Q. What is a personal umbrella liability policy?
A. The personal umbrella liability policy is an insurance contract with two goals:
To increase liability protection beyond what the policy owner already has in his or her homeowners and automobile insurance policies.
To fill gaps in a policy owner's liability coverage that are not covered by automobile and homeowners policies.
When combined with homeowners and automobile insurance policies, umbrella policies provide broad personal liability protection.
Q. Do I need earthquake insurance? How can I get it?
A. Direct damages from earthquakes are not covered under standard homeowners insurance policies. You probably do not need this coverage unless you live in an area that is prone to earthquakes. If you do live in an area with high earthquake activity, you can add an endorsement to your homeowners policy that will cover damage due to earthquakes, landslides, volcanic eruptions and other earth movements.
Q. What is the difference between “actual cash value” and “replacement cost”?
A. Covered losses under a homeowners policy can be paid either on an actual cash value basis or a replacement cost basis. "Actual cash value" reimburses the policy owner the depreciated value of the damaged property. "Replacement cost" coverage pays the policy owner the amount necessary to replace the article with one of similar type and quality.
Q. What are the coverage limits in the standard homeowners policy?
A. Coverages A and B protect the dwelling and other structures on the premises on an all risks basis up to the policy limits. The owner sets the policy limit for the dwelling when the insurance is purchased, and the policy limit for other structures usually equals 10% of this amount. Coverage C covers losses to the insured's personal property on a named perils basis and has a policy limit of 50% of the policy limit on dwelling. Coverage D covers additional expenses the policy owner may incur when the residence is unusable due to an insured loss. The policy limit for additional expenses is equal to 20% of the policy limit on dwelling. The coverage limit on Coverage E (Personal Liability) is determined by the policy owner at the time of issue. The coverage limit on Coverage F (Medical Payments to Others) is usually set at $1000 per injured person. (Note: this answer is based on the Insurance Services Office's HO-3 policy.)
Q. Where and when is my personal property covered?
A. Coverage C applies to all your personal property (except specific exclusions) anywhere in the world. For example, suppose that you purchase a dresser while traveling and want to ship it home. Your homeowners policy would provide coverage for the named perils (less the deductible) while the dresser is in transit, even though the dresser has never been in your home before.
Q. What are some practical things I can do to lower the cost of my homeowners insurance?
A. The best thing to do is to shop around. Quotes on homeowners insurance for the same coverage on the same home may vary by hundreds of dollars. When you comparison shop, ensure that each insurer is offering the same coverage.
You may also be able to lessen homeowners insurance costs through discounts. For example, many insurers offer price breaks if you buy both automobile and homeowners insurance with them. They may also offer discounts if there are deadbolt exterior locks on all your doors or if your home has a security system. Ask your agent if you can save premium dollars through any of these incentives.
Another easy way to reduce the cost of your homeowners insurance is to raise your deductible. Increasing your deductible to $500 or $1000 can lower your premium by as much as five or ten percent. However, keep in mind that you should have the financial resources necessary to pay the larger deductible if the need arises.
Q. What is homeowners insurance, and who should buy it?
A. Homeowners insurance is one of the most popular forms of personal insurance on the market today. The typical homeowners policy has two main sections. Section I covers the property of the insured, and Section II provides personal liability coverage to the insured.
Almost anyone who owns or leases property has a need for homeowners insurance. In fact, lenders often require that you have it to be eligible for a mortgage.
Q. What factors should I consider when purchasing homeowners insurance?
A. Here are things you should consider when you purchase homeowners insurance:
First, decide the amount and type of homeowners insurance, personal property insurance, and personal liability coverage that you need. If your policy limit is less than 100% of the replacement cost of your home and its contents, any loss payment from your insurance company may be subject to a coinsurance penalty.
Second, determine which (if any) additional coverage you want to add to your policy. For example, do you want the personal property replacement cost endorsement or the earthquake endorsement? Consider additional coverage for jewelry, furs, guns and computers.
Finally, once you have decided on the coverage you want from your homeowners insurance policy, choose which insurer you would like to provide your insurance. Bynum Insurance represents several companies and can help you find the right fit.
Q. Suppose I lend my car to a friend, is he/she covered under my automobile insurance policy?
A. Whenever you knowingly loan your car to someone, he or she is covered under your automobile insurance policy. Even if you do not give explicit permission each time a person borrows your car, that person is still covered under your automobile insurance policy as long as they had a reasonable belief you would have given them permission to drive the car.
Q. I have an older car whose current market value is very low. Do I really need to purchase automobi
A. Most states (including South Carolina) require that drivers have at least some automobile liability insurance. These compulsory insurance laws were enacted to ensure compensation of automobile accident victims for losses caused by negligent individuals.
Many people with older cars decide not to purchase physical damage coverage beyond the minimal liability coverage. Often, the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just "total" the car and give you a check for the car's market value less the deductible.
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