Insurance basics:


Paying for your insurance:

Homeowner's Insurance:

Auto Insurance:

Umbrella Insurance:

Worker's Comp:

What if I don't see my question here?

What does "Liability" insurance cover?

Quite simply, liability insurance is insurance that you buy to "protect other people." It covers the monetary "damages" (up to your policy limits) you may be legally responsible to pay in the event of an accident or claim that is determined to be your fault.

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What does "Property" insurance cover?

This is the insurance that you purchase to protect your own property. Depending on the type of property you have, you may need a personal property insurance policy (to cover your home and it's contents) or a commercial property insurance policy (to cover your business and it's property). There are also very specialized policies to cover Fine Art collections, Musical Instruments, Guns, Coins, Jewelry, and many more.

What is a Deductible and how does it work?

A deductible is a set amount that you agree to be personally responsible to pay in the event of a claim or loss. Deductible amounts can be very small to very large amounts; it all depends on how much "risk" you are comfortable taking on personally or on the type of policy you are purchasing.
Traditionally the higher the deductible the lower the annual premium, but even this needs to be looked at closely to make sure it makes sense. You may save a $100 dollars a year by choosing a high deductible, but how many years do you have to be "claim free" to add up to the additional amount you may have to pay. You should be looking closely at the deductibles on your policies to make sure they make sense for you. Definitely talk to your agent about what is appropriate for you.

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I Know "High Limits" are good, but why?

Typically this question is associated with Liability insurance limits and most often with people asking about their Auto insurance. So we address this in the Auto section below, but still wanted to provide an overall answer as well. So, Yes, High limits are good. They're good because ultimately they protect you (the policy holder) from being personally responsible for paying out damages for any "accidents" you cause.
Particularly in California where lawsuits and large judgments are commonplace, your insurance policy is often the only thing that stands between you and the possibility of losing your home, business, or even bankruptcy. Even if you believe that, "you don't have anything" for anyone to take, did you know that they can garnish your wages or attack what are called "future earnings"? So, even if you're young, especially if you're young, high limits are there to protect your future and the life you're hoping to build.
Beyond personally protecting you and your future, high limits will allow you to try and "set right" a situation where you may have hurt another person. Higher limits may allow you to, at least from a financial standpoint, do the right thing that lets the injured party recover at least some of what they may have lost, because of something you were found liable for causing.

General Info:

Well, what limits should I have?

The typical individual consumer needs to be concerned with two types of coverages, either property (which covers your stuff), or liability (which covers other people and their stuff).

For property coverage (your home, your contents, jewelry, etc.) it is important that your limits are at least equal to the actual cost to replace your stuff. If you are underinsured, you risk incurring some penalties if there is even a small claim.

For liability coverage you should be certain to carry a high enough limit that will reflect your income earning potential as well as the value of your assets.

Talking with one of our insurance counselors can help you establish what those limits might be.

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Why should I use an agent/broker, instead of online services?

An independent insurance agent typically represents several different insurance companies. Not only can they check with all of these companies at once to make sure you are receiving the best price, but an agent can also make certain that you are buying a policy that fits your needs and adequately covers all of your exposures.

Working with an agent means that you can consult with a live person whenever you have questions or concerns. Call them on the phone, email them, or just walk into their office and ask to speak with someone. When you work with an agent, you wil always be able to find the assistance you need.

How do I cancel my policy?

To cancel your policy you may either contact your insurance company's service center and request the cancellation, or you can speak with your agent / account manager. You will probably need to sign a form (sometimes called a "Lost Policy Release" or LPR).

You can always decide to simply stop paying your bill, but that can often times result in unwanted (and usually unnecessary) late fees or other charges being applied to your account.

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How do I reach my insurance company?

There are three main ways to get in contact with your insurance companies. Most companies have a Service Center that you can call and speak to someone that will answer questions regarding claims, billing, help you make changes, etc. Most companies will also have a website where you can check your bill, make payments, and sometimes even request changes.

The last way is to simply get in touch with your agent or account manager. Many times they can quickly and easily answer any of the questions you might have, or assist you with making changes to your existing policies.

How do I save money or get discounts on my insurance?

The easiest way to save money on auto insurance is to keep your driving record clean of tickets or accidents. So lighten up on the accelerator and make sure you actually stop when you see a red light.

Another simple but effective way to save some money is to insure your home and your autos with the same insurance company. Most companies will provide a "Multi-Policy Discount", and if you're not taking advantage of that, you are likely over paying.

Many insurance companies also offer discounts based upon certain other qualifying factors, such as your profession, security systems, protective devices, etc. To ensure you are getting all the discounts you think you are entitled too, be certain to have a discussion with your agent.

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What does it mean when someone says they are "Bonded & Insured"?

Most businesses, especially contractors, will advertise that they are bonded and insured. This simply means that they carry the appropriate type of bond required for their business license (frequently this is required by the state or other governmental department), or that they carry a bond to protect you (their customer) against potential theft or dishonest acts by their employees.

When they claim to be "insured", that means they have liability insurance to help protect you and your stuff in the event the services they are providing injure someone or cause property damage.

Paying for your Insurance:

How can I pay my bill?

There are a few easy ways you can pay your insurance premium these days. Most insurance companies will let you make a payment via their website, or you can call their service center and make a payment by phone. And you are always welcome to stop by your agent's office and make your payment in person.

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What is the grace period for paying my bill?

The grace period is a bit of a myth that has done a lot more harm than good. When your insurance company issues an invoice, it will have a stated due date on it. If your payment is not received by the due date, a notice of cancellation will be issued. The cancellation period will typically be anywhere from ten days to two weeks, during which time you can make your payment and your policy will probably be reinstated with no problems.

However, if you do not make your payment by the cancellation date, your policy has effectively ended and you are without coverage. You can try to still make a payment, and sometimes the company will be lenient, but they are under no obligation to reinstate any policy if payment is made after the cancellation date.

What kind of fees are there on an insurance policy?

When an insurance policy is issued, technically the entire premium is then due. However, nearly all companies will allow policyholders to make some form of installment payments. For this added convenience, the insurance company typically charges a fee. The installment fee will ranged from just a few dollars per month to upwards of $30 or $40 per month, depending upon the size of your premium.

Most insurance companies will also assess late fees if you do not make your installment payments on time. Late fees also range in size from around $10 to potentially $50 or more. But rather than worry about the size of late fees, it is always best to simply try and get your premium payment in on time.

If you make a payment for your policy with a check, and there are not sufficient funds in your account to cover the check, the insurance company will charge you a NSF fee, usually of about $25. Your bank may also charge you additional fees for writing this check when you did not have sufficient funds to cover it.

Finally, some policies may come with a broker fee on them. This happens when the insurance company is paying your agent / broker little to no commission on the policy. So in order to cover their costs, the agent has to charge a small fee to service the policy. The good news is that most policies written by preferred companies will not have any broker fees associated with them.

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Homeowner's Insurance:

What is the difference between Market Value & Replacement Cost?

This has been a hot topic over the last few years as Home prices continue falling. The simplest way to put it is, Market Price is the approximate amount for which your home could be purchased at any given time and Replacement Cost tries to estimate the cost to rebuild your house "exactly" as it stands right now in the event of a loss.

The biggest difficulty in understanding these two concepts is the fact that (especially right now) they are often dramatically different amounts. Because of the surplus of Homes and lack of buyers at the moment, market prices are way down. But why does Replacement Cost continue to rise when Home prices are decreasing? Well, the most direct reason is that the cost of materials and labor continues to rise and drives the cost to rebuild your home past the price of simply purchasing a new home at today's rates. There are other factors at play as well, including the added costs and care that needs to be taken when only partially rebuilding a home.

What is a Replacement Cost Estimator?

This is a tool that your insurance company uses to try and calculate the cost of replacing your home or building in the event of a total loss to the property. The forms contain many detailed questions in hopes of determining an accurate price.. So, your agent isn't being nosy by asking what type of cabinets you have, or how much carpet you have in your home...they just want to make sure they are offering you the right amount of coverage for your home or building.

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Is all of my Stuff covered?

The Homeowners or Renter's policy you purchase, typically has coverage for your personal belongings, most often described as "contents" or "personal property." This is a faq that should be looked at very closely to make sure in the event of a major loss like a fire or burglary, you will be able to replace those things you have worked so hard to acquire. Most often the insurance company will assign a value to your contents based on a percentage of the limit established as the "replacement cost" of your home (Renter's will be asked to establish a limit on their own).
There are many factors to consider when trying to determine the right amount of coverage you will need for your "contents." Most people will focus on big items like furniture or TV's, but don't forget to consider how quickly replacing things like plates, silverware, kid's toys, or even socks may add up. If it seems overwhelming there are specialty software systems available to help you determine the value off your "stuff," like the free one at the Insurance Information Institute's website (www.iii.org).
Other special consideration should be taken if you have anything that might be considered a "specialty" collection or item, such as musical instruments, jewelry, guns, art, comic books, etc. Most policies have built in "sub-limits" that state they will only pay a set amount for these types of items, no matter what your overall "contents" coverage may be. You should definitely speak with your agent about any possible "sub-limits" in your current or future policies.

Auto Insurance:

Why do I need high auto limits? And why are they so expensive?

High auto limits are a necessity to protect your personal assets and belongings, and even your potential earnings. In this day and age, even "small" auto accidents can quickly turn into five or six-figure settlements. And with the prevalence of attorneys and lawsuits, having high limits simply means you will have enough protection to withstand these sometimes frivolous lawsuits.

If you are involved in an auto accident and do not have high limits, it does not mean you will not get sued or have a large judgment rendered against you. It simply means that the court could potentially attach the settlement to your future earnings, sometimes taking 20% or 30% of your gross paycheck until the settlement is paid off.

High limits are not as expensive as you think they might be. Often times you can get an additional $50,000 or $100,000 of auto liability protection for as little as $10 or $20 a month.

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What does 15/30/10 even mean?

Often times insurance agents will rattle off this string of faqs or something close to it as they sit and review the auto quotes with their prospective clients. Too often though, most insurance buyers don't know what that series of faqs even means...they just think, "Whew I'm covered, so off I go."
Well, this is actually a really important string of faqs because they represent the total amount of liability coverage you have in the event of an auto accident. They are the maximum amounts your insurance company will pay on your behalf "per person/per accident/ in property damage. So, let's take a look at the 15/30/10 string above, these are the minimum limits currently required by the state of California. They mean in the event of an accident the most your policy will pay for the other driver's (or their passengers) injuries is $10,000 per person with no more than $30,000 being paid out for the whole accident. And that last 10 means that your company will only pay a maximum of $10,000 for any property damage you may cause.

I have ten days to tell you I bought a new car, right?

Technically yes, your auto policy will usually give you a few days leeway to report new vehicles and have them added onto the policy. However, it is always a good idea to let your agent know right away when you purchase a new vehicle. Newly purchased vehicles will only be covered for things like Comprehensive & Collision coverage if the vehicles already listed on your policy have that coverage as well. If none of your current vehicles have Comp. & Collision, and you are waiting to add on the new vehicle, you could be out of luck in the event you are involved in an accident. Also, if your policy is about to renew, it is important to get newly purchased vehicles reported right away, as once the policy renews, any owned but unscheduled vehicles will cease to be covered.

Don't think the dealership will make the call for you; it's your policy and only you can make any changes.

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What is Med Pay? How does it work?

Med Pay, or "medical payments" is a no fault coverage that covers passengers of your vehicle, or anyone that you might hit, for minor or incidental medical treatment they might receive as a result of an auto accident. "No fault" means that even if you did not cause the accident, your policy will pay for these medical services just to make certain your passengers or other individuals are able to receive the treatment they need. Even if the people have health insurance, Med Pay will help pay their deductible, co-pays, prescription costs, etc.

Med Pay is typically written at a limit of $1,000 or $5,000 per person. Though some companies will offer higher limits if requested.

What if I use my vehicle for work?

Most personal auto policies will let you use your vehicle for incidental work related driving. So if you are a salesman and drive to meet clients, or sometimes run errands for your business (like going to bank or the post office), those incidental activities would likely be covered with no problem.

Where trouble comes is when you are transporting or delivering people or goods as part of your business. So if you are delivering pizza, or packages, or driving people around town (like a chauffeur or taxi service), your personal policy will almost certainly not cover you in the event there is an accident. For this type of exposure you will definitely need a commercial auto policy. The cost is usually a bit higher, but your independent agent can definitely help you find the policy that will cover you at a premium you can afford.

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Umbrella Insurance:

An Umbrella covers everything right? If I have one, I don't need high limits or full coverage do I?

What an umbrella does is provide additional liability coverage over and above your existing liability policies.

So a personal umbrella will extend over your homeowners policy, which provides your personal liability coverage, as well as your auto policy. It will probably also extend over other personal policies as well, such as a personal watercraft / boat policy, motorcycle policy, jet skis, etc. In the event you cause an accident or injury, and are sued as a result of it, you will have the limits from the underlying policy, as well as the umbrella policy, to cover the costs of the lawsuit and any resulting judgments that might be issued against you.

An umbrella does not provide any additional property coverages. So if your home burns down as a result of fire, the umbrella will not pay you an extra $1,000,000 to rebuild a mansion. Nor will the umbrella cover your Picasso that you neglected to properly schedule on an art floater / policy.

All umbrellas will have a minimum limit that the underlying policies need to meet in order for umbrella coverage to apply. If your personal liability or auto liability limits are not high enough, then either the umbrella will not cover them, or you would be responsible for paying the difference in the event of a large claim. Typically it is rather inexpensive to raise your limits high enough for the umbrella to apply.

Worker's Comp

When do I need workers' comp.?

As soon as you hire someone, you need to have the proper coverage in force. This is state law and it is a misdemeanor to not have your workers' comp. policy in place. Employers that do not have a workers' comp. policy are subject to fines. So if you are thinking about hiring employees, contact your agent right away. Typically you can obtain a quote for workers' comp. in less than twenty-four hours.

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What does a Worker's Comp policy do?

Workers' comp. is a statutory policy. This means that it is required by the state, and also that the policy coverages are strictly regulated. All workers' comp. policies will provide the same coverage, regardless of which company you purchase it from. In the event one of your employees is injured on the job, your policy will pay for both their medical treatment, as well as pay them a percentage of their salary while they are off the job and recuperating. In the event of serious or life altering injuries, your policy will pay for your employee to have continual medical care, or be rehabilitated to learn new job skills.

The policy is based upon your annual payroll. The more payroll you have in a year, the bigger your premium will be. The policy is first issued simply using a payroll estimate, and then at the end of the year a final audit is done and the payroll is "trued up". If your actual payroll came in less than what was estimated, you will probably receive a refund from the insurance company. If your payroll comes in higher than estimated, you will owe additional premium to the company.

What is an Ex Mod?

An Ex Mod, which is short for Experience Modification, is a factor used in determining the premium for your workers' comp. policy. Once your policy reaches a certain premium size, an independent / third party organization known as the Workers' Compensation Insurance Rating Bureau (WCIRB) will assign your business an Ex Mod. The Ex Mod is determined by your last several years worth of payroll, as well as any claims you might have had.

If your business has not had any claims, or they have been very small in comparison to the payroll and premiums you have paid, you will receive a "credit mod", which means you will be paying less than the assigned rate for your classification. For example, if you have never had a claim, and the WCIRB assigns you an Ex Mod of 80%,that means you will be receiving a 20% credit as compared to other businesses in your industry.

Conversely, if your business has had either several claims (Frequency), or perhaps just one or two large claims (Severity), the WCIRB will assign you a "debit mod", which means you will be paying more than other businesses in your same classification. Debit mods can range from 101% up to 300% or 400% in the event of extreme claims problems.

Your agent can help you work with your insurance companies to achieve the lowest Ex Mod possible. This is usually done by coordinating with the insurance company and ensuring that claims are closed on a timely basis, or claim reserves are lowered as the injured employee recovers.

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What if I don't see my question here?

Just ask us. Feel free to click on the "Contact Us" button above and submit a question directly to us or you can post it on our Facebook page; we'd be happy to respond and help you out. You should also feel free to contact one of our agents if you prefer an "in-person" explanation.