When the first U.S.
auto insurance policy was purchased in 1898, there were
barely 100 cars nationally. Horses and carriages ruled the
roads and the main concern for both insurers and auto
drivers was any injury those noisy new machines might do to
auto insurance is the most widely purchased of all
property-casualty insurance, yet few drivers are familiar
with the details of their particular policy.
Though this guide does not represent the provisions of any
particular policy, it should serve as a starting point on
your road to finding the best policy for your needs.
If you own your own business or are a partner in one, you're
probably already familiar with risk. After all, few things
in life are riskier than launching and running your own
small business. Part of the risk of any small business is
the loss of critical tools and property or
liability to others. Either of which can cause loss of
income or even force you to close your doors.
Large companies employ full-time risk managers to keep their
risk-taking to a minimum. But chances are that as a
small-business operator, you are your company's risk
manager, along with its personnel director, office manager
and possibly the entire staff all rolled into one.
While juggling all the jobs that need to get done to make
your firm a smooth-running and profitable operation, you may
already be asking yourself: "Who has time to think about
Keeping risks and losses to a minimum is a cornerstone of
business success, especially for small businesses. Take a
few minutes now to check your risk factors, find out your
insurance needs and learn the many options available to you.
And remember choosing the right agent is as important as
choosing the right insurance.
This guide does not represent the provisions of any
particular policy, but it can serve as a starting point to a
complete package of protection.
Chances are your home is your single most valuable
investment. Homeowners insurance is a "package" policy that
covers property structures, personal possessions, and
Because it is comprehensive, your homeowners insurance
policy may include coverage you are not even aware of. If
your luggage is stolen from a motel room while you are a
thousand miles away from home, for example, you will of
course want to notify the police. You will also want to
check with your
about coverage for loss under your homeowners policy. And if
your house burns down leaving you without a place to stay,
your policy provides living expenses as well as
reimbursement for damaged property.
Your Peck-Glasgow insurance
agent can explain your policy in detail. To get you
started, this guide outlines the key areas of coverage as
well as any exclusions or limits that might apply. More than
any other line of coverage, homeowners insurance is
substantially standardized throughout the U.S. The questions
and answers in this guide are based on the most commonly
insurance policy (called HO3 in the industry)
offering the widest protection.
You may be interested in knowing that claims can consume 80
cents or more of every premium dollar (the exact amount
varies from year to year). The rest of that dollar goes to
taxes, marketing and administrative costs, dividends and
profits. It is in your best interests to be aware now of
your protection so that you may select the insurance that
best meets your needs.
*Throughout this guide, the term "homeowners insurance" is
used. However, for renters and condo owners the coverage for
personal property and liability is similar. The main
difference, of course, is that you do not need to insure the
building. Therefore, almost all the information contained in
this guide should be of use to you whether you own or rent,
live in an apartment, a condominium, or a home. Questions on
specific concerns about condominiums and renting an
apartment or dwelling are answered after the general
House/Apartment Insurance 101 Questions and Answers
Your car is likely one of the most expensive things you
own. Insurance protects your investment and guarantees
you a way of coping with the expense of accidents,
vandalism or theft. It also secures your financial
responsibility to the institution lending you money to
buy your vehicle.
When you drive you are responsible for the safety of
your passengers, your fellow drivers, other peoples
property, pedestrians and yourself. Insurance helps
ensure your ability to cover the costs of potential
damages or injuries.
You are also required to be financially responsible by
state laws, which are best satisfied through your
insurance coverage. In most states insurance is a
prerequisite to registering your car. So if you want to
drive your own vehicle, you must be insured.
Auto insurance is divided into several
types of coverage:
General liability covers damage you cause to other
peoples property and injuries to the people themselves.
Collision covers damage to your own vehicle in an
Comprehensive (i.e., fire, theft and other non-collision
damage) covers fire damage to your vehicle, break-ins,
vandalism or theft, as well as natural disasters
(earthquake, hail, hurricane, flood, etc.--unless the
vehicle is overturned, then it is considered a
Medical payments insurance, usually in the range of
$5,000 to $10,000, covers medical expenses for injuries.
This "good-faith" coverage guarantees immediate medical
payments for you, your passengers and other parties,
regardless of who is at fault. It also covers you and
members of your household in any accident involving an
automobile, whether you are on foot, on a bicycle, in a
Uninsured motorist (UM) and underinsured motorist (UIM)
coverage protects you if you are injured in an accident
with others who themselves carry insufficient or no
Extra coverages include expenses for towing, labor,
temporary replacement vehicles, etc. These are generally
defined as add-ons or "endorsements" to your policy.
Drivers are grouped according to the level of risk each
one poses—i.e., the amount of loss incurred by insurers
within categories of policy holders. For various
reasons, drivers are categorized by:
Sex—Men have more accidents on the road than women.
Age—Drivers under 25 (and, for some insurers, under 30)
are considered at higher risk of having an accident.
Marital Status—Married drivers tend to have fewer
accidents than single drivers.
Personal Driving Record—Years of driving experience,
accidents, speeding tickets and drunk-driving offenses
are all factors in determining how much of a risk you
pose as a motorist.
How You Use Your Vehicle—If you commute by car during
rush hours, you are at greater risk of having an accident
than if you only drive for errands and recreation on the
weekends. Drivers who use their own vehicles for
business also are considered to be at greater risk.
Type of Vehicle—The value, size, weight, age of your
vehicle, even the cost of replacement parts, are
essential to determining the price of your insurance.
Larger, heavier vehicles are considered at lower risk
than smaller, lighter ones. Plus, more expensive cars
are costlier to have repaired than economy models.
The cost of your insurance policy is based on the
average cost of covering actual losses, spread out over
your particular "rating group" as a whole. Of course,
you may never have an accident or have your car stolen,
and therefore will never need to be compensated. But
others in your category may not be so lucky. Your
premium will help to pay for their losses, just as their
premiums would help to pay for yours.
For example, if you are a 23-year-old man and you park
your new sports car on a downtown street in a large
city, you will likely pay more for insurance than a
37-year-old woman who parks her four-wheel-drive in the
suburbs, simply because, based on average losses, you
have a greater chance of having an accident or being the
victim of auto theft.
Where you live (or, more precisely, where you keep your
car) has a bearing on your chances of having an accident
or becoming a victim of theft or vandalism. That is why a
vehicle owner in Brooklyn, New York, pays a higher rate
than the owner of an identical vehicle in Casper,
Other factors affecting regional insurance rates include
time and efficiency of police response and law
enforcement, local road and traffic conditions and the
quality of local medical services. Insurers even factor
in the litigation rates in a given area, that is, how
many lawsuits are filed, go to trial, are settled out of
court and for how much.
Vehicles are also grouped into categories according to
their likelihood of being damaged, vandalized or stolen.
Insurers generally consider the size and type of
vehicle, as well as the value and the cost of repairs
(which can vary greatly, even on vehicles that cost
roughly the same). Thus, a new station wagon is expected
to hold up better in an accident than a sports car or a
Putting insurance aside, safety is key when buying an
automobile. Your life depends on it! Some cars are
considered safer than others because of their
performance record in safety tests and real accidents.
That is why you should research insurance coverage before
you buy your car. It helps you to understand the actual
cost and indicates those vehicles with good safety
records. Your insurer will ultimately reward you for
putting safety first.
No-fault insurance is a system adopted
in some states that essentially bypasses the
conventional legal procedure which finds fault in an
accident. (This is the procedure by which you hire a
lawyer, file suit and possibly go to court to prove the
accident was the other guys fault.) No-fault simply does
away with the concept of one party or the other being at
fault. There are no lawyers, no court, no judge, no
jury, no lengthy lawsuits against the other party. This
is considered beneficial to taxpayers, because it
eliminates costly legal proceedings that the state must
manage, and to insurance policyholders, because it helps
keep rates down.
If you are insured in a no-fault state and have an
accident, you don't go after the other driver. You
contact your own insurer and file a claim. Your own
insurance policy guarantees you immediate compensation
for damages, medical expenses, lost wages, etc.
The type and range of no-fault coverage varies by state.
What defines the limitations of no-fault policies can
differ in two critical areas:
Threshold—The type of damage/injury or the cost of
repair/recovery that triggers the need for legal action.
Mandated Benefit Level—The package of benefits (medical,
wage loss, replacement services and other expenses) your
state requires you to carry.
The details of no-fault insurance can be complicated.
Contact your Peck-Glasgow agent or your states
insurance department for further information.
No. Some states, while not mandating auto insurance,
have "financial responsibility laws" that require all
drivers to be able to pay for any damage or injury they
may cause. However, carrying liability insurance is
still the best way for you to meet your states financial
UM and UIM policies are offered by law in all states,
including no-fault states. In fact, some states require
all motorists to carry this coverage to gain protection
from inadequate insurance coverage of other drivers.
First, call the police to the scene to be sure all
pertinent information is properly recorded. Your nerves
will be shaken right after an accident, and it helps to
have a calm and knowledgeable person walking you through
the necessary details.
Then, contact your Peck-Glasgow agent immediately and
ask about filing a claim. If you followed all the
recommended guidelines when you bought your policy, you
should be covered within the limitations of that policy.
Remember, your insurance policy is designed to protect
If the cost of your damages or injuries exceed the
amount your policy will pay out, it may be time to take
legal action against the other party. Even if you have
no-fault insurance, sometimes the only way to be
compensated is to place blame and responsibility where
Technically, in most states your insurer can cancel your
policy only if:
you fail to pay your premium;
you lose your drivers license;
you are guilty of material misrepresentation during the
application process (i.e., you fail to notify your
insurer of a recorded violation such as a drunk-driving
you fail to report a substantial change of risk, such as
buying a high-powered sports car to replace a family
However, your insurer can choose not to renew your
policy for a variety of reasons.
Do you have a bad driving record? Have you received a
lot of speeding tickets? Have you ever been caught
driving drunk? Not only are these scenarios considered
unsafe and illegal, they are justifiable cause for your
insurer to label you a bad risk and refuse to renew your
policy. (Some insurers may feel compelled to cancel
policies after only one accident.)
Where do you live? Has the neighborhood changed in the
last few years? Have the accident or crime rates risen
noticeably? As regions are reassessed periodically,
their status could change and you could suddenly find
yourself living in a high-risk area where your insurers
rates may not be adequate to cover losses.
Even "good" drivers can be dropped by their carrier.
Reasons range form a "drinking while driving" violation
or other serious violations (that make you a high risk)
to situations outside your control, such as when
insurers in your state are suffering severe business
losses. Overall rises in claims or losses can cause
insurers to become highly selective in determining whom
they can afford to insure.
If you are licensed to drive, by law, you are eligible
for insurance. However, your options for new coverage
may be limited. Each state has created and regulates a
market of last resort for those who cannot otherwise
obtain coverage. These groups have various names,
depending on the state you live in, such as "assigned
risk" plans or the "residual market." Your
Peck-Glasgow agent will know more about the particulars in
Regardless of the reason you were dropped, you need to
act immediately to get policy. Under no circumstance
should you drive your vehicle without insurance. Call
your Peck-Glasgow agent to help you find new coverage. If you
do find yourself in the residual market, the price may
be higher but it may be your only alternative in
maintaining your freedom to drive.
The most obvious way to maintain your low-risk status is
to keep a clean driving record. If you have been in an
accident, consider taking a defensive driving course.
Even those of us who have been driving for years rarely
know the simple tricks to preventing accidents through
Also, look into purchasing special safety and security
features for your car, such as anti-lock brakes and an
alarm system. Your Peck-Glasgow agent can give you further tips on how to
show your insurer you are a safe driver.
Insurers often discount their rates for good drivers and
those who take of safety and security precautions.
Depending on the insurer, you can often lower your rates
from 5 to 35 percent.
Sometimes the investment you make in your vehicle is
worth the discount, and sometimes it is simply worth some
peace of mind. For example, the purchase of anti-lock
brakes merits a discount from nearly every insurer, but
the discount probably will not pay for the brakes during
the normal life of your vehicle.
Insurers generally offer discounts for:
Safety Features— Anti-lock brakes, air bags and passive
restraint systems (i.e., automatic seat belts).
Defensive Driving— Clean violation record, drivers
education courses for teenagers and defensive driving or
accident prevention courses for adults (insurance
discounts for the latter are required in some states).
Security Systems— Alarms, electronic locks and disabling
Changing Driving Habits— Commuting by public transit,
using a company vehicle for work-related travel and
Formal Agreements Not to Drink and Drive— The
availability of a discount for signing such an agreement
varies among insurers and states.
Buying Home Owners and Auto Policies from the Same
Company—If you own a home and an automobile and you are
insured by two different companies, check into the cost
of carrying both policies by one insurer. Your
Peck-Glasgow agent can give you information about which
insurers offer discounts.
You can also lower your insurance rates by requesting
higher deductibles (the amount of money you pay before
you make a claim). Increasing your deductibles on
collision and comprehensive coverage from $100 to $250,
or even $500, will bring your rates down. Moreover, you
may not need collision and comprehensive coverage if you
drive an older car. Ask your Peck-Glasgow agent which
discounts are available to you.
The more people you allow to drive your vehicle on a
regular basis, the greater the chances of your vehicle
being in an accident. Teenagers are especially expensive
to insure because they are the least experienced
A drivers education course can help ease the burden of
insurance costs since it teaches your teenager defensive
driving techniques. If your child's high school does not
offer drivers education, try to find one offered by
another school or a private firm in the area. After all,
the cost of drivers education could be cheaper than the
extra cost of your insurance. (Many insurers offer "good
student" discounts as well.)
An adult's driving experience can also affect your rates
significantly. Don not assume that every adult you know has
been driving since age 16 or is a competent driver with
a clean record. Again, taking a defensive driving course
is a good way for adults to prove they are responsible
drivers, thus lowering their risk and their insurance
rates. (This is a great solution for new couples who are
jointly insured but unmatched in their driving skills or
With few exceptions, your insurance company does not set
its own rates (unless you live in Illinois). It requests
the right to charge appropriate rates from your states
insurance department, which responds with legal approval
and authorization, provided the requested rates are
Every state has some sort of department, administration
or agency that regulates and monitors every insurer
operating within the states borders. In addition to
approving rates, your states insurance department is
involved in all insurance matters on behalf of private
citizens and businesses. It also issues operating
licenses to insurance companies and agents, based on
their ability to meet the states requirements for
conduct and knowledge about insurance issues.
Your insurance company works closely with your states
insurance department to make sure you are getting the
best and fairest possible service within the states
guidelines. Contact your states insurance department if
you wish to know more about how it serves your
If you have fully insured your own vehicle, including
collision and comprehensive coverage, and rent a vehicle
for pleasure only (while on vacation, for example), you
do not need to buy extra insurance from the rental
company. In fact, in most states your basic rental fee
by law will include liability coverage for damage or
injury to others. But different rules apply when you
rent a car for business purposes, so check with your
Peck-Glasgow agent for details.
If you do not have your own insurance, be aware that
many car rental liability policies cover you only at the
states required minimum. Also, you should buy the
collision and comprehensive coverage offered by the
rental company for your own protection. Plus, do not buy
a collision damage waiver (CDW) from the rental company
assuming it is insurance. A CDW simply releases you from
financial responsibility if you damage the vehicle you
are renting, provided you comply with the terms of the
rental contract. But those terms can vary considerably,
and CDWs are not state-regulated, which means they are
technically not insurance.
Its always a good idea to review your policy before
renting a vehicle and, if necessary, contact your
Peck-Glasgow agent for clarification.
Yes. Liability and coverage for physical damage (i.e.,
comprehensive and collision) always follow your car. So,
if a friend borrows your car and has an accident, you are
still protected against the cost of damages or injuries.
Plus, if the driver of your car is insured, his/her
policy will also be available to cover the cost of
damages and injuries.
The same rules apply when you borrow someone else's
vehicle. Your own insurance follows you no matter whose
car you are driving. But the vehicle owners policy is
the key coverage if you have an accident.
Comprehensive insurance, which covers you for fire and
theft, generally covers you against damage by flood,
earthquake, hail and other natural perils, except when
your car is overturned (which is technically considered
a collision). If you have special concerns about the
safety of your vehicle in the face of Mother Natures
wrath, contact your Peck-Glasgow agent for
information on catastrophic coverage.
While you don't need a law degree or an agents license to
understand your policy, you should read it thoroughly.
After all, it is a binding legal contract. If there is
anything you don't understand, ask your Peck-Glasgow
agent to explain it to you. You have the right to know what
is in your policy.
If you wish clarification beyond your agents
explanation, or if you want to be certain that the
policy is completely valid, contact your states
Usually, insurers that refuse to cover a claim have a
strong legal reason for doing so—even if you disagree.
Contact your Peck-Glasgow agent if you feel you are
experiencing customer service issues, because your
agent can assist you with these issues.
But if it is a legal problem, you may have to hire a
Talk to your Peck-Glasgow agent if you have a problem
with your insurer, and talk to your state insurance
department if you want more specific information on
state regulations and legal precedents.
After an accident, you should call your Peck-Glasgow
agent as quickly as possible, to help you complete a
claim form, determine what exactly happened and evaluate
any damages or injuries. Your agent then
will contact your insurer's claims adjuster—usually
within an hour of your report—whose job is to work with
you to fix the problem. While compensating you for auto
repairs or medical expenses is easy and immediate,
determining liability is more complicated. The adjuster
will begin the settlement process, the length of which
will depend on the cooperation of the other party.
The amount of compensation for your loss can vary
according to the adjuster's analysis of the damage. You
do not have to accept the first amount of money you are
offered, if it is lower than the cost of your repair or
recovery. While you may have to do some homework to
prove your reported loss is valid, its worth it to be
certain your insurer lives up to the provisions of your
Remember, negotiating with an adjuster is just business.
Insurers simply want to settle claims fairly in light of
possible fraud. While it is your insurers responsibility
to root out false claims, you pay the price in the end.
In fact, you spend nearly a dime on every dollar of your
premium to cover the false claims of others. So, try to
keep an open mind when working with your adjuster to
settle on a price that is fair to both you and your
You should always talk to your Peck-Glasgow
agent about coverage of rare and valuable property.
Since a classic car usually cannot be replaced, you will
probably want ample compensation if it is lost. A
classic car, because it is rare or unique, may indeed
require a special insurance policy.
While most drivers today are generally insured for
collision and theft, this coverage may not be necessary
for every vehicle.
Liability insurance, as mentioned earlier, is essential
and in many states required. But if you drive a
clunker—an older car that isn't worth much money—you may
be able to do without collision insurance. If you have
an accident, repair costs could easily be higher than
the value of your vehicle, thus "totaling" it. This
means your insurer will pay you the total book value of
your vehicle, and that could be far less than the cost
of your vehicle's repair. So, collision insurance may not
cover your loss adequately.
Since it depends on special circumstances, ask your
Peck-Glasgow agent for assistance
Yes, because the chance that you could suffer a loss
begins with the first day of business. You can't get
help after the fact. If you suffer a loss and have no
insurance or have improper or insufficient coverage,
there is very little, if anything, your
Peck-Glasgow agent can do to help you. You must be
prepared for the risks that are inherent in any business
and the losses, sometimes catastrophic, that they can
Also, many states and local jurisdictions require that
businesses be insured to begin operating. And if you
rent space for your business, your landlord probably
requires that you be adequately insured as well.
Every business has some property. And, when you think
about it, your business is your property. Just like your
home and your car, your business needs to be protected
from loss, damage and liability. In addition, your
business is your source of income, so you need
protection from the potential loss of that income.
Generally, there are two types of insurance -- property
and liability. Property insurance covers damage to or loss of the
policyholder's property. And if somebody sued for
damages caused by you or your possessions (other than a
vehicle covered by your insurance policy), the
cost of the suit -- both defending it and settling it,
if necessary -- would be covered by your liability
It can be. Many small businesses are now insured under
package policies that cover the major property and
liability exposures as well as loss of income. A common
package policy used by many small businesses is called
the Businessowners Policy (BOP).
Generally, these package policies provide the small
owner more complete coverage at a lower price than
separate policies for each type of insurance needed.
Your Peck-Glasgow agent can help you decide which
policy or policies are right for your business.
Additional coverage for property, liability or perils or
conditions otherwise excluded (e.g., flood protection)
can be purchased as endorsements to a standard policy or
as a separate, second policy called a
difference-in-conditions (DIC) policy.
Because businesses vary, it is impossible to have a
standard policy to cover all contingencies. Also, some
businesses, regardless of their size, do not fit the
profile of a standard business owners policy. For
example, restaurants, wholesalers and garages have
special liability needs that are not met in the standard
businessowners policy. Your Peck-Glasgow agent can
provide you with information so you can choose the right
policy (or policies) to protect you and your business.
Your business may not possess all the following types of
property, but you can use this list to make sure that
you have considered all the property categories and any
insurance coverage that may be warranted:
Buildings and other structures (owned or leased)
Furniture, equipment and supplies
Inventory Money and securities
Records of accounts receivable
Improvements and betterments you made to the
Machinery Boilers Data processing equipment and
media (including computers)
Valuable papers, books and documents
Mobile property such as automobiles, trucks and
Satellite dishes Signs, fences, and other outdoor
property not attached to a building
Intangible property (good will, trademarks, etc.)
To establish the amount of insurance you need on
each, your Peck-Glasgow agent can help you review the
types of property you own and their uses. Some of these
items are covered in the basic policies. For others,
coverage can be added by an endorsement, or rider. And
some, like money and securities, may not be covered by a
standard commercial policy and may require a second,
The best thing to do is to take a complete inventory of
all your business property, determine all of its value
and decide if each is worth insuring. Then check to see
that the items on the inventory list are included in the
basic business property policy and covered for the
correct amount. If not, ask your Peck-Glasgow agent
about the cost of purchasing additional coverage to meet
You also need to consider your business situation. Are
you planning a major expansion? Does your inventory have
a decidedly peak season (like a toy store in December)?
Or does it fluctuate throughout the year (like a
clothing store)? Is your liability limit high enough in
light of the new job contract you just signed? Business
policies are designed to be added to or subtracted from
to meet your needs. Be sure to discuss changes to your
business with your Peck-Glasgow agent so that he or
she can help you ensure your policy still provides
Some common additional coverages for business property
include (although this list is by no means
Boiler and Machinery Insurance
Even if you do not own a boiler, you may need this
coverage. The term "boiler and machinery insurance" is
gradually being replaced with terms such as "equipment
breakdown" or "mechanical breakdown" coverage. This
insurance provides coverage against the sudden and
accidental breakdown of boilers, machinery or equipment,
including computer systems and telephones/communication
systems. Coverage usually includes reimbursement for
property damage, expediting expenses (e.g., express
transportation charges), and business interruption
Builders Risk Coverage
This covers buildings in the course of construction.
Depending on the policy, this coverage can be for either
the building's value at the time of loss or its full
value at the time of completion.
Building Ordinance Coverage
Provides coverage when a community has a building
ordinance stating that when a building is damaged to a
specified extent (usually 50%), it must be completely
demolished and rebuilt in accordance with current
building codes rather than repaired. Special attention
is required when establishing the amount of insurance.
Business Interruption Insurance
This covers the loss of earnings as a result of damage
or loss of business property. Reimbursement for
salaries, taxes, rents, and other expenses plus net
profits that would have been earned during the period of
interruption can be included.
Commercial Crime Coverages
This covers money and securities, stock and fixtures
against theft, burglary and robbery both on and off the
insured premises and from both employees and outsiders.
Debris Removal Coverage
Covers the cost of removing debris after damage from
fire or other covered peril that requires debris removal
before reconstruction of the damaged building can begin.
This is not part of fire insurance coverage and must be
added as an endorsement.
This covers business owners for losses due to dishonest
acts by their employees.
This provides coverage for glass breakage such as store
windows and plate glass on office fronts.
Inland Marine Insurance
Primarily covers property in transit such as from
warehouse to warehouse or warehouse to retail store, as
well as other people's property left on your business
premises, such as clothes left at a dry cleaning
business or an employee's personal effects left in the
company locker room.
Insurance for Loss of Lease Income or Value
This covers the loss of income when rental property is
damaged or destroyed and the loss of value when the
owner of the rental property also used some of its space
for business. If the tenant of the destroyed or damaged
building is forced to rent space elsewhere at a higher
cost, this is called loss of lease value.
There is no one answer to this because each business is
different. You can consult with your Peck-Glasgow
agent on the monetary limits needed to cover your
potential for loss. Obviously, a one-person accounting
firm will need to purchase less insurance than a store
with a substantial inventory. But each will need to make
sure that all necessary business property is covered,
that the limits of liability are sufficient to protect
the owner and the employees and that loss of income is
In addition, each business has unique needs and
situations that must be handled. If the store happens to
be located on a flood-prone area, the owner should
invest in flood insurance. The accountant may wish to
purchase reconstruction-of-accounts-receivable insurance
to cover the loss of accounting records. The costs of
reconstructing those records, money borrowed because of
delayed payments due to the records being lost, and lost
payments from those clients whose records cannot be
reconstructed are all covered.
Liability protection also will vary from
business to business. A retail business is more at risk
for potential suits than a business that is not open to
the public. Also, in some states, courts tend to respond
more positively to lawsuits, increasing both the
likelihood of successful lawsuits and the amount of
damages awarded. In today's lawsuit-conscious society,
higher liability limits are extremely important
and relatively inexpensive. Your Peck-Glasgow agent
can help you decide how much coverage is needed for your
Property insurance can be purchased on the basis of the property's actual
value, on its replacement cost, or on an agreed amount.
The differences among the three are:
Actual Cash Value
The replacement cost of the item minus depreciation. For
example, a new desk may cost $500. If your 7-year-old
desk gets damaged in a fire, it might have depreciated
50%. Therefore, insurance would pay you $250.
This coverage pays the cost of replacing an item without
deducting for depreciation. So today's cost for a desk
of a size and construction similar to the 7-year-old one
damaged by fire would determine the amount of
compensation. If it costs $500 today, that would be the
Art objects, antiques and other unique items are usually
insured at an amount agreed upon when the policy is
being written. An appraiser values the goods to be
insured and the business owner and the insurer agree
upon an amount that the insurer will pay if the goods
are destroyed due to a covered peril.
Check your policy. If you prefer replacement coverage
and do not already have it, this coverage can be added
to your policy. Inflation-guard coverage, which
automatically increases your insurance amount a certain
percentage, protects against rising construction costs.
Your Peck-Glasgow agent can tell you about the costs
Basic property insurance policies generally cover losses
caused by fire or lightning and the cost of removing
property to protect it from further damage (e.g.,
removing inventory or equipment from a damaged building
so it won't be stolen). "Extended perils," including
windstorm, hail, explosion, riot and civil commotion,
and damage caused by aircraft, automobiles or vandalism,
are usually covered in a standard policy. Other
important perils, often not covered and considered
"optional" in almost all standard policies, include
earthquake and flood damage, building collapse, and
Property insurance can be written as
either "named peril" policies or so-called "all risk"
policies. A named peril policy provides coverage for
those perils specifically named in the policy. An all
risk policy covers loss by any perils not specifically
excluded in the policy. The term "all risk" does not
mean that all perils will be covered and, to avoid
confusion, is often replaced with the term "special
form" or "special causes of loss" coverage.
Check with your Peck-Glasgow agent on the perils
covered by your policy. If you wish, additional coverage
can be added.
No business can afford to be unprepared for a lawsuit.
Liability insurance protects your business assets when
the business is sued for something the business did (or
failed to do) that contributed to injury or property
damage to someone else. Liability coverage
extends not only to paying damages but also to the
attorneys' fees and other costs involved in defending
against the lawsuit--whether valid or not.
The standard businessowners policy provides
liability coverage, as does a separate policy known
as a commercial general liability (CGL) insurance
policy. Generally, commercial liability insurance,
whether purchased in a separate policy or as part of a
standard businessowners policy, will cover
bodily injury, property damage,
personal injury or advertising
injury. The medical expenses of a person or
persons (other than employees) injured at the business
or as a direct result of the operations of the business
are also covered.
Usually excluded from both types of liability insurance
policies are suits by customers against a business for
nonperformance of a contract and by employees charging
wrongful termination or racial or gender discrimination
Check with your Peck-Glasgow agent for help finding
liability protection covering the situations that may
arise in your business.
Yes, but in addition to covering the vehicles you own
for liability, medical payments, uninsured motorist
coverage, comprehensive and collision, it also covers
you when you rent a car and when your employees are
operating their personal cars for your business. Be sure
to review your auto exposures with your Peck-Glasgow
Yes, and in most states there are legal requirements
that must be met, and for which you may be responsible.
State laws vary, but most states require that you carry
some form of workers compensation insurance. This
protects the employee and also offers you, the business
owner, and a degree of immunity from lawsuit by an
Yes. Whether you have one vehicle or several, you will
need a business automobile policy. Such a policy covers
any motor vehicle used in your business including cars,
vans, trucks and trailers pulled by trucks, and offers
coverage if they are damaged or stolen. It also covers
liability if the business vehicle is in an accident and
the driver is at fault. This policy is not for truckers
or commercial garages. They have special liabilities and
must secure special policies that deal with their
different needs. Businesses that have a fleet of
vehicles will of course have different needs than a
business with one or two, and their policies will
reflect these differences.
Whether the business lease is for a building or for
equipment, your Peck-Glasgow agent needs to determine
who is responsible for insuring the leased items--you or
the lessor. For leased buildings or building space,
there are other factors to be considered, such as who is
responsible for plate glass coverage and whether your
landlord requires tenants to carry minimum amounts of
liability insurance, and the extent of a hold harmless
agreement. These and other situations covered in the
lease affect the amount and kinds of insurance you need.
Yes, if your business transports, stores or uses toxic
materials, you are required by law to have a special
environmental liability policy. If these materials
should be discharged accidentally into the water or leak
onto the ground due to a covered peril like fire, the
cost of extracting the pollutant from the business
premises is covered up to the dollar amount set forth in
the property section of your policy.
The standard businessowners policy contains
coverage for loss due to fire, including coverage for
property of others the insured business was repairing,
storing, or otherwise servicing earn money. The coverage
only applies, however, if the business is legally
liable. Thus, if lightning causes the fire, the business
is not responsible because lightning is out of the
control of the business owner. There are other policies,
called Bailee's policies, which provide even broader
coverage for your customers' possessions. A Bailee''''s
policy is often useful to help maintain good customer
Shipping companies often carry insurance to cover their
losses. However, the shipping company's insurance may be
too low or you may have difficulty collecting on a claim
after signing for the shipment. Therefore, "property in
transit" insurance is available to cover your property
being transported by truck, rail, ship or other means of
shipment. Also, the firm you hire to transport goods and
the contract you sign with them may affect your need for
coverage. Make sure you check with your Peck-Glasgow
Yes, but on a very limited basis. Loss of business
property is usually reimbursed up to $2,500 in the house
and up to $250 for business property damaged or lost
away from the premises. Even if your business is a
sideline such as a craft studio, these limits may be too
low to cover all the equipment and materials you have
accumulated. It's also important to know that no
business liability coverage is included in a standard
homeowners policy. Your Peck-Glasgow agent can help
you ascertain what, if any, additional coverage you
need. This additional coverage may be added to your
homeowners policy or found in a separate
Most business policies include a "coinsurance" clause
stipulating what percentage of the total value of your
property must be insured to be fully reimbursed for a
loss, even a partial one. (Most losses are partial.) If
you insure for less than that amount, your insurance
company may impose a "coinsurance penalty" on your
Here's how coinsurance works:
Let's say you have a building insured that you believe
would cost $100,000 to replace and a coinsurance penalty
in your policy of 80 percent. You insure the building
for $80,000, thinking you have fulfilled the coinsurance
clause. A fire loss causes $60,000 worth of damage, so
you submit a claim. Your insurance company subsequently
determines that the replacement cost of the building is
actually $150,000. To determine how much to pay on the
claim, the insurer divides the amount of insurance you
purchased ($80,000) by the amount you should have
purchased (80% of $150,000 or $120,000). The result
(two-thirds of $60,000 is $40,000) is the amount of your
claim the insurer will pay.
Thus, even for a partial loss within the monetary limits
of your policy, you will receive only two-thirds of the
amount claimed. If the building had been insured for at
least $120,000, the insurer would have reimbursed you
for the full amount of the loss.
You should check with your Peck-Glasgow agent for
help maintaining the amount of coverage you want. Adding
an endorsement to the policy that automatically
increases policy limits to keep pace with inflation is a
As long as you do not alter the products you receive
from manufacturers for resale, you have only a secondary
liability. The product manufacturer is the first liable
party. General liability insurance usually covers this
secondary liability, but you should check with your
Peck-Glasgow agent so that he or she can help you
ensure your business is adequately covered. Recognize,
too, that your liability policy will pay
defense costs, whether or not a judgment is rendered
Employee benefits generally include health insurance
(sometimes including dental and vision benefits),
term life insurance, and possibly a retirement
program. Group disability insurance is also available,
although employers and employees opt for this benefit
Employers can provide coverage for their employees alone
or for the employees and their families. Cost is usually
the determining factor. With the high cost of health
insurance in the United States today, employers are more
likely to ask employees to pay some or all of the costs
of health insurance for their families and sometimes for
the employees themselves.
Depending on the size of the group to be insured, the
business may serve as the policyholder for the group's
insurance. However, for many small businesses,
the insurer will pool them together in a
multiple-employer trust. The trust itself, rather than
any single employer, is the policyholder. This enables
smaller businesses to benefit from the lower premiums
and other services enjoyed by large groups.
Small businesses can also sometimes obtain employee
benefit insurance through their trade or
professional association. Your best bet as a small
business operator is to find a way to join a larger pool
seeking benefits. Check with your Peck-Glasgow agent
on the options available to you.
Remember that all insurance premiums are based on the
risks involved. The insurance company evaluates the
situation to determine the risks--or potential for
losses--and bases its rates on the results. Therefore,
deliberate steps you take to lower your risks not only
can help safeguard your business but also may make you
eligible for lower insurance rates. Consider these
Maintain adequate lighting throughout your
Keep electrical wiring, stairways, carpeting,
flooring, elevators, and escalators in good repair.
Install a sprinkler system, smoke and fire alarms,
and adequate security devices.
Keep only a small amount of cash in the cash
Keep good records of inventory, accounts
receivable, equipment purchases and the like. Consider
keeping a second set of records in a safe off-site
location, such as a safety deposit box at your bank or
other secure place.
Make sure your employees have good driving
Make sure your employees know how to lift properly
and use all necessary safety equipment, such as
goggles, gloves and respirators.
Consider using the services of a risk manager.
Such an outside consultant can advise you of any
safety or environmental regulations you may have
overlooked or not been aware of and talk to your
employees about safety practices.
You may also wish to raise your deductible where
appropriate to lower your insurance premiums. How high
to raise the deductible should be governed by how much
you can afford to pay out of pocket. Be careful not to
raise it so high that you cannot cover it should a
Your Peck-Glasgow agent should be able to
inform you of various risk-management techniques to
help you address some of the risks inherent in your
Insurance is a heavily regulated industry. Every state
has a department that regulates and monitors every
insurer operating within the state's borders. In
addition to approving rates, your state's insurance
department is involved in all insurance matters on
behalf of private citizens and businesses. It also
issues operating licenses to insurers and agents, based
on their ability to meet the state's requirements for
conduct and knowledge about insurance issues.
Your insurance company and Peck-Glasgow agent work
together to provide you with prompt, quality service in
the case of a claim. If you ever have difficulty
resolving a claim, you should speak with your agent. However, you can also contact your
state's insurance department if you wish to know more
about your options and rights as an insurance consumer.
Agents are there to help you. At the most basic level,
any agent should be able to answer your questions about
insurance, help you thoroughly assess your insurance
needs and offer you insurance products to help meet
those needs. Also, any insurance agency should provide
you with prompt, quality service in the case of a claim.
Just as important is the level of professional
confidence and personal comfort you feel with the agent.
Many people stick with the same insurance agent for
decades, even generations. It helps to find an agent you
can get to know and trust.
An important, but sometimes overlooked factor to keep in
mind is that there are two kinds of insurance agents:
those who represent only one insurance company and those
who represent more than one insurance company.
Agents offering through their agencies only the policies
of one insurance company often are referred to as
"captive agents," because the company they represent
does not allow them to offer their customers competitive
By contrast, agents offering through their agencies the
policies of more than one insurance company are called
independent agents, because they can shop around for
their customers for the best insurance values among a
variety of competing companies. A nationwide survey
showed that Americans prefer to work with
agents by a 2-to-1 margin over captive agents.
For most people, their home is their single most
valuable possession and largest investment. Homeowners
insurance protects your investment as well as you, your
family and your household possessions.
If you were to suddenly lose your home due to fire or a
tornado, or have the contents damaged or stolen, you
probably could not afford to replace everything all at
once. If somebody sued you for an injury or damage
caused by you or your property, the cost of defending
against that lawsuit could be very expensive regardless
of the outcome.
All of these situations are covered by the homeowners
package policy. And while it may be unpleasant to think
about fire, theft, and other uncertainties of life,
let's face it, that's reality.
Yet another reason you need to carry homeowners
insurance is that mortgage lenders require it. No
mortgage company will lend the large amounts of money
needed to finance homes at today's prices without
requiring an insurance policy to protect that
You do. It's your home and your insurance policy. As a
means of protecting its investment, the mortgage company
collects a set amount from you each month, puts it in
escrow, and then pays your insurance and taxes when they
fall due. However, the policy is still yours and you may
select the insurance you feel offers the best coverage
at the best rates. In fact, if you allow the mortgage
company to choose, you might well end up paying more for
your homeowners insurance.
"Exact" coverage is hard to define because there are
different policies. However, about 80 percent of
homeowners policies are based on a standard form, which
we described in this guide. All homeowners policies
cover two important areas: property and liability.
Remember that you have to have protection against the
proverbial thief in the night and the person who slips
on your sidewalk by day.
What this means in insurance terms is that your
homeowners policy has two basic components. It covers
your structures, possessions, property insurance, and it
furnishes protection against personal liability.
Personal liability, as its name implies, means you are
legally obligated to pay money to another person for
actions caused by you, your family, or your property.
That liability extends to medical payments to others for
injuries caused by you or your family.
Remember that policies vary but homeowners insurance
usually covers damage to both structures and personal
property caused by:
Fire or lightning
Windstorm or hail
Riot or civil commotion
Theft or vandalism (sometimes called malicious
Weight of ice, snow or sleet
Freezing of a plumbing, heating, air conditioning
or other such household system
In fact, your coverage is most likely even more
comprehensive than the above list. Many homeowners
policies cover damage by "just about everything," unless
the coverage is specifically excluded. In these cases,
it is even more important to understand what is not
Most catastrophes are covered; for example, wind damage
from hurricanes and tornadoes come under the windstorm
peril listed in the previous question and so are
included. Flood and earthquake damage, however, are not
covered by a standard policy.
Be careful not to be lulled into a false sense of
geographic security. Flood and earthquake activity is
more widespread than many people realize. For example,
almost 90 percent of the U.S. population lives in
seismically active areas. Since 1900, earthquakes have
caused damage in all 50 states. And if your home is
located in a flood-prone area, you are 26 times more
likely to suffer a flood loss than a loss from fire.
You may want to check with your Peck-Glasgow agent about special catastrophic policies for
normally excluded conditions like floods and
earthquakes. Of course, the cost of such extra coverage
may reflect the high risk involved. If you live along a
shoreline, for example, expect to pay a higher premium
for flood coverage than someone living on a mountaintop
There may be other exclusions spelled out in your policy
such as neglect, intentional loss, earth movement,
general power failure and even damage caused by war. If
you neglect to take care of your property (e.g., a leaky
roof), you may not be covered. Obviously, if you intend
to lose an object or damage your property, there is no
One other exclusion that can be costly is the Ordinance
or Law exclusion. Building codes established by
governmental bodies that drive up the cost of rebuilding
or repairing after a loss occurs may not be covered by
your insurance policy. Thus, if you discover when
replacing damaged property that current law demands
higher grade or more expensive materials than the
original ones being replaced, the new materials may not
be covered for the full price.
For example, if the current building code in your area
requires a higher grade of electrical wiring and after a
fire you are replacing all the wiring in your home, your
policy may cover only the cost of replacing the older
wiring. The difference in cost between the old wiring
and the new wiring required by ordinance or law is your
Even if you live in a fairly new home, laws and building
codes are constantly being updated. Coverage to include
ordinance or law requirements can be added to your
homeowners policy with an endorsement an addition that
could save you money in the long run.
Yes, they are both your property so they are both
covered. The value of the real property in your home,
garage, shed and other structures is generally based on
the value of the main structure, the house itself. Thus,
if the house were insured for $75,000, the shed,
detached garage and other auxiliary structures would be
covered for 10 percent or $7,500 worth of damages.
Additional property protection features may include
living expenses should your home not be habitable for a
period of time.
Your personal property is also covered by a homeowners
insurance policy. Personal property includes the
contents of your home and personal belongings used,
owned, worn, or carried by you or members of your
household basically, everything and the kitchen sink!
This coverage is also based on the house coverage, and
there are limits on the losses that can be claimed.
Higher limits can be purchased for both real and
State laws may dictate how losses are to be figured,
which means the same insurance company may use one
method in one state and a different method in another.
The common methods are:
Actual Cash Value - The replacement cost of the item
minus depreciation. For example, a new television set
may cost $500. If your 7-year-old TV set gets damaged in
a fire, it might have depreciated 50 percent. Therefore,
you would be paid $250 for that set.
Replacement Coverage - The cost of replacing an item
without deducting for depreciation. So today's cost for
a TV set with features similar to the 7-year-old one
damaged by fire would determine the amount of
compensation. If it still costs $500 today, that would
be the replacement coverage.
Replacement value should not be confused with market
value. The market value is what your house, for example,
would actually sell for and is generally more than the
replacement cost. This is because replacement value does
not include the land, which almost always does not need
to be replaced.
Check your policy. If you prefer replacement coverage
and do not already have it, this coverage can be added
to your policy. Typically, the difference in premiums is
10 to 15 percent to upgrade from actual cash value
coverage to replacement coverage. However, it is well
worth it to protect your investment in your possessions.
Your Peck-Glasgow agent can tell you about the costs
Remember that homeowners insurance is designed to cover
general personal possessions, not valuable collections
like antiques, jewelry or original art.
Insurance companies deliberately limit their
coverage of expensive possessions so that household
premiums are more affordable to everyone. After all, if
they had to cover museum-level art collectors under
standard homeowners policies, we would all end up paying
higher premiums to cover those expensive items.
Your policy lists the specific monetary limits for
personal property under what is called "Special Limits."
Those limits usually are:
$200 for money, bank notes, gold and silver (other
than goldware and silverware), platinum, coins, and
$1,000 on securities, accounts, deeds, evidences
of debt, letters of credit, notes (other than bank
notes), manuscripts, passports, tickets, and stamps.
$1,000 on watercraft, including their trailers,
furnishings, equipment and outboard motors.
$1,000 on trailers not used for watercraft.
$1,000 for loss by theft of jewelry, watches,
furs, precious and semiprecious stones.
$2,000 for loss by theft of firearms.
$2,500 for loss by theft of silverware,
silver-plated ware, goldware, gold-plated ware and
$2,500 on property on the resident premises, used
for business, and $250 on this property damaged or
lost away from the premises.
If these limits seem low to you (maybe that
engagement ring is worth much more than $2,500), you may
wish to talk to your Peck-Glasgow agent about additional coverage for specific items.
Yes, perhaps in this case the term "homeowners" is
misleading because this is a package of insurance
coverage that extends to all your possessions no matter
where they are. If you take a round-the-world vacation
and lose a valuable item, as long as the loss is by a
covered event or peril, the location does not matter.
The liability component also extends well beyond the
boundaries of your home. Should you be found legally at
fault for injury or loss to another individual, whether
you unfortunately caused a tumble down a San Francisco
hill or a fall in an Indiana barn, that is personal
liability which again is addressed in your homeowners
As in the property section of your homeowners policy,
there are limits and exclusions to personal liability.
Your business activities, for example, are not covered
under a homeowners policy. You are also not covered for
injuries or damage you purposely cause. So if a fight
with a neighbor turns physical and you end up bopping
him on the nose, your homeowners insurance will not
cover the injury or any resulting suit. Your policy
lists specific exclusions and limits
No. Your property and the structure (the basement) are
covered by your policy as is your personal liability.
However, the tenants' possessions and liability are not
covered by your policy. Therefore, they may wish to
purchase their own renter's insurance. Whether you are a lessor or a
renter, you should check with your Peck-Glasgow agent to make sure you have the
coverage that is right for you.
As a member of the family, she is probably covered under
your homeowners policy. So too is your child away at
college covered for personal liability or theft or
damage to his or her property even in the dormitory or
college apartment. However, you should check with your
Peck-Glasgow agent to be sure you have chosen the
coverage that is right for you.
Insurance companies can operate in more than one state
so the company that carries your primary residence may
issue a policy for your vacation home. Personal
liability is covered in the first homeowners policy so
the second policy need cover only property. This type of
policy is called a "dwelling policy."
If you rent out your second home for all or part of the
year, your homeowners policy may need
to be endorsed (added to) to cover the increased
liability exposure. The renter's property is not covered
under your dwelling policy. Should damage occur while
someone is renting your property, they will need to
check with their own agent about their coverage.
Yes, but within certain limits. Both are covered as
personal property used for business purposes. However,
like all personal property, there are monetary limits on
reimbursement. Whether your home business is your
primary occupation or a hobby that nets you a few
hundred dollars a year, it is still a business and you
should treat it as such. If you've invested quite a bit
in equipment (woodworking tools, for example) and sell
the occasional decoy, you should consider whether the
personal property limits are sufficient.
Also, keep in mind that the personal liability
protection in your homeowners policy does not extend to
business liability. Check with your Peck-Glasgow agent
concerning your business
If most of us suddenly found ourselves without anything
due to some calamity, we would be hard pressed to know
all that we had lost. When was the last time you counted
the number of shoes you own or CDs, not to mention
furniture, dishes, drapes, or audio and video equipment?
The list goes on and on. How much is it all worth and
where would you start if you had to replace it?
Now is the time to make a list of major household items
and possessions. Just remember
that, where possible, it is wise to list the serial
number, date and cost of purchase, and even include the
receipt if you can.
Another easy way of preparing a home inventory is to use a video camera
or take pictures of your home and its contents. As you
take the video, you can also talk about the items and
their date and cost of purchase.
Whichever method you choose, have a copy made and ask a
friend or family member to hold on to it. Or store your
copy in a safe deposit box. That way if the worst
happens and your home is destroyed, the inventory list
will be safe at another location.
The insurance company has to weigh many factors in
determining a premium to charge for your policy. One
factor is access to water (hence the question about the
location of the nearest fire hydrant) as well as the
dependability and nearness of your local fire company
and police. Rural homes more than five miles from a
water supply are more at risk for severe damage from
fire and lightning. Therefore, they can be more
expensive to insure and rural homeowners may even have
difficulty obtaining insurance.
Other factors are, of course, the age and construction
of your house. Generally, brick and stone homes are
cheaper to insure than ones constructed of wood.
The number and dollar amount of lawsuits in your state
can also influence your premiums. Residents in states
that experience a large number of lawsuits or of
verdicts in excess of $1 million may face higher
premiums to cover the cost of those suits.
Because your premium is based partly on the level of
risk the insurance company must take, there are things
you can do to lower your premium. Installing deadbolt
locks (to discourage theft), fire extinguishers, smoke
alarms, and burglar and fire alarms that alert your
local police and fire stations can often save you up to
15 percent on your premium. Check with your
Peck-Glasgow agent before purchasing any of
these items to see if your insurance carrier has
specific requirements to qualify for the discount.
Many insurers also offer discounts if you insure both
your home and automobile with the same company. Another
way to save may be to increase the deductible on your
homeowners policy. If your deductible is $100, it means
that you agree to pay this amount first, and your
insurance company will pay for damages that exceed this
deductible. By increasing your deductible from $100 to
$250, or even $500, this decreases the insurance
company's risk, which may mean a savings in your
Also, it pays to shop around for insurance coverage just
like anything else. Of course, you may want to keep in
mind that the extent of coverage also determines the
premium cost so the cheapest policy is not necessarily
the best. Your Peck-Glasgow agent can help you
evaluate the different policies and companies so you can
make the choice this is right for you.
Insurance is a heavily regulated industry. Every state
has a government department that regulates and monitors
every insurer operating within the state's borders. In
addition to approving rates, your state's insurance
department is involved in all insurance matters on
behalf of private citizens and businesses. It also
issues operating licenses to insurers and agents, based
on their ability to meet the state's requirements for
conduct and knowledge about insurance issues.
Your insurance company and agent work closely with your
insurance department to make sure you are getting the
best and fairest possible service within the state's
guidelines. If you ever have difficulty settling a
claim, work with your Peck-Glasgow agent to resolve
the difficulty. However, you can also contact your
state's insurance department if you wish to know more
about your options and rights as an insurance consumer.
Contact your Peck-Glasgow agent as soon as possible.
If there is damage to your home or possessions, make
"emergency" repairs to protect yourself and your
property from further damage, then call your
Peck-Glasgow agent. For example, if some of the windows in
your home have been blown out by wind, you may board
them up to prevent additional damage. In fact, your
policy covers the cost of these emergency measures.
However, before setting about to make permanent repairs,
call your Peck-Glasgow agent. The insurance company
has the right to inspect the property in its damaged
condition. They may want to send a claims adjuster or
instruct you to get an estimate from an independent
If you have property stolen, notify the police
immediately and call your Peck-Glasgow agent.
Liability covers bodily injury and property damage to
others due to your negligence. The coverage applies to
non-auto accidents that occur either at your residence
or off the premises. Medical expense payments such as
first aid can also be due to the injured party. Should
you be sued or suspect that you may be, contact your
Peck-Glasgow agent immediately.
The same rule of thumb applies to renters as to
homeowners. If catastrophe struck tomorrow, could you
afford to replace everything you own? Or if you were
sued, would you have enough money to pay legal fees and
possibly settle the suit? If not, chances are you would
benefit from the protection that renters insurance
Renters insurance offers the same
general personal property coverage and liability
protection as a homeowners policy. Thus, your camera is
insured while you are on vacation, and you are covered
if your grandfather clock crashes into the apartment
lobby's wall and leaves a gaping hole. In fact, most
policies are surprisingly extensive and may include
additional living expenses (also called loss-of-use
coverage) if you are forced by fire or other damage to
No, the landlord's insurance covers
damage to the building and the landlord's property, not
your personal property or liability. Plus, you may be
liable for damage to the building if it is your fault.
If you go out and leave the stove on and an ensuing fire
causes extensive damage to the entire building, you may
be held liable to the landlord.
Renters insurance is surprisingly inexpensive. That's
because you are not insuring a building. Like all
property/casualty policies, the value of your property
to be insured and other risk factors are weighed by the
insurance company to determine your premium. Your
Peck-Glasgow agent can help you find the best
combination of coverage and cost that you determine are
right for you.
Check with your Peck-Glasgow agent. Usually, it is
best if all roommates are on the same policy although it
is possible for each to purchase his or her own
coverage. If you do need to "go it alone," you alone
receive the security of renters coverage.
Condo owners insurance covers the same general areas
outlined throughout this guide for homeowners in the
important areas of personal property and liability. In
addition, condo owners insurance provides coverage for
some situations specific to condominium unit owners.
Usually, the condominium association buys insurance to
cover the property (building and structures) and
liability coverage for the general association. If you
own a condominium unit, you may be responsible for
covering from the "walls in" on your unit, that is, for
your personal property and the interior of your unit
(whatever area is excluded from the condo association's
policy) as well as for your personal liability.
Sometimes, condo owners are assessed by their condo
association for losses "outside the walls" that were not
completely covered by the association's policy. For
example, if the clubhouse is destroyed and the condo
association did not have it insured, you could be
assessed for a "share" amount needed to replace it. If
you wish, check with your Peck-Glasgow agent about
adding such "loss assessment coverage" to your condo
When a person dies, there are many expenses that will
need to be paid. These expenses may include such items
as funeral costs, burial expense, current bills, and
estate taxes. In addition, there may be financial needs
the insured would have met if they had remained alive,
including family living expenses, mortgage payments,
long-term debt, and college costs for children. The
Primary Function of a Life Insurance policy is to provide, upon death of
the insured, an amount sufficient to pay for any or all
of the preceding costs and expenses. Which expenses or
costs are to be provided for, and how much money will be
needed is entirely up to the insured.
There are many and varied needs for funds upon the death
of an individual, and all must be taken into account to
arrive at a proper amount of insurance. For simplicity,
some authorities recommend a good rule of thumb to be
five times your annual income. Your Peck-Glasgow
agent can talk with you about your needs and goals, and
illustrate how each item translates into a given amount
of funds needed at the time of death. He or she can also
share how to account other sources of income (such as
Social Security or retirement plans) that will actually
lower the amount of life insurance necessary.
Upon death of the insured, the insurance company pays
the policy's benefit amount to the beneficiary (or
beneficiaries) named by the insured on the policy. Some
policies may provide additional benefits, so be sure to
discuss this with your Peck-Glasgow agent.
During the first two years of the policy period, there
may be conditions (fraud, misstatement of age, suicide)
that can affect the death benefit paid by the policy.
Your Peck-Glasgoiw agent can discuss these with you.
After two years, the full policy death benefit is
payable, regardless of the cause of death. (Some
policies may also pay extra benefits in certain
conditions, such as the insured dies in an accident.)
Will my beneficiaries receive the benefit in one lump
sum, or will it be distributed over a period of years?
That is entirely up to you, or you can leave the
decision to your beneficiaries. Both options are
Your choice of beneficiaries is entirely yours. You can
name individuals, organizations or your estate. You can
also change them at any time. The original beneficiaries
under your policy, as well as any changes you later
make, must be designated in writing to the insurance
company, and attached to your policy by endorsement.
Although there are many types of life insurance policies, nearly all are variations
of two basic types, term and permanent. (A third type,
known as universal life, is a combination of term,
permanent and various investment options. Its complexity
is beyond the scope of our overview, but if you are
interested, your Peck-Glasgow agent can discuss if
universal is a good fit for your life insurance needs
Term insurance is exclusively death coverage. The
policies are written for a specific length of time
(the term referred to in the name). Common terms are
one year, five year and ten year, although longer
terms may be available. If the insured dies during the
term of the policy, the death benefit is paid to the
beneficiaries. If at the end of the term the insured
is still alive, the coverage ends.
Unlike term insurance, a permanent insurance policy
(often referred to as whole life) never terminates as
long as the premiums are paid. It also builds cash
values in the policy that can provide valuable living
benefits in addition to the death benefit.
For term insurance, the answer is always yes. For
permanent insurance, as the living benefits accumulate,
they may be used to provide funds for financial needs
such as loans, premium payments and retirement benefits.
For permanent insurance, no. For term insurance, if an
insured wishes to continue the coverage beyond the
specified term, many policies (known as renewable term)
allow the insured to continue the coverage for another
term of the same length, without any need to fill out a
new application or undergo an underwriting review. This
is a valuable provision, since the insured's health or
occupational status may have changed during the policy
period in ways that would render them uninsurable if
they were to try and purchase a new policy.
Although there may be a myriad of fees, expenses,
interest assumptions, and other factors used to develop
a given life insurance company's premiums for a policy,
the rates for life insurance are ultimately based upon
one factor the statistical chances of the insured dying
in a given year. Such statistics, based upon insurance
company experience and government records, are used to
calculate an annual death cost for each $1,000 of life
Since statistically few people will die at younger ages,
the death cost for those years will be extremely low. As
people age, the statistical chance of death increases
slowly at first, then more rapidly after the insured
passes middle age and therefore so does the annual death
Since term insurance only provides a benefit if the
insured dies during the policy term, its premiums will
be the closest to pure death cost. This is why term is
the least expensive coverage to buy at younger ages. At
older ages, however, the cost of a term policy rises
rapidly along with the increasing death cost, and may
soon become prohibitive for many senior citizens. A term
insurance policy's premium will remain the same during
the term, and then increase at each renewal. For
example, an annual renewable term policy is written for
one year at a time, so the premium will generally
increase each year. A five-year renewable term policy's
premium will remain level for the five-year term, and
then increase at the renewal. Once renewed, the policy
premium remains level until the next renewal, and so on
until the renewal provision expires (typically at age
65), or when the insured either decides the premium has
risen too high or the insurance is no longer wanted.
Permanent insurance rates are also fixed for the policy
term. However, since the policy is permanent, this fixed
premium must represent an average death cost over the
entire expected life of the insured. The result is that
permanent policy rates will be often be significantly
higher than term rates at the younger ages, but then
significantly lower at older ages.
There are many reasons. As food for thought, here are
three of the key considerations:
Permanent insurance will always be there. Some
final expense needs are permanent, and only permanent
insurance is guaranteed, assuming you pay the
premiums, to be there when needed. Term insurance, by
its nature, is temporary, and at some point will
become nonrenewable. In fact, a good life insurance
rule of thumb is to buy permanent insurance for
permanent needs (funeral, burial, estate liquidity),
and term insurance for temporary needs (mortgages,
Permanent insurance premiums are fixed for life.
While the premium may be higher at younger ages than
term, it will never go up. And that can be a great
comfort upon reaching older age and not having to face
the possibility of your term insurance premium
increasing beyond your ability to pay, possibly at the
very time you need your insurance the most.
Permanent insurance builds cash values. During
those early years of your policy, when your lifetime
average premiums are higher than the death cost, that
extra money is set aside to help cover the higher
death costs in later years. But in the meantime it is
put to good use. In effect, it becomes a form of
savings account inside your life policy. This cash
value, as it grows, can be used as the basis for a
loan from the insurance company, used to pay premiums
if necessary, or taken as a cash settlement in the
event you cancel the policy.
If your policy is term insurance, it will have no value.
Term only provides a death benefit. If your policy is
permanent insurance, you will be eligible to receive the
current cash values contained in the policy, whatever
they may be at that point in time. Your Peck-Glasgow
agent will be able to show you sample charts
illustrating your policy's anticipated values for any
particular year after your policy is issued.
Maybe. Many factors must be considered, such as: Do I
plan to remain at my current job? Do I feel secure in my
current job? What current benefits does my employer
provide, and do I feel they are sufficient? Are there
certain benefits that are not provided, or limited in a
way I feel leaves a gap to be filled in my coverages?
Are there members of my family who are not adequately
covered, or are ineligible, for my group benefits?
Discuss these issues with your Peck-Glasgow agent and
he or she can make a recommendation as to the best
choices to assure your medical coverages are adequate
for your needs.
This is the most common form of individual or group
health insurance is a major medical health policy. It
provides benefits for sickness or injury, regardless of
whether the care is provided at a doctor's office,
clinic or hospital. The types of sickness and injury
covered are typically broad, although there are always
limitations that should be discussed with your
Peck-Glasgow agent prior to purchasing the coverage. Major
medical policies normally have an annual deductible and
a lifetime maximum amount of benefits that will be paid.
A deductible is the amount you must pay before the
insurance company begins to pay on your bills. This is
an annual amount per insured person, although typically
there will be a maximum amount of deductibles you will
have to pay in a given year. For example, if your per
person deductible is $500, and you have five people in
your family covered under your health insurance, the
maximum family deductible will usually be $1,500. Once
three of the people in your family have paid out a $500
deductible, no more deductibles will apply to any member
of the family for the remainder of the year. This can
vary, so be sure to discuss the specifics of your policy
with your Peck-Glasgow agent.
In a health policy, coinsurance represents the
percentage of the medical bills the insured will be
responsible to pay after the deductible is met. For
example, if your policy is 80% coinsurance, then once
the deductible is met, the insurance will pay 80% of
covered medical bills and you pay 20%. Typically there
will also be a provision called a stop-loss, which is
basically a maximum amount you will ever have to pay out
of your own pocket for covered medical bills. For
example, let's say your policy states it is 80%
coinsurance, with a $1,000 stop-loss. Once you've paid
your deductible, your covered medical bills are $7,000.
Here's how that would work: First, the coinsurance
provides the carrier will pay 80% of the $7,000 ($5,600)
and you will pay 20% ($1,400). But, your stop-loss says
your maximum payable for this claim is $1,000! So you
only pay the $1,000, and the additional $400 comes from
your insurance company. Notice this provision gets more
valuable as the claim gets larger no matter how large
the final claim, or what percentage of coinsurance
you've purchased, your stop-loss says your share of the
covered expenses will never exceed $1,000.
Please note some polices refer to stop-loss as maximum
out-of-pocket. And many polices include the amount of
the deductible in determining when you hit your maximum,
also a helpful provision.
All of these are provisions meant to help control the
cost of the policy. For example, if the coinsurance
percentage tells you how much of the covered expenses
the company insurance is on the hook to pay, then
clearly the higher the coinsurance percentage, the
higher your policy premium will be. Similarly, the lower
your deductible and stop-loss, the more you are asking
the insurance company to pay, and the higher your policy
premium. While these terms my seem complicated, the
bottom line is the more of your medical expenses you can
afford to pay out of your own funds, the lower your
medical insurance premium can be. Your Peck-Glasgow agent can discuss the various options available to you,
and the amount of difference each will make to your
insurance premiums. You can then choose the combination
of provisions that best fits your budget and needs.
In its simplest sense, it means you are unable to work.
But it's important you realize the definition of the
term under a given disability income policy will be
specified by that policy. The broader the definition of
disability, the higher the cost and increased limits to
the underwriting restrictions. For example, some
policies will define disability to mean the inability to
reasonably perform the duties of your occupation, while
another will define it as the inability to reasonably
perform the duties of any occupation. How significant is
this difference of a single word? To use an extreme
example, if you were a highly trained surgeon, the first
policy would pay you if you were sufficiently injured
that you couldn't perform surgery. The second would
refuse to pay if you could perform any job even sweeping
floors or answering phones. Despite the obvious loss of
income when going from surgeon to receptionist, the
policy definition of disability will determine whether
you will receive benefits for specific policy. As you
might guess, the second policy is likely to be great
deal less expensive. Also, you can see your current
occupation is the single most important factor in
determining what type of disability policy and coverage
options you will be eligible for.
Policy provisions vary, as do the premiums depending
upon which provisions you choose. Generally the policy
will specify a maximum period of time it will pay for a
covered disability. Typical policy terms are for two
years, five years, or to age 65. If during that time you
recover from the disability and return to work, the
policy will provide that a new disability will start a
new benefit period. For example, if under a five year
disability policy, you meet the definition of disability
for three years, then return to work, the policy will
have paid you three years worth of benefits. Four years
later you suffer a new disability. For that new
disability, your policy will pay benefits for up to five
Typically a disability policy will provide for some
length of time the disability must last before benefits
begin. This is usually referred to as a waiting period.
Similar to a deductible under major medical insurance,
the purpose is to avoid paying benefits for minor
injuries or illnesses, thus saving the insurance to
apply to major times of need. The length of the waiting
period can vary, and usually you will have several
options. Clearly the longer you are willing to wait, the
lower the premium. Your Peck-Glasgow agent can
discuss your available options with you.
This stands for Preferred Provider Organization.
Basically, this is a network of health care providers
who have agreed to provide certain services at
agreed-upon costs for individuals whose coverage is a
part of the network. (Some suggest it is best described
as a discount-buying club for medical care.) You are
free to use any medical provider within the network, and
all will honor the agreed services and fees. If you
choose to use a provider who is not an approved member
of the network, your coverage may be diminished, your
personal cost higher or, in some cases, benefits for
non-emergency services may be totally denied. Be sure to
discuss with your Peck-Glasgow agent if your coverage
will utilize one or more PPOs, who are the current
approved providers, and how utilizing an out-of-network
provider will affect your coverage.
This stands for Health Maintenance Organization. Unlike
a PPO network of independent care providers, HMOs are
typically fixed facilities, and benefits are designed to
cover services obtained at the HMOs facilities and
supplied by HMO personnel. HMO coverage plans must
specify how and under what circumstances services may be
obtained from non-HMO providers, and this information is
crucial to determining the value of the HMO under your
particular circumstances. Your Peck-Glasgow agent can
assist you in determining whether there are good HMO
options available in your area, their benefits and any
limitations for you to consider in making your final
medical coverage choices.
By assembling a network of providers who agree to
provide services at a discount (PPO) or by requiring you
get all of your services from a specific provider, with
an emphasis on preventative care (HMO), the hope is to
provide you the best possible care at the lowest
possible costs. A downside is such benefits and
discounts require a great deal of control over your
health care options by the PPO or HMO, and not all the
limitations are popular or convenient. And whether these
approaches are always successful is subject to ongoing
debate, and results can vary greatly by where you live.
You can buy health insurance which basically says go to
whomever you want and have them send us the bill (often
referred to as indemnity coverage), but it lacks the
negotiated cost discounts and overview of services
(meant to dissuade providers from over treating and over
billing) that PPOs and HMOs utilize to try and keep
costs lower. Thus an indemnity policy may be readily
available to you, but may be significantly more
expensive than a coverage plan utilizing a PPO or HMO.
Ask your Peck-Glasgow agent for your options and
possible premiums, and then choose the coverage method
that best meets your personal preferences and needs.