Insurance Definitions And Coverages When people think about insurance, they probably think about the last insurance premium they paid, the auto accident they had last year or the trip last month to the emergency room. This is what's expected. In 1995 (latest data available), 6.8% of American household expenditures were allotted to insurance needs. WHAT IS INSURANCE? In simplest terms, insurance is a concept where "many people share the losses of the comparatively few." This concept does not necessarily provide comfort until you become "one of the few." The purpose of insurance is to help pay for losses that ordinarily you wouldn't be able to afford on your own. INSURANCE INDUSTRY REGULATION The Ohio Department of Insurance is the largest consumer protection agency in the state and sole regulator of Ohio's insurance industry. The department ensures the financial stability of insurers through ongoing reviews, audits and policy making. Additionally, the department regulates insurance company rate-setting and compliance standards. The Ohio Department of Insurance preserves Ohio's healthy insurance climate as well as protects the interests of millions of policyholders. AUTOMOBILE INSURANCE A policy constitutes a contract by which a company promises to pay to, or on behalf of, an insured certain losses under specified conditions. The policy also provides certain services. Automobile insurance contracts generally spell out the dollar limits of coverage and the conditions applicable to a loss occurrence. CONTENTS OF POLICY Most automobile insurance policies are composed of several interrelated parts. These parts are: declarations, coverages, supplemental payments, definitions, exclusions and conditions. DECLARATIONS: The declaration section serves to personalize the policy by listing the pertinent information described in the policy. COVERAGES: Each automobile insurance policy provides several types of coverage, and each, when purchased, has a specific function. Common coverages are: BODILY INJURY LIABILITY (BI): If you injure someone in an automobile accident for which you are legally to blame, this coverage will pay claims for injury or death against you, up to the amount of insurance you purchase and the cost of legal defense. PROPERTY DAMAGE LIABILITY (PD): Similar to bodily injury liability coverages, except that it protects you against a claim for damage to another automobile or other property, in an accident for which you are legally liable. The protection is again up to the amount of insurance you purchase. This does not cover your car or property. MEDICAL PAYMENTS: Pays for medical or funeral expenses, up to the amount of insurance you purchase, for you and others injured or killed while riding in your car, no matter who caused the accident. It also covers you and resident members of your family if struck by a car as a pedestrian or if riding in another cal. UNINSURED MOTORISTS (UM): Provides coverage if you or your passengers are injured by someone who does not carry automobile insurance. UM Coverage will pay for injuries up to your policy limits and includes medical expenses, loss of wages and related expenses. UM coverage also applies if you are a victim of a hit and run driver. UNDERINSURED MOTORISTS (UIM): Provides coverage for death and injury expenses to you or your passengers when the other person's insurance is inadequate. This coverage fills the gap in protection between the at-fault driver's bodily injury liability coverage and your UIM coverage. UNINSURED MOTORISTS PROPERTY DAMAGE (UMPD): Provides coverage for your vehicle if involved in an accident with an insured motorist. Insurance companies are not required to offer UMPD to those carrying collision coverage since it provides similar coverage. COLLISION: This coverage pays for damage to your car caused by impact with another object or an overturn, regardless of fault. The collision coverage usually includes a deductible. This means you pay the first $100, $200 or so for repairs to your car and the company pays the rest. Selecting a larger deductible lowers your collision premium. OTHER THAN COLLISION (COMPREHENSIVE): This is a catch-all coverage that pays you for damage to your car caused by something other than collision or upset. Perils covered under "other than collision" may include fire, theft, missiles, falling objects, larceny, explosion or earthquake, tornadoes and windstorms, hail, water, flood, malicious mischief, vandalism, riot, civil commotion and contact with a bird or animal. "Other than collision" is also available with deductibles. This coverage is also available with deductibles to lower your premium. TOWING AND LABOR: This is an extra coverage that pays up to a state amount for towing your car and any labor required at the scene when your car becomes disabled. Other coverages may also be available from your insurance company. Always ask what coverages are available and then decide what is best for you. DEFINITIONS: This section of the insurance policy defines the various terms used in the policy. It explains such terms as who is covered by the contract and what the company describes as the "insured vehicle". EXCLUSIONS: Exclusions clarify the intent of the insurance policy by explaining the situations in which the policy will not cover you or the insured vehicle. You may be able to "buy back" coverage for certain exclusions by adding endorsements to the policy. Policyholders should pay special attention to this section and should be aware that the policy does not cover all things under all circumstances. CONDITIONS: This section establishes the conditions that must be present or complied with by the company and/or the insured. Examples of conditions include time-period restrictions, duties in the event of a claim, proof of loss, cancellation, etc.   HOMEOWNERS INSURANCE Homeowners insurance generally protects your home and personal property from losses caused by fire, lightning, windstorm, theft and other listed perils. More importantly, it also provides liability protection. Renters Insurance coverage protects your possessions such as furniture, clothing, appliances and other valuables while providing personal liability coverage too. Coverage doesn't extend to the building itself since you're not the owner. For condominium owners, the same applies as for renters with additional limited coverage provided for building additions and alterations inside the individual unit. A homeowners policy protects your home and detached structures (like a garage or tool shed) on your property that are not used for business purposes. Your policy states limits of coverage for each type of loss and in some cases provides limited coverage to certain types of property such as boats, jewelry and art. Other types of coverage provided in a typical homeowners policy include: ADDITIONAL LIVING EXPENSE ALLOWANCES / LOSS OF USE: If your home, condo or rental property becomes uninhabitable due to an insured loss, coverage for above-normal expenses (like a motel room and meal expenses) is provided up to the limit stated in your policy. LIABLITY: All homeowners forms include liability coverage, which provides protection in the event you are sued by persons who claim that your negligence caused injury to them or damage to their property. If a suit is filed, your insurance company covers the cost of your defense whether you are ultimately found liable or not, up to the coverage limits shown in your policy. Defense costs will not affect your liability coverage limits. Liability coverage also extends to accidents occurring away from home caused by members of your household, including pets. MEDICAL PAYMENTS TO OTHERS: Regardless of fault, your policy covers accidental injuries to non-residents whether they're injured on your premises of elsewhere if caused by you, a family member or pets. This coverage is also provided up to the limits stated in your policy. DAMAGE TO PROPERTY OF OTHERS: Regardless of fault, your policy covers minor damages (up to $500.) caused accidentally by you or someone in your family to another person's property. Damage caused by children under age 13 is covered, whether accidental or intentional. SUPPLEMENETARY COVERAGES: Reimbursement is provided, up to specified limits, for debris removal, temporary repairs, the department service charges and credit card theft. WHATS NOT COVERED One of the most important parts of either a homeowners, renters or condominium insurance policy is the "exclusions" section. It outlines those perils that are not covered by your policy. A peril is the cause of a possible loss, such as fire, windstorm or theft. Typical exclusions include: floods, earthquakes, landslides, tidal waves, sewer and water backup, seepage, war and nuclear radiation. Other exclusions include: Mopeds and other motorized bicycles Transmission of communicable diseases Home day care-related activity Secondary dwellings on your property Home-based businesses In many cases, you can obtain coverage for these stated exclusions by purchasing "endorsements"' which can also be bought to increase the limits on certain coverage types. ENDORSEMENTS To provide consumers choices, insurance companies offer a variety of coverage options known as "endorsements". Policy endorsements modify or extend the coverage outlined in the basic policy. It is advisable to check into available endorsements when purchasing or renewing your homeowners insurance, based on your particular needs. Common endorsements to consider include: REPLACEMENT COST OF PERSONAL PROPERTY: Your policy may only provide "actual cash value" for property losses, which is its original cost minus its depreciation. This endorsement will insure your property for its replacement cost rather than its depreciated value. SCHEDULED PERSONAL PROPERTY: Certain types of personal property are provided limited coverage by a standard policy. For an additional premium, your valuables can be covered to value. This includes jewelry, furs, cameras, fine arts, stamp and coin collections, and silverware. Companies require appraisals and / or sales receipts for scheduled personal property. EARTHQUAKE COVERAGE: Owners of fame structures will pay less for this endorsement than those with masonry structures, since frame buildings are better able to withstand earth movement. A substantial deductible applies to losses, usually 5-10% of the coverage limits. BACKUP OF SEWERS AND DRAINS: Many insurance companies offer this endorsement providing coverage for sewer and drain backup, which often follows heavy rains or flooding. Some "preferred" homeowners policies automatically provide this coverage. Be sure to check coverage limits and applicable deductibles, as they vary. SUPPLEMENTARY COVERAGES Three supplementary coverages included in all homeowner forms are the Fire Department Service Charge, Debris Removal coverage and Credit Card Theft coverage. The Fire Department Service Charge pays up to $500 for a fire department run. The Debris Removal coverage pays for the cost of removing the debris of covered property that has been damaged by an insured peril, up to a stated amount. The Credit Card Theft coverage will pay up to $500 for the theft or unauthorized use of credit cards or electronic fund transfer cards issued in the policyholders name. TYPES OF POLICIES Most insurance companies offer the following policy forms: HOMEOWNERS 2 (HO-2 Broad Form): Perils covered by the policy are specifically listed. If you do not understand the perils, ask for an additional explanation from your insurance agent or company representative. HOMEOWNERS 3 (HO-3 Special Form): Policy lists perils that are excluded from coverage. This is the policy used by most homeowners. Known as an "open-perils" policy, a peril is covered unless the policy indicates that coverage excluded. The personal property coverage on a HO-3 is the same as a HO-2, but open-perils coverage can be extended to cover personal property as an endorsement. HOMEOWNERS 4 (HO-4 Tenants Form): Coverage for rental property. It covers personal property as well as liability protection and additional living expenses. HOMEOWNERS 6 (HO-6 Condominium Form): Coverage for condominium owners. It covers personal property and building additions and alterations to the insure of the owner's unit. The condominium owner can purchase endorsements to protect property and liability associated with his/her share in the condominium association's common ownership. HOMEOWNERS 8 (HO-8 Modified Coverage Form): Coverage for those who live in an older home whose replacement cost far exceeds its market value. This policy allows the homeowner to carry lower limits of insurance without violating the coinsurance clause. Payment for losses depends on whether the property was damaged or destroyed. HOW PREMIUMS ARE DETERMINED Some of the factors that determine homeowners or renters insurance premiums include: TYPE OF CONSTRUCTION AGE OF HOUSE LOCAL FIRE PROTECTION AMOUNT OF COVERAGE DEDUCTIBLES DISCOUNTS CLAIMS FREQUENCY DETERMINING HOW MUCH COVERAGE TO BUY It's important to know the replacement cost of your home so that you can insure it properly. Your homeowners insurance will fully pay for a partial loss, minus the deductible. If you carry less than 80% of your home's replacement cost, you may have to share in the percentage of loss. If you have not reviewed your homeowners coverage with your insurance agent in the past few years, you may find that you are underinsured. Many companies offer "inflation guard" protection," which automatically increases your policy coverage by a stated percentage annually to keep pace with construction costs. If you would like help in determining how much coverage is the right amount for you, please call the David M. Coleman Insurance Agency.   Welcome | About Us | Services | Products | Contact Us Consumer Information   |   Helpful Links David M. Coleman Insurance Agency, Inc. 190 Currie Hall Parkway PO Box 686 Kent, OH 44240 Phone: (330) 673-0485 Toll Free: (800) 732-0851 Fax: (330) 673-3390 Map to Office: Click Here Email: dcoleman@dmcolemaninsurance.com website design by