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Auto Insurance FAQs

Business Insurance FAQs

Home and Apartment Insurance FAQs

Life and Health Insurance FAQs
 

 


Auto Insurance FAQs

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 horses.

Today, 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.

Auto Insurance 101 Questions and Answers

 

Business Insurance FAQs

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 insurance?"

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.

Business Insurance 101-Questions and Answers

 

Home and Apartment Insurance FAQs

Chances are your home is your single most valuable investment. Homeowners insurance is a "package" policy that covers property structures, personal possessions, and liability.

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
Peck-Glasgow agent 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 purchased homeowners 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 questions.

House/Apartment Insurance 101 Questions and Answers

 

Life & Health Insurance FAQs

To help you get started with your planning, we have provided answers to a few of the common questions most frequently asked about life, health and disability insurance.

Life/Health Insurance 101 Questions and Answers

 

Why do I need auto insurance?

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.

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What are the different types of policies and what do they cover?

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 accident.
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 collision).
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 friends car.
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 liability insurance.
Extra coverages include expenses for towing, labor, temporary replacement vehicles, etc. These are generally defined as add-ons or "endorsements" to your policy.

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Why and how are policies priced for different drivers?

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.

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How does where I live affect my premium?

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, Wyoming.

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.

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Why are rates different for different cars, even if the cars cost the same?

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 subcompact.

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.

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What is "no-fault" insurance?

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.

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Do all states require some kind of liability insurance?

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 responsibility requirements.

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.

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What happens if I have an accident with an uninsured driver?

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 you.

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 it belongs.

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Why would my insurer cancel my policy?

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 offense); or
you fail to report a substantial change of risk, such as buying a high-powered sports car to replace a family sedan.
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.

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What do I do if my insurer cancels or refuses to renew my policy?

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 your state.

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.

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How do I keep my insurance company from canceling my policy?

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 defensive driving.
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.

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What steps can I take to reduce my rates?

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 devices.
Changing Driving Habits— Commuting by public transit, using a company vehicle for work-related travel and car-pooling.
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.

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How does adding drivers to my policy affect my rates?

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 drivers.

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 experience.)

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Who is watching the insurance companies?

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 fair.

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 interests.

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Do I always need to buy insurance when I rent a car? Am I not covered by my own policy?

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.

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What happens when I loan my car to someone? Is that person covered by my policy? Am I still covered?

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.

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Am I covered for natural disasters or "Acts of God?"

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.

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What should I make sure my policy includes? Do I really need to read all the fine print?

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 insurance department.

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How can I challenge my insurers if they refuse to cover a claim?

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 lawyer.

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.

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What actually happens when I report an accident?

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 policy.

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 insurer.

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Do I need special insurance for a classic car?

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.

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Under what circumstance do I not need certain types of auto insurance?

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

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'm just getting my business started. Do I need insurance right away?

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 cause.

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.

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I don't have any major business assets. Why do I need insurance?

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 insurance.

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Is insurance coverage different for different businesses?

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 business 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.

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What types of property do I need to insure?

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 premises
  • Machinery Boilers Data processing equipment and media (including computers)
  • Valuable papers, books and documents
  • Mobile property such as automobiles, trucks and construction equipment
  • Satellite dishes Signs, fences, and other outdoor property not attached to a building
  • Intangible property (good will, trademarks, etc.)
  • Leased equipment

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, separate policy.

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What types of property insurance should I consider buying?

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 your needs.

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 adequate coverage.

Some common additional coverages for business property include (although this list is by no means all-inclusive):

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 losses.

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.

Fidelity Bonds

This covers business owners for losses due to dishonest acts by their employees.

Glass Coverage

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.

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How much property insurance do I need to buy?

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 protected.

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 particular business.

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Who decides how much my business property is worth?

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.

Replacement Coverage

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 replacement coverage.

Agreed Amount

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 involved.

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What kinds of events does business insurance cover ?

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 glass breakage.

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.

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Everybody seems to be suing everybody else these days. What if someone sues my business?

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 or harassment.

Check with your Peck-Glasgow agent for help finding liability protection covering the situations that may arise in your business.

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What about the cars and truck that I have in my business? Is the coverage like what I have on my personal car?

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 agent.

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Will I need to protect my employees in the event they are injured on the job?

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 injured employee.

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I keep one auto strictly for business. Do I need a separate policy?

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.

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I just signed a 3-year lease to open my business. Why does my insurance agent want to see my lease?

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.

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My business requires that I store gasoline on the premises. Do I have to have special insurance?

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.

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I run a dry-cleaning business. What happens if fire destroys many of my customers' clothes that were stored in the building?

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 relations.

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What if the clothes I manufacture are damaged in shipment. Does the shipping company reimburse me or do I put in a claim to my insurance company?

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 agent.

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I work out of my home. Will my homeowners insurance cover my business?

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 commercial policy.

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What is coinsurance all about?

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 claim.

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 good idea.

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As a retailer, do I need to worry about product liability?

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 against you.

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Now that my business is established, I think it is time to offer my employees some benefits. What do I need to know?

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 less frequently.

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.

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Can I do anything to lower my insurance premiums?

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 steps:

  • Maintain adequate lighting throughout your business premises.
  • 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 register.
  • 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 records.
  • 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 loss occur.
  • 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 business.


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Who keeps an eye on the insurance companies?

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.

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What should I look for in an agent?

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 alternatives.

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 independent insurance agents by a 2-to-1 margin over captive agents.

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Do I really need insurance for my home?

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 investment.

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My homeowners insurance is part of the payment I make each month to the mortgage company. Who decides what insurance to get?

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.

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I know I have that homeowners policy in a drawer somewhere. What exactly does it cover?

"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.

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What kinds of perils am I protected against?

Remember that policies vary but homeowners insurance usually covers damage to both structures and personal property caused by:

  • Fire or lightning
  • Windstorm or hail
  • Explosions
  • Riot or civil commotion
  • Aircraft
  • Vehicles
  • Smoke
  • Theft or vandalism (sometimes called malicious mischief)
  • Falling objects
  • 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 covered.

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What about floods, earthquakes and other catastrophes?

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 would pay.

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Are there any other exclusions I should know about?

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 coverage.

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 responsibility.

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.

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Are the backyard shed and my color TV both covered in my homeowners policy?

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 personal property.

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Who decides how much my property is worth?

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 involved.

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How much will I be paid for damage to my personal property?

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 medals.
  • $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 pewterware.
  • $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.

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Does my policy cover my possessions even when I go on vacation?

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 policy.

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

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I rent out my basement. Are my tenants covered by my homeowners policy?

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.

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My mother lives with us in a separate in-law suite. Are her possessions covered?

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.

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What about our vacation home in the next state?

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.

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I work out of my home. Are my inventory and business property covered?

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 insurance needs.

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Help! I've lost everything! Where do I start?

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.

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Why does the insurance company want to know where the nearest fire hydrant to my home is?

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.

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Is there anything I can do to lower my premiums?

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 premium.

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.

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Who keeps an eye on the insurance companies?

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.

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What do I do when my property is damaged or stolen?

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 contractor.

If you have property stolen, notify the police immediately and call your Peck-Glasgow agent.

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What if I am sued or found liable for injury to another person?

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.

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I am a renter, not a homeowner. Do I need insurance?

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 brings.

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 live elsewhere.

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Isn't my apartment covered under my landlord's policy?

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.

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How are prices determined for renters insurance?

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.

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I live in an apartment with three roommates. Do we each need a policy?

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.

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I own a condo. How is my policy different?

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 owners policy.

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What is life insurance?

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.

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How much life insurance should I have?

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.

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Who will receive money if I die? How much?

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.

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Does it matter how I die as to how much my beneficiaries will collect?

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 available.

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Who can I name as my beneficiaries? How often can I change them?

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.

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Are there different types of life insurance I should consider?

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 and goals.)
 

  • 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.

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Do I have to die to collect life insurance?

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.

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Will I ever need to requalify to keep my life insurance policy, as long as my premiums are paid on time?

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.

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How do they set a price for life insurance?

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 insurance benefit.

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 cost.

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Which life insurance is less expensive, permanent or term?

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.

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If term life insurance is less expensive, why buy permanent?

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, college costs).
  • 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.

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If I need to cash in my life insurance at some point, how much will it be worth?

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.

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What is the major purpose of health insurance?

To use the machine analogy in our introduction, health insurance is designed to cover repairs, maintenance and any lost income while the machine is in the shop.

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What are the major types of individual health insurance policies?

There are many variations of Health Insurance policies. The two most common are major medical and disability. Your Peck-Glasgow agent can share other, more specialized types of coverage.

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Do I need an individual policy if I have group insurance at work?

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.

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What is a major medical health insurance policy?

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.

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How does a health insurance deductible work?

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.

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What does coinsurance mean in a health insurance policy?

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.

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What is the purpose of coinsurance, stop-loss, maximum out of pocket, etc. Isn't this just complicating the policy?

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.

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What does a disability income policy do?

Disability income is a form of health insurance that is designed to provide you with an income during the time you are unable to work due to illness or injury.

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What does disability mean?

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.

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How long can I collect under a disability income policy?

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 full years.

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Must I be disabled for a certain length of time before my disability benefits begin?

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.

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What is a PPO?

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.

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What is a HMO?

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.

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What is the purpose of PPO's and HMO's?

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.

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What if I want to go to any doctor or hospital I choose?

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.

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Hartselle Office

Location: 1612 Highway 31 SW
Hartselle, AL 35640         Directions, Map

Mailing Address: P.O. Box 427
Hartselle, AL 35640

Phone: (256) 773-2210
Fax: (256) 773-2314
Email: insure@peck-glasgow.com

 

Madison Office

Location: 8075 Madison Blvd Suite 107 Madison, AL 35758         Directions, Map

Mailing Address: P.O. Box 613
Madison, AL 35758

Phone: (256) 772-9704
Fax: (256) 772-9495
Email: insure2@peck-glasgow.com

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