Glossary of Insurance Terms

Thursday, May 22nd, 2014

We at Agency by the Mall know the language used by the insurance industry can be confusing. We want to make sure that you clearly understand your options and know precisely what you’re paying for.

Here are some terms we use for types of coverage. There are also a variety of other terms that might be unfamiliar to you. We hope this glossary helps make the world of insurance easier to understand.

Additional Living Expenses 

If you can’t live in your home because of a covered loss, your insurance company may pay the necessary increase in living expenses while damage is assessed and your home is repaired or rebuilt.

Broad Form Liability Coverage

Helps protect you from expenses related to injuries or property damage you or your watercraft cause in an accident. Some policies also cover certain accidental fuel spill liabilities and wreckage removal.

C.L.U.E.

Comprehensive Loss Underwriting Exchange is a claims history database that enables insurance companies to access consumer claims information when they are underwriting or rating an insurance companies to access consumer claims information when they are underwriting or rating an insurance policy. It typically contains up to five years of personal auto or personal property claims history. You can order a C.L.U.E. report from LexisNexis Personal Reports or call 1-866-312-8076. You may also request a copy from the seller of a home you are purchasing or thinking about purchasing.

Collision Coverage

This type of coverage pays to repair your auto, classic auto, motorcycle, RV damages caused by an accident. One of our agents can help you determine the limits you need based on the agreed value of your vehicle.

Comprehensive Coverage

This type of coverage pays to repair or replace your vehicle if it is stolen, vandalized or damaged in some way other than in a collision. It may include loss from fire, cracked windshields, floods, falling objects, and wind.

Custom Parts and Equipment Coverage

Many motorcycle owners like to customize their rides, and some policies pay for customized parts and equipment, often at no extra charge. Ask one of our agents for details.

Deductible

When you get insurance, you agree to pay up to a certain amount out-of-pocket in case of a loss. This amount is called your deductible. The deductible you choose often affects how much you pay for your premium. For example, a higher deductible usually means a lower premium. In the case of a covered loss, you’ll only be required to pay your deductible, and the insurance company usually covers the rest, up to the applicable limit for that loss under your policy.

Emergency  and Roadside Assistance

For auto, boat and personal watercraft, emergency assistance pays for the cost of towing or emergency service. For RVs, it also covers housing and transportation costs if your RV becomes uninhabitable and covers the loss of personal property in your RV. Some policies also provide roadside assistance for motorcycles.

Excess Liability

Sometimes used interchangeably with “umbrella”, excess liability refers to extended liability coverage. This coverage is meant to supplement your insurance coverage if the damages exceed your liability coverage. Be sure to talk to one of our agents about what your excess liability covers.

Fidelity Coverage

Companies and businesses often purchase this coverage to protect them against loss from employee dishonesty (such as theft of money, equipment, or other assets).

Identity Theft

Identity theft occurs when someone steals your personal information and uses it to open accounts or incur charges without your permission. Thieves can access your personal information in a variety of ways, including stealing your personal mail, your wallet, or hacking your computer files. The thief then uses your identity to rack up debt in your name or to issue fake IDs.

Indemnity

Providing indemnity means to financially restore someone after a loss through payment, repair or replacement.

Insurance Score

A Credit Based Insurance Score (CBIS) is derived from information on your credit report. It is a number that measures likelihood of having an insurance claim–not a measure of credit worthiness. Insurers us CBIS along with a number of other factors including driving records, claims history, and the type of home or vehicle owned, to evaluate new and renewal auto and homeowner insurance policies. Most states have rules about how information can be used in insurance. Contact your state’s Department of Insurance for the latest information on your state’s rules.

Medical Coverage (Home)

This type of coverage covers medical expenses for guests if they are injured on your property, and, in certain cases, people who are injured off of your property. It does not cover healthcare costs for you or other members of your household.

Medical Coverage (Auto, Boat/Personal Watercraft, Motorcycle, RV)

This type of coverage provides medical expenses incurred from an accident for your passengers and yourself.

Liability and Personal Liability Coverage

For homeowners, this coverage applies if someone is injured or property is damaged and you are to blame. The coverage applies anywhere in the world. When choosing liability coverage for your home, auto, boat, personal watercraft, or RV, consider how much money you make and what you own. Your liability coverage should be high enough to protect your belongings if you are sued.

Personal Property Coverage

Your home is filled with furniture, clothes, sports  equipment, and other items that mean a lot to you. This coverage helps repair or replace these items if they are lost, stolen, or destroyed as a result of an insured event.

Personal Watercraft (PWC)

A personal watercraft (PWC) is as recreational watercraft that the rider sits or stands on, rather than inside of, as in a boat. Models have an inboard engine driving a pump jet that has a screw-shaped impeller to create thrust for propulsion and steering.

Premium

Simply put, a premium is the payment you make in exchange for one term of policy coverage. The higher the premium, the lower the deductible.

Property or Dwelling Coverage

This type of coverage typically pays to repair or rebuild your home if it’s damaged or destroyed by an insured event.

Scheduled Personal Property Coverage

If you have special possessions such as jewelry, art, antiques or collectibles, you may want to talk to one of our agents about this additional coverage.

Umbrella Insurance

Umbrella insurance is the coverage that may kick in when your losses under other insurance policies, such as homeowner’s and auto coverage, have exceeded policy limits.

Underwriter/Underwriting

Underwriting is the process of assessing risks  when deciding whether to issue a policy of insurance.

Uninsured/Underinsured Motorist Coverage

This type of coverage pays for damages associated with bodily injury or death from an accident caused by an uninsured, underinsured, or hit-and-run driver, as defined by the law in the jurisdiction where the accident occurred, who is at fault.

Unattached Equipment Coverage

This type of coverage pays to repair or replace equipment that isn’t permanently attached to your boat or personal watercraft. This includes items like life jackets and water-skis.

 

Insurance FAQ

Tuesday, May 20th, 2014

*Insurance FAQ provided by Agency by the Mall*

Q. What kinds of questions should I expect to be asked when I’m applying for an insurance policy in Pennsylvania or Delaware? Why do insurers need so much information?

A. When you apply for an insurance policy at Agency by the Mall, you will be asked a number of questions. For example, one of our agents might ask your name, age, gender, address, etc. You will also be asked a series of more specific questions which will be used to determine how likely you are to make a claim.

When Agency by the Mall is looking for the best auto insurance for you, we need to know about your previous driving record, whether you have any recent accidents or tickets, and what type of car will need to be insured.

Agency by the Mall offers a variety of programs for different programs for different customers. Adults with good driving records will generally pay less for car insurance than young drivers with traffic tickets. In order to determine which program you qualify for, Agency by the Mall will need basic information about you. Age, gender, driving experience, and information about the car you drive is also needed to determine a fair price. For example, a large luxury car costs more to repair or replace than a compact car. Also, someone in Philadelphia or Wilmington who commutes 30 miles each way is more likely to be in an accident than someone who commutes via bus and only drives on weekends.

Q. What are the advantages to using an agent to purchase insurance?

A. By using an independent agent such as Agency by the Mall, the policyholder receives more personalized service. We find our customers the very best deals for them, all while they enjoy complimentary coffee or tea and candy.

Having direct contact with Agency by the Mall can be very important when purchasing insurance and absolutely necessary when filing a claim. Agency by the Mall delivers quality insurance to residents of Pennsylvania and Delaware with competitive pricing and local, customized service.

CAR INSURANCE FAQs IN PENNSYLVANIA

Q. I have an older car whose current market value is very low–do I really need to purchase car insurance?

A. Pennsylvania has an insurance law that requires drivers to have at least some car liability insurance. This law was enacted to ensure that victims of car accidents receive compensation when their losses are caused by the actions of a negligent individual.

Often times the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually “total” the car and give you a check for the car’s market value. Many people with older cars decide not to purchase any physical damage coverage.

Q. What is the difference between collision physical damage coverage and comprehensive physical damage coverage?

A. Collision is defined as the losses you incur when your car collides into another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.

Comprehensive provides coverage coverage for most other direct physical damage losses you might incur, including theft. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.

Q. What factors can affect the cost of my car insurance in Pennsylvania?

A. A number of factors can affect the cost of your car insurance in Pennsylvania–some of which you can control and some that are beyond your control. The type of car you drive, the purpose the car serves, your driving record, and where the car is garaged can all affect how much your car insurance will cost you in Pennsylvania. Even your marital status can affect your cost of insurance. Statistics show that married couples tend to have fewer and less costly accidents than those who are single.

HOMEOWNERS INSURANCE FAQs IN PENNSYLVANIA

Q. What are some practical things I can do to lower the cost of my home insurance? 

A. There are a number of things you can do to lower the cost of your homeowners insurance. The easiest thing to do is request a comprehensive review of your policy and your needs from Agency by the Mall.

It’s not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sre each insurer is offering the same coverage.

Another way to lower the cost of your home insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you insure both your car and your home with them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system.  Be sure to ask our agents about any discounts that you may qualify for.

Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium by as much as five or ten percent.

Q. Why do I need homeowners insurance?

The typical homeowners policy has two main sections:

  • Section I covers the property of the insured
  • Section II provides personal liability coverage for the insured

Almost anyone who owns or leases property has a need for this type of insurance. Usually, lenders require homeowners insurance to obtain a mortgage.

Q. What is the difference between “actual cash value” and “replacement cost?”

Covered losses under a homeowners policy can be paid on either an actual cash value basis or a replacement cost basis. “Actual cash value”  entitles the policy owner to the depreciated value of the damaged property. Under the “replacement cost” coverage, the policy owner is reimbursed on an amount necessary to replace the property with one of similar type and quality at current prices.

Q. What factors should I consider when purchasing homeowners insurance?

A. There are a number of factors you should consider when purchasing homeowners insurance:

  • Determine the amount and type of insurance you will need. The coverage limit of your house should equal 100% of its replacement cost. If your policy limit is less than 80% of the replacement cost of your home, any payment from your insurer will be less than the full cost to replace your home, and you’ll have to pay the rest out of your own pocket.
  • Decide if the personal property and personal liability limits are adequate for your needs.
  • Decide which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement, an earthquake endorsement or a jewelry endorsement?

Once you have decided on the coverage you want in your homeowners insurance policy, please consult us at Agency by the Mall. Our agents will be able to help you determine if there are any gaps in coverage that you might not have been aware of, explain the details of the policy’s exclusions and limitations, as well as recommend an insurance company that will meet your expectations and needs.

Q. What are the policy limits (coverage limits) in the standard homeowners policy?

A. According to the Insurance Services Office’s HO-3 policy, the home and other structures on the premises are protected on an “all risk basis” up to the policy limits. This means that unless the policy specifically excludes the manner in which your home is damaged or destroyed, there is coverage. The policy limit for the home is set by the policy owner at the time the insurance is purchased. The policy limit for any other structures on your property is usually equal to 20% of the policy limit on the home.

The coverage limit on personal liability is determined by the policy owner at the time that the policy is issued. The coverage limit on medical payments to others is usually set at $1000 per injured person.

Q. Where and when is my personal property covered?

A. Personal property (except property that is specifically excluded) is covered anywhere in the world. For example, suppose that while traveling, you purchase a dresser and you want to ship it home. Your homeowners policy would provide coverage for the “named perils” while the dresser is in transit–even though the dresser has never been in your home before.

Q. Do I need earthquake coverage in Pennsylvania? How can I get it?

A. The standard insurance policy does not pay for direct damages caused by “earth movement.” “Earth movement” is a much broader term than earthquake–it includes, volcanic activity, and other earth movement. This coverage may be available by endorsement for an additional charge. Since Pennsylvania is unlikely to have an earthquake, you’ll pay less for earthquake coverage than places which are susceptible to earthquakes, such as California.

RENTERS INSURANCE FAQs in PENNSYLVANIA

Q. Why would I want to buy renters insurance?

A. If you live in an apartment or a rented house, renters insurance provides important coverage for you and your possessions. A standard renters insurance policy protects your personal property in many cases of theft or damage, and may pay for temporary living expenses if your rental is damaged. It can also shield you from personal liability. Anyone who leases a house or apartment should consider this type of coverage.

Q. How does a renters insurance policy protect my personal property?

A. A renters insurance policy provides named perils coverage. This means that the policy only pays when your property is damaged or destroyed by any of the ways specifically described in the policy. These usually include:

  • fire or lighting
  • windstorm or hail
  • explosions
  • riots
  • aircraft
  • vehicles
  • smoke
  • vandalism or malicious mischief
  • theft
  • falling objects
  • weight of ice, snow, or sleet
  • accidental discharge or overflow of water or steam
  • freezing
  • sudden and accidental damage from artificially generated electrical current
  • volcanic eruptions (not including earthquakes or tremors)

Renters insurance coverage applies to your personal property no matter where you are in the world. This means you’re covered when you are on vacation as well as at home.

Q.  Why do some apartment complexes require tenants to have renters insurance?

A. Owners of apartment complexes buy insurance policies for their liability in order to cover their buildings and personal property. However, these policies do not cover any of the tenant’s property or liability. By requiring their tenants to have renters insurance, the apartment owner is assured that the tenants will not mistakenly believe that the apartment complex owner’s policy will provide coverage for a tenant’s property or personal liability. Although this type of requirement benefits the apartment complex owner, there are benefits for the renter as well. At Agency by the Mall we recommend you purchase renters insurance regardless of what your landlord requires.

Q. What if I share my apartment with a roommate? Do we both need to have renters insurance? 

A. Standard renter’s policies cover only you and relatives that live with you. If your roommate is not a relative, each of you will need your own renter’s insurance policy to cover your own property and to provide you with liability coverage for your own actions.

UMBRELLA INSURANCE FAQs IN PENNSYLVANIA

Q. What is a personal umbrella liability policy?

A. The personal umbrella liability policy is designed to increase your liability protection. This single policy acts as an “umbrella” over all of your personal liability policies–home, car, boat, RV, etc., so you have a higher personal liability limit than what would otherwise be available. In certain circumstances, an umbrella insurance policy provides coverage may provide personal liability coverage that is otherwise excluded from your other policies. For example, an umbrella insurance policy provides coverage anywhere in the world, whereas your car insurance policy usually provides coverage in only the US and Canada.

Q. How do I know if I need a personal umbrella liability policy?

A. It used to be that the only people who needed personal umbrella liability policies were wealthy individuals who had sizable amounts of personal assets that would be at risk in a lawsuit. However, in our very litigious society, even individuals with modest incomes are often subjects of large lawsuits. Since those with modest incomes are even less able to pay damages than a wealthy individuals, Agency by the Mall recognizes the need to provide coverage limits greater than what can be obtained from their homeowner insurance or car insurance policies.

For a FREE Quote call 610-543-3113 or email info@agencybythemall.com or text 610-405-2921.


Agency by the Mall | 1301 Baltimore Pike - Springfield, PA 19064