COMMON AUTO INSURANCE QUESTIONS
What is the difference between the full & limited tort option?
Act 6, which was passed in June of 1990, resulted in the ability for drivers in PA to choose between "Full tort" and "Limited tort." A policy with the Limited tort option is less expensive than the same policy with the Full tort option. Which option you choose is a personal decision that only you can make. Remember though, that frivolous lawsuits increase insurance prices for everyone.
In any accident, damages can be divided into two categories. ECONOMIC LOSSES are very tangible items that you can show physical proof to substantiate the amount of your loss. They include damage to your vehicle, rental costs you incurred, income loss you can prove, medical bills you can provide etc. NON-ECONOMIC LOSSES are those less tangible items, including pain & suffering, inconvenience, mental anguish.
Under the Full Tort option you retain the right to sue for both ECONOMIC & NON-ECONOMIC LOSSES in any accident, regardless of how minor it is. Under the Limited Tort option you waive your right to sue for NON-ECONOMIC losses in a non-seriuos accident. You always have the right to sue for ECONOMIC losses and you would maintain the right to sue for NON-ECONOMIC losses in an accident defined by the courtss as a serious accident (one involving permanent disablement, dismemberment, disfigurement or death.) Under certain special circumstances, full tort rights are returned to a policyholder that has chosen limited tort.
Why do insurance costs rise each year when my car is getting older?
Insurance companies pay claim using the premium dollars collected from their policyholders. Higher auto repair costs including increased parts and labor rates, higher medical costs, and an increase in the number and size of lawsuits filed for auto accidents have made claims more costly to settle. Insurance companies do everything they can to control expenses, but as the costs for goods and services purchased by the insurance companies increase, so must premiums be raised to help cover those costs.
Why do some cars cost more than others to insure? Why am I paying more than my neighbor is?
There are many factors in determining insurance premiums. Differences in liability limits, tort options, deductibles, vehicle usage, annual mileage, claim record, driving record, number of cars and drivers in the household, discounts, safety features, and types of vehicles all play a role in determining your rate. In general, the physical damage rate is determined by a symbol, which is assigned to each vehicle. The symbol is based on the cost of the vehicle initially and is then revised based on many additional factors. The symbik can be increased or decreased depending on how the vehicle performs in low speed and high-speed crashes and the average cost of repair. The auto theft rate and component theft rate, the average injury rate and the average fatality rate also play a factor. Finally the body style, safety features, engine size, curb weight to horsepower ratio and whether the vehicle is two wheel or four wheel drive can also affect the symbol and therefore the premium on your vehicle.
Financing a vehicle or leasing a vehicle does not increase the premium except that your agreement may include a requirement for certain coverages, minimum limits of liability and maximum deductibles.
What coverages are require by the State of Pennsylvania?
The state of Pennsylvania requires that each policy cover Bodily Injury in the amount of $15,000 per person/$30,000 per accident, Property Damage in the amount of $5,000 and First Party Medical Expenses in the amount of $5,000. All other coverages are optional.
What does each part of my auto insurance policy cover?
Bodily Injury Liability: Covers your legl liability for property damage claims brought against you.
Property Damage Liability: Covers your legal liability for property damage claims brought against you.
First Party Medical Payments: Covers the medical expenses for injuries sustained by you and your resident, relatives as the result of an auto accident.
First Party Income Loss Payment: Covers the amount of income lost while you and your resident, relatives are unable to work as a result of an auto accident.
First Party Accidental Death Payment: Money paid to the estate of the insured or a resident, relative in the event of a fatality caused by an auto accident.
First Party Funeral Benefits: Covers funeral costs for the insured or a resident, relative in the event of a fatality caused by an auto accident.
Uninsured and Underinsured Motorist Coverage: Provides coverage to an insured if the insured is legally entitled to recover money for Bodily Injury from an at-fault party in an auto accident and the at-fault party is either uninsured or underinsured.
Comprehensive: Pays for damage to your auto and its equipment not caused by a collision or upset.
Collision: Pays for damage to your auto and its equipment caused by collision or upset.
Emergency Road Service: Pays for emergency road service up to the limit specified on the policy. Most policies cover only the amount to tow to the nearest garage capable of handling your emergency
Transportation Expenses: Covers the cost of car rental up to the limit specified on the policy, while your vehicle is inoperable due to a reported claim or until a total loss settlement is offered.
Loan Lease Security Coverage: Provides additional protection in the event of a total loss to a covered auto. Coverage is provided for the difference between the actual cash value of the auto and the amount due under the terms of the lease or loan.
My car isn't running or I don't use it in the winter. Can I remove it from my policy?
Pennsylvania Motor Vehicle Laws require liability insurance coverage for any vehicle registered in the state of Pennsylvania. Whether the vehicle is being driven or not is immaterial. If you maintain valid plates on your vehicle, it must remain on your insurance policy.
If I loan my vehicle to a friend and there is an accident, whose policy pays for the damage?
Generally, the insurance follows the car for everything except first party benefits. If your friend is injured, his own policy should pay for his injuries. All other expenses would be paid from your policy; therefore your policy would also suffer any consequences caused by the accident. Your policy would be subject to surcharges from the accident and in some cases possible cancellation.
I just got a speeding ticket and I'm afraid my insurance will be cancelled. Is that possible?
It is unlikely that your policy would be cancelled for 1 violation unless the situation was a very serious one, like failure to stop for a school bus with flashing red lights (which can result in a license suspension) or a speeding ticket at a high rate of speed. However any violation, with the exception of parking tickets, can cause an increase in your premium due to surcharges. In the State of Pennsylvania, a policy can be non-renewed if there are 2 at-fault accidents, totaling $1350 for applications effective prior to 7/1/11
or $1450 for applications effective on and after 7/1/11, paid under any one policy within 36 months of the renewal date of that policy. Any alcohol or drug related offense will likely cause cancellation as quickly as is allowed by the laws. Comprehensive claims, not-at-fault accidents and not-at-fault first party benefit claims cannot be used as grounds for cancellation but may prevent your policy from receiving claim-free or other discounts that would otherwise apply.
Does a child with a permit only, a child at college or a friend that lives in my household need to be added to my policy?
Although your teen's exposure begins when he or she gets a permit, most companies do not require the addition of that driver until they obtain their license. But be aware that it can be difficult to add a young driver to your policy if they've already had accident, violation or arrests prior to obtaining their license. Your child in college still needs coverage. Remember your policy covers them for medical payments in any auto-related accident, even when riding a bus or as a pedestrian. Most companies have special rates for children who are at college, as long as they do not have a vehicle with them at that location. If any licensed driver is added to your household for any reason, you should contact your agent with that information. Because that driver may on occasion drive your vehicle or because your carrier might be required to pay damages in excess of the limits carried on the other driver's policy. It is important that your carrier is informed of all licensed drivers in your household.
I'm moving! What do I have to do?
If you are moving to a new location within the State of Pennsylvania, you are required by law to notify the Bureau of Driver Licensing in writing within 15 days. Likewise, you should immediately contact your agent with your change of address to assure that billings and financial responsibility cards arrive in a timely manner. If you are moving into Pennsylvania, you must get a PA driver's license within 60 days. If you have established a residency in PA and wish to operate a vehicle in this state, you are required to have a PA title, registration card and registration plate. Proof of PA insurance will be required to register your vehicle. Similarly, if you are moving out of PA, you cannot maintain PA plates and insurance. Because you are legally a resident of another state, you are subject to the laws of that state and your PA policy may not provide the protection you need. To be certain you are covered properly, you should change your driver's license, title, registration and insurance in accordance with the laws of your state.
COMMON HOME INSURANCE QUESTIONS
What are the basic parts of a typical Homeowner's policy?
Dwelling: Which covers your home and any attached structures.
Other Structures: Structures at your premises that are separate from the dwelling.
Personal Property: The contents owned by you.
Loss of Use: The additional living expenses you incur due to temporary relocation due to claim.
Personal Liability: pays for personal injury, including bodily injury or property damage claims brought against you.
Medical Payments to Others: pays for injuries to others from an accident arising from your premises or your personal activities.
I could only sell my home for $80,000. Why is my policy written for $150,000?
Market value is the price at which a house, including land, could normally be sold. Replacement cost is today's cost to rebuild or replace a structure with materials of like kind and quality. Because an insurance company's job is to repair or replace a home at the time of loss, they base the policy on the replacement cost, not the market value.
Most homes should be insured within 80% to 100% or the replacement cost. Only when the market value of a home is extremely lower than its replacement cost, should a special type of policy be considered that uses the market value of the home as the basis for insurance coverage.
What is the difference between a "named perils" policy and an "all-risk" policy, and how do I know which coverage I have?
A "named perils" policy actually lists the perils for which the policy provides coverage. Any peril not listed is assumed to be excluded from coverage. An "all-risk" policy would be more accurately called a "comprehensive peril" policy wince no insurance policy covers all perils. It can be thought of as a "named exclusion" policy as compared to the "named peril" policy and would provide coverage for loss by all perils except those that are specifically excluded in the policy.
You can determine what coverage you have by looking at your policy. Each section will either list the perils covered or state that coverage is provided against risks of direct physical loss except those that are specifically excluded elsewhere in the policy. "Named perils" and "all-risk" coverage can apply to different sections of the same policy so you must look at each section separately to get an accurate picture of your policy coverages.
What should I do if I make additions or improvements to my dwelling?
It is always a good idea to let your agent know what improvements you are making to be certain that you are adequately covered. Reconstruction costs estimates can be calculated for you to help you determine the proper amount of insurance to cover your dwelling including the updated additions or improvements. Most companies insist that you notify your agent of any project that exceeds $5,000. Notice should be given as soon as possible, but certainly within 60 days after improvement or additions are started.
What is the difference between a "replacement cost" settlement for personal property and an "actual cash value" settlement?
Replacement cost settlement allows you to collect the amount of money that you need to replace the damaged items on today's market with an item of similar kind and quality. No consideration is given to the age of the items damaged. The actual cast value settlement is based on the replacement cost of the item less the depreciation of that item. For example, you own a 20" Sony cable-ready colored television with remote, that is a total loss as a result of a lightning strike. You paid $500 for that television 5 years ago. If the average useful life of a television is 10 years, you would have already used half of the life of the television. Therefore, under an actual cash value settlement, you could expect to receive $250 less the policy deductible. Under a replacement cost settlement, you would receive whatever it costs to replace that television with one of similar kind & quality on today's market, less your deductible.
How do I cover special items that I own like jewelry, silver, guns, furs, collectibles and fine arts?
For most homeowner's policies these types of items are covered for the same perils as any other item that you own but may be subject to a specific sub-limit on the policy. For example, your policy will list a maximum amount paid for cash in your home, for theft of guns, for theft of jewelry etc. It is very important that you review your policy for specific sub-limits. In order to insure specialty items at a higher limit or for additional perils, you will need to purchase an endorsement to your Homeowner's policy or an Inland Marine policy for those items. It is likely that an additional premium will apply.
My dog is usually very friendly, but will I be covered if he bites someone?
In 1996, insurance companies in the US paid out more than 1 billion dollars in dog-related claims. The courts at one time had a "first bite" doctrine which in essence permitted an animal its first bite or attack before being declared vicious. Currently, the courts use a "propensity to be vicious" doctrine which is much stricter. In general, it is very likely that you and your insurance company will be held legally liable for injuries caused by your dog, regardless of the dog's history and are responsible to make restitution up to the limits of the policy.
Therefore, all insurance companies take dog-related issues very seriously. Most will not write a policy for a home where there are certain breeds of animals that are bred for their aggressiveness or where a previous bite has occurred. If a dog-bite incident is reported to the company or if it is discovered that a vicious animal is on the premises of a current policy, regardless of whether an incident has or has not occurered, the company will ask that the animal be removed from the premises or the policy will be cancelled.
I don't own a home but I'd like to cover my possessions. Can I do so?
Yes! A specific policy is available to those who do not own their own home. The policy is designed just like a Homeowner's policy except that no coverage is provided for the dwelling. (For condominium owner's a specific policy is available.) The policy covers your contents, loss of use and some add coverage for betterments & improvements you make to the property. It also covers your personal liability that could be important if you are found to be legally liable for accidental damage to the premises that you rent. For example, you start a charcoal grill outside your apartment and then leave the fire unattended to take a phone call. The fire burns out of control and sets the building on fire. You are found negligent by the court and ordered to pay your landlord's damages. Without insurance coverage, how will you pay for the damage?
My roof needs replaced, my furnace stopped working and my pipes are old and leaky. Will my insurance policy pay to fix them?
Most likely it will not. As a homeowner you are responsible to maintain your home. Your insurance policy is not a home warranty. It is coverage for sudden, accidental and unforeseen events that cause damage. None of these maintenance items are unforeseen or sudden. They are gradual deterioration that can be expected and foreseen by any homeowner. Just as it is necessary to routinely maintain your auto to keep it in good working condition and try to avoid costly mechanical breakdowns, it is your reponsibility to pro-actively maintain your home and the systems within your home as needed.
We had a heavy rain and my home was flooded, water seeped through my foundation or backed up through my sewers. Is it covered?
Surface water is considered flooding, and is excluded from virtually all Homeowner's policies. Flood insurance, sold by the National Flood Insurance Program can be obtained through your agent. Water from below the surface that exerts pressure on, flows, seeps or leaks through any part of a building or other struction is also excluded and coverage is not likely available. Water, which backs up through sewers or drains, is also excluded under most standard Homeowner's policies, but many carriers will add coverage for and additional premium.