Frequently Asked Questions about Insurance

COMMERCIAL INSURANCE

What type of insurance do I need for my business?

For a small to medium size business, you will need liability protection and property insurance.
Liability protection covers your company's legal responsibility for harm it may cause to others.

Property insurance covers buildings and/or contents owned or leased by your company. It also includes business interruption insurance covering the loss of income in the event of a disaster.

What may not be covered by my property insurance?

Two disasters not covered by property insurance are floods and earthquakes. You may check with your agent, local government, or bank to see if you are in a flood zone. You may choose to purchase earthquake insurance policy if you are in an earthquake prone area.

Should I consider workers compensation insurance?

Yes. Workers compensation insurance is required and is available to protect employees from lawsuits resulting from workplace accidents, and to provide medical care and compensation for lost income to employees injured in work-related accidents.

Is a commercial automobile insurance policy necessary?

If your vehicle is owned by your business, you need a commercial automobile policy. This policy provides the same type of full coverage as your personal automobile policy and normally has higher liability limits. Because there is a variety of coverage, please check with your agent about your particular circumstances.

What is Employment Practices Liability Insurance?

EPLI coverage is for claims made by workers against employers claiming their rights have been violated. This policy provides protection against lawsuits including claims of:

- Sexual harassment
- Discrimination Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Depravation of career opportunity
- Wrongful inflection of emotional distress
- Mismanagement of employee benefit plans

EPLI coverage is something you should discuss with your agent. The cost depends on your company's type of business and exposure.

How can I determine a cost savings on my business insurance?

Work closely with your agent. Your insurance professional will provide invaluable advice to protect your company for unexpected disasters. Having the right coverage and a disaster plan will save you money and could save your business.
Consider a higher deductible. A higher deductible will lower the premium.

Buy a package policy. A package policy can save money for small to medium size businesses. Instead of purchasing individual coverage, a package policy should include all the necessary coverage.

Prevent losses. By following your agent's advice, you may reduce your premium. Some recommendations may include safety manuals, a human resource department, and an emergency preparedness plan.

LIFE INSURANCE

Why is life insurance necessary?

If anyone depends you're your income, life insurance will enable a surviving spouse and children with funds to continue their current lifestyle.

Generally, you should plan for approximately five times your annual salary or more, depending on your assets and liabilities.

Life insurance can assist with immediate and long-term needs including funeral expenses, medial expenses, debt, taxes, dependent care, educational expenses, and additional financial resources.

How do you determine how much life insurance is needed?

Every situation is different. First, you should evaluate your family's financial needs and organize your financial information so that you can estimate what your family needs in the event of your death. As a general rule, five times your annual income is the recommendation. Of course, your needs will vary depending on all your financial factors.

What is a beneficiary?

A beneficiary is a person or trust fund established in an insurance policy as the recipient of the funds in the policy at the time of the policyholder's death. It is recommended to name a secondary beneficiary, in the event the policyholder outlives the first beneficiary.

AUTOMOBILE INSURANCE

What is automobile insurance and what is included?

In the event of an accident, automobile insurance serves as a contract between you and the insurance company to protect you from financial loss. Agreed upon premiums are paid by the policyholder and the insurance company agrees to pay the losses incurred as defined in your policy. Most automobile policies are for six months to one year.

There are three types of coverage:

Property coverage: for damage to or theft of your automobile
.
Liability coverage: for your legal responsibility to others for bodily injury or property damage.

Medical coverage: for the cost of treating injuries, rehabilitation, and sometimes lost wages and funeral expenses.
What is included in a basic automobile policy?

There are six components of a basic automobile policy.

Bodily injury liability: this coverage applies to injuries you, the driver, or policyholder cause to someone else. The policy also covers you and family members listed on the policy when driving someone else's car, with their permission. In the event of a serious accident, you could be sued for a large sum of money; therefore, it is important to have an adequate amount of liability insurance.

Medical payment: this coverage pays for the treatment of injuries to the driver and passengers of the policyholder's automobile.

Property damage: liability this coverage pays for damage to someone else's property for you or another person driving your car, with your permission.

Collision: this coverage pays for damage to your automobile resulting from a collision with another vehicle, object, or as a result of flipping over. If you are at fault, your collision coverage reimburses you for the cost of repairing your automobile, less the deductible. If you are not at fault, your insurance company may try to recover the amount of the damages from the other driver's insurance company.

Comprehensive: this coverage reimburses you for the loss due in the event of theft or damage caused by something other than a collision with another vehicle or object, such as fire, falling objects, missiles, explosions, earthquakes, windstorms, hail, flood, vandalism, riot, or contact with animals like birds or deer.

Uninsured and underinsured motorist coverage: this coverage will reimburse you, a family member, or a designated driver, if one of you should be hit by an uninsured or hit-and-run driver. When a driver of the other vehicle is at fault and has insufficient insurance to pay for your total loss, underinsured coverage is necessary.
How much insurance coverage do I need?

You are required by the state of Alabama to carry liability limits of $25,000 bodily injury per person; $50,000 per accident; and $25,000 property damage.

It is recommended that you have $50,000 to $300,000 liability insurance to protect you and your assets in the event of a serious accident and/or lawsuit. If your net worth is more than $300,000, you should consider additional liability insurance. Collision and comprehensive coverage is also recommended. The coverage limit is reflected by the market value of your automobile.

What determines the price of my policy?

Your driving record: your premium is often lower with a good driving record.

The number of miles you drive in a 12-month period: the more miles you drive, the greater chance of an accident; therefore, the fewer miles driven, the less premium you can expect.

Where you live: this helps determines the local statistics for accidents, thefts, etc. in the area in which you live.
Your age: generally more mature and experienced drivers have fewer accidents and this may reduce the premium.
The type of automobile you drive: some types of cars are determined to be safer, less expensive, and less likely to be vandalized and could result in a lower premium.

If I lease an automobile, what do I need?

The automobile dealer or bank requires you to carry comprehensive and collision coverage, in addition to the state required liability insurance. You may consider gap insurance from the dealer to cover the difference between what you owe on the lease and the actual cash value of the automobile in the event there is a loss.

What kind of information should I provide to the agent?

The names and ages of all drivers of your vehicle.

The make, model, and vehicle identification number of the vehicle.

Information about the features of the automobile, such as anti-theft protection, air bags, anti-lock brakes, etc.

What determines if a policy is cancelled or not renewed?

A policy that has been in force for more than 60 days cannot be cancelled unless you fail to pay the premium, you have committed fraud or made a serious misrepresentation on your application, or your driver's license has been revoked or suspended.

A policy may be non-renewable if you or your insurance company decides not to renew the policy at expiration. The insurance company is required to give you an explanation of why the policy is not being renewed.

HOMEOWNERS INSURANCE

What is homeowners insurance and what kind of coverage is included?

A homeowner's insurance package covers damages to your property and your legal responsibility for any injuries and/or property damage you or family members may cause to other people.

Homeowner's insurance provides financial protection against disasters, except flood and earthquake losses which requires separate coverage.

What is included in a standard homeowner's insurance policy?

A standard policy insures the home and the things inside. There are four essential types of coverage.

Dwelling: the policy covers rebuilding the structure if damaged by a covered peril. The coverage should be enough to rebuild your home. Most policies include 10% of the dwelling amount for other structures on the property like detached garages, fences, work sheds, gazebos, etc.

Personal property: this includes furniture, clothes, appliances, and other personal items in the even they are stolen or destroyed by a covered peril. Most companies provide 70% of the dwelling amount to cover your personal property and it includes worldwide coverage of 10% of personal property.Items such as silver, jewelry, and guns are covered for $1,000 to $2,000 so if they are valued at more than this amount, you should schedule the items and state their values.
Liability protection: this provides coverage against lawsuits for bodily injury or property damage that you or family members cause to other people.

Additional living expenses: if a disaster causes you to temporarily live away from home, additional expenses such as meals, lodging, etc. may be covered. Most policies provide 20% of the dwelling amount.
How much of each type of coverage do I need?

Dwelling: the amount needed to cover the cost of rebuilding your home and other structures on the site at current construction costs. Your replacement cost policy should replace or repair damaged property with the same type of materials, without any depreciation.

Personal property: personal property should be insured on a replacement cost basis and is generally 70% of the dwelling amount. If the limits on other expensive items are too low, it is recommended that you purchase an endorsement to cover these items.

Liability: this coverage provides protection against lawsuits for bodily injury and/or property damage that you or family members may cause to other people.

Additional living expenses: this coverage is for the cost of temporarily living away from home due to a fire or other covered disaster.

How much should I plan to pay?

The premium(s) will vary depending on the square footage of your home; building costs in your local area; the likelihood of natural disasters; crime statistics; the proximity to fire hydrants and fire stations; and the condition of your plumbing, hearting, and electrical systems.

What about insurance for a condominium or town home?

A condo policy insures personal property, improvements, and additional living expenses in addition to liability protection.

Other coverage to be considered includes:

Unit assessment: to reimburse you for your share of an assessment charged to all owners as a result of a covered loss to a common area.

Water back-up: insures your property for damage caused by sewer and/or drain back-up.

Flood or earthquake: separate policies may be purchased to cover these disasters.

What determines if a policy is cancelled or not renewed?

A policy that has been in force for more than 60 days cannot be cancelled unless you fail to pay the premium, you have committed fraud or made a serious misrepresentation on your application, or your driver's license has been revoked or suspended.

A policy may be non-renewable if you or your insurance company decides not to renew the policy at expiration. The insurance company is required to give you an explanation of why the policy is not being renewed.

Why should I consider an umbrella liability policy?

An umbrella policy provides additional liability coverage and begins when you reach the underlying limit of liability coverage in your homeowner's, renter's, condo, or automobile policies. A million dollar personal umbrella liability policy may be purchased for $200 to $400. Since certain limits must be met in your policies to purchase an umbrella policy, please check with your agent.