Insurance involves more vocabulary terms than all the grade school science classes combined. It can be overwhelming for those new to purchasing insurance and non-native English speakers. We want to offer easy definitions for the most common terms and policies used in insurance. Below, we break down terms and policies into four separate categories to better explain the place of their overall use. These categories are very broad and include many insurance options.
The four categories we use are personal, business, specialty, and benefits.
Personal insurance includes coverage options for things like your home, automobile, and apartment. This category includes options such as flood insurance and motorcycle insurance. Check out the full variety of insurance options included in personal coverage here. The coverage options that make up personal insurance are some of the most important types of coverage a person will purchase in their life.
Home insurance, or homeowners insurance, is not required by law in the state of Illinois, or any state for that matter. But that does not mean you should skip out on it. Homeowners insurance policies, like other kinds of policies, give you security in the event there is damage to your home.
Did you know most policies use the term perils to describe losses and damage?
However, home policies do not automatically cover homeowners for every type of loss they may suffer. It is important for your policy to specify the areas coverage that are most important for you. Homeowners should research how damage prone their home is to determine the level of coverage they need. For example, if your home is located in a flood prone area due to the sloping of the surrounding land you should consider adding flood coverage to your home insurance policy. The Federal Emergency Management Agency has a great resource available to help homeowners determine their homes flood risk.
Auto insurance legal requirements vary by state, however, all states but one requires at least liability coverage. Nerdwallet.com has a great listing of the minimum insurance requirements by state for every state. When Illinoisans purchase an auto insurance policy in Illinois they will have the minimum amount of insurance coverage required by law. But that does not mean that their insurance policy is adequate to fulfill their specific needs. Policies that give minimum coverage only cover the damage and injuries done to the other vehicle and driver in the event of a crash. If you have a car that is worth a significant amount of money you may want to consider more extensive coverage options.
Did you know that car theft in Chicago more than doubled from 2019 to 2020, rising to 1,125 vehicles stolen?
Some insurance policies can even cover you in the event that your car is stolen. Unfortunately, vehicle theft is a concern for those who spend time in the great city of Chicago. Whether living in the Windy City or commuting there for work, it is a good idea to consider a policy that includes auto theft coverage.
No, it does not protect you from getting wet in the rain. Umbrella insurance is an extra layer of protection for your home or auto policy that deals specifically with liability. Liability refers to what you will have to pay if you are considered responsible for the damage or injury to another person, just like liability coverage for auto policies covers you for the damage and injury to the other driver. Umbrella insurance covers liability costs that go beyond the terms of your base policy.
For example, say you cause an automobile accident that results in $35,000 in damage. But you only have the minimum liability coverage required by law. In Illinois, minimum liability will cover $25,000. If you have umbrella insurance the remaining $10,000 will be covered by the policy. Without umbrella insurance, the remaining $10,000 will be your responsibility to pay.
Did you know some umbrella insurance policies can cover you for liability costs beyond $1,000,000 for only a few hundred dollars a year?
Oftentimes, these policies wait in dormant for unforeseen accidents that lead to extraordinary high injury costs and typically lawsuits. Because of this low risk to use the policy, premiums for umbrella polices tend to be more affordable than you may think. Similar to life insurance umbrella coverage can cost you less then a daily cup of coffee. This type of coverage is especially relevant for high-net worth individuals who are a common target for lawsuits.
Getting the Most Out of Your Personal Insurance
Make sure you know the most common terms you will encounter when purchasing and utilizing your insurance policies. Knowing these terms will help you understand what you need most out of your insurance coverage.
There are many different insurance policies and additional coverage options available. At Konen Insurance, we are here to help you get the most out of your coverage. With custom policy recommendations we ensure your coverage is specific to your needs. Have questions about your coverage? Contact us and we can help.