “deductible” when filing an insurance claim.

Both parties will have to agree on the coverage. Ideally, the vehicle owner should get maximum coverage but this is rarely the case because it becomes too expensive to maintain. Thus, a vehicle owner should prioritize certain factors when customizing his insurance policy plan.

For instance, if the vehicle owner takes frequent road trips, he might want to increase coverage to include towing and road assistance. If you own an expensive automobile, you might want to increase the insurance on collision coverage because repairs on high end luxury cars are usually more expensive.

The Basic Types of Coverage are:

Bodily Injury Liability – This pays for injuries to the driver and any passengers of the other vehicle if you are responsible for the accident. This money will help you in case you are sued by the injured party/parties.

Medical Coverage – This covers you, as the car owner, your passengers and even the people who live with and use the insured car in case of an accident. It also includes insurance for the car owner if he is a victim of a vehicular accident and he is a pedestrian.

Property Damage – This is similar to Bodily Injury but applies to property like the other party’s car

PIP or Personal Injury Protection – On top of the medical coverage, PIP can be applied in no-fault cases. It can include funeral expenses, hospitalization, treatment, income loss, and other related expenses.

Uninsured or Underinsured – This covers Bodily Injuries and damages to you or your passengers if you are victims of a road accident and the other party has no (or not enough) insurance.

what is the difference between PIP coverage and bodily injury coverage?

There are many different types of products that automobile insurers are currently offering. Due to this fact, consumers commonly ask questions like, “What is the difference between PIP coverage and bodily injury coverage with car insurance?”. Understanding how each type of protection works is essential for making informed purchasing decisions. Buyers can make sure that their plans are fully representative of their needs.

PIP is actually short for personal injury protection. This is a protection that is reserved solely for the insured, particularly in instances in which he or she is at fault for an automobile accident or has been involved in a crash with a person who is uninsured or under-insured. It will cover damages when no other types of protection exists.

This cover will handle all medical costs that they insured incurs as the result of injuries sustained in these events, up to the limits specified by the policy. In some areas and instances, this will even cover any lost wages so that the insured is not placed at a financial disadvantage due to his or her injuries and the necessary recovery period. Without this protection, people who are at fault or have been injured by uninsured motorists would have little or no recourse.

Bodily injury, however, is designed to meet the needs of the other driver. It is legally required for all motorists to have this and there are specific, legal specifications concerning the limits of this coverage in all areas. This will provide the same protections that are granted by the PIP cover, however, it will provide them to any other motorists that have been involved in these evens, apart from the insured.

This is the portion of the policy that claimants will rely upon when filing their claims. It can cover medical costs and it may afford protection for lost wages resulting from the injury. Given that this is a standard part of the legal requirements for automobile cover, all drivers must have it as well as property damage liability for ensuring that damage to the other party’s car is accounted for.

Personal injury protection is often an optional expense. This is an add-on that drivers can buy to protect themselves from events that may not be reflected in a more basic policy. While it usually reflects a fairly nominal, additional cost, it is generally well-worth the investment. The benefits it provides drivers with are more than worth the investment, particularly when drivers find themselves responsible for accidents or involved crashes with drivers who are not properly insured themselves.

Basic car insurance policy for drivers over 50 years old

Basic car insurance policy for drivers over 50 years old

A study done in 2012 by the National Highway Traffic Safety Administration revealed that a crash at 31 miles per hour, a woman aged 50 years old would have 10% chance of being seriously injured while an 80 year old would have a 40% risk factor. People over 50, while generally safe from DUI and speeding accidents tend to be very vulnerable to other types of accidents especially left-hand turns and cross traffic.

Basic car insurance for this age group generally focus more on aging and the layering of age-related problems like reflexive action and being able to react in enough time to prevent an unexpected situation. However, there is a growing population of drivers aged 50 and older who are responsible, alert, and physically fit to drive. There is also a greater number of older drivers on the road who would feel lost without their driver’s license, enjoy the feeling of being independent and free to drive whenever and wherever they want.

Most insurance companies understand this and give due respect to older drivers with a more appropriate car insurance plan.

First of all, 50 is not old. But, vision can be problematic especially at night and there are other physical conditions that can affect a person at this age. Fortunately, 99% of the common aging problems at age 50 are easy to find solutions for so driving will not be impaired. The primary advantage for drivers over 50 is experience and most car insurance companies welcome drivers with experience with special discounts. The discounts will depend on the following:

  • Driver’s record
  • Whether the driver has taken a recent defensive driving course
  • Driving time behind the wheel for low mileage discount
  • Type and year of vehicle

Unfortunately, the rates will increase with age because of the higher risk factors related to aging. There are ways to keep these higher rates from affecting your insurance budget. You could raise deductible, review your coverage and remove unnecessary coverage, and change the primary driver to a younger person like your children or spouse.

Signs that you should consider cutting down on your driving hours include declining vision, slow to react, loss of focus, and a tendency to get lost when driving or near misses.

There are a few myths about older drivers that you can debunk in case they are ever thrown at you. They are”

  1. Older drivers are less cautious, tend to get tired faster, drive slower, and are sheltered – In the UK, 19% of all licenses were issued to drivers 50 years and older and definitely 19% of the driving population are not overly caution, slow, or unusually tired.
  2. Compulsory retirement is gone – No, once you reach a certain age, the agency that issues drivers’ licenses have a procedure to check whether a driver in his 50s or older is competent enough to be behind the wheel. If you do not pass the test, you will be denied a driver’s license.

In addition, drivers past a certain age must report health problems or treatments that may affect driving skills. This does not mean that the driver’s license is automatically revoked or the car insurance is not renewed. It only means that further questioning and documents will be required to prove driving competency.

 

Medical Insurance Basics Coverage

Medical Insurance

medical_insurance

Medical Insurance is bought to protect one from expensive medical treatment, cost of medical emergencies, and to guarantee negotiated lower rates with selected physicians and hospitals through an accreditation scheme.

By 2014 under the Obamacare program, all individuals are required to have Medical Insurance or pay a tax penalty. This is known as the Individual Mandate. Individual Mandate refers to who are exempt from the tax penalty due to their circumstances. For instance, religious churches, people in jail, non-US citizens are all exempt from the program and the tax penalty.  For those who will not get the minimum Medical Insurance, the tax penalty may be 1% of the income, $95 per person, or $285 for a family of more than 3 members.

There are 2 kinds of Medical Insurance: Individual or Employer. The Individual Medical Insurance is voluntary so the amount and coverage will depend on the policy holder. It is assumed that the policy holder will get at least the minimum requirement under the law.

The Employer Medical Insurance is also known as a group plan. It has friendlier premiums because you are enrolled as a member of a large group. The insurance premium is automatically deducted from your pay.

Medical Insurance Basics

With Medical Insurance, there is a term called “Pre-existing conditions.” This refers to the increase in the premium based on a medical condition that exists at the time of application. A few examples would be hypertension, a smoking habit, or a family history of heart problems. The insurance company may also opt to add a clause in the policy protecting them from claims against pre-existing medical conditions. Fortunately, under the new health insurance for 2014, no insurance company can deny an application or charge higher for medical insurance based on pre-existing medical conditions.

The coverage of Medical Insurance also includes hospital stay, surgery, doctors’ fees, and lab or diagnostic fees and medical tests. Some plans also include Dental and Eye Insurance.

The Best Way To Shop For Medical Insurance

In anticipation of the new law in 2014, it pays to start shopping around for your best options. Here are a few quick tips:

  • You are not required to provide personal medical history to anyone
  • You should never give out your Social Security number as well as private finance account numbers like credit card and bank account numbers without verifying the request
  • Do ask as many questions as you want before agreeing to any policy
  • If you are suspecting someone of trying to commit fraud, you can report the incident to online Complaint Assistant of the Federal Trade Commission

If you are unemployed, you qualify for Medicaid and your children are covered under the Children’s Health Insurance Program. The amount of aid will be determined by an estimate of your household’s income for the year.  You may also be eligible for lower premium rates based on your income level. Part-time workers without medical insurance from their employer may also apply for lower premiums through Medicaid as well.

Life Insurance Basics Plans and Coverage

Life Insurance Basics

life_insurance

Life Insurance is a strange term because it covers one’s family after the policy holder dies. It’s called “life” because it protects your family from sudden income loss or provides them with a financial gift from you after you pass away. It is a tax-free benefit worth buying since you can work with the insurance company to come up with a plan you can afford to pay. On the part of the policy holder, he never benefits from his Life Insurance plan unless he sells or cashes in on his policy – a process which is very complicated and diminishes the value since he would have to pay commission to the agent who brokers the sale.

There are 2 main types of Life Insurance plans: the Permanent and the Term. The Permanent covers your entire life. Even if you suffer from a medical condition, the premium does not increase so you are protected from additional medical expenses. The Term Life Insurance covers a limited time period usually 1 to 20 years. After the period expires, the insurance policy is no longer valid and the beneficiaries or policy holder do not receive anything. Term Life Insurance is common with parents of young children or adults with an elderly dependent on their income like a sickly parent. You would want to insure their protection if you happen to pass away before they do.

Life Insurance Basics

The cost of Life Insurance is wide open for those interested. There is no perfect plan that will fit everyone. You will have to customize a plan that will fit the needs of your beneficiaries. Insurance companies expect a certain amount of diligence from their customers and so are mostly willing to discuss terms and work out a cost-friendly premium.

According to the National Association of Insurance Commissioners, women ages 35 up to retirement age have a 30% chance of getting injured or unable to report for work for a limited period. Men have a 20% chance of something happening to cause them to stop earning. This makes Life Insurance critical because it will ensure against loss of income. In addition, majority of finance experts say that Life Insurance is most important when you have dependents. Under this assumption, there are a few guidelines to take note of:

  • As much as possible, buy Life Insurance when you are healthy and young because the rates are lower but don’t buy until you have people dependent on your income. Also, if you are a smoker, you will probably be charged a higher premium based simply on your smoking habit
  • Be honest with your personal details especially your medical history
  • Your coverage should be good enough to cover your needs
  • Never be pressured by an insurance agent to close a deal. Read the terms and compare with other quotes. Keep in mind that approximately 80% of your premium paid on the first year goes to pay the insurance broker’s commission and being in a very competitive market, these brokers tend to be very aggressive and push for Permanent or Whole Life Insurance rather than Term Life Insurance

A common misconception about Life Insurance is that it is an expendable commodity when it should be thought of as an investment. There are Whole Life Insurance plans that require you to pay for a number of years and once you are fully paid, you are given options to cash out, increase its value by upgrading the policy, or allow it to earn interest.

Basics of Home Insurance

Home Insurance Coverage and Basics

basics_home_insuranceHome Insurance is also known as homeowner’s insurance (HOI) or hazard insurance. It is covered under property insurance for privately-owned property – as compared to commercial buildings, warehouses, or factories.

Home Insurance covers different types of protection like fire, loss of use, damage to content, theft, personal liabilities, rental while home is being repaired, and damage to the house caused by something other than flood, earthquake, misuse, vandalism, or poor maintenance. There are special types of insurance policies that cover damages caused floods and other natural calamities.

If a house is under mortgage, the homeowner will be required by the lender to purchase Home Insurance. Once the property is fully paid, Home Insurance is a personal decision and not mandated by law. However, in case the homeowner has plans of applying for credit or a loan and plan to offer your house as collateral; or you live in an apartment complex or condominium; the lenders or your neighbors will ask that you insure your property.

On the average, Home Insurance covers 50 to 70% of the assessed value of your home. This means that in case of repairs or damages, the insurance company will cover this amount and nothing more. This is also one of the reasons it is imperative for homeowners to personally but objectively assess the contents of the house and incorporate the valuable items into the Home Insurance policy or insure them separately,

Home Insurance Basics

Since Home Insurance is a combination of property and liability coverage it is also known as a multiple-line policy with an indivisible premium. This means the policy holder is paying only one monthly premium for both risks.

Deciding on the insurance amount for your house would depend on several factors such as assessed value of the property and its contents, the cost to replace it, budget, and the offers by the different insurance companies. The policy covered a fixed period which is usually 12 months. During the 12 months, the premium does not change. Once the policy expired, the insurance company may or may not increase the premium under a new contract. This would depend on the negotiations, renovations done on the property, repairs needed, and payment performance of the policy holder. On the other hand, it is possible to negotiate for a Perpetual Insurance which does not have a fixed term.

Aside from flood and earthquake, the standard Home Insurance policy does not cover or offer limited coverage on the following: mold damage, damage from a backed-up sewage, sinkholes, termite infestation, radiation from a nuclear plant accident, and acts of terrorism. There are insurance companies that will charge you extra to include a few of these threats like the backed-up sewage.

Many financial experts would advise homeowners to buy Home Insurance because it is a financial asset that protects your real estate asset. There are ways to afford home insurance by looking at the following:

Home Insurance Discounts

Insurance companies are willing to talk about a lower premium if the homeowner has one or more of the following:

  • A security system acceptable under their standards including window and door dead locks
  • The dwelling is equipped with working smoke alarms and unexpired fire extinguishers. Fire extinguishers have a life span of 5 to 15 years depending on its type.
  • Length of ownership
  • And whether or not there is someone at home all the time

Home Insurance Group Schemes

Insurance companies also offer group discounts to certain groups of people like engineers or any other responsible professionals who the insurance company deems as trustworthy and unlikely to make a claim or cause damage to their property.

Other Ways To Lower Home Insurance Costs

  • Pay annually
  • Remove the unnecessary add-ons like pet cover and appliance repair

Insurance Basics Overview

What are Insurance Basics?  Premium – Deductibles – Copay

Basics of Insurance

Insurance has always been about protecting your interests and possessions against calamities, accidents, risks, or unforeseen events. By paying a monthly premium, you are storing funds with an insurance company to cover your financial needs in time of stress or a change in your normal routine.

There are different kinds of insurance and over the years insurance has become so specialized that it is possible to insure parts of the body, specific situations like flooding or weddings that did not push through, and even strange coverage like alien abduction and zombie attacks. Fortunately, most people stick to the mainstream insurance plans like Auto, Life, Medical, and Home insurance.

For all insurance types, there are similar basics such as:

Premium – This is the amount you pay every month to cover your insurance. There are some businesses that pay for part of the premium for their employees like health insurance.

Deductible – This is the amount you have to pay the insurance company after a claim has been approved for payment. For instance, your car is involved in an accident and would cost $500 to repair. You can file an insurance claim but will have to pay the agreed deductible written on the insurance policy before the insurance company pays for the repairs.

Copay – This is a flat rate that you are required to pay when you avail of coverage

Maximum – This is the final amount that an insurance company will pay. It is usually applied with a recurring expense like a medical condition

In almost all cases, insurance for auto is mandated by law. You can’t drive a car that isn’t insured. With the new Health Insurance Law in the United States which takes effect in 2014, Health Insurance will also be a requirement or a penalty tax will be levied on the non-paying individual. Related information here..

In most cases, a person is free to determine the amount of insurance he or she wants to purchase provided there are no loans or mortgages attached to the vehicle or property.