Personal Insurance

Personal Insurance Tips

References: The information contained herein has been obtained from insurance companies contracted with LSB Financial, including but not limited to Allied, Travelers, EMC, and others. In addition, information has been acquired from the Federal Emergency Management Agency (FEMA), the Independent Insurance Agents of America, and the Iowa Insurance Division. The information contained herein is intended to be general and informative in nature and does not supersede verbiage contained in actual insurance policies.

Personal Automobile Insurance

There is a lot to know about auto insurance in order to fully understand what you're paying for. The following information provides a quick education to help you navigate the twists, turns and choices involved in buying auto insurance.

Remember that in order for your insurance coverage to take effect, all drivers and cars must be specifically listed on your policy. You should also refer to your automobile contract for the specific terms and conditions of the coverage that you have purchased. If you have any further questions you should speak directly with your insurance agent.

Liability - Liability coverage offers protection against claims, property damage or bodily injury to a third party that you or a member of your household accidentally caused while driving your car. This coverage applies only if the driver is considered legally responsible for the damage.
Medical payments - The medical payments portion of your policy assures that you, your family members and passengers in your car will receive necessary medical and dental services resulting from an auto accident...regardless of who caused the accident.
Uninsured motorist/Underinsured motorist
- Uninsured motorist coverage will pay for injury expenses incurred should you, your family members or passengers be involved in an accident with an uninsured motorist. This coverage also provides protection for a hit-and-run accident or an accident with a driver who has less insurance than required by law.
- Underinsured motorist coverage comes into play when the other driver is found legally responsible for an accident and has coverage, but not enough to cover your injuries. If your coverage limits are higher than those of the at-fault driver, this coverage will absorb the additional expenses.
Damage to your auto - Another common loss is the physical damage to your vehicle that can result from an accident. There are two types of physical damage coverages: Collision and Comprehensive.
- Collision coverage pays for any damage to your car caused by accidental impact with another vehicle or object...or if your vehicle overturns.
- Comprehensive coverage pays for most types of damage to your car resulting from a situation other than a collision.
Situations where damage is not covered. Please be aware that your policy will not pay for damages due to normal wear and tear such as mechanical or electrical breakdowns and flat tires.
Personal injury protection (No-Fault) - Your policy will provide no-fault insurance for residents of states where it is required. This means that you, your family and any passengers are covered under your policy regardless of who is responsible for the accident.
Additional, optional coverages - Some coverages are not included as part of the basic auto policy. However, you can customize your policy to your needs by adding the following coverages:
- Towing and labor: pays for towing and labor costs each time your car is disabled.
- Rental reimbursement: pays for a rental car if your car is damaged by a situation covered by comprehensive or collision coverage and if your car is out of commission for more than 24 hours.

Homeowners Insurance

Homeowners insurance is basically designed to bring your home and possessions back to the same condition they were in before a loss occurred. There are several different types of homeowners policies offered by a wide variety of insurance companies and not all coverages are the same or are available in all states.

While reading through the information below, you should keep in mind a couple definitions: (a) Exclusions are situations where your policy does not provide coverage; and (b) Liability is something for which you are legally responsible.

Dwelling (referred to as Coverage A in the policy) - Imagine your house on moving day...empty, waiting to be filled. This is the part referred to as Coverage A: your physical home (rooms, fireplaces, tile floors, carpeting, etc.) and the structures attached to it, such as an attached garage.

The amount of coverage assigned to your dwelling should reflect the amount it would cost to completely repair or rebuild your home should it suffer a covered loss. Often this is determined by your home's purchase price plus inflation. However, if it's been a while since you last updated your policy coverage or if you are not sure that your dwelling is adequately covered, you should check with your insurance agent.

Other structures (Coverage B) - Not all structures that exist on your property are actually attached to your house. Therefore, Coverage B offers insurance protection for other structures such as a detached garage, gazebo, or storage shed.
Personal property (Coverage C) - Your personal possessions such as furniture, clothing and appliances are covered. Certain types of possessions are excluded or have limited coverage.
Loss of use (Coverage D) - The coverage is also called Additional Living Expense. Essentially, this pays for your housing and other living expenses (like meals and laundry) if a major loss makes your house uninhabitable and you have to move out temporarily while it's being repaired.
Covered perils - A homeowners insurance policy provides protection from the following perils: fire or lightning; windstorm or hail; explosion; aircraft; vehicles; riot or civil commotion; smoke; theft; vandalism/malicious mischief; glass breakage; volcanic eruption.
Some policies also provide coverage for: falling objects; weight of ice, snow or sleet; freezing of plumbing; accidental plumbing discharge; rupture of steam or hot water heating system, air conditioning systems, or water heaters; damage from artificially generated electricity.
Exclusions - A homeowners policy does not provide coverage for the following perils: loss due to flood, or water that backs up through sewers; loss to building by earthquake, aftershocks and mud slides; loss by enforcement law or ordinance regulating construction, repair or demolition, or zoning; loss due to power interruption when the interruption takes place off the residence property; loss due to neglect of the insured to save and preserve property following a loss; war and nuclear perils; intentional loss.
Limits of liability - For basic homeowners policies, a specific minimum amount of coverage is required for each of the major property coverages, based on the primary amount of insurance selected.
- Coverage A (Dwelling) = Primary limit
- Coverage B (Other Structures) = 10% of Coverage A limit
- Coverage C (Personal Property) = 50% of Coverage A limit
- Coverage D (Loss of use) = 20% of Coverage A limit.

For example, if your home is insured for $100,000 under Coverage A:

Coverage B liability limit is $10,000

Coverage C is $50,000

Coverage D is $20,000.

Deductibles - With a homeowners policy, a deductible applies to the property portion of the policy. A deductible is the amount you would have to pay out of your own pocket before the insurance coverage kicks in. Typical deductibles are $100, $250, $500 or higher and some policies have several deductibles. The higher the deductible you select, the lower your premium payment will be.

Optional coverages - There are a number of optional coverages (also called endorsements) which enhance your basic homeowners policy either by adding or removing certain coverages. Some of the more common add-on coverages include:

Broadened coverage for contents: provides "all-risk" protection for your possessions. This means that your personal property is covered in most situations, regardless of the cause of loss.
Contents replacement cost coverage: after a loss, you would be paid based on the replacement cost...with no deduction for depreciation...subject to your policy limits and deductible. Special limits apply to certain items such as jewelry, watches and furs.
Valuable Items: provides higher limits and worldwide protection for special property such as jewelry, silverware, fine art, furs, cameras, firearms, musical instruments, and home computers for an extended variety of losses.
Water back up of sewers or drains: you're covered for a specific dollar amount if water backs up through a sewer or drain, or overflows from a sump pump.

Personal property exclusions and limits of coverage - Certain classes of property are specifically excluded from coverage because of the nature of what they are or because they are generally covered by other types of policies.
- Animals, birds or fish
- motorized vehicles or aircraft, including equipment and accessories
- radios, CB radios, tape decks, etc., while in or on a motor vehicle
- articles separately described and specifically insured in any other insurance
- property of boarders
- aircraft or aircraft parts
- property in an apartment held for rental by the insured
- property rented to others off the residential premises.
Certain classes of property have specialized limits of coverage:

money or related property, coins and precious metals other than tableware
securities, manuscripts, and other valuable property
water craft, including trailers and equipment
trailers
grave markers
loss by theft of jewelry, watches, furs and semi-precious stones
loss by theft of firearms
loss by theft of silverware, goldware or pewterware
property on the residence premises used for business purposes
property away from residence premises used for business purposes.

There are several endorsements or separate policies that cover personal property items for higher limits of coverage.

Personal liability (Coverage E) - Provides coverage for bodily injury and property damage which you are legally responsible. For example, let's say your dog bites someone, a guest falls down your front stairs, or your son throws a ball through your neighbor's window. You are legally responsible for these actions. Personal Liability helps to cover the associated costs of these related damages. Most homeowner policies provide a minimum of $100,000 of liability protection. However, you can opt to increase this amount.
Medical payments (Coverage F) - Pays all reasonable and necessary medical expenses for a period of three years from the date of an accident to a person or persons injured while on your property. This coverage does not apply to the insured or regular residents of the insured's household.
Bodily injury - This coverage helps to pay for the expenses created in the event that a physical injury to others is caused by you, residents of your household, or your pets.
Property damage - If someone's property is accidentally damaged by you, members of your household, or your pets, your homeowners policy will help to repair or replace it.
Liability coverage exclusions - A homeowners policy does not provide coverage for: bodily injury or property damage which is expected or intended by the insured; bodily injury or property damage arising out of business pursuits; bodily injury or property damage arising out of rental of any part of the premises; liability arising out of ownership, maintenance, use, loading or unloading of aircraft, motor vehicles or water craft; liability arising out of war or insurrection.

Additional exclusions to Coverage E only: liability assumed under contract or agreement; property damage to property owned by, used by or in the care of the insured; bodily injury which is covered under a Workers Compensation policy.

Personal Umbrella Protection

The more your earning power and assets increase, the more you have at risk, and therefore, the more you need to protect.
If you think you need at least a million dollars of additional protection above your current homeowners or automobile liability limits, you can purchase something called excess liability. Often referred to as an umbrella policy, excess liability is the additional protection you need in case a judgment against you exceeds the liability limits of your existing auto or homeowners policy. Available in amounts ranging from one to five million dollars, excess liability coverage increases your personal liability limits by adding protection to your current auto, boat or homeowners policies.

Coverage provided - Excess liability coverage provides:

Protection for covered claims by others for personal injury or property damage caused by you, members of your family/household, or hazards on your property for which you are legally liable
Personal liability coverage for occurrences on or off your premises
An additional layer of protection above your primary auto policy against auto-related liabilities
Protection against non-business related personal injury liabilities such as slander, libel, wrongful eviction or false arrest
Legal defense costs for a covered loss. Lawyer fees and associated court costs are covered
Worldwide coverage- no matter where you go, with the only exception being situations involving foreign ownership of dwellings or cars

How it works - Depending on the type of accident, your homeowners, auto or boat policy liability limits are used up first, then the excess liability policy covers all remaining costs (up to the amounts of coverage you purchased).

Some Definitions - Insurance products tend to get loaded down with legal-sounding jargon, especially a product that specifically deals with circumstances for which you are legally responsible. Therefore, a few common definitions might help clear up any confusion:

Personal Liability: Coverage for damages that you are legally liable (responsible) for. This includes incidents occurring at your home and/or caused by you, residents of your household or your pets.
Personal Injury: This all-inclusive definition covers many predicaments. Personal injury can take many forms, including: bodily injury, shock, emotional distress, mental anguish, sickness or disease, or death arising from any of the above. Personal injury also means false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, humiliation, libel or slander, defamation of character or invasion of privacy.
Property Damage: Accidental damage to the property of others caused by you, residents of your household, or your pets.

Exclusions - Often, insurance policies are defined not by what they cover, but by what they don't. This is especially true for excess liability products. If something is not specifically excluded, you're covered. Exclusions vary widely by company. Here are some common exclusions:

damages expected or intended by insured.
damages arising out of business or professional pursuits.
liability assumed under contract or agreement.
liability arising out of ownership, maintenance, use, loading or unloading of aircraft.
liability arising out of ownership, maintenance or use of non-traditional watercraft such as jet skis, air boats or air cushions.
liability arising out of ownership, maintenance or use of most recreational vehicles. Only snowmobiles and golf carts are covered.
damages to property you take care of, own or use.
damages covered under a Workman's Compensation policy.
liability arising out of war or insurrection.

How much is enough? Obviously, determining how much coverage is right for you is a personal decision. Much depends on the value of the current assets you have to protect. However, there are also other factors to take into consideration. What will the value of your future assets be? Are you involved in activities that put you at greater risk? Do you have teenagers? Do they drive?

Insurance-Related Web Sites

www.fema.gov - The Federal Emergency Management Agency (FEMA) is an independent agency of the U.S Government that works to reduce risks, strengthen support systems and help people and their communities prepare for and cope with disasters regardless of the cause.

www.independentagent.com - The Independent Insurance Agents & Brokers of America is a national alliance of 300,000 business owners and their employees who offer all types of insurance and financial services products.

www.ibhs.org - The Institute for Business and Home Safety is a nonprofit association that engages in communication, education, engineering and research. Its mission is to reduce deaths, injuries, property damage, economic losses and human suffering caused by natural disasters.

www.hwysafety.org - The Insurance Institute for Highway Safety is an independent, nonprofit, scientific and educational organization. It is dedicated to reducing the losses - deaths, injuries and property damage - resulting from crashes on the nation's highways. The Institute is wholly supported by automobile insurers.

www.nas.edu/trb/ - The Transportation Research Board (TRB) promotes innovation and progress in transportation through research. In an objective and interdisciplinary setting, the TRB facilitates the sharing of information on transportation practice and policy by researchers and practitioners; stimulates research and offers research management services that promote technical excellence; provides expert advice on transportation policy and programs; and disseminates research results broadly and encourages their implementation.

www.iiaba.net/tc - Thousands of Trusted Choice® insurance agencies offer policyholders a broad selection of insurance policies, companies and financial services, customization of coverages for home and business, and advocacy support. These agencies are committed to providing clients with excellent customer service. They also benefit from access to many leading insurance companies.

Flood Insurance

Flood insurance is available through (and in conjunction with) the National Flood Insurance Program administered through FEMA. If you don't think you need flood insurance, consider these facts:

80% of the natural disasters that strike the US each year involve flooding.
1 in 3 flood claims are made outside flood-prone areas.
90% of floods are not declared federal disasters, which leaves the full cost of rebuilding up to the homeowner or business owner.
Homeowner and business owner policies do not cover flood losses. Only flood insurance will protect homes, businesses and personal belongings from damage associated with flooding.
Homeowners are four times more likely to sustain a loss from flood than from fire.

Consider Flood Insurance. If you are not certain whether this is an important coverage for you, check with your insurance agent.