Use Our
Beginners Guide to Learn all About Basic Insurance Coverages!
Oftentimes
in insurance there are confusing terminologies
and coverages that seem difficult to understand. Coverages and limitations will
often vary depending on the type of policy you have and what carrier you
choose. Even so, it's important to know the basic insurance coverages so you
don’t feel completely lost if you have a claim or even just when reading over
your declaration page.
Continue
reading for a breakdown of the basic coverages provided in typical auto and
homeowners policies.
Auto Insurance
When it
comes to auto insurance,
it’s important to know that
depending on where you live, some coverages will be mandatory, and some coverages
will be optional. Mandatory coverage-minimums will vary depending on the state
you live in. For example, New
York State law requires that you carry a minimum amount of liability
insurance of $25,000 for bodily injury to one person, $50,000 for bodily injury
to all persons, and $10,000 for property damage in any one accident.
This would mean your maximum coverage for bodily injury liability for one
person injured in one accident would be $25,000 and $50,000 total for
all persons injured in one accident. Mandatory "no-fault" or Personal
Injury Protection coverage of $50,000 is also required in New York State.
Frequently Required
Coverages:
Depending on the
state you live in, you may be required to purchase the following
coverages:
- Bodily Injury
Liability
— This coverage can help pay for the costs associated with injuries and
death that you cause while driving your car or a rental car. It’s
important to note that this kind of coverage only applies to someone
else’s medical bills, not your own.
- Property Damage
Liability —
This coverage can reimburse others for damage that you or another driver
operating your car causes to another vehicle or property, such as a
fence
or building front.
- Uninsured Motorist
Coverage —
This can provide coverage to you, the insured
and passengers within your vehicle if they are injured in a motor vehicle
accident, and the other car involved either does not have insurance or
does not have coverage limits high enough to fully compensate our insured
for the injuries sustained in the accident. In those instances, you can potentially pursue
full recovery directly from your own insurance policy.
- Personal Injury Protection (PIP) — PIP, also
known as “
no fault” insurance, can cover the costs for medical expenses for injuries
to you or your passengers, regardless of who is at fault. It can also
cover lost wages and other related expenses if deemed appropriate. You can
also purchase Medical Payments Coverage in addition to the state mandated
PIP coverage to increase your protection.
Optional
Coverages
The following coverages can be added to your auto policy by choice:
- Comprehensive — Comprehensive
coverage, otherwise known as “Other than Collision” can provide payment
against theft and damage caused by an incident other than a collision. For
example,
damage caused by flood, vandalism, hail, fire, or
falling objects can all be covered under comprehensive.
- Collision — Collision can
help reimburse you for damage to your vehicle as a result of a collision
with another vehicle or object. It’s important to note that while collision
coverage
will not reimburse you for mechanical failure or normal wear-and-tear, it
will cover damage from potholes or damage from a rollover.
- Full Glass Coverage
— Damage
to windshields is a common
occurrence, so the purchase of full glass coverage can be a good
investment. This type of coverage helps pay for damage to your windshield
and the other glass windows in your vehicle.
What is Gap Insurance?
When
leasing or financing a vehicle, lenders may require you to purchase
collision and comprehensive coverage. It’s important to know that comp and
collision will only cover the car’s actual cash value, meaning it may not cover
the amount you paid for the car in full if it is stolen or totaled. To ensure there is no “gap” in financial recovery,
you might consider purchasing gap insurance to pay
the difference between the amount insurance pays and the balance on your loan.
Homeowners Insurance
Home
insurance is not mandated by the state, but it will be required if you choose
to take out a
mortgage when buying a home. Home insurance tends to be a little more
complex than auto insurance as there are more choices to make regarding
policy type and coverage. An
agent can be an excellent resource when it comes finding a policy that
fits your needs.
What Does Homeowners Insurance Cover?
Homeowners
insurance covers much more than just your home. Along with the protection of
your home itself, policies will typically cover personal
belongings as well as certain expenses that may come up after a loss.
Liability, medical payments, and additional living expenses can all be covered
to the limits set in your policy.
What are the Different Types of Homeowners Insurance?
Different
insurance carriers will offer several different standardized policies which
contain varying types and amounts of coverage. Depending on the type of home
you purchase and your mortgage requirements, you can choose a policy that
adequately fits those needs. This is something that you may want to review
with your insurance agent, who can provide you details regarding coverage limits
depending on the form and carrier you choose.
What Do
These Coverages Mean Exactly?
Here is a
breakdown of the coverages offered in a standard homeowners policy:
- Coverage A-
Dwelling Coverage: With a standard homeowners policy, the dwelling
coverage pays to repair
or rebuild your home’s physical structure if there is damage in
the event of a covered loss.
- Coverage B-
Other Structures: Your home policy will typically cover other structures
on your property such as
fencing,
sheds, a detached garage etc.
- Coverage C- Personal Property Coverage: This coverage protects your belongings, for example clothing and furniture.
- Coverage D- Loss of Use Insurance: In the event of a covered loss, where your home has been made uninhabitable, this coverage can help pay for the costs of additional living expenses, should they be deemed necessary. Hotel costs, food, and extra mileage to and from work are all examples of what could be covered.
- Coverage E- Personal Liability Insurance: Personal liability
coverage can help you pay for your
legal expenses (in the event that you were sued) for another
person's injury or property damage loss. This
coverage can apply regardless of whether or not you are ultimately found
liable.
- Coverage
F-Medical Payments Insurance: This coverage can help pay for a
visitor's immediate medical
expenses
if they happen to become injured while on your property, regardless of who
is at fault.
Understanding
insurance in general can be tricky, let alone the details of your specific
policy. This is why it is essential you have a working knowledge of the
associated coverages and terminologies.
You might also be interested in learning more about auto and homeowner policies
with NYCM or the discounts you may qualify for. Click the link below to contact
an agent!
