BECAUSE YOU ASKED: “What does that mean?”

BECAUSE YOU ASKED:

“What Does That Mean?“

 

We are always here to answer insurance questions that come our way. We do not answer questions when we don’t know, with absolute certainty, that what we are sharing, is the truth. When asked about the specifics of a policy, Chris often says, “If we cannot put a highlighter to it, it might not be true”. When necessary he will ask an underwriter, a claims adjuster, or one of our company representatives to show us their answer by highlighting the policy language as validation that we can prove, or they can prove, what they are saying is correct. We can not leave to chance just “believing” something to be true. Maybe this is why we get calls from so many other people that are not just our clients asking for advice. Last weekend our pastor said that we should want to be called “Goody-Two-Shoes”. If you don’t know the story behind this expression, it is a Cinderella story that tells of a goodwife’s joy on merely getting two shoes. Because this goodwife held herself to a higher standard, and was overjoyed at receiving two shoes, “Goody, two shoes!” she would go around in joy telling all who would hear, people began saying, as we do today, she is “too good” or “too nice”, “too smart” or “too by the rules”. Doing things right is not always easy, but it is the right thing to do both in life and in business.

 

In this business being “close enough” is not good enough. Being close enough is not good enough when you have a fire and your home and your belongings must all be replaced. It is not good enough to be “close enough” when you lose your spouse and find out their life insurance will not cover the remaining debts or mortgage on your home. You may hear from our neighbors and family members about their perception of how insurance should work. All of us hear the commercials telling us this or that about insurance. Knowing the “words” within your insurance policy becomes very important when someone knowledgeable about a particular insurance policy is not there to help guide and advise you. I wonder when you have a tooth ache or get a letter from the IRS requesting audit information for your business, do you stop by your neighbor’s house for the answers, or do you wait for a comical commercial to tell you how things are going to work out? Please do yourself a favor and don’t let someone who is untrained take care of your dental, tax, or insurance needs.

 

Here is a list of basic insurance terms we think everyone should know. In our business these terms are widely used. But don’t stop here, keep going. Keep asking questions. Keep learning. I will end with a phrase that Thomas Jefferson liked to quote from the late 16th Century philosopher Francis Bacon, “Knowledge is Power”.

 

 

Insurance 101:

Risk:
   A “risk” is why a lot of us buy certain types of insurance such as home insurance; we do not want to carry the entire “risk” ourselves,               should  a loss occur. A risk is the possibility of losses, some  of which gets transferred from us, the insureds to the insurer (insurance               carriers like Auto Owners, Celina, Indiana Farmers, Pekin, Progressive, Safeco…) for a certain length of time; normally  either 1 year or 6-       month terms. Insurance companies then evaluate each risk individually and set a price based upon that specific risk.
Policy Declaration: or your declaration page(s), often referred to as “Dec Pages”
  Here you will find the following information:
     *Name and address of policyholder
     *Policy number, effective date, and expiration date
     *Name of the insurance company
     *The premium for each coverage part included in the policy
      **We advise all our clients to look over all the information on this document and carefully review it for correctness: check for misspellings          of name, incorrect address, inaccurate policyholders. It’s important to understand what and how much is covered, and what is                         excluded.   This is, however, only a snap shot of your policy.
Premium:
   This is the amount you, the insured, pays an insurance company in return for taking on a portion of the “risk”. The premium amount                 depends on different factors.  A couple factors include the coverage limits and deductibles you choose.
Deductible:
   This is the amount of “risk” you retained. It is the amount of money paid by you, the insured, when a loss occurs. The insurance company       pays the amount in excess of  your deductible. Your carrier will DEDUCT this amount from the total claim payment. As a heads up, policy       premiums and deductibles are conversely linked: higher deductible = lower premium, and vice versa.
Liability Coverage:
   Liability coverage offers you, the insured, protection against claims from injuries and damage to other people and/or their property.
Collision Coverage:
   Collison coverage protects your property when damage occurs when there has been a collision with another object no matter who caused      the accident. You do not have to carry collision coverage on your vehicles, this is optional.
Comprehensive Coverage: sometimes called “other than collision coverage”
   Comprehensive coverage protects your vehicle when there is damage from something “other than a collision” such as vandalism or a fire       or a tree falling on your car. This is coverage is also optional.
Peril:
    A peril is a specific cause of loss that puts an insured, their items, or property in danger of injury, damage, or loss. Only certain perils are        covered on policies! Know what perils are covered and what is not. The worst thing that can happen at a time of loss is hearing, “I’m sorry,      you are not covered for that”.
Claim:
    A claim is a statement or request from you the insured to the insurance company requesting compensation for “said” damages that                 occurred for a covered loss on your policy. Since you, the insured have just “claimed” that something has happened an adjuster will               confirm  the incident occurred and falls under the perils of your policy.
Adjuster:
   An insurance adjuster is trained and specially educated to examine a loss, determine coverage limits, and settle losses. An adjuster will be     a well versed and knowledgeable person to speak to after the claim has been filed.

Once again, these are just some basic terms; but, there are so many more. What about the terms Actual Cash Value verses Replacement Cost, or a named non-owner policy? And what is Medical Payments (med pay)? And do you know how much you have or what in the world is an Umbrella Policy? Would you be surprised to know that this type of policy could save you from financial ruin for less than 50Cents a day (now I sound like a commercial)!  There is so much to know and learn about in regard to insurance. We can help you feel secure and not leave things up to chance. We are here when you have questions, just ask.