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Homeowners Insurance

What is homeowners insurance?

Homeowners insurance provides you with financial protection in the event your home or property is damaged or destroyed. It also provides you with personal liability coverage in case of lawsuits arising from incidents on and off your property.

What is the difference between "actual cash value" and "replacement cost"?

Covered losses under a homeowner's policy can be paid on either an actual cash value basis or on a replacement cost basis. When "actual cash value" is used, the policy owner is entitled to the depreciated value of the damaged property- so the older the item is, the less money you may receive for it. Under the "replacement cost" coverage, the policy owner is reimbursed the amount it costs to replace the property with something of a similar type and quality at current prices.

If I have an accident I think is covered under my homeowner's policy, what should I do?

Insurance contracts and conditional contracts. That means policy owners have certain responsibilities to meet if a covered loss occurs. Not completing these can result in nonpayment by the insurance company for losses that otherwise would have been covered. These include:

  1. Notify the insurance company or the agent that a loss has occurred, this should be done as soon as you discover the loss.
  2. Protect the property from further damage and/or make any repairs necessary to prevent further damage.
  3. Preparing a detailed list of the personal items damaged that contains descriptions, the items' actual cash value, or their replacement cost if you have added the replacement cost endorsement to your policy.
  4. Being prepared to show the company and/or the insurance agent the damaged items
  5. Provide a complete statement to the insurance company that explains how the loss occurred, for example, the time the damage occurred, the cause, etc.

Auto Insurance

Why do I need auto insurance
What are the different types of policies...
Why and how are policies different for different drivers
What steps can I take to reduce my rates
How does adding drivers to my policy affect my rates
Do I always need to buy insurance when I rent a car
What happens when I loan my car to someone.....
What happens when I report an accident...
Do I need special insurance for a classic car?

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, youre 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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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 its 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.

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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. A Budd 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 Budd 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 childs 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 adults driving experience can also affect your rates significantly. Dont 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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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 Budd 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 Budd 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, youre 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 elses 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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What actually happens when I report an accident?

After an accident, you should call your Budd Agent as quickly as possible, to help you complete a claim form, determine what exactly happened and evaluate any damages or injuries. Your Budd Agent then will contact your insurers 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 adjusters 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 thats 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 Budd Agent about coverage of rare and valuable property. Since a classic car usually cannot be replaced, youll 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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Source: TrustedChoice.com