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Understanding Homeowners Insurance
A homeowners insurance policy usually covers four kinds of incidents on the insured property: interior damage, exterior damage, loss or damage of personal assets/belongings, and injury that occurs while on the property. When a claim is made on any of these incidents, the homeowner will be required to pay a deductible, which in effect is the out-of-pocket costs for the insured.
For example, say a claim is made to an insurer for interior water damage that has occurred in a home. The cost to bring the property back to livable conditions is estimated by a claims adjuster to be $10,000. If the claim is approved, the homeowner is informed of the amount of their deductible, say $4,000, according to the policy agreement entered into. The insurance company will issue a payment of the excess cost, in this case, $6,000. The higher the deductible on an insurance contract, the lower the monthly or annual premium on a homeowners insurance policy.
Every homeowners insurance policy has a liability limit, which determines the amount of coverage the insured has should an unfortunate incident occur. The standard limits are usually set at $100,000, but the policyholder can opt for a higher limit. In the event that a claim is made, the liability limit stipulates the percentage of the coverage amount that would go toward replacing or repairing damage to the property structures, personal belongings, and costs to live somewhere else while the property is worked on.
Acts of war or acts of God such as earthquakes or floods are typically excluded from standard homeowners insurance policies. A homeowner who lives in an area prone to these natural disasters may need to get special coverage to insure their property from floods or earthquakes. However, most basic homeowners insurance policies cover events like hurricanes and tornadoes.
Understanding
Auto Insurance
Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy.
Auto insurance provides coverage for:
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Property – such as damage to or theft of your car
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Liability – your legal responsibility to others for bodily injury or property damage
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Medical – the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses
Basic personal auto insurance is mandated by most U.S. states, and laws vary. Auto insurance coverages are priced individually (a la carte) to let you customize coverage amounts to suit your exact needs and budget.
Policies are generally issued for six-month or one-year timeframes and are renewable. The insurance company sends a notice when it’s time to renew the policy and pay your premium.
Examples of Specialty Insurance-
Marine Insurance
Take a boat, for example, not everyone owns one, but those who need insurance on it. It’s a costly item that’s prone to damage due to an accident or natural disaster.
Therefore, boat owners benefit greatly from having marine insurance on their watercraft; especially for those in Ocean City, NJ.
Boats and yachts are high-priced items that are devastating to lose and need to be insured just like vehicles. After all, they’re aquatic automobiles, aren’t they?
Flood Insurance
Sadly, most standard insurance policies don’t cover flood damage and separate flood coverage is needed.
Flooding is one of the primary reasons for destruction to homes; which could destroy the structure, plumbing, electrical outlets, and more.
Umbrella/Excess Liability Insurance
There are times when things happen in life that out of your control. Although you might not expect certain events to happen, it’s good to be prepared just in case.
Luckily, umbrella insurance covers claims that extend past your standard policy for home, auto, and marine coverage.
Furthermore, it also protects those who are not members of your household. So, if your neighbor comes over and hurts themselves while in your home, this type of insurance would cover their medical expenses.
It also comes in handy when others try to sue you…
For instance, if your child has a birthday party and all of the kids get food poisoning, the parents could take legal action. In an unfortunate situation like this, your excess liability insurance saves you.
The primary purpose of this kind of specialty insurance is to protect yourself and the things you’ve worked hard for. Let’s say you are sued, it could completely wipe out your retirement and savings account—which is tragic.
Of course, no one wants legal action taken against them, but it’s best to have coverage just in case.