We hope these "common sense" definitions will help you navigate your policy and understanding of insurance.
Liability (Bodily Injury/Property Damage)
When you think of Homeowners policies, you probably think of coverage for fire or theft. But many times a claim can involve injury as well. In Montana, a slip and fall on an icy sidewalk is common. Beyond those types of injuries, Liability also covers your activities on, and away, from your premises. A typical claim might involve hitting someone with a ball during a round of golf, injuring another party while hunting, or damaging another's property while at their home. Claims can be quite varied, and sometimes quite unusual.
On occasion, someone visiting your home can be injured. Medical Payments provides coverage, regardless of fault, for those injuries. Limits can range from $500 to $2,500 per person.
New for Old... it is about that simple. Most property covered in a homeowner's loss is covered for Replacement Cost. That means that the insurance company will reimburse you for the cost of replacing the property with like kind and quality. The policy does require, however, that you actually replace the property. If you don't, then you get reimbursed based on replacement cost minus depreciation.
Who is an Insured
Anyone listed in the "Named Insured" section of the policy is an insured, but a homeowners policy also covers other people as well. Your spouse, your children or other resident relatives. It is important that both spouses be listed on the policy, but children are not unless they have ownership in the house. Once children leave the home, they must purchase separate coverage. The exception to this is when they are away at college.
Liability (Bodily Injury/Property Damage)
In an accident, when you are at fault, you have the potential of injuring another person(s) or damaging property; this is the coverage that protects you if that occurs. See Lesson # 4 for a discussion on the type of limits to buy. In Montana you are required to carry the following minimum limits:
- Bodily Injury
- $25,000 Per Person
- $50,000 Per Accident
- Property Damage
- $10,000 Per Accident
Accidents can be traumatic events, and many times you can't easily determine who is at fault. When that happens, Medical Payments coverage can pay for the initial injuries to your passengers without regard to fault. Limits, for this coverage, can range from $500 to $5,000 Per Person.
Upwards of 40% of the vehicles in Montana are operating without insurance. If you are involved in a accident with one of those vehicles, you need Uninsured/Underinsured Motorist coverage. This coverage will pay for your injuries (assuming you were not at fault in the accident) if the other driver has no insurance, or his limits are sufficient to pay for your injuries. See Lesson # 5 for a discussion of a claim example. Your limits on this coverage should match your Bodily Injury/Property Damage limits.
Sometimes referred to as "Comp", this is a physical damage coverage on your car. Literally, it is defined in the policy as everything but Collision (see next term). Some of the kinds of losses that fall into this very broad coverage include fire, theft, vandalism, hail damage, windshield breakage, etc. If your car has been damaged, and it didn't happen in an accident, then you find coverage here. Oddly, collision with a animal comes under this coverage instead of Collision.
This physical damage coverage for your car is just what the name indicates... Collision with another object (or overturn of the car). As mentioned above, the one exception is collision with an animal which is covered under "Comprehensive".
This coverage reimburses you for the expense of renting a car after a claim. The limits on this coverage are usually expressed in dollars per day/dollars per claim. As an example, $15/day for a total of $450 (30 days coverage). Many of our clients have similar coverage with AAA or a credit card they carry. You can forgo this coverage under those circumstances.
This coverage reimburses you for the expense of towing your car when you car is disabled. The limit is ordinarily $50 or $75 for each tow. If you also have AAA, or some other towing service, you can collect on both.
Who is an insured?
All insurance policies are quite specific as to "Who is an insured". This question is important because it is what determines who is covered by the policy and who is not. In the case of an auto policy, there is a section, on the front of the policy, that lists the individuals insured. That listing should include all owners of vehicles listed on the policy, including both spouses if married. Resident children do not need to be listed unless their names are on the title of the car. Once the children are no longer dependents, then they must be transferred to their own policy.