Insurance is a financial safety net, covering you in case of an accident, theft or lawsuit. But the terms and conditions of insurance can be confusing. This article will help you understand the basics of insurance and find policies that meet your needs.
A car insurance policy pays for other people’s repairs if you cause an accident, and medical bills and lost wages for yourself and your passengers. Most states require you to have liability coverage of at least $30,000 per person and $60, 000 per accident, plus $25,000 for property damage. Some drivers also choose to purchase more expensive collision and comprehensive coverage, which protects against damage caused by hitting an object or by fire.
Homeowners insurance, or hazard insurance, pays to repair or replace your house and other structures on the property such as sheds and fences. It usually also covers your personal belongings if they are stolen or destroyed by a covered peril. Many lenders require you to take out home insurance as a condition of getting a mortgage.
Some policies cover lost business income if a disaster forces your company to close, such as a fire or tornado. These policies typically cover your average monthly revenue based on historical data.
Life, private passenger automobile, homeowner’s, workers’ compensation and professional liability insurance are examples of insurance that is required by law or recommended for most individuals and businesses. Other types of insurance include disability, flood and earthquake insurance.
When you apply for insurance, the insurance company uses its own standards to determine whether it will give you a policy and how much to charge for it. These are known as underwriting guidelines. Insurance companies are generally prohibited from turning you down or charging you more because of your age, gender, marital status, geographical location or driving record unless they can show that there is an increased risk of loss.
In addition to underwriting criteria, the insurance company may consider your credit history when setting your rate and determining the amount of your premium. The insurance company must notify you if it decides to use your credit information in this way. In general, the better your credit score, the lower your rate will be. The insurance company also may consider your credit history when determining the amount of your deductible, which is the amount you must pay before the insurer starts to cover your claim.
The insurance company must also send you a copy of any Endorsements or Riders to your policy, which add to, delete from or modify the provisions of your original contract. It is important to read any such riders carefully so that you fully understand how your policy has been changed and if it meets your current needs. If you have questions about any changes to your policy, discuss them with your agent. If you are not satisfied with the answers, ask for a full refund of your premium. 501(c)(3) insurance requirements