Insurance 101

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Lesson 1
  1. So what's it all about?
  2. Perils and Risks
  3. Sharing risk
  4. Before we begin, check out these words
  5. Why bother with insurance? Maybe I'll get lucky!
  6. Is the minimum enough?
  7. If we have to have it, let's be smart about it
  8. What do I need to know?
  9. Reading and understanding the policy

Lesson 2
  1. What are these coverages all about?
  2. Medical coverage
  3. Uninsured or underinsured motorist bodily injury coverage (UMBI)
  4. Uninsured or underinsured motorist property damage coverage (UMPD)
  5. Uninsured motorist collision deductible waiver
  6. Comprehensive and collision
  7. Collision protection
  8. Comprehensive protection
  9. Deductible

Lesson 3
  1. Coverage vs. cost
  2. How much coverage is enough?
  3. What the experts recommend
  4. What's enough? Individual factors
  5. Helpful rules
  6. Where's the big risk?
  7. Liability minimum vs reality
  8. How much medical coverage is enough?
  9. When is it applied?
  10. Your personal health insurance

Lesson 4
  1. What about uninsured and underinsured motorist coverage?
  2. Comprehensive and collision
  3. Should I have comprehensive and collision or not?
  4. Why is it important?
  5. What about endorsements?
  6. How can I save a few bucks?
  7. Comprehensive and collision, do I need it?
  8. Limit how far you drive
  9. Using the car for business?
  10. Safety! This is a biggie
  11. If you want the ferrari it's going to cost you
  12. Get your car off the streets
  13. Protect the vehicle

Lesson 5
  1. You've had an accident. It happens!
  2. Your description of the accident should be a little better than this!
  3. Hit and run
  4. Important! Information is the key!
  5. Here's a check list you may want to review before filling in your claim form
  6. Stuff you should have handy
  7. Two basic types of claims
  8. Who should you talk to?
  9. Once you've reported your claim, what then?
  10. How long does it take?
  11. What does the adjuster do?


SO WHAT'S IT ALL ABOUT?

When it comes to insurance we're talking about risk and peril. The basic idea is that if a lot of people are subject to the same peril it's a great idea to share the risk. Driving 90 in the fast lane or parking beneath a dying elm tree is risky business.

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PERILS AND RISKS

Living on planet Earth is filled with natural and unnatural peril. Perils, by the way, are all those unpleasant surprises that happen without our being asked if it was okay.

A person is driving a BMW 740i 50 MPH in the fast lane while talking on the "cell" to their mother-in-law. This is a peril.

Or, before you figure out why the leaves are shedding off the elm tree, it falls on your fine new Lincoln Navigator and creates two little Navigators. This is perilous stuff for sure.

There's also theft and vandalism in case you didn't have enough on your mind.

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SHARING RISK

If you were the only one these things happened to, you'd have to bear the burden of the entire risk, and the consequences, probably very expensive.

Here's the good news. How about if millions of people pay a fraction of the potential loss to a single driver in order to reduce the cost of a possible unpleasant meeting with the person in the BMW or the dying elm tree.

This is really what insurance is all about, sharing risk.

Note: You can click on anything in blue and underlined. You will be taken to a glossary definition or further information on the subject.

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BEFORE WE BEGIN, CHECK OUT THESE WORDS PLEASE.

Medical Coverage
Uninsured Motorist & Underinsured Motorist
Comprehensive & Collision Coverage
Deductible
RAP
Endorsements & Exclusions

Follow these links. Knowing what all these words mean will definitely help you understand your policy.

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WHY BOTHER WITH INSURANCE? MAYBE I'LL GET LUCKY!

Sorry. It's the law. Every state requires that you be financially responsible when driving a car. Not only are you required to have automobile coverage, you are also required to have certain basic minimum amounts.

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IS THE MINIMUM ENOUGH?

There are billions and billions of lawyers out there. Ask yourself this, if I get sued and my insurancecoverage isn't enough, what will they come after? My vacation home in Plano, Texas? My Microsoft stock?
If you cause an accident and the other driver and or passengers suffer damages greater than your insurance limits, your personal property and earnings may be put at risk.

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IF WE HAVE TO HAVE IT, LET'S BE SMART ABOUT IT.

This is something you can be sensible about. All you need are the facts. Survival is going to help you be a smart auto insurance buyer. It's good for you, it's good for us.

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WHAT DO I NEED TO KNOW?

- You need to know how to read and understand your auto insurance policy.

This could be quite a test because there's a lot of legal stuff in it. Don't worry, we'll help.

- You need to know how to measure the cost of insurance against the coverage you want.

If the street value of your car is $900.00 collision coverage may not be needed at all as the cost to insure could be greater than the value of the car.

- You need to be able to compare insurance products so you get the best deal.

Survival is an insurance brokerage. We will give you quotes from dozens of insurance companies. It is in our best interests and yours to find you the best match for your insurance needs.

We build the ability to compare right into our "getting a quote" process.

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READING AND UNDERSTANDING THE POLICY

Your insurance policy has sections. One part discusses liabilitycoverage, this is the coverage you have to have.

There are three additional kinds of coverage that are optional; you don't have to have them.

Medical
Uninsured/Underinsured Motorist
Comprehensive and Collision

But, and it's a big "but", really look things over before you decide whether or not to have these coverages.

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WHAT ARE THESE COVERAGES ALL ABOUT?

Let's start with liability. Liability has two parts: Bodily Injury Liability (BI) and Property Damage Liability (PD).

BI provides coverage (protection) for people that are hurt if you are at fault in an accident.

PD provides coverage (protection) for the property of another that is damaged where you are at fault.

This business of "who's at fault" is what lawyers live for. Let's not pay for their next vacation in Cancun, all right?

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MEDICAL COVERAGE

People get hurt in accidents. Metal against flesh and bone has a fairly predictable outcome.

Your Medical Coverage is an optional coverage under an automobile liability policy that pays for you and your passenger's injuries and related medical expenses. If you have personal medical insurance it will usually be applied before your Medical Payments coverage.

It pays these expenses up to certain limits regardless of who was responsible for the accident.

If you had Blue Cross, for example, it may provide benefits before your Medical Coverages kick in.

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UNINSURED OR UNDERINSURED MOTORIST BODILY INJURY COVERAGE (UMBI)

Yes, there are people zooming around in 3000 lbs of fine Detroit steel without any kind of insurance coverage at all.

If you have UMBI, your insurance company will pay losses to the insured (this is you) which the other person can't pay because he is uninsured or underinsured. This coverage applies to bodily injury losses only.

By law in California, insurance companies must offer this coverage. If you don't want this coverage you must specifically reject it.

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UNINSURED OR UNDERINSURED MOTORIST PROPERTY DAMAGE COVERAGE (UMPD)

If you have UMPD, the insurance company will pay losses to you for damages to your car which another motorist is unable to pay because he is uninsured or underinsured. This coverage applies to property damage losses only.

Most insurance companies require that the owner or operator of an uninsured vehicle be identified or the uninsured vehicle is identified by its license number if you want your coverage to be applied.

By law in California, insurance companies must offer this coverage. If you don't want this coverage you must specifically reject it.

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UNINSURED MOTORIST COLLISION DEDUCTIBLE WAIVER

Uninsured Motorist Collision Deductible Waiver coverage is similar to Uninsured Motorist Property Damage. However, it is only available if you have collision coverage on the vehicle, then it will pay your deductible if an uninsured motorist is at fault.

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COMPREHENSIVE AND COLLISION

We'll look at these coverages separately. So far most of the protection we have looked at is for the other guy, or the other guy's property. These are for your property.

If you have a nice new Jaguar and it is run over by a semi-truck full of scrapped cars, minimum liability coverages (No Comprehensive or Collision) aren't going to help much.

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COMPREHENSIVE PROTECTION

This is the coverage that protects your vehicle against loss by fire, theft, vandalism, and or falling objects.

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COLLISION PROTECTION

This is a form of automobile insurance that covers loss to your own vehicle caused by collision with another vehicle or object (like a tree or wall, etc.).

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DEDUCTIBLE

Basically deductible is like self-insurance. With regards to Comprehensive and Collision, it's the amount you have to pay before your insurance kicks in. Deductibles come in different amounts, but generally they are $100, $250, $500 or $1000. Suppose you have $3000 in damages and your deductible is $500. If you have an accident your insurance will cover $2500 and you pay the other $500 out of your own pocket.

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COVERAGE vs. COST

Decision time: You want to strike a balance. Here are the most important things to think about:

- What can I afford?
- What is the value of my vehicle?
- What is the value of the things I own that I want to protect?
- How much can I pay if the costs of an accident are more than my coverage?

There's another thing that is often missed. How much worry can you stand? Your peace of mind affects your mental health. If you are covered at the bare minimum, are you going to worry yourself sick thinking about it?

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HOW MUCH COVERAGE IS ENOUGH?

The fact is, there is often quite a gap between what you're required to carry and what you should carry.

This isn't Las Vegas. You don't wake up and roll your "will I have an accident today?" dice and win or lose a few bucks.

One thing you can be sure of, your insurance company wants you to have a perfect day! That means no accidents or problems that bring your coverage into play.

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WHAT THE EXPERTS RECOMMEND


Even in states with the toughest requirements, many insurance experts suggest:

- That you have a larger range of coverage (i.e., more types) than the state requires.
- That your coverage limits in most areas exceed required minimums.

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HOW MUCH COVERAGE IS ENOUGH? INDIVIDUAL FACTORS

Ok, you can't afford as much insurance as is ideal. Your financial condition can affect how much coverage you purchase. You may have to lower your coverages to get the premium in the proper range for your pocket book. This isn't a bad thing, this is just life.

Other individual things can have an effect also. Things like your location, how much driving you do, the way you drive. If you make your living on the NASCAR circuit this could affect your choices. Another thing is what you own and how much insurance you need to protect your property.

There are some good rules that will help you figure out how much coverage is enough.

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HELPFUL RULES

We'll look at each kind of coverage separately. I know we are covering some of the ground already covered. This is okay, we'll try to add a bit more to your insurance skills as we go along.

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WHERE'S THE BIG RISK?

Liability coverage: We have two parts to liability.

- Bodily injury liability which covers losses that happen when you or someone else injures or kills people with your car. This is pretty harsh but we see it everyday on the 6 o'clock news.
- Property damage liability that covers you for losses that result when you or someone else damages someone else's property with your car.

The bodily injury part is the big one. Here's why: liability claims against you for medical expenses, lost earnings, and pain and suffering if you injure or kill someone in an accident can easily exceed hundreds of thousands of dollars.

Property damage claims can also be massive. You destroy someone's new Ferrari; besides breaking the owner's heart, this is going to cost a bundle.

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LIABILITY MINIMUM VERSUS REALITY

In most states, the required minimum liability coverage wouldn't begin to cover the cost associated with a serious car accident.

If you are sued, and you are underinsured, you're going to have to pay part of the expenses out of your own pocket. If this happens you could learn what pain and suffering are really all about.

This could be very bad if you own a home and have other property to protect.

Most insurance experts recommend at least the following coverages:

100/300/50, which translates to $100,000 per person injured with a total of $300,000 per accident, and $50,000 property damage.

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HOW MUCH MEDICAL COVERAGE IS ENOUGH?

If you or someone in your family is in an accident, whether it's your car or someone else's car, Medical Payments Coverage will pay medical expenses incurred as a result of the accident (typically up to three years following the accident).

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WHEN IS IT APPLIED?

Since the other driver's insurance should cover these costs if he or she is at fault, Medical Payments Coverage is used when the accident is the fault of the other person.

It's best to buy the highest limit available, although this will vary from company to company.

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YOUR PERSONAL HEALTH INSURANCE

Important Note: If you have good personal health insurance for yourself, such as Blue Cross, you may think you don't need Medical Payments Coverage on your Auto Policy. The fact is your health insurance doesn't cover passengers who aren't related to you if they are hurt in an accident in your car. Medical Payments Coverage often will.

However, if you drive alone and have good health coverage, medical payments may be less necessary.

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WHAT ABOUT UNINSURED AND UNDERINSURED MOTORIST COVERAGE?

This protection covers losses you and others suffer as a result of an accident that is the fault of another driver who either doesn't have adequate auto insurance, or has no insurance at all.

If you were in an accident caused by a driver without insurance and with nothing else of value to compensate you, you would be out of luck.

Uninsured and Underinsured Motorist Coverage guarantees that your insurance company will cover whatever expenses the driver of the other car can't cover up to the limits of the coverage. Your policy may provide coverage if you are a pedestrian and are injured by an uninsured motorist. Be sure to refer to the "Uninsured Motorist" section of your policy booklet.

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COMPREHENSIVE AND COLLISION

These are actually two different kinds of coverage as we noted earlier.
Comprehensive covers your losses when fire, flood, vandalism and other natural disasters damage your vehicle.
Collision covers your losses when your vehicle is damaged in an at-fault collision with another vehicle or object.

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SHOULD I HAVE COMPREHENSIVE AND COLLISION OR NOT?

These are both optional. You pay an added premium for them. The answer to the question is generally, yes. If you don't have them and your vehicle is damaged you will have to pay for repairs or replacement out of your own pocket (unless the accident was caused by another driver).

One thing to keep in mind is that they both come with a deductible, which is the amount of the cost of repairs you must pay. Collision and comprehensive generally only cover the cash value of your vehicle. Here's a situation where you really must measure the cost against the return.

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WHY IT'S IMPORTANT

Here's why it is so important. The number of uninsured and underinsured drivers, and hit and run drivers on the road these days is very high.
In many California cities as many as 50% of drivers can be uninsured. Think about that for a moment! These are not the kind of odds one would take to Las Vegas.

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WHAT ABOUT ENDORSEMENTS?

Endorsements are optional coverages you can add to your policy for an extra premium.

Typical endorsements include coverage for things like towing and labor, car rental costs, special equipment (stereo,CD player, etc.) or extraordinary medical costs. Obviously the number and type of endorsements will determine the total overall cost of your policy.

Like Comprehensive and Collision coverage, you must weigh the benefit against the cost.

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HOW CAN I SAVE A FEW BUCKS?

Shop around. You'd shop for the car, right? An accident could cost a lot more than the car if you don't have the right coverage. We will help with this. Comparing quotes from different Insurance Companies is part of our quote process.Increase your deductible. For some people raising the deductible on their auto insurance is a good way to cut the cost.

It's possible to decrease your premium by as much as 10% or more if you increase your deductible from $250 to $500 annually. Let's be sensible about it though, ok? If you can't afford the extra cost in the event of a loss, it's not a good idea. You can limit the type of coverages you have. As we said earlier, you have to have liability, but some of the other optional coverages could be reduced or eliminated. The other side of this coin is that there is serious risk to being underinsured if you are in an accident. We recommend you don't get rid of these coverages altogether. If necessary, you can reduce the amounts of some coverages.

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COMPREHENSIVE AND COLLISION, DO I NEED IT?

Here's a possibility. If you drive an older car worth less than $1000, maybe you could drop Comprehensive and Collision. If there's an accident the amount you receive might not even cover the cost of the premiums and the deductible.

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LIMIT HOW FAR YOU DRIVE

Don't drive as much. Not possible? If you drive less than say 7500 miles a year maybe you will qualify for a low-mileage discount. If your insurer has this discount it may be worth it to find a way to reduce your mileage.

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USING THE CAR FOR BUSINESS?

Don't use your car for business purposes. Generally work-related driving means a higher premium than pleasure use. If you can find a way to stop or reduce the amount you use your car for business you may reduce the cost of your insurance.

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SAFETY! THIS IS A BIGGIE

Drive safely. If you have a clean driving record it can definitely lower the cost. Most insurance companies consider a clean driving record as one with no accidents or serious moving violations or drunk driving convictions, etc. for a period of three years.

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IF YOU WANT A FERRARI IT'S GOING TO COST YOU

If you have a car that every thief in California lusts after, your insurance is going to be more expensive. There's always a trade off: A red Porsche versus a Saturn.

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GET YOUR CAR OFF THE STREETS

Park your car in the garage where it is less likely to be stolen, damaged or struck by another car.

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PROTECT THE VEHICLE

Install anti-theft and safety devices. If you have options like anti-lock brakes, automatic seat belts, and airbags you may qualify for a break in price. If you have the Lojack Tracking system it decreases the chance of your car being stolen and could reduce the cost of your comprehensive coverages.

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YOU'VE HAD AN ACCIDENT. IT HAPPENS!

Yep! It happened. You hit someone or something with your car, or someone or something hit you. Now's the time to see if you got the coverage(s) you paid for.

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YOUR DESCRIPTION OF THE ACCIDENT SHOULD BE A LITTLE BETTER THAN THIS!

"I thought my window was down, but I found out it was up when I put my head through it."

An actual report on a claim form.

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HIT AND RUN

If you are in a Hit and Run incident you should report this to the police immediately. This incident should also be reported to the insurance company as soon as possible.

Note: Some companies have time requirements for reporting, so be sure to read the Hit and Run section of your Policy Booklet regarding these requirements.

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IMPORTANT! INFORMATION IS THE KEY

Talk to witnesses. Write things down as soon as you are able and it is fresh in your mind. How much information you are able to provide could very well affect how well a claim activity proceeds.

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HERE'S A CHECK LIST YOU MAY WANT TO REVIEW BEFORE FILLING IN YOUR CLAIM FORM

We know: you've just been thrown all over the place and now people want you to remember everything! Don't worry; do your best.

Here's a little incentive. If you are sued, how well and accurately this data is provided to your legal support could mean the difference between you being lunch or having dinner.

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STUFF YOU SHOULD HAVE HANDY

Before you begin filling out your claim form we recommend you have your automobile registration and driver's license handy as information from these documents will be required for the claim form.

These are some of the things you should record:
- Names, addresses, and phone numbers of everyone involved, including witnesses. Get other drivers' license numbers, vehicle plate numbers, registration information, and insurance company name and policy number.
- Vehicle year, make, color, license plate # and state.
- Location of the accident (street, city and state).
- Make notes or sketches to help remember details, the time, weather, road conditions, etc.
- Number and name of passengers in each car.
- Names, addresses and phone numbers of vehicle owners, drivers and witnesses.
- Description of damage (severity and point of contact).
- Who was injured and what the injury was.
- Who, if anyone, left the accident scene by ambulance.
- Name of responding Police Department and police report #, if the police came to the scene.

You should report the claim as soon as possible. You can do this online, or by calling customer service for assistance.

We recommend that you print the "What to do in case of an accident" form and put a copy in every vehicle. We also recommend keeping a disposable camera in your glove compartment so you can take pictures of the accident scene.

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TWO BASIC TYPES OF CLAIMS

- Those where there is loss or damage to your automobile.
- Liability claims that happen when someone else suffers an injury or damage to their property as a result of something you did.

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WHO SHOULD YOU TALK TO?

Call your solicitor as soon as possible to report the claim or call the special toll free lines set up by the insurance company or companies you chose.

Oh, and don't forget, you may need some documentation as "proof of loss" for things like auto repair and medical bills. Another important document is the police report.

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ONCE YOU'VE REPORTED YOUR CLAIM, WHAT THEN?

Once your solicitor has received the forms they will be forwarded to a Claims Adjuster. The Adjuster begins the investigation process.

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HOW LONG DOES IT TAKE?

Here's the honest answer. It can vary all over the place depending on the complexity.

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WHAT DOES THE ADJUSTER DO?

The adjuster investigates the claim and makes a recommendation to the insurance company.

- The adjuster may recommend that the claim be accepted and the full amount be paid.
- Another possibility is the adjuster may recommend only part of the claim be accepted and a partial payment made.
- The third possibility is that the adjuster could recommend the claim be refused entirely.

The accuracy and completeness of your report will certainly have an effect on the outcome.

Here's an important piece of information. You do NOT have to accept the first amount the adjuster offers.

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