Homeowners Insurance

What's the right amount of insurance for my home?

Your coverage should match the value of your home. Homeowners insurance cannot cover the land your home is on, only the structure. That means that the insurance amount could be less than the purchase price or loan amount.

What is "replacement" coverage?

In general, replacement coverage means that in the event of a loss, the insurance company will pay what it costs to replace the property at today's prices.  Different insurers offer different levels of replacement coverage.

Does my homeowners insurance cover my personal property?

Homeowners insurance will also cover the property you own as well as the structure itself.  Your clothing, furniture, appliances, and other belongings will usually be insured up to a maximum limit.

What about special items such as jewelry, works of art, etc.?

A homeowners insurance policy will frequently limit coverage on some special items jewelry, currency, works of art, etc. Homeowners who need additional coverage on these items can usually obtain it for an additional cost.

What about flood insurance?

If your property is officially designated as being in a special flood hazard area, you must obtain flood insurance. While the federal government provides most flood protection, you are responsible for applying and obtaining this coverage.   It's important to know that flood insurance is not included in a standard homeowners policy. The standard homeowners policy also excludes water seepage and sewer backup coverage.  Even if your home is not in a special flood hazard area, you may wish to consider whether you need flood insurance.

Automobile Insurance

What Is Liability Insurance?

Liability insurance helps protect you and your assets if you cause an injury to others or damage the property of others with your vehicle and you are determined to be liable.

If you are judged to be legally liable for an accident, you may be held responsible for property damage, hospital and medical payments, rehabilitative care, lost income and even the pain and suffering of the injured person. You can be sued for the full cost of the damages. If the cost of this loss exceeds the amount of your liability insurance coverage, you may have to pay the rest. So, be sure you have sufficient liability coverage to protect your assets.

Your insurance policy usually describes the amount of liability coverage you have as split limits. Suppose your limits of liability coverage reads 50,000/100,000/50,000. In this example, $50,000 is the maximum the insurance company will pay for bodily injuries to each person in the accident. The maximum amount paid for all bodily injuries, no matter how many people are hurt in the accident, is $100,000. The maximum amount paid for damage to someone else's property in the accident is $50,000. Your Bodily Injury and Property Damage Liability may also be shown as a single limit, e.g., $100,000 Combined Single Limit (CSL).  Minnesota requires drivers to carry a minimum amount of liability insurance of 30,000/60,000/25,000. That means there would be $30,000 to cover injuries to any one person, $60,000 total for all injuries, and $25,000 for property damage.

What Are Collision and Comprehensive Insurance?

Collision coverage pays for damage to your own auto that results from colliding with another vehicle or object, or from a vehicle rollover. Your car is covered no matter who caused the accident.

Comprehensive coverage pays for damage to your auto caused by something other than a collision. This includes theft and vandalism, and disasters such as fire, flood and hail.

Collision and comprehensive coverage's usually do not pay for the total loss. You generally have a deductible, an amount you must pay out of your own pocket before your insurance payment takes effect. Suppose, for example, that you have a $250 deductible. On a loss of $1,000, you would pay the first $250 and your insurance company would pay the remaining $750.  Depreciation will also affect the amount you recover for the damages done to your car. As your car ages and its value declines, the amount you would collect for a total loss declines as well. Your insurance company reimburses you for the actual cash value of your car or its parts, at the time of the loss. For example, if your car was purchased for $20,000, you will get less than your original purchase price to replace it due to the car's "natural" depreciation in value. You can find out the current value of your car by consulting the N.A.D.A. Official Used Car Guide, which is in most public libraries and banks.

Sometimes it may not make financial sense to buy collision and comprehensive insurance on an older car.  Why? Generally, speaking, cars depreciate as they age. The maximum amount that will be paid under Collision coverage is the actual cash value of your car minus the deductible. When making this decision, you need to know, the "book" value of your car, your deductible for each loss, the cost of coverage, and the amount you would receive if your car was "totaled" (after subtracting your deductible from the book value). Only you can decide after considering everything whether the cost of insurance is more economical than the cost of repairing or replacing the car at your own expense.

What Are Medical Payments Coverage and Personal Injury Protection Insurance?

Medical payments insurance covers the cost of doctors, hospitals and funeral expenses of you and/or your passengers, that result from an accident, regardless of who is at fault. This coverage will protect you when you drive another person's car (with permission) or if you or your family are struck by another vehicle as pedestrians. The coverage is relatively inexpensive and generally available with limits between $1,000 and $100,000. It also provides for funeral expenses, when necessary. The availability varies state by state. 

Personal injury protection (PIP) is a form of no-fault insurance required in states with no-fault laws. This coverage is a broader form of medical payments insurance. It pays for medical care, lost wages and replacement services for the injured party (for example, paying for a baby-sitter for children while a mother is hospitalized). It pays regardless of who is at fault in an accident. States with no-fault laws usually limit the right to sue for non monetary damages such as pain and suffering, but you still may be able to sue in cases of incapacitating disability or death. This coverage varies by state and is sometimes an optional offering in states without no-fault laws. In your evaluation of coverage, remember that Medical Payments and PIP also protects your passengers. If you exceed your medical medical coverage on your auto policy, then Bodily Injury coverage may be needed.  Before choosing medical payments or no-fault protection, check with your state's insurance department for details of no-fault coverage in your state. Then review your other insurance policies. If you already have good medical and disability insurance, you may not need to purchase protection in addition to the minimum limits of your state (if Medical Payments/PIP is a required coverage).

What Is Uninsured/Underinsured Motorist Protection?

 If you are involved in an accident with an uninsured driver, you have very little chance of collecting payment for your damages from that driver. Uninsured motorist (UM) coverage* pays the cost of damages and injuries resulting from being hit by an uninsured driver or by a hit-and-run driver. Both you and your passengers are covered for medical expenses, lost wages and other injury-related losses. You may also be able to collect for pain and suffering.

 Similarly, Underinsured motorist (UIM) coverage* will pay for damages that exceed the amount of coverage carried by an underinsured driver. You choose the amount of coverage when you buy this protection.

 *Keep in mind that uninsured motorist coverage and underinsured motorist coverage vary by state law.

What is a deductible?

The deductible is the portion of a medical expense that a plan member must pay before your medical insurance plan will begin to cover any medical expenses. If your plan deductible is $1,000 then you will pay for the first $1,000 of your medical expenses before your plan will begin paying for covered medical expenses. The amount of your chosen deductible can have an effect on your health insurance premiums.

What is a copayment?

A copayment is a set dollar amount or percentage that the plan member will pay for each doctor visit or service. A common copayment percentage is 80/20. This means that the insurance company will pay 80% of covered medical expenses, while you will only pay 20%. Copayment percentages can also effect the insurance premium the plan member is charged.

Things to consider when choosing a health insurance plan:

• What is the monthly or annual cost of the plan?

• Is there a deductible that must be met before the plan begins to cover my medical expenses?

• After the deductible is met what portion of medical expenses will the plan cover?

• What kinds of doctors are part of the plan, and where are the medical facilities located?

• Are their limits on the amount of coverage the plan will offer under certain medical conditions?