What is Covered By a Basic Auto Policy?

Your auto policy may include six coverages. Each coverage is priced separately.

1. Bodily Injury Liability

This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.

2. Medical Payments or Personal Injury Protection (PIP)

This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.

3. Property Damage Liability

This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.

4. Collision

This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.

5. Comprehensive

This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.

Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.

Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.

6. Uninsured and Underinsured Motorist Coverage

This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

For More Information Visit: Insurance Information Institute

Air Bag Safety

Air bags save thousands of lives each year, according to The National Highway Traffic Safety Administration (NHTSA). In frontal crashes, air bags reduce deaths among drivers by about 30 percent and among passengers by 27 percent.

Air bags, however, can be dangerous. If small children sit unbelted in the front seat, they can be catapulted into the path of a deploying air bag, which inflates with great force. This risk also applies to small adults—who must sit close to the steering wheel in order to reach the pedals—pregnant women and the elderly. Infants in rear-facing safety seats on the passenger side can be severely injured because their heads are in the direct path of an inflating air bag. If your airbag is stolen or it deploys, you must get a new one, but you will be reimbursed under the comprehensive portion of your auto insurance policy.

Preventing air bag injuries

Drivers should have all children sit in the backseat wearing a safety belt. Infants should be placed in rear-facing car seats and put in the backseat. Small adults should move the seat back so that their breastbone is at least 10 inches from the air bag cover.

1. If this is not possible, air bag switches can be installed so that the vehicle owner has the option of turning the bag off or on, depending on the situation. In January 1998, NHTSA allowed auto dealers and repair shops to begin installing air bag cut-off switches. Before the switch can be installed, vehicle owners must complete a four-step process:
   Obtain an information brochure and request form from NHTSA, dealerships or repair shops
   Return the form to NHTSA
2. Receive authorization from NHTSA after it reviews the case
3. Take the vehicle to the service shop along with the authorization from NHTSA which certifies that the owner has read the brochure and met one of the four eligibility classifications:

• rear-facing infant seat can be in the front (necessary if the vehicle has no back-seat)
• driver's seat cannot be adjusted to keep more than 10 inches between the driver and the steering wheel
• putting a child 12 or under in the front seat can not be avoided
• having a medical condition that puts them at risk of injury when an air bag deploys.

For More Information Visit: Insurance Information Institute

What are the Principal Types of Life Insurance?

There are two major types of life insurance—term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. In 2003, about 6.4 million individual life insurance policies bought were term and about 7.1 million were whole life.

Life insurance products for groups are different from life insurance sold to individuals. The information below focuses on life insurance sold to individuals.

Term

Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.

There are two basic types of term life insurance policies—level term and decreasing term.

• Level term means that the death benefit stays the same throughout the duration of the policy.
• Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policy’s term.

In 2003, virtually all (97 percent) of the term life insurance bought was level term.

For more on the different types of term life insurance, click here.

Whole Life/Permanent

Whole life or permanent insurance pays a death benefit whenever you die—even if you live to 100! There are three major types of whole life or permanent life insurance—traditional whole life, universal life, and variable universal life, and there are variations within each type.

In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit increases as the insured person ages, and it obviously gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what’s needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.

By law, when these “overpayments” reach a certain amount, they must be available to the policyholder as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional, benefit under the policy.

In the 1970s and 1980s, life insurance companies introduced two variations on the traditional whole life product—universal life insurance and variable universal life insurance.

For more on the different types of whole life/permanent insurance, click here or visit the Insurance Information Institute.

How To Take a Home Inventory and Why?

Would you be able to remember all the possessions you’ve accumulated over the years if they were destroyed by a fire? Having an up-to-date home inventory will help you get your insurance claim settled faster, verify losses for your income tax return and help you purchase the correct amount of insurance.

Start by making a list of your possessions, describing each item and noting where you bought it and its make and model. Clip to your list any sales receipts, purchase contracts, and appraisals you have. For clothing, count the items you own by category -- pants, coats, shoes, for example –- making notes about those that are especially valuable. For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom.

• Don't be put off!
  If you are just setting up a household, starting an inventory list can be relatively simple. If you’ve been living in the same house for many years, however, the task of creating a list can be daunting. Still, it’s better to have an incomplete inventory than nothing at all. Start with recent purchases and then try to remember what you can about older possessions.
• Big ticket items
  Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Check with your agent to make sure that you have adequate insurance for these items. They may need to be insured separately.
• Take a picture
  Besides the list, you can take pictures of rooms and important individual items. On the back of the photos, note what is shown and where you bought it or the make. Don’t forget things that are in closets or drawers.
• Videotape it
  Walk through your house or apartment videotaping and describing the contents. Or do the same thing using a tape recorder.
• Use a personal computer
  Use your PC to make your inventory list. Personal finance software packages often include a homeowners room-by-room inventory program.
• Storing the list, photos and tapes
  Regardless of how you do it (written list, floppy disk, photos, videotape or audio tape), keep your inventory along with receipts in your safe deposit box or at a friend's or relative's home. That way you’ll be sure to have something to give your insurance representative if your home is damaged. When you make a significant purchase, add the information to your inventory while the details are fresh in your mind.
  

For FREE Home Inventory Software Visit Know Your Stuff

For More Information Visit: Insurance Information Institute

Shopping for a Safe Car

If you’re like most people shopping for a new car, safety ranks high among things you're looking for. Every new car must meet certain federal safety standards, but that doesn’t mean that all cars are equally safe. There are still important safety differences, and some vehicles are safer than others. Many automakers offer safety features beyond the required federal minimums. The following safety features should be considered when purchasing a car:

1. Crash-Worthiness
   These features reduce the risk of death or serious injury when a crash occurs. You can get a rating of crash-worthiness from the Insurance Institute for Highway Safety’s Web site.
2. Vehicle structural design
   A good structural design has a strong occupant compartment, known as the safety cage, as well as front and rear ends designed to buckle and bend in a crash to absorb the force of the crash. These crush zones should keep damage away from the safety cage because once the cage starts to collapse, the likelihood of injury increases rapidly.
3. Vehicle size and weight
   The laws of physics dictate that larger and heavier cars are safer than lighter and smaller ones. Small cars have twice as many occupant deaths each year as large cars. In crashes involving smaller and larger vehicles, heavier vehicles drive lighter ones backwards, decreasing the forces inside the heavier car and increasing them in the lighter car.
4. Restraint systems
   Belts, airbags and head restraints all work together with a vehicle’s structure to protect people in serious crashes. Lap/shoulder belts hold you in place, reducing the chance you’ll slam into something hard or get ejected from the crashing vehicle. If you aren’t belted, you’ll continue moving forward until something suddenly stops you—often a hard interior surface that will cause injuries.
   
   
   
   • Shoulder belts are on inertia reels that allow upper body movement during normal driving, but lock during hard braking or in a crash. Belt webbing is stored on the reel, and during a frontal crash any slack in the webbing can allow some forward movement of your upper body. Then you could strike the steering wheel, dashboard or windshield. This problem is addressed in some cars with belt crash tensioners that activate early in a collision to reel in belt slack and prevent some of the forward movement.
   • Airbags and lap/shoulder belts together are very effective. However in some circumstances, a deploying airbag can cause serious injuries and even death. The greatest risk of injury occurs when you are on top of, or very close to an airbag when it starts to inflate. Choose a car that allows you to reach the gas and brake pedals comfortably without sitting too close to the steering wheel. Some cars offer telescoping steering column adjustments that may help.
   • Side airbags are designed principally to protect your chest. They may also keep your head from hitting interior or intruding structures.
   • Head restraints are required in the front seats of all new passenger cars to keep your head from being snapped back, injuring your neck in a rear-end crash. But there are big differences among head restraints. Some are adjustable, and others are fixed. They also vary in height and how far they are set back from the head. To prevent neck injury, a head restraint has to be directly behind and close to the back of your head. Look for cars that have this type of restraint. If the restraints are adjustable, make sure they can be locked into place. Some don’t lock, so they can get pushed down in a crash.
5. Anti-lock brakes
   When you brake hard with conventional brakes, the wheels may lock and cause skidding and a lack of control. Anti-lock brakes pump brakes automatically many times a second to prevent lockup and allow you to keep control of the car. If you were trained to brake gently on slippery roads or pump your brakes to avoid a skid, you may have to unlearn these habits and use hard, continuous pressure to activate your antilock brakes. Anti-lock brakes may help you keep steering control, but they won’t necessarily help you stop more quickly.
6. Daytime running lights
   Daytime running lights are activated by the ignition switch. They are typically high-beam headlights at reduced intensity or low-beam lights at full or reduced power. By increasing the contrast between a vehicle and its backgrounds and making the vehicles more visible to oncoming drivers, these lights can prevent daytime accidents.
7. On the road experience
   Other design characteristics can influence injury risk on the road. Some small utility vehicles and pickups are prone to rolling over. "High performance" cars typically have higher-than-average death rates because drivers are tempted to use excessive speed. Combining a young driver and a high-performance car can be particularly dangerous.

For More Information Visit: Insurance Information Institute

Flood Insurance: Top 10 Things Every Homeowner Should Know

1. Everyone lives in a flood zone.

• You don't need to live near water to be flooded.
• Floods are caused by storms, melting snow, hurricanes, and water backup due to inadequate or overloaded drainage systems, dam or levee failure, etc.

2. Flood damage is not covered by homeowner’s policies.

• You can protect your home, business, and belongings with flood insurance from the National Flood Insurance Program (NFIP).
• You can insure your home with flood insurance for up to $250,000 for the building and $100,000 for building’s contents.

3. You can buy flood insurance no matter what your flood risk is.

• It doesn't matter whether your flood risk is high, medium, or low, you can buy flood insurance as long as your community participates in the National Flood Insurance Program. And, it's a good idea to buy even in low or moderate risk areas: almost 25 percent of all flood insurance claims come from low to moderate risk areas.

4. There is a low-cost Preferred Risk Policy for homes in low to moderate risk areas.

• Homeowners can insure buildings and contents for as little as $180 per year.
• Business owners can insure buildings and contents for as little as $500 per year.
• Residential renters can insure contents for as little as $39 per year.

5. Flood insurance is affordable.

• The average flood insurance policy for a single family, one floor, no basement home in a floodplain zone costs a little more than $500 a year for about $65,000 of coverage for building and contents.
• In comparison, a $50,000 disaster home loan can cost you more than $240 a month at 4 percent interest over 20 years.

6. Flood insurance is easy to get.

• You can buy NFIP flood insurance from private insurance companies and agents.
• Some companies may allow the purchase of flood insurance with credit.
• You may be able to purchase flood insurance with a credit card.

7. Contents coverage is separate, so renters can insure their belongings too.

• Up to $100,000 contents coverage is available for homeowners and renters.
• Whether you rent or own your home or business, make sure to ask your insurance agent about contents coverage. It is not automatically included with the building coverage.

8. Up to a total of $1 million of flood insurance coverage is available for non-residential buildings & contents.

• Up to $500,000 of coverage is available for non-residential buildings.


• Up to $500,000 of coverage is available for the contents of non-residential buildings.

9. There is usually a 30-day waiting period before the coverage goes into effect.

• Plan ahead so you're not caught without flood insurance when a flood threatens your home or business.

10. Federal disaster assistance is not the answer.

• Federal disaster assistance is only available if the President declares a disaster.
• More than 90 percent of all disasters in the United States are not declared federal disaster areas. Flood insurance pays even if a disaster is not declared.

FEMA prepares the nation for all hazards and manages federal response and recovery efforts following any national incident. FEMA also initiates mitigation activities, trains first responders, works with state and local emergency managers, and manages the National Flood Insurance Program and the U.S. Fire Administration. FEMA became part of the U.S. Department of Homeland Security on March 1, 2003.

For More Information Visit: FEMA

Cell Phone Safety Tips - Driving Safely

Today, drivers increasingly use their cell phones in the car. While we recommend that you avoid talking on the phone while driving, we recognize it may be unavoidable at times. If you must use your cell phone while driving, here are a few cell phone safety tips to follow.

• Legislative Tracking Database - Follow your state's cell phone legislation and other current issues.
• National Conference of State Legislatures
  CHART: Cell phone use while driving - state laws
• CTIA — The Wireless Association offers tips to drive safety with a cell phone, hands-free device and more.

Safety Tips

• Get to know your cell phone and its features, such as speed dial and redial.
  Carefully read your instruction manual and learn to take advantage of valuable features most cell phones offer, including automatic redial and memory. Also, work to memorize the phone keypad so you can use the speed dial function without taking your attention off the road.


• When available, use a hands-free device.
  A number of hands-free cell phone accessories are readily available today. Whether you choose an installed mounted device for your cell phone or a speaker phone accessory, take advantage of these devices if available to you.


• Position your cell phone within easy reach.
  Place your cell phone within easy reach and where you can grab it without taking your eyes off of the road. If you receive a call at an inconvenient time, if possible, let your voice mail answer it for you.


• Suspend conversations during hazardous driving conditions or situations.
  Let the person you are speaking with know you are driving. If necessary, suspend the call in heavy traffic or hazardous weather conditions. Rain, sleet, snow and ice can be hazardous, but heavy traffic can be just as dangerous. As a driver, your first responsibility is to pay attention to the road.


• Do not take notes or look up phone numbers while driving.
  If you are reading an address book or business card, or writing a "to do" list while driving a car, you are not watching where you are going. It's common sense. Don't get caught in a dangerous situation because you're reading or writing and not paying attention to the road or nearby vehicles.


• Dial sensibly and assess the traffic. If possible, place calls when you are not moving or before pulling into traffic.
  Try to plan your calls before you begin your trip, or attempt to coincide your calls with times you may be stopped, such as at a stop sign, red light or in a parking space. But, if you need to dial while driving, follow this simple tip: Dial only a few numbers, check the road and your mirrors, then continue dialing.


• Do not engage in stressful or emotional conversations that may be distracting.
  Stressful or emotional conversations and driving do not mix — they are distracting and even dangerous when you're behind the wheel of a car. Make people you are talking with aware you are driving and, if necessary, suspend conversations which have the potential to divert your attention from the road.


• Use your cell phone to call for help.
  Your cell phone is one of the greatest tools you can own to protect yourself and your family in dangerous situations — with your phone at your side, help is only three numbers away. Dial 911 or another local emergency number in emergencies such as a fire, traffic accident, road hazard or medical emergency. Remember, an emergency call is a free call on your cell phone!


• Use your cell phone to help others in emergencies.
  Your cell phone provides the opportunity to be a "Good Samaritan" in your community. If you see a car accident, crime in progress or other serious emergency where lives are in danger, call 911 or another local emergency number, as you would want others to do for you.


• Call roadside assistance or a special cell non-emergency assistance number when necessary.
  Certain situations you encounter while driving may require attention, but are not urgent enough to merit a call for emergency services. Even so, you still can use your cell phone to lend a hand. If you see a disabled vehicle posing no serious hazard, a broken traffic signal, a minor traffic accident where no one appears injured or a vehicle you know is stolen, call roadside assistance or another special non-emergency cell number.

Tips provided by the Cellular Telecommunications Industry Association. For more information, please call 1-888-901-SAFE.

Safety Tip Information provided by: Progessive.com