Bodily Injury and Property Damage Liability bodily injury liability applies if you injure another person(s) with your vehicle. It covers medical/funeral expenses, rehabilitation, loss of income, pain and suffering, etc. Property damage liability provides coverage for the property that you've damaged another car, maybe a mailbox or even a building. Liability coverage is always for other people, not for you. You can have either split limits (ex: 100,000 per person, 300,000 per accident, 100,000 property damage) or a combined single limit ($300,000 per accident). At Michelman Insurance Group, Inc. we do not sell minimum liability limits. We care too much about our clients to send them out on the road with low limits.
Uninsured/Underinsured Motorists Bodily Injury and Property Damage protects you if the other driver does not have insurance, does not have enough insurance, or leaves the scene of an accident. Like liability insurance, the bodily injury portion covers a variety of costs besides medical including loss of income, rehabilitation, pain and suffering, etc. for the driver and passengers. It can also come into play if you are in another person's car and they have inadequate coverage for this situation. Uninsured/underinsured property damage is coverage for your car when the other driver has no insurance, not enough of it, or leaves the scene. The property damage portion comes with a deductible of $100-300, depending on the carrier and circumstances.
Personal Injury Protection (PIP) provides medical, loss of wages,
essential services and funeral expenses for you as a driver and everyone else in your car. The coverage is provided on a per person limit, so no matter how many passengers you have, they are all covered. PIP covers you as a driver, a passenger in another car, or as a pedestrian. PIP is considered a "no fault" coverage, meaning the coverage "kicks in" instantly without delay while an accident is being investigated. Since
PIP is used frequently, we do not sell any auto policy without this coverage.
Collision provides coverage for your car when you "collide" with someone or something else. Collision coverage comes with a deductible, which is the amount you pay out of pocket when this coverage is used. For example, if the cost to repair your vehicle is $2,500, and your deductible is $500, the insurer pays $2000. The higher the deductible, the less this coverage will cost. Unless you have a special policy, the most your collision insurance will pay is the actual cash value of your car. Most people think that collision only applies if you are "at fault" in an accident. However, you may wish to use your collision in other instances. One example is if the other driver's carrier is unable to establish fault and there are delays in settling the claim. If you want to get your vehicle fixed promptly, you can allow your carrier to fix it under collision and pay the deductible. Then,
if the other carrier accepts fault, you will be reimbursed your deductible. If you have a loan or lease on the car, the lender will generally require that you carry both collision and comprehensive coverages. If you don't have a loan or lease, you are not required to buy collision...for instance, you may wish to forego this coverage if you have an older car.
However, keep in mind, if you don't have collision coverage, your carrier cannot help you with a collision situation, regardless of fault. So if you had an accident and problems with another carrier, your company cannot get involved fixing your car if you do not have this coverage.
Comprehensive/Other Than Collision this coverage comes into play for situations that do not fall under the definition of a collision loss such as glass breakage, vandalism, theft, or a tree falling on your car in a windstorm. Like collision, comprehensive comes with a deductible and is usually required when you have a loan or lease on the vehicle. Beyond the deductible amount, the insurer will pay to repair your vehicle or pay you the actual cash value of your vehicle if it is stolen or totaled. Again, like collision, you may choose to forego this coverage if your vehicle is older. However, unlike collision, remember that many of these losses are out of your control, so you may want to have comprehensive coverage and not collision.
Loss of Use/Transportation/Rental Car provides coverage to rent a vehicle if your vehicle is in the shop for a covered collision or comprehensive loss. This coverage will have a limit per day and/or a total limit. This coverage does not come into play if your vehicle is in the shop for other reasons such as a tune-up or detailing. (There is also another coverage situation with rental cars and that is when your vehicle is perfectly fine, however, you choose to rent a car... in many situations your coverage may extend, though you should contact us to know the conditions and any restrictions).
Towing and Labor pays for towing and minor labor costs if your vehicle is disabled. Your policy may have a limit per incident or a roadside service. Labor includes services that can be done at the site such as changing a tire, or paying for a locksmith if you lock your keys in the car. Towing can have a limit per incident. Your policy will indicate the limit if there is one.
Auto Loan/Lease Coverage pays the difference between the actual cash value of your vehicle and the loan/lease amount. If you total your car and don't have this coverage, the insurer will pay the actual cash value of the car, however, in many cases, your loan amount is greater than what the car is worth. This coverage will pay off your loan or lease. If you do not have a loan or lease, you do not want this coverage.
(Homeowners, Condo, Renters, Dwelling Fire Policies)
Dwelling this coverage is the amount provided to repair or replace the dwelling subject to a deductible. The limit is based on the anticipated replacement cost of the home, not the market value or the assessed value. Market value is what the home and land will sell for and takes into account the re-sale value, location, proximity to schools, recent sales of similar homes, etc. The assessed value is what you get from the tax assessor to determine how much tax you will pay. The replacement cost takes into account things like the age of the home, the materials used, where it is located, square footage and features. Replacement cost also includes costs such as permits and debris removal.
Replacement Cost Guarantee -
indicates that the contract provides extra coverage for the dwelling in the event of a total loss. Most carriers these days have a cap of 120-150%. Here's an example: let's say you have a home insured for $500,000, and the home burns to the ground. If you have the home replacement guarantee with a 125% cap, the insurer will pay up to $625,000 to replace the home (125% of $500,000). If there is no cap, then the insurer will pay above and beyond the dwelling amount with no limit until the home is re-built like before. If you do have a cap, it is imperative that you review your dwelling limits regularly and report any improvements or remodeling to your agent so your dwelling amount keeps up.
Replacement Cost Endorsement
this means you will get your current home rebuilt with new materials, with no deduction for depreciation. This is why a home assessed for $200,000 can cost $300,000 to replace. If a tree falls thru your roof that is 10-years old, and you choose to replace it, you are going to get a new roof, the insurer will not depreciate the roof unless, perhaps you choose not to repair it, which most likely won't happen.
Other Structures these are items that are not attached to the home such as sheds, hot tubs, garages, etc. Most homeowners policies will provide 10% of the dwelling amount for other structures with no extra charge. So, if your home is insured for $500,000, you will receive $50,000 for outbuildings coverage. This coverage is subject to the deductible you choose.
Personal Property - this is all your "stuff" like clothing, furniture, linens, electronics.
With most homeowners contracts, you will get 50 75% of the dwelling amount for your property automatically, however, this coverage can usually be increased. So, with our $500,000 home, you would have $250,000 - $375,000 for your personal property. Your property is covered anywhere in the world...while you are traveling, or in the car. However, remember that there is a deductible with this coverage. So, if you have a theft from the car, you will have a deductible on the auto policy, and a deductible on the homeowners/renters/condo policy.
Another thing to know is that all property contracts will have internal limits for certain types of property. For example, any contract will have a limit for theft of jewelry, silverware, guns, and business property. As an internal limit, you may have a maximum of $1000 - $3000 total for theft of jewelry subject to the policy deductible. Some policies also have a per item limit. To avoid being disappointed during a claim, it is a good idea to review these limits with your agent. If you need more coverage, you can usually add it to your policy to fit your needs
Full Value Contents you get "new for old" for your personal belongings in the event of a covered loss. However, with most contracts there is a condition that you have to replace the item(s). If you don't, you will get the actual cash value amount which accounts for depreciation. Example: you have a jewelry box that is stolen from your home. Because it is ten years old, and has some scratches, it is worth $300.00. If you choose not to replace it, or you don't know if you wish to buy another one, the claims adjuster will send you a check for the actual cash value amount, $300.00. You receive the check, but in the interim, you decide to replace the jewelry box. A new one of the same type is $900.00. You buy the new one for $900.00, send the receipt to the claims adjuster and they send you a check for the difference, or $600.00.
Loss of Use
this coverage pays for extra expenses incurred if you have to live somewhere else in the event of a covered loss.
Example: you have a smoke damage loss, and your family cannot live in the home for a week while the home is being repaired and
cleaned up. The policy will pay the extra expenses for you and your family to stay in a hotel and the extra expenses incurred for eating out. It does not pay for "regular expenses" that continue,
like your mortgage payment. Some insurers have a dollar limit which is often just a percentage
of the dwelling amount and some carriers have a time limit. Many insurers include this in the home contract
so you are not paying extra for this coverage.
Fair Rental Value this coverage applies in situations where you are a landlord. This coverage pays for the rental income in the event of a covered loss. For instance, if your rental
home burns down, and takes six months to rebuild, you would get six months of rent. However, keep in mind that, whether it comes with the policy or you have to add it, there is a limit to this coverage. In most cases, the limit is 10% of your dwelling amount over a twelve year period. Example: you have a $100,000 rental. The policy gives you $10,000 per year for this coverage, divided by 12 months, equals $833 per
month. You can buy extra coverage if the amount included in the policy is not adequate.
Personal Liability this coverage comes into play when you are liable for bodily injury or damage to someone or something else. Remember, auto liability protects you for the injuries/damage you cause when operating a vehicle. Personal liability protects you for the injuries/damage you cause as a person. Example: you leave a hose out on your walkway, and your guest trips and injures their back. They incur costs for medical expenses, rehabilitation and time off work.
Since you were negligent in leaving the hose out, you would be liable for the damages. Personal liability follows you anywhere you go. Sports is another example: you are playing golf, and accidentally hit the ball into someone's eye, causing serious injury. You would be covered under personal liability. This coverage extends to household members and your pets. If you child is playing baseball and hits the ball into your neighbor's car, or if your dog "Sparky" bites a guest, there is coverage under personal liability. There is no deductible with this coverage.
Medical Payments this pays for medical and first aid expenses for others in the event of an injury
caused by your activities. This coverage does not apply to you or regular residents of your household. An example: your child has a friend visiting, and the friend falls and sprains his ankle. The medical treatment is $350.00. Your insurance carrier would rather pay for this loss, regardless of fault, to promptly rectify the situation. If they didn't, the loss could escalate to a large personal liability claim. Like liability coverage, no deductible applies.
Building Ordinance/Rebuild to Code Coverage
pays for the extra costs incurred after a covered loss to bring the home up to code. Many people do not realize that most homeowners contracts limit this coverage, usually to 10% of the dwelling limit. So, if you have an older home, it is important that you consider increasing this coverage. Code does not apply to just the electrical system it applies to what materials can be used, or things like the design of the building. Lets say you have a smoke damage loss, and it affects the kitchen and lower floor of your two story 1940 home. After the loss, you discover that building code requires that you re-design the stairs so that they are less steep, create extra vents in the foundation, change the windows. These extra costs are what is paid for under building ordinance coverage.
Earthquake Since the peril of earthquake is excluded on property policies, you have to buy it as an additional coverage and often on a separate policy. In the
Northwest, earthquake coverage is becoming harder to buy because of the likelihood of the event. Most carriers will have requirements in order to offer this coverage such as proof of retrofitting (home bolted to the foundation), pictures of the front and back of the home showing how the dwelling is situated on the land, and proof that the water heater is strapped. Homes built after 1980 are usually retrofitted. For more information on retrofitting, check out our link page.
Earthquake coverage comes with a different deductible than what you have on your homeowners policy. It is usually a percentage such as 10%. So if your home is insured for $500,000, your deductible is $50,000. The deductible may apply once, or apply to each line of coverage. Any loss below that deductible is not covered. Also keep in mind that earthquake policies have exclusions for things like chimneys, walkways, pools, brick veneer and breakables such as art.
Flood this is also excluded under your
property policy. This is not the same as water damage. Flood, for insurance purposes, refers to uncontained water over a large area. The National Flood Insurance Program (NFIP) came about through a government program called FEMA
the Federal Emergency Management Act to ensure that property owners in flood areas could buy flood insurance. Areas are assigned a flood zone, which indicates how likely it is that the area will suffer a flood. If you buy a home located in a higher risk flood zone, your mortgage company will require that you carry flood insurance in addition to your homeowners insurance. Check out our link page to look up your flood zone.
Scheduled Coverage many clients choose to purchase additional insurance for items that are limited in the policy. Items that are valuable, breakable, transportable or all of the above are good candidates. When you buy scheduled coverage for an item, that item is insured for a specific amount with no deductible and broader coverage. For instance, you may choose to schedule your wedding ring because your homeowners policy does not provide adequate coverage. If you schedule your ring, it will be covered for anything unless it is excluded in the contract. It would be covered if you lost it down the drain, for example, though it would not be covered for gradual deterioration because this is an exclusion on the policy. If you have a valuable that you are concerned about, talk to your agent to see if scheduling would be appropriate.
Condominium Building Items These include additions, alterations, appliances, fixtures, installations and improvements which are inside your unit and your responsibility to insure under the condominium association agreement. Also included are items of real property that pertain to your unit or structures owned by you (not the association) on the premises of the described condominium. In most cases, you will have a base amount of coverage for condo building items and you can increase that limit to fit your needs.
Loss Assessment If an Association experiences a claim on their policy, there could be costs that are not covered and assessed to each unit member. This could be either a property loss (windstorm) or a liability loss (drowning in the pool). Earthquake claims are excluded from this coverage. Your carrier may have a deductible or may have a per occurrence limit with this coverage. Every policy will have a base limit of loss assessment coverage which can usually be increased.
Identity Recovery/Fraud Coverage This is a fairly new option that some carriers offer. In some cases, the insurer offers a monetary limit such as $10,000 to cover expenses incurred if your identity is stolen (notarizing costs, lost income, attorney's fees, loan fees). Other carriers offer a case management service to assist you during this process, and some offer a combination of both.
Water/Service Line Coverage pays for service line repairs and for damage to outdoor property caused by repairs. Examples (underground pipes and wiring that bring service to the home). There will be a limit and deductible for this coverage. For example, you could have a limit of $10,000 with a $500 deductible.
*These explanations are intended to give you a quick summary. They do not expand or alter your coverage. Please review your contract for specific details.