Insurance Basics

Auto Insurance In California
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability and medical coverage.

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California Business Liability Insurance
No business can afford to be unprepared for a lawsuit.

Liability insurance protects your business assets when the business is sued for something the business did (or failed to do) that contributed to injury or property damage to someone else.

Liability coverage extends not only to paying damages but also to the attorneys' fees and other costs involved in defending against the lawsuit, whether valid or not.

The standard business owners policy provides liability coverage, as does a separate policy known as a commercial general liability (CGL) insurance policy.

Generally, commercial liability insurance, whether purchased in a separate policy, or as part of a standard business owners policy, will cover bodily injury, property damage, personal injury or advertising injury. The medical expenses of a person (other than an employee) injured at the business or as a direct result of the operations of the business are also covered.

Usually excluded from both types of liability insurance policies are suits by customers against a business for nonperformance of a contract and by employees charging wrongful termination or racial or gender discrimination or harassment.

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California Life Insurance Quotes
This web site is intended to be used as a tool to help teach the basics and have this material available for easy reference. The following is an introduction into life insurance:

The Basics

Why do I need Life Insurance?

     Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure that your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents will not have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries. The death benefit of a life policy owned by a C corporation may be included in the calculation of the alternative minimum tax.

How much Insurance do I need?

     Before buying life insurance, you should assemble personal financial information and review your family's needs. There are a number of factors to consider when determining how much protection you should have. These include:

• any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes;
• funds for a readjustment period, to finance a move or to provide time for family members to find a job
• ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.

     Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb used is buy life insurance that is equal to five to seven times annual gross income.

     Buying life insurance is not like any other purchase you will make. When you pay your premiums, you're buying the future financial security of your family that only life insurance can provide. Among its many uses, life insurance helps ensure that, when you die, your dependents will have the financial resources needed to protect their home and the income needed to run a household.

     Choosing a life insurance product is an important decision, but it often can be complicated. As with any other major purchase, it is important that you understand your needs and the options available to you.

     The main types of life insurance available are term and permanent. Term insurance provides protection for a specified period of time. Permanent insurance provides lifelong protection. To learn more about term and permanent insurance click on the appropriate button at the top of this page..
 

Additional Points

1.  What happens if I fail to make the required payments?
If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium. After that, the policy will lapse. You may be able to reinstate with evidence of insurability depending on your policy's provisions. If your policy has sufficient cash value, the company can, with your authorization, draw from a permanent policy's cash surrender value to keep that policy in force. This does not apply to term insurance because there is no cash value to draw from. In some flexible premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values.
 

2.  What if I become disabled?
Provisions or riders that provide additional benefits can often be added to a policy. One such rider is a waiver of premium for disability. With this rider, if you become totally disabled for a specified period of time, you do not have to pay premiums for the duration of the disability.

3.  Are other riders available? (* availability and specifics of these riders vary by carrier and state.)

• "Accidental death benefit", provides for an additional benefit in case of death as a result of an accident.
• "Accelerated benefits", also known as "living benefits." This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home.
• "Child rider", provides insurance for all your children, usually from $1,000 to $20,000 of death benefit.

4.  When will the policy be in effect?
If you decide to purchase the policy, find out when the insurance becomes effective. This could be different from the date the company issues the policy.

5.  How do accelerated death benefits work?
It allows policyholders to receive all or part of the policy's proceeds prior to death under certain circumstances, including the need for long-term care and confinement to a nursing home. Because payments may affect tax status and Medicare eligibility, and will be deducted from the overall benefits paid later to beneficiaries, policyholders should thoroughly investigate options in advance.

6.  By using medical tests are insurers trying to eliminate any applicant likely to develop a serious health condition?
Medical tests can provide accurate and current information about an applicant's health, thus enabling insurers to charge premiums that reflect the level of risk an applicant represents. Because some health conditions are easily managed through proper medication, therapy or lifestyle changes, medical information sometimes makes it possible for insurers to cover applicants who might not otherwise be insurable. More serious or incurable conditions present an enormous risk that an insurer simply cannot assume.

7.  What should I consider in naming life insurance beneficiaries?

• Always name a "contingent," or secondary, beneficiary, just in case you outlive your first beneficiary.
   
• Select a specific beneficiary, rather than having the proceeds of your life insurance paid to your estate. One of the great advantages of life insurance is that it can be paid to your family immediately. If it is payable to your estate, however, it will have to go through probate with the rest of your assets.
   
• Be very clear in wording beneficiary designations. Naming specific children may exclude those born later. If your child dies before you, do you want the proceeds to go to that child's children? Changing the beneficiary designation is easy, but you have to remember to do it.

8.  Does it make sense to replace a policy?
Think twice before you do, because in many situations it may not be to your advantage. Before dropping any in-force policy, make sure your "new" policy is paid for and in effect and first consider:

• If your health status has changed over the years, you may no longer be insurable at preferred or standard rates.
   
• Even if both policies pay "dividends," it may be years before the new policy's dividends equal those of your present one.
   
• If you replace one cash-value policy with another, the cash value of the new policy may be relatively small for several years and may never be as large as that of the original one. There may also be a period wherein a surrender charge is applicable on the first policy.
   
• You should ask for a detailed listing of cost breakdowns of both policies, including premiums, cash surrender value and death benefits. Compare these as well as the features offered by both policies.
   
• If you decide to surrender or reduce the value of the policy you now own and replace it with other insurance, be sure your new policy is in force before you cancel the old one.

9.  As a single person, do I need insurance?
The answer almost always is yes. You may want to consider these options:

• Disability income insurance - especially important for self-supporting singles without sizable assets, this can replace a good part of the income you would lose if you were unable to work because of accident or illness. If you don't have long-term disability coverage at work, it would be wise to consider an individual policy designed to replace at least 60 percent of your income.
   
• Health insurance - if you don't have on-the-job coverage, an individual policy is your first line of defense against ever-escalating medical and hospital costs. You can keep premium costs down by electing a large deductible, thereby "self-insuring" as much as you can afford.
   
• Life insurance - even if you have no dependents now, you may later. If you buy now when you are younger and healthier, you can "lock in" lowest-cost coverage, including guaranteed insurability.

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Homeowners Insurance Comparisons California
Coverage A - Dwelling:
Provides protection for the dwelling on an all risks basis up to the policy limits. The policy limit is set by the policyowner at the time the insurance is purchased. You can choose to insure your home and belongings for either replacement cost or actual cash value. The home should be insured for replacement cost. Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. Depreciation is the decrease in home or property value from the time it was first built or purchased because of age or wear. Actual cash value is the amount it would take to repair or replace damage to your home after depreciation. Most insurers require homeowners to insure their homes for at least 80 percent of the replacement cost. If you insure for less than 80 percent of the replacement cost of your home, any loss payment from your insurance company will be subject to a coinsurance penalty. You may wish to insure at 100 percent of replacement cost so you will have sufficient coverage in the event of total loss.

Coverage B - Other Structures:
Provides protection for unattached structures such as tool sheds, detached garages, houses and their contents. Coverage B is usually equal to 10 percent of the policy limit on Coverage A.

Coverage C - Personal Property:
Provides protection for personal belongings. Items such as clothing, furniture and standard electronics are covered. Some policies may include credit card theft and away from home theft. The policy limit on Coverage C is equal to 50 percent of the policy limit on Coverage A. Most standard home insurance policies cover the contents of your home on an actual cash value basis. Many insurers offer an option to insure your belongings at replacement cost. The premium will be higher for this coverage but may be worthwhile. Some forms of personal property, such as, silverware, computers, guns, money, expensive antiques and jewelry, have limited coverage under the homeowner's policy and may be added to the policy as an endorsement

Coverage D - Additional Living Expenses:
If your home is damaged to the extent of being uninhabitable, this coverage will pay for the living expenses away from the home while repairs are being made. These expenses could include limited motel, restaurant and warehouse storage. The policy limit to Coverage D is equal to 20 percent of the policy limit on Coverage A.

Coverage E - Personal Liability:
This coverage protects you against a claim or lawsuit resulting from bodily injury or property damage to others caused by your negligence. For example, your dog bites someone, your child breaks a window or a friend or stranger hits his or her head on something. This coverage applies to you and all family members who live with you. The amount of coverage is determined by the policyowner at the time the policy is issued.

Coverage F - Medical Payments to Others:
Regardless of who is at fault, this coverage pays for the medical expenses for persons accidentally injured on your property.
 

Types of Policies 
There are two types of policies: all risks and named perils. A named perils policy covers losses that are due to only those perils listed in the policy. The perils typically covered include fire, windstorm, hail, and other direct physical losses. An all risks policy covers losses that are due to any peril except those specifically excluded in the policy. It is important to note the all risks policy provides broader protection than do named perils policies.

The five types of homeowner packages offered to owners of single family owner occupied homes are HO-1, HO-2, HO-3, HO-3 with HO15 and HO-8.

HO-1 Basic Homeowner
Insures your property against the following 11 basic named perils: fire/lightning, loss of property removed from premises endangered by fire or other perils, windstorm/hail, explosions, riot/civil unrest, aircraft, vehicles, smoke, vandalism/malicious mischief, theft, and breakage of glass constituting a part of the building.

HO-2 Broad Basic Homeowner
Insures your property against the 11 basic named perils in HO-1 plus 7 additional named perils: falling objects, collapse of roof due to weight of ice or snow or sleet, collapse of building(s) or any part thereof, bursting of steam/hot water system , leaking of plumbing or heating system, freezing of pipes, sudden and accidental damage from artificially generated currents to electrical appliances or devices or fixtures or wiring,

HO-3 Special Extended Homeowner
Provides for comprehensive coverage (all risks) on your home and the 18 (HO-2) broad named perils coverage on your contents. This is the most popular of all homeowner policies.

HO-3 with HO-15 Comprehensive Homeowner (all risks)
Covers your home and personal property for everything that is not specifically excluded. This policy usually provides the broadest all risks coverage available, but is not offered by all insurance companies.

HO-8 Modified Homeowner
Covers homes that have suffered extensive depreciation. Historical or architectural features may make the home more expensive than its market cost. This coverage is more restrictive much like HO-1 but is geared towards older homes.

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Individual California Health Insurance
Capitation
A method of paying medical providers through a pre-paid, flat monthly fee for each covered person. The payment is independent of the number of services received or the costs incurred by a provider in furnishing those services.

COBRA
The Consolidated Omnibus Budget Reconciliation Act 1985, commonly known as COBRA, requires group health plans with 20 or more employees to offer continued health coverage for you and your dependents for 18 months after you leave your job. Longer durations of continuance are available under certain circumstances. If you opt to continue coverage, you must pay the entire premium, plus a two percent administration charge.

Coinsurance
The amount you are required to pay for medical care in fee-for-service plan or preferred provider organization (PPO) after you have met your deductible. The coinsurance rate is usually expressed as a percentage of billed charges. For example, if the insurance company pays 80 percent of the claim, you pay 20 percent.

Co-payment
A cost sharing arrangement in which a person pays a specific charge for a specific medical service -- say $10 for an office visit or $5 for a prescription.

Deductible
The amount of money you must pay upfront each year to cover your medical care expenses before your insurance policy starts paying.

Exclusions
Specific conditions or circumstances for which the policy will not provide benefits.

Fee-for-Service
A payment system for health care where the provider is paid for each service rendered.

Health Maintenance Organization (HMO)
Prepaid health plans in which you pay a monthly premium and the HMO covers your doctor's visits, hospital stays, emergency care, surgery, preventive care, checkups, lab tests, X-rays, and therapy. You must choose a primary care physician who coordinates all of your care and makes referrals to any specialists you might need. In an HMO, you must use the doctors, hospitals and clinics that participate in your plan's network.

Health Savings Accounts (HSA)
An HSA works like an IRA, except that money is used to pay health care costs. Participants enroll in a relatively inexpensive high deductible insurance plan. Then, a tax-deductible savings account may be opened to cover current and future medical expenses. The money deposited, as well as the earnings, is tax-deferred. The money can then be withdrawn to cover qualified medical expenses tax-free. Unused balances roll over from year to year.

Lifetime Limit
A cap on the benefits paid under a policy. Many policies have a lifetime limit of $1 million, which means that the insurer agrees to cover up to $1 million in covered services over the life of the policy.

Managed Care
An organized way to manage costs, use, and quality of the health care system. The major types of managed care plans are health maintenance organizations (HMOs), point-of-service (POS) plans and preferred provider organizations (PPO).

Medicaid
A joint federal-state health insurance program that is run by the states and covers certain low-income people (especially children and pregnant women), and disabled people.

Medicare
The federally sponsored health insurance program of hospital and medical insurance primarily for people age 65 and over.

Out-of-Pocket Maximum
The most money you will be required to pay in a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.

Point-of-Service (POS) Plan
A type of managed care plan combining features of health maintenance organizations (HMOs) and preferred provider organizations (PPOs), in which individuals decide whether to go to a network provider and pay a flat dollar copayment (say $10 for a doctor's visit), or to an out-of-network provider and pay a deductible and/or coinsurance charge.

Portability
The ability for an individual to transfer from one health insurer to another health insurer with regard to pre-existing conditions or other risk factors.

Pre-authorization
A cost containment feature of many group medical policies whereby the insured must contact the insurer prior to a hospitalization or surgery and receive authorization for the service.

Pre-existing Condition
A health problem that existed before the date your insurance became effective. Many insurance plans will not cover preexisting conditions. Some will cover them only after a waiting period.

Preferred Provider Organization (PPO)
A network of health care providers with which a health insurer has negotiated contracts for its insured population to receive health services at discounted costs. Health care decisions generally remain with the patient as he she selects providers and determines his or her own need for services. Patients have financial incentives to select providers within the PPO network.

Premium
The amount you or your employer pays in exchange for insurance coverage.

Primary Care Physician
Under a health maintenance organization (HMO) or point-of-service (POS) plan, usually your first contact for health care. This is often a family physician, internist, or pediatrician. A primary care physician monitors your health, treats most health problems, and refers you to specialists if necessary.

Provider
Any person (doctor or nurse) or institution (hospital, clinic, or laboratory) that provides medical care.

Third-Party Payer
Any payer of health care services other than you. This can be an insurance company, an HMO, a PPO, or the federal government.

Usual and Customary Charge
The amount a health plan will recognize for payment for a particular medical procedure. It is typically based on what is considered "reasonable" for that procedure in your service area.

Utilization Review
A cost control mechanism by which the appropriateness, necessity, and quality of health care services are monitored by both insurers and employers.

California Truck Insurance