An explanation of the terms of homeowner and motor vehicle insurance policy.
Most people don't "speak insurance." Wading through the technical jargon and
legal lingo can be daunting and tiresome. Not until a freak storm rips off your
roof or puts a tree branch through your car's windshield does understanding your
policy become a big deal. Simply stated, your policy is a written contract
between you and your insurance company, also called a "carrier." Your policy
spells out the financial benefits that your carrier provides when you have a
loss.
Usually you will find the "POLICY DECLARATIONS" on top of the policy's first
page; review them carefully. For your insurance premium (the fee that you pay)
you buy protection that helps pay your bills when you have certain kinds of
damage. That is your coverage. The coverage you purchase is listed on the
declarations page. There, you will also find your policy limits, your
deductible, and the amount of your premium that goes toward each coverage. The
terrible things that can happen to your home or your car are called perils.
Typical perils on homeowners insurance are fire, weather, and theft. Auto perils
often confuse people. Simply stated they are:
Liability: You hit someone or something. This coverage pays for their
damage, including physical injuries.
Collision: You hit something. This coverage pays for the damage to
your car. (Not physical injuries.)
Comprehensive: Basically, something hits you. The tree branch
mentioned above shatters your windshield. Someone throws eggs on your car. An
animal, such as a deer, runs in front of you.
PIP (Personal Injury Protection): You and/or your passengers are
injured while in your car. This coverage pays for your medical care, regardless
of who was at fault.