The Basics of Insurance

The many types of insurance available to us tends to be confusing. However, when it comes to the question of who needs insurance, there's only one answer: you do. That's why we want to help you understand and choose the right coverage. Basic information on a variety of insurance is included here to assist you; simply select the type of insurance below. If you would like additional information or have any questions, please feel free to contact us by a visit to our office, a phone call or by email.

The Basics of Homeowners Insurance

Homeowners is one of the most popular forms of personal insurance available and a typical policy will have two sections. The first section covers your property. The second section provides personal liability coverage (should someone get hurt on your property and file a lawsuit against you). If you own or lease property, you should have this type of insurance. Most lenders require homeowners insurance to obtain a mortgage.

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

Under a homeowners policy, covered losses can be paid on either an actual cash value basis or on a replacement cost value. Under an actual cash value basis, you are entitled to the depreciated value of the damaged property. In other words, the older the property is, the less money you will receive for it. When replacement cost is used, the policyowner is reimbursed the amount it will cost to replace the property at current prices using similar products and quality.

What is the difference between "all risks" and "named perils"?

A named perils policy covers only those perils actually listed in the policy. Typically they include physical losses such as fire, windstorm and hail. An all risks policy covers losses that are due to any peril unless specifically excluded in the policy.

Do I need earthquake insurance?

Damage to your property as the result of an earthquake are not covered under standard homeowners insurance. As most Southeast Missourians realize, we live in an area known to be at risk for earthquakes. Policyholders can add an earthquake endorsement to their homeowners policy which will cover damages from earth movements such as earthquakes and landslides.

What should I consider when purchasing homeowners insurance?

Buy the amount and type of insurance you need. A point to remember: if your policy limit is less than 80% of the replacement cost of your home, you will face a "coinsurance penalty," which means you will have out-of-pocket expenses to cover costs beyond your policy's deductible. For example: if your home's estimated replacement value is $100,000, you would be required to carry at least 80% of the value, or $80,000. If you were to buy a $40,000 policy, you would be underinsured by half. If this were to happen, the insurance company would pay half of a loss, less the policy deductible. For instance, if you were this $40,000 policyholder with a $500 deductible and suffered a $10,000 covered loss, your policy would pay only $4,500.

The Basics of Health Insurance

What is health insurance?

Health insurance is a protection against medical costs. This type of insurance is a contract between an insurer and an individual (or group) whereby specific health insurance is provided at an agreed-upon price. Policies differ in cost and range of protection.

Who needs health insurance?

The cost of medical treatment has soared the past few years, making this a vital insurance coverage for everyone. One major surgery or illness could inundate you with medical bills.

Families with growing children find numerous trips to the doctor inevitable and expensive over a period of time. Health insurance can give you the assurance that when you need medical attention, you can receive treatment without the threat of financial hardship.

What do I need to know about health insurance?

You need to understand the differences between HMOs, PPOs and POS plans. Compare coverage to cost and balance the two. Learn your policy; what it covers and doesn't cover. Does your policy pay for annual exams? Does it include pharmacy benefits? There are a variety of policies available to you and you will want the best policy to meet your family's needs.

The Basics of Auto Insurance

What factors influence the cost of auto insurance?

First of all, the kind of car you drive will influence your insurance costs. A high-performance sports car will be more expensive. Other factors that will affect cost include your age, marital status, where you live and how you use your car (business or pleasure).

What factors can reduce auto insurance costs?

Cars that have safety features such as antitheft devices, air bags and anti-lock brakes may have a lower cost. A higher deductible can reduce your premiums. A driver with a safe driving record and no accidents will have a lower cost.

What are some of the coverages available in an auto insurance policy?

Bodily injury liability: In case you cause an accident in which someone else is hurt or killed.
Property damage liability: If you damage someone else's property.
Collision: When your car is damaged as a result of colliding with another car or object.
Comprehensive: If your car is stolen or damaged in ways that don't involve a collision.
Medical payments: Pays the doctor bills, hospital bills or funeral expenses for injuries that occur to you or members of your family that live with you, no matter who caused the accident.
Uninsured motorist: Pays for your injuries when you're hit by a driver who has no insurance.

When do I need to update my policy?

Update your policy when you move, marry, change jobs or no longer insure a young driver.

The Basics of Life Insurance

What is life insurance?

Life policies pay an amount of money, selected prior to issuance by the policyholder, to the beneficiary of the policyholder's choice.

What is term life insurance?

There are different types of term life insurance. Level term policies provide a consistent amount of insurance. A decreasing term policy starts with a specified face amount which decreases annually until it reaches zero at policy expiration. Increasing term, of which there is rare need, provides a growing amount of insurance.

Are term policies renewable?

Many are renewable, which means they can be renewed without providing the company evidence of your good health. However, because of the policyholder's advancing age, renewal premiums will be higher than previous premiums. Also, many term policies can be converted to another type of policy, such as whole life.

Whole life insurance, also called straight life or permanent life, is protection that can be kept as long as you live. At your death, whole life pays a lump sum benefit to your designated beneficiary. Whole life is also a cash value account. Your premiums are invested and a fixed rate of return (that may change periodically) is paid to your policy's account. There are details and limitations that you should know and that we can explain fully.

There are many kinds of insurance that we can provide to protect you and your family--protection that also includes disability and long-term care. Please contact us for more information or to schedule a visit.

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