Personal Lines FAQ
Disclaimer: This is a general guide only. Rules differ by state. Coverage can often be excluded in specific situations. It is recommended that you consult with a licensed insurance agent (we’re licensed insurance agents – please call us with your questions) to help you answer any specific questions you may have in reference to your specific situation. Unless stated otherwise, the information provided here is relevant specific to the State of Pennsylvania.
- What liability limits do I need?
This is a question that is hard to answer without knowing more about you. The answer to this is often customized to you and your family on a personalized basis. To get you started, we recommend calculating your net worth together with about 25% of your future income. For most people, your Liability Limits should at least exceed this amount, but you might need more if you have things in your life that put you at greater exposure to risk.
Personal Auto Insurance
- What’s the difference between Full and Limited Tort?
The Tort option on your Personal Auto policy has to do with what you retain the legal rights for. With Full Tort, you retain the rights to sue for non-economic damages (often referred to as pain & suffering) in accidents involving vehicles. With Limited Tort, you still retain the right to sue for economic damages (such as medical expenses and lost income) but in most cases, you don’t have the right to sue for pain & suffering. Naturally, your policy will cost more to retain Full Tort. While many states have similar laws in place, the specifics of the differences, as well as the terminology do vary by state.
- What is Bodily Injury Liability in Auto Insurance?
The limit of Bodily Injury Liability coverage on your policy’s declaration page is the maximum amount of coverage your insurance company will pay in an auto accident involving an injury to someone not in your vehicle (note that this includes pedestrians, bicyclists and motorcyclists). Often, coverage is split between two different limits – the first is the “per person” limit and the second is the “per accident” limit. These work just as they sound – the per person limit is the most that will be paid for injuries to a single person and the per accident limit is the most that will be paid in a single accident if multiple people are injured. Coverage Limits can vary greatly by policy, usually as low as $15,000 and as high as $500,000.
- What is Property Damage Liability in Auto Insurance?
The limit of Property Damage Liability coverage on your policy’s declaration page is the maximum amount of coverage your insurance company will pay in an auto accident involving damage caused to real property, such as another person’s vehicle or building. If coverage is split with Bodily Injury liability, the Property Damage Liability limit is relevant “per accident.” Coverage Limits can vary greatly by policy, usually as low as $5,000 and as high as $500,000.
- What is Combined Single Limit?
Most insurance companies offer the option to combine Bodily Injury Liability and Property Damage Liability under a single limit paid on a per accident basis. For example, a $500,000 Combined Single Limit will pay up to $500,000 in damages combined between Bodily Injury and Property Damage – for example, if $50,000 is paid in Property Damage losses, that would leave $450,000 to be paid in Bodily Injury losses.
- What is Collision coverage?
Collision is a type of Physical Damage coverage that protects your own vehicle in an accident involving a collision with other real property. If you’re responsible for the damages, than the Collision Deductible applies. You pay the deductible first, then the insurance company covers the rest of the claim. Collision coverage is not automatically included on your policy – it is an optional coverage. Note that collision with animals is not covered by Collision, but by Comprehensive coverage.
- What is Comprehensive coverage?
Comprehensive (or, Other Than Collision) is a type of Physical Damage coverage that protects your own vehicle in a loss resulting from anything other than a collision with other real property. Common examples include stolen vehicles, if a tree falls on your car, glass claims, or if you hit an animal. If you’re responsible for the damages, the Comprehensive Deductible applies. You pay the deductible first, then the insurance company covers the rest of the claim. Comprehensive coverage is not automatically included on your policy – it is an optional coverage.
- What is Uninsured Motorists coverage?
Uninsured Motorists coverage provides you with coverage if you’re injured in an accident that’s not your fault and the responsible driver doesn’t have insurance coverage. This coverage is important because if someone doesn’t have insurance, they might also not have any assets from which to pay your medical bills or replace your lost income.
- What is Underinsured Motorists coverage?
Underinsured Motorists coverage provides you with coverage if you’re injured in an accident that’s not your fault and the responsible driver doesn’t have enough insurance coverage. This coverage is important because if someone has low limits of coverage, they might also not have any assets from which to pay your medical bills or replace your lost income.
- What are First Party Benefits?
First Party Benefits are split into four categories: Medical Payments, Work Loss, Accidental Death and Funeral Expense. First Party Benefits are payable to you (you’re the first party) as the Insured on the policy. Limits are available at various levels for First Party Benefits. You can have up to $1,100,000 in Medical Payments, up to $50,000 in Work Loss Benefits, up to $25,000 in Accidental Death Coverage and up to $2,500 in Funeral Expenses. These coverages can be particularly important if you don’t have health insurance, disability insurance and/or life insurance.
- What Deductible should I have for car insurance?
The answer to this is dependent upon your financial situation and how you’d be likely to handle the claim. If you’d be hard pressed to come up with more than $500 in the event of an accident, than it would be important to keep your deductible low. However, if you’d be unlikely to file a claim for anything less than a few thousand dollars, a higher deductible makes sense to help you save premium. If your vehicle is leased or financed, you might be required by contract to keep a maximum $1,500 Deductible, but if you pay cash for your vehicles and would only use insurance for larger claims, higher deductibles are available and often make sense for higher value vehicles.
- What does OEM parts mean?
OEM stands for Original Equipment Manufacturer. This is a term in auto insurance because when repairing your vehicle after an accident, insurance companies often require the use of After Market Parts made by companies other than the original manufacturer used in the original manufacture of your vehicle. These parts are often less expensive, so insurance companies save money by using After Market Parts at scale. Some insurance carriers will offer either by default, or for an additional premium, coverage that will require the use of OEM parts in repair of your vehicle.
- What is Agreed Value coverage?
Agreed Value coverage in Auto Insurance refers to a limit of coverage on your vehicle that is typically higher than the depreciated value of the vehicle. Most auto insurance policies will only pay for repairs to your vehicle on an Actual Cash Value, which is essentially the depreciated value of the vehicle. There are policies that offer Agreed Value, which will list a specific value on your policy that shows what the vehicle is insured for. This can make a big difference in whether a vehicle is repaired or determined to be totaled. If you have a car that’s five years old and there’s significant damage, your insurance carrier may decide it’s less expensive to total the vehicle than to repair it, based on the depreciated value of the vehicle. If the vehicle is totaled, you’re likely footing a significant additional cost in purchasing a similarly aged vehicle to replace your totaled vehicle. Not all insurance companies offer Agreed Value coverage. It would be particularly important to get this coverage if you drive a vehicle that is expensive, or is costly to repair.
- Who is covered by my Auto Insurance policy?
There are a couple of tiers to this answer. First, anyone you give permission to use your vehicle is allowed to drive it (as long they’re licensed and legally allowed to drive). This is referred to as Permissive Use. Note that most policies require that you list any household resident that is licensed (this varies to a degree if there are other drivers in your home that have separate insurance – check with your agent about this). Some policies can also exclude specific drivers (usually only if they have insurance elsewhere).
On a second level, the person or people listed as “Named Insureds” get additional coverage under the policy, such as when renting a vehicle, that listed drivers that aren’t Named Insureds don’t receive.
- Do I have to list my child on my auto insurance policy when they’re away at school?
Usually, yes. There are a few exceptions to this. If your child still uses your address as their residence (what address is listed on their driver’s license?), you’ll want to keep them on your policy. If your child has a vehicle with them at school that’s insured under your policy, keep them on your policy. However, if your child has their own insurance on a vehicle titled in their name and they have a drivers license that lists their residence at school, then you don’t need to keep them on your policy. It’s highly recommended that you consult with your insurance agent about this before making any changes.
- What’s the difference between Market Value and Replacement Cost?
Market Value is what you can sell your home for. Replacement Cost is how much it would cost to rebuild your home. This is an important distinction because Homeowners Insurance requires (in most cases) that your home be rebuilt or repaired following a loss (such as by fire).
- What is Replacement Cost Coverage?
Replacement Cost Coverage is how most homeowners insurance policies value your home. In other words, it is the basis upon which your home is insured. The limit of coverage on your home should meet the approximate cost to rebuild (or replace) your home. Often, the Replacement Cost of your home will vary (sometimes significantly) from the market value of your home.
- Why does my policy include Other Structures coverage?
Most Homeowners Insurance policies include a coverage called “Other Structures.” This coverage is typically included on homeowners insurance policies by default. It is a type of property coverage similar to the coverage on your home, but applies to physically separate structures on your property (such as a shed or detached garage). Most policies base this limit on 10 – 20% of the limit used to insure your home. Coverage can be increased if necessary. If you have no structures physically separate from your home, your policy may still include this coverage by default. Some newer versions of Homeowners Insurance allow this coverage to be excluded, but the premium savings are usually minimal.
- What is Personal Property coverage?
Personal Property regarding Homeowners Insurance policies is essentially a catch all term for your possessions (but not all of them!). Commonly, this includes things such as furniture, electronics, and clothing. If it’s not “permanently” attached as part of your home, most likely it’s included as Personal Property. Common exceptions to this include jewelry, art work, fire arms or cameras.
- What is Loss of Use coverage?
Loss of Use coverage (or Additional Living Expenses) reimburses you for additional expenses you incur as a result of a loss covered by homeowner insurance that prevents you from residing in your home. A common example is the cost of staying in a hotel or other temporary residence until it’s safe to live in your home again. Note that it does not cover your normal expenses (such as a mortgage or insurance premium).
- What is Personal Liability coverage?
Personal Liability coverage is a Homeowners Insurance coverage that pays for Bodily Injury or Property Damage to others that you’re responsible for. For example, if a guest on your property is injured (such as by a fall, or dog bite), your homeowners insurance will likely pay for the medical expenses as well as other expenses you might be liable for, (such as loss of income). This coverage typically follows you away from your home as well.
- What is Medical Payments coverage?
The Medical Payments coverage on Homeowners Insurance is the amount of coverage provided for injuries that might occur to a guest on your property regardless of fault. This limit is usually low ($5,000 or less) because of the ‘no-fault’ condition. Additional coverage for injuries to others can also be provided by Personal Liability coverage (see above).
- What is Additional Replacement Cost Protection?
Additional Replacement Cost Protection is a coverage that applies to the limit of insurance coverage on your home, increasing your coverage to meet full replacement cost in the event your coverage limit does not meet policy requirements. Because there are penalties if you don’t have your home insured to full Replacement Cost, this coverage is there to help make sure your limit fully covers your home. This coverage is optional but should almost always be included on homeowners policies due to the low additional premium to include it.
- What is Special coverage?
The term Special coverage is applicable to Property coverages. This is the best available type of property coverage because it provides the broadest legal coverage language. This coverage is sometimes referred to as “All-Risk” coverage, but this is a misleading term because it does not cover you from all risks.
- What is Water Backup coverage?
Water Backup coverage pays for damage caused by water backing up through pipes and plumbing or in the event a sump pump fails. This is an optional coverage and not automatically included on the standard homeowners policy.
- What is Service Line coverage?
Service Line coverage pays for repairing or replacing damaged underground water lines. This is an optional coverage and not automatically included on the standard homeowners policy.
- What is Identity Theft coverage?
Identity Theft (or Fraud) coverage reimburses you for expenses related to regaining your identity if it’s stolen. Most insurance companies often provide specific resources and guidance to help you through this process. This is an optional coverage and not automatically included on the standard homeowners policy.
- Does Homeowners Insurance cover flooding?
No. Standard Homeowners Insurance does not cover flooding. Flood insurance is most commonly provided by the National Flood Insurance Program (NFIP), but there are now additional options to obtain coverage through Private Markets.
- Do I have to be in a High Risk Flood Zone to get Flood Insurance?
No. Flood insurance is available whether or not your in a flood zone. Flooding regularly occurs outside of the highest risk flood zones.
- Does Homeowners Insurance cover Earthquake?
No. Standard Homeowners Insurance does not cover earthquakes, but coverage can often be added for an additional charge.
- Does Homeowners Insurance cover Sinkholes?
No. Standard Homeowners Insurance does not cover sinkholes, but coverage can often be added for an additional charge.
- What is ACV coverage?
ACV stands for Actual Cash Value. ACV is a form of valuing property for insurance purposes. ACV coverage reduces the amount eligible to claim under a policy for depreciation.
- What is Personal Injury Liability?
Personal Injury Liability provides you extended liability protections that don’t qualify as Bodily Injury or Property Damage. This typically includes Libel, Slander, and Invasion of Privacy. Personal Injury Liability is not automatically included. The coverage has only a small cost to add to your policy and is highly recommended for every homeowner or renter.
- Are pets covered by Homeowners Insurance?
Injuries to pets are not covered by Homeowners Insurance, but Homeowners Insurance does typically cover injuries caused to other by your pets. If your dog bites someone, that would be covered by your Personal Liability coverage (unless your carrier excludes it); however, if your dog were bitten by someone else’s dog, there’s no coverage under your policy. Note that the owner of the dog who bit your dog may be liable for damages to you.
- Are pools covered by Homeowners Insurance?
Yes, in several ways. The major concern is from a liability exposure, such as if someone is injured on your property – pools increase the likelihood of this happening! In addition, pools can be considered property as defined by your policy. The coverage would apply either as part of your Coverage A – Dwelling (if attached/inside your home) or as Coverage B – Other Structures (if detached from your home).
- Are trampolines covered by Homeowners insurance?
The major coverage concern is from a liability exposure, such as if someone is injured on your property – trampolines increase the likelihood of this happening! In addition, trampolines can be considered Personal Property, although coverage can differ from one policy to another.
- What is an Umbrella policy?
An Umbrella Policy extends your liability coverage to provide better protection for your assets. For example, if you have a $500,000 liability limit on your auto insurance and a $1,000,000 Umbrella policy, you have $1,500,000 in liability coverage. For anyone with savings, investments, equity in your home, or ownership of a business, an Umbrella a necessity.
- How much does an Umbrella policy cost?
Umbrella policies can be as little as $150 per year. The more vehicles and properties you own can increase the premium, as can other factors which increase your risk, such as a pool, young drivers or recent claims or violations.