Shopping for Insurance

Like many things in life, some word of mouth can help you cut through the barrage of insurance advertising and get to some real-life experience that family and friends have had with their insurance agencies.

1. Ask trusted family members, friends, and co-workers.

2. Read reviews. Never go with the cute funny ads because they have just a few seconds to tell you what is covered and these decisions require more research.

3. At a minimum, you should compare coverage and quotes from five different companies.

In general, look for the things that are most important to you and your family with coverage. You may have to pay more for exactly what you need and want to feel insured, but the time spent to compare can give you the desired coverage and reap some savings too.

Shopping Tips

1. Fix your credit before you shop. Insurance companies run credit checks to help determine the price of your policy. It’s a good idea to look at your credit report and fix anything that you can before getting insurance quotes. Often the higher your credit score is the lower the rates will be.

2. Bundle your plans. Purchasing two or more different insurance policies from the same company is known as bundling and that often comes with a discount. Some insurers will offer this discount, but if you don’t see it listed on the quote, ask why not.

3. Buy for your needs. The higher the deductible the lower the premium. But you need to make sure that if an accident happens you can afford to pay the deductible. Research to know what your needs are and get professional advice before buying. Higher deductibles and dropping uninsured motorists will lower your rates but might not be the best way to reduce cost but you do want to eliminate the coverage you do not need. Purchase riders for additional coverages that protect your liabilities and your assets.

4. Check the insurance company’s ratings. Protecting you is something that you depend on your insurance company to do without question. For reassurance, check the insurance company’s rating with Weiss RatingsStandard & Poor’sFitch Ratings, and Demotech, Inc.

5. Use an agent. When you are buying insurance for the first time, it is wise to use an agent. Shopping online for coverage can be done, however, the internet can also be a world of deception. What’s the best course of action? Start by asking around and getting recommendations from trusted family members and friends for agents. If you don’t like the agent, you can always find a new one!

6. Re-evaluate your coverage after significant life events. If you get married, have a baby, or buy a house, you might need more life insurance. It’s a good practice to audit your insurance coverage annually to make sure you have the coverage you need.

Closing

Our goal with this guide has been to provide you with a broad overview of insurance basics. Insurance policies cover you when accidents, health issues or death happens. Your policies can give you peace that your finances and legal burdens will be protected, especially when you have the knowledge to understand the terminology. As a next step, please explore our glossary or refer back to specific sections.

Actual Cash Value (ACV) – The amount of money an insurer will pay in the event of a loss, replacement, or repair.

Annual Maximum  – The most money a dental plan pays for dental care under the terms of your policy within a 12-month benefit period. Any amount over the annual maximum is paid by the insured.

Beneficiary – Any person(s) receiving benefits provided by an insurance policy.

Bundling – Purchasing two or more insurance policies with the same company for a price discount.

Claim – A request for insurance company compensation as part of policy coverage for a covered loss.

Collision Coverage  – Insurance to repair or replace a vehicle damaged in a collision, regardless of who is at fault.

Comprehensive Coverage – Insurance protection for vehicle damages that occur in an event other than a collision. Including theft, natural disasters, vandalism, and most things not covered by collision coverage.

Co-payment – A fixed amount of payment made by a beneficiary (especially for health services) in addition to that made by an insurer.

Coverage – The protection against financial loss provided by an insurance contract for policy specific inclusions.

Deductible – A set amount of money required by you to pay towards care, damages, replacement, or repair costs before your insurance coverage kicks in to cover additional or remaining costs.

Dental health maintenance organization (DHMO) – A structured type of dental plan with provider approved dentists and services negotiated to offer reduced prices to the policyholder.

Dental indemnity plan – A dental insurance plan offering the policyholder a more personal selection of dentists and services, with insurance also paying more of the costs. This plan typically has the highest premiums.

Dental preferred provider organization (DPPO) – A dental insurance plan allowing policyholders to work with dentists that are in or out of the plan’s network, with out-of-network providers costing the policyholder more for services.

Depreciation – A decrease in the value of property (e.g., house, car, roof, water heater, etc.) due to wear and tear or becoming obsolete.

Elimination period – The time period between an injury and the receipt of benefit coverage or payments.

HMO: Health Maintenance Organization – Health Maintenance Organization (HMO). A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO.

In-network  – Refers to healthcare service providers whose services are contracted with your insurance company, and services are less expensive than out-of-network providers.

Insurance Rider – A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy. For an additional cost, riders provide insured parties with options such as additional coverage, or they may even restrict or limit coverage. A rider is also referred to as an insurance endorsement. It can be added to policies that cover life, homes, autos, and rental units.

Lapse – The portion of uninsured time between policies caused by the termination of a policy for non-payment or other unmet contractual requirements.

Liability Coverage – A basic level of vehicle insurance where a minimum amount of coverage is required by law.  Often set by each state individually and can vary widely.

Loss – The injury or damage sustained by the insured that the insurance company agrees to cover.

Market Value – The estimation of how much your property is worth if sold today.

Negligence – A lack of reasonable care exercised by a person/party in a given situation.

No-Fault Insurance – A type of car insurance for covering the costs of medical, hospital, and funeral expenses that result from a car accident —regardless of who is at fault.  Also called Personal Injury Protection (PIP) Insurance.

Out-of-network – Refers to healthcare service providers who do not have negotiated rates with an insurance company, with services often costing more than in-network providers.

Personal Injury Protection (PIP) Insurance – See No-Fault Insurance.

Policy – A formal contract of insurance consisting of terms, conditions, and coverage specifics.

Policy Length – Or policy duration is the length of time during which an insurance policy remains valid—ranging from months to years depending on insurance type.

Policy Owner – Person or party named in the policy, having the authority to make policy changes.

PPO: Preferred Provider Organization – A healthcare provider who has a contract with your insurance company to provide services to you at a discount.

Premium – The amount of money an insurance company charges for providing coverage.

Reinstatement – The reactivation of a policy after a lapse in coverage.

Replacement Cost Value (RCV) – Coverage paying for the replacement or repair costs to restore damaged property to pre-damaged condition.

Term – The length of time for policy coverage. Also, see policy length.

Total Loss/Totaled – Property damage determined by the insurance provider to be destroyed or exceeds the cost of repair.

Underinsured Motorist Coverage – Coverage for bodily injury or property losses caused by a motorist with coverage insufficient in covering the full amount of damage costs.

Uninsured Motorist Coverage – Similar to underinsured coverage, uninsured coverage can help pay for damages when an at-fault driver uninsured, so instead of their policy covering the costs, your policy would.

Waiting Period – A period of time an insured must wait before some or all of coverage is available. The insured may not receive benefits for claims filed during the waiting period.