As the nation's leading online auto insurance agency, we often get questions from consumers, not just about auto insurance, but about insurance in general.
We love to get questions because we're here to make insurance a little easier. What follows are some of the most interesting questions that we received recently—along with our fairly detailed replies. Ask us a question, and you could see it in our next article of answers.
Condo Master Policy
Regarding condo and homeowners insurance, we received quite a tricky question around what's covered and what's not under a condo association's master policy. The owner of the condo was having trouble getting a straight answer about how much additional coverage she should buy. We replied:
Generally, a condo association's Master Policy covers the "shell" of the building—which includes the exterior (roof, siding, brick, windows, etc.) and the interior construction (floors, walls, plumbing). But, it does not cover things like carpeting, flooring, light fixtures, window treatments and furniture.
Our suggestion is to ask both the president of your condo association and the management company to contact the agent and ask for two things:
- A clear statement of what is covered and what is not covered—in simple language. If the agent who wrote the association's policy cannot or will not provide this information, then the association should look for a new agent prior to the expiration date of your current policy. Your current agent is paid commission to advise your association about its coverage—and as homeowners, you are entitled to clear advice.
- A guideline for determining how much individual coverage a homeowner should purchase. An experienced agent will be able to provide a general guideline, based on the size of your condo and the contents you have in it. Pay special attention to unusual items such as artwork, jewelry, guns, computers, coins and other collectibles, as those often have specified limits. You can always buy additional coverage specifically for one category. (Naturally, you own agent can advise about this—but it would be a good idea to ask the agent for the association, too—just to see how his recommendation compares.)
How Car Insurance Works
We often get questions about how auto insurance actually works—is it the car that's insured, or the driver—or both? And how much insurance do you actually need?
The short answer is that insurance generally follows the car. So, if you own a car, you must insure it for the minimum coverage required by the laws of your state. These laws are often called Financial Responsibility (FR) Laws—and they define the type and minimum amount of coverage that the owner of a vehicle must buy. For example, in the state of Ohio, the FR laws require an owner to buy minimum Bodily Injury liability coverage of $12,500 per person and $25,000 per accident. And, in Ohio, when you purchase new or renewal license plates, you must sign a statement affirming that you do have insurance.
If you do not own a vehicle, but occasionally drive a friend's car with their permission, it's important to ask whether they have insurance on the car—and whether the coverage extends to your occasional use of the car. If they do not have liability insurance on the car, you need to buy a Non-Owner's liability policy to protect yourself, in case you cause an accident which results in injuries to your passengers or others. Also, if you rent a car and do not have your own insurance, you should buy the coverage offered by the rental car company, to protect yourself if you cause an accident.
Lost Life Insurance Policies
Another common question we receive involves finding a lost life insurance policy for a relative who has recently passed away. Even though we aren't a life insurance company, we are often the first place that some relatives come to start their search.
We have a useful article on the subject (The Hunt For A Missing Life Insurance Policy) in which we suggest some ways to make finding a missing policy easier:
- Look through canceled checks or go to the relative's bank and request copies of old checks. Review these checks, and see if any were made out to life insurance companies.
- Talk to your relative's lawyer, insurance agent or accountant to see if they have any information that can help.
- Call their old employers, in case they had bought group life insurance.
- Call the Medical Information Bureau—an organization that maintains a database that you can use to see if insurers requested your relative's medical information.
Dealing With Underinsured Driver Claims
When an accident with an underinsured driver occurs, the claims that result can be confusing. One family sent this note—and our answer follows.
"I was involved in an accident that left me injured. The at-fault driver had coverage worth $25,000 for bodily injury. We have the underinsured clause in our policy, which was needed because the claim was in excess of the $25,000. I used my health insurance to cover my injuries but now my health insurance company wishes to be reimbursed. While I understand that my health insurance company has the right to take money from my settlement, I'd like to know how much can they take? The health insurance has paid out a little over $55,000. If my car insurance company says that my claim is worth $100,000 is the $25,000 from the at-fault driver's company counted in the total?"
Please understand that without reading the policy contracts for the at-fault driver and your own policy, we can't be certain. And, state laws about UM/UIM coverage are important. But in general, here's how this type of claim situation is handled.
If your health insurer paid $55,000 to cover your medical costs, the health insurer is entitled to receive all of that money from any available auto insurance policies that apply to this accident. That means that the health insurer is entitled to receive $25,000 from the at-fault driver and $30,000 from your own insurance company, from your underinsured motorists coverage.
If your insurance company determines that your claim is worth $100,000, the amount payable by the at-fault driver's company would, indeed, be deducted from the total. This means that you would be entitled to recover $75,000 in total from your underinsured motorists coverage. But, remember that your health insurer is entitled to be paid by your insurance company first, so the net amount left for you personally is $45,000 ($75,000 minus $30,000).
These have been just a few of the questions we've received, but perhaps some of the most common—do you have questions for us? Please let us know, and we'll do our best to answer them!