Health Insurance 101

Overview

In the United States, national health care spending has increased at a rapid trajectory. This is due in part to the argument that people are living longer but are experiencing declining health. In fact, the consumption of more medical services has contributed to the rising costs.

According to 2010 Census Bureau statistics, there are many more uninsured people delaying medical services than the insured. In 2010, the uninsured visited a medical provider significantly less than in 2001. See Note 1. The uninsured essentially costs the health care system more money than the insured and are far less likely to forgo choosing adequate medical coverage even when government-based options are available.

What is Health Insurance?

In general, insurance falls under the category of risk management, which is defined as a process of identifying, assessing, and prioritizing risks. Insurance is the transfer of risk of loss between two or more parties in exchange for consideration, or payment. Insurance risk managers use the process of risk management to coordinate the application of resources that help to minimize and control the probability of future events.

To be sure, health insurance is a type of insurance used to hedge against the risk of incurring (and/or incurred) medical expenses. Insurers develop a finance structure to allot funding for health care benefits referenced within the insurance agreement, or contract that provides details regarding financial compensation for covered benefits. The contract may be renewable annually or monthly and/or lifelong depending upon the policy.

The insurance carrier is the company selling insurance and the insurer of one entity in exchange for the monthly premium. The insured may be a person or organization purchasing an insurance policy; the insured is also defined in contract terms as the policyholder. Within this context, the insurer indemnifies the insured in case of a medical personal loss.

The type of health care costs the insurance carrier covers is typically outlined in writing. Individuals and companies communicate officially with insurance companies through their respective policies and agree to adhere to the provisions of the member contract, or “Evidence of Coverage” handbook.

The provision of insurance coverage is sponsored by an employer’s self-funded ERISA plan. The acronym ERISA stands for Employee Retirement Income Security Act, which is a federal law enacted in 1974. According to the Department of Labor, ERISA establishes minimum standards for private company pension plans in the United States. Visit DOL.gov for more information on ERISA plans. See also the reference section of this article for the exact link to the ERISA section on the agency’s website.

To be sure, ERISA does not require a company to create a pension plan; however, it does set guidelines for companies that establish plans. In addition, as a statute, ERISA does not require companies to specify the amount of money to be paid as a benefit, but requires companies to provide information to employees about the plan in terms of features, funding, participation requirements, vesting, and the accrual of benefits. Within this context, plan participants may sue for benefits and on the grounds of breach of fiduciary duty.

The provision of health care has been subject to debate within the last decade, with the 2008 financial crisis serving as the major catalyst for 2010 reforms. With this in mind, the Affordable Care Act, signed by President Obama on March 23, 2010, establishes “comprehensive health insurance reforms” that are set to roll out over the next four years (HealthCare.gov). Consumers can expect a new patient bill of rights (2010); free preventative services for Medicare (2011); the reduction of paperwork and administrative costs (2012); the improvement of preventative health coverage (2013); and the elimination of annual limits on insurance coverage (2014). The law aims to help make (health) care more affordable(HealthCare.gov).

This is an overview of health insurance as a concept. There are different types of health insurance programming offered by companies and through government-based benefits. Let’s review them.

Categories of Health Insurance

HMO
An HMO, or health maintenance organization, is a type of private-entity, employer-based plan that functions as a liaison between health care providers (i.e., hospitals, doctors, etc.) and health care plan participants, or policyholders. The HMO provides managed care on a prepaid basis and typically covers emergency care. A company’s HMO plan programming is subject to the guidelines of the Health Maintenance Organization Act of 1973, which requires employers to offer HMO options in addition to traditional health care options. Doctors and professionals agree by contract to provide health care under specific guidelines.

An HMO member must select a primary care physician (PCP). Through the PCP the HMO plan member receives access to medical services. A PCP may be an internist, pediatrician, general practitioner (GP), or a family doctor. Patients typically need a referral from a PCP to see a specialist or other type of doctor who is not a primary care physician. The only exception to this rule is when a patient visits the emergency room or when the HMO guidelines restrict this option.

An HMO typically covers preventative care, immunizations, well-baby checkups, mammograms, and physicals. Outpatient services are limited by the type; and experimental treatments are typically not covered if they are not medically necessary. Experimental treatments include plastic surgery and other elective services.

PPO
A PPO is also a private-entity, managed care organization. A PPO, or preferred provider organization, consists of medical doctors, health care providers, and hospitals. A PPO provider serves as a liaison between the insurer or third-party administrator and a plan participant. A PPO participant receives health care at a reduced rate.

With this in mind, the PPO arranges for subscription-based medical services for members, allowing for a discount below standard charged rates by designated professionals. A preferred provider earns revenue by charging the insurance company an access fee—negotiating with multiple providers regarding fee schedules, disputes, and the formation of new relationships.

A PPO charges a slightly higher premium to the plan participant than HMOs. This type of plan is typically more flexible and less restrictive than a standard HMO.

FSA
A flexible spending account (FSA) is a type of financial account that offers tax advantages. An FSA is considered under the guidelines of Section 125 of the Internal Revenue Code to be a “cafeteria plan,” which is defined as an employee benefit plan that allows employees to choose from different types of benefits. This process is similar to a consumer choosing from a menu of available food items in a standard cafeteria.

The FSA plan is established through an employer where one or more employees create a goal to save a portion of their earnings for the purpose of meeting qualified expenses. Qualified expenses relate to medical, dependent care, and other types that fall under the guidelines. These include “accident and health benefits, adoption assistance, dependent care assistance, and group term-life insurance coverage” (IRS.gov).

Money is deducted from an employee’s pay and is put into a flexible spending account; under these conditions, deductions are not subject to payroll taxes. There is a drawback to choosing an FSA. An employee must use the funds by the end of the plan year or run the risk of losing all of the money deposited into the account. This is known as the “use or lose it rule” under the flexible spending account plan.

Employees typically use an FSA for medical expenses or to meet related health care costs. This is why an FSA is often referred to as a “medical expense FSA” or a “health FSA” because it is similar to a health savings account (HSA) or a health reimbursement account (HRA). However, an HSA is unlike an FSA, because with the former, funds are not lost to the employee at the end of the plan year.

Medicaid
Medicaid is a United States government-based health care program designed for individuals and families with low incomes. The program is jointly-funded by federal and multiple state governments, but is significantly managed by each participating state. A program participant of Medicaid must be a U.S. citizen or a legal permanent resident; must demonstrate proof of income below certain guidelines; and must provide evidence of disability if using this as a factor to meet eligibility requirements.

As a Medicaid managed care program, the features of a state-based Medicaid plan include enrollment in a private health plan; the plan receives a monthly premium on the program participant’s behalf from the state. The health plan then provides health care to the recipient.

Since Medicaid is primarily managed as a state-based program, some states operate the program under HIPP, or the Health Insurance Premium Payment Program, where Medicaid recipients receive private health insurance.

The Medicaid plan is offered through the Social Security program and includes dental services benefits. Dental benefits are optional for adults over the age of 21; but individuals under this age are typically eligible, by default, to receive these services. Minimum dental services include pain relief and restoration of teeth. Early and mandatory screening is a required benefit under the Medicaid program.

Medicare
Medicare is a U.S. government-based national social insurance program created initially in 1965. The purpose of the Medicare program is to guarantee individual Americans over the age of 65 and younger people with disabilities access to health insurance.

The Medicare program allocates financial risk differently from private, for-profit insurers. The purpose of a private insurer in terms of risk allocation is to adjust pricing according to the insurer’s perception of risk. However, with a social insurance program, risk is allocated across a society for the purpose of protecting everyone that lives in that society. In essence, the social role objectives are different for each insurer.

Medicare defines its coverage in four parts. For example, Part A covers hospital care. Part B covers outpatient medical services. With Part C, the federal government assumes the risk for private health coverage, submitting payments to the health care provider. Lastly, Part D covers outpatient prescription drugs.

According to Kaiser Family Foundation statistics, “Medicare provided health insurance to 48 million Americans” where Medicare covered approximately 48% of the cost and individuals aged 65 and older were expected to cover the remaining costs (Kaiser Slides). These out-of-pocket costs vary and are based upon the type of health care the Medicare enrollee needs. Out-of-pocket expenses may fall under “services” or “premiums.”

For More Information

To view Fact Sheet: Health Insurance Coverage of Women Ages 18 to 64, by State, 2010-2011, click here.

To view Issue Brief: Medicaid’s Role for Women Across the Lifespan: Current Issues and the Impact of the Affordable Care Act, click here.

To view Men’s Health statistics by the Centers for Disease Control and Prevention, click here.

References

Census.gov: Health Status, Health Insurance, and Medical Services Utilization: 2010

United States Department of Labor: ERISA

HealthCare.gov Insurance Basics

HealthCare.gov: Key Features of the Affordable Care Act, By Year

IRS: FAQs for government entities regarding Cafeteria Plans

Medicaid.gov

Centers for Medicare and Medicaid Services: Medicare and Medicaid Statistical Supplement, 2012 Edition

Kaiser Family Foundation (KFF.org): Sources of Payment for Medicare Fee-for-Service Beneficiaries’ Health Care Spending, 2006

Notes

1 The U.S. Census Bureau’s statistics suggest that “[y]early medical provider visits among the uninsured aged 18 to 64 declined from 28.4 percent in 2001 to 24.1 percent in 2010” (http://www.census.gov/prod/2012pubs/p70-133.pdf).

Basic Guide For Important Life Insurance Choices

Individuals work hard to accumulate property and develop a comfortable lifestyle that must be protected through appropriate life insurance coverage. Discussions about the potential loss of a primary wage earner are uncomfortable. These difficult talks will enable the life insurance shopper to find the right types of life insurance for each life phase. Preparation will prevent financial hardship for survivors. The life insurance shopper should spend sufficient time making key decisions that could determine how well the family, or business, survives the loss of an important person. Neglecting this important series of decisions could cause unimaginable financial difficulties for those who are left behind.

Who Needs Life Insurance

Anyone who has responsibility for providing monetary support, or supportive care, for others must consider the long-term effects of the loss of that person. Postponing the decision can be devastating for dependents if the unthinkable happens prematurely. Lack of life insurance coverage can cause the death of life-long dreams for anyone associated with the provider.

• Wage earners – In a family, one or more persons will provide a steady income that pays monthly bills, provides housing and transportation and builds a foundation for the fulfillment of future dreams. Loss of income places the family at risk of losing the financial security provided through the individual’s work income. Two wage earners will require separate life insurance policies to compensate for the loss of income if either earner loses his or her life.

• Homemakers – The mother, or father, who stays home to raise children provides care throughout the work hours when the wage earner is away from home. The loss of the life of a homemaker will require that the wage earner pay someone to care for the children. Additional childcare expense can cause financial hardship without sufficient life insurance coverage on the homemaker. Home chores must be performed with assistance from someone, and sufficient funds can make this affordable.

• Business owners – Only 20 percent of all businesses will survive the loss of an owner, or principal. Even with a succession plan, most businesses do not have sufficient funds to pay for the legal services required to make the transition. All leaders of a company must be insured to provide sufficient working capital for the company until proper replacement personnel can be hired.

• Caregivers – Aging parents require ongoing care that could be disrupted if the caregiver passes away unexpectedly. Sufficient life insurance coverage would allow the family to hire professional assistance for an elder, or a special needs child.

Which Type of Life Insurance

All life insurance products have definite advantages that should be considered prior to purchasing a life insurance policy. Age, lifestyle, financial goals and family composition are important factors when selecting the appropriate life insurance product. Every life insurance company offers specific insurance products that offer advantages to the insured person. Comparison between the types can be performed when the face value, term length and features are evaluated.

• Whole life – This two-part life insurance product separates the investment component from the life insurance component. The monthly premium will include additional funds that are invested to build the cash value in the policy. Each whole life insurance product has different rules that dictate the policyholder’s options.

• Term life – As the least expensive life insurance option, the term life insurance policy pays a pre-agreed death benefit amount to the beneficiary in the event of the insured person’s death. A set premium amount is paid throughout the policy term. At the end of the term, the policyholder has the option to renew the coverage at a new annual premium rate. The age of the policyholder is the primary factor in the calculation of the annual premium.

• Annuity – Certain annuity products offer a death benefit, which is paid to the beneficiary upon the death of the policyholder. A lump sum, or series of payments, is deposited into the annuity. At the agreed point in time, the insurance company will begin to issue checks for the amount of money stated in the policy documentation. Many different annuity products have been developed as investment tools.

How to Devise a Life Insurance Strategy

Life insurance decisions seem overwhelming because of the number of years that the policy will be in force. A life insurance strategy should include sufficient insurance for each phase of life. The policyholder can make changes to the coverage at any point in time. Some important points must be considered in the quest to purchase sufficient life insurance for various points in life.

• One large policy will be more expensive than multiple smaller life insurance policies. One-million dollar life insurance policies are expensive because one insurer will be required to make a large payment if the insured dies. The cost of insurance can be reduced through smaller policies with multiple insurance companies.
• Multiple term insurance policies can overlap during the years when the children will be in college and the house has a mortgage. These years are critical for the financial security of the entire family. One term policy that spans 20 years for $100,000 can be combined with a 10 year, $250,000 policy that will expire at the end of the college years. This combination is less expensive than a 20 year, $350,000 policy.
• Business owners must consider the life insurance benefit for his family and a separate benefit for the company. The business should pay the annual premium for each owner and principal while the business is the beneficiary on the policy.
• A life insurance policy can be purchased to repay the mortgage and ensure that the family has a place to live as the children continue to grow if the wage earner passes away.

Cost of Life Insurance

The life insurance shopper must remember that annual premiums are not the only consideration in the quest to acquire sufficient life insurance coverage for each phase of life. Annuity policies offer security and a steady income stream, but the cash is no longer available to the policyholder without surrender charges. Whole life policies will be more expensive because of the cash value. Every potential insurance customer must understand the nuances of each type of insurance to avoid surprises.

Insurance companies are required to provide written policy documentation during the underwriting process. Most states have enacted legislation that will ensure the documents are not packed with legal-ease. The policyholder should ask questions about the information in the pages of documentation because the terms of the policy are legally binding. The insurance company will write exclusions into the policy, which the buyer must review.

Final Decision

Multiple discussions about life insurance needs will allow the life insurance shopper to learn the important points about each type of life insurance. Many people choose to begin with a term life insurance policy because this type of insurance is inexpensive and easy to acquire. More complex types of insurance will offer benefits over the long-term. Multiple types of insurance in the insurance portfolio will be economical and flexible as each life stage passes. Older people will not need as much insurance as a middle-aged wage earner with children headed for college. Family and business needs require careful consideration because of the reliance on important people. Risk of loss is mitigated through proper management of the life insurance coverage.

Home Owners Insurance 100

Home owners insurance is highly recommended for homeowners and renters today. Natural disasters and human-initiated damage can lead to costly repairs and replacements. In addition, a guest who might accidentally trip while inside the property and add to the homeowner’s financial burden if a lawsuit occurs. With homeowner’s insurance, all of this is covered.

In the U.S., every state has its own department that deals with consumer needs including home owners insurance. In the state of New York, the Department of Financial Services helps consumers understand the nature of homeowner’s insurance. In Oregon, the state’s insurance division outlines the requirements for homeowners insurance in the state. It is paramount to know the basics so that consumers are able to choose the most suitable policy for their situation.

According to the NAIC, there are two major reasons why buying homeowners insurance is a good decision. One is to protect assets, and the other is to satisfy mortgage lenders. Generally, mortgage lenders require borrowers to keep homeowners insurance while they have pending loans. There is no chance homeowners can escape from this because the lender will end up buying the insurance on their behalf. This means higher premiums and limited coverage.

Homeowners Insurance Coverage

Homeowners’ insurance policy coverage can be very tricky. Many consumers get confused about what their policy covers and what it does not. Basically, the insurance policy only covers the reason behind the loss or damage that has been stated in the policy. A person whose home was damaged and becomes unlivable due to an earthquake may only be able to file a claim if the policy covers earthquake-related damage. This means homeowners will never be compensated if this is not included in their policy.

The following are the main types of homeowners insurance policy coverage:

• Dwelling

This insurance coverage pays for all damages to the house and any structures attached to it. It may cover damage to fixtures like electrical wiring, plumbing, permanently installed air conditioning and heating systems.

• Personal Property

The homeowners or renters insurance policy will pay for the value of belongings including clothing, furniture, appliances and electronics that were lost or damaged even if they are not inside the property such as things in storage facilities.

• Loss of Use

While the property is under repair, the homeowner gets payment for additional living expenses from the insurance provider.

• Medical Payments

Medical coverage pays for hospital bills incurred for guests who get hurt while at the property.

• Other Structures

Damage to structures that are not attached to the main property can also be covered in homeowner’s insurance. This includes tool sheds, fences, guest cottages and freestanding garages.

Types of Homeowners Insurance Policies

1. Homeowners-1

The homeowners’ basic policy or HO-1 covers the following things that are also offered in HO-3 along with the other perils.

• Personal property at home or away
• Medical payments
• Civil judgments
• Damage to others’ property
• Bodily injury
• Vandalism and malicious mischief
• Riot and civil commotion
• Aircraft or vehicle damage
• Glass breakage
• Explosion
• Theft and burglary
• Windstorm and hail
• Fire, smoke and lightning damage

2. Homeowners-2

HO-2 or broad form policies protect the property against the perils included in HO-1 and the following.

• Water heaters and heating system rupture
• Electrical damage to appliances
• Plumbing system freezing
• Water from plumbing systems
• Weight of snow or ice
• Falling objects
3. Homeowners-3

HO-3 is the special form policy that covers almost all risks of physical loss except for floods, nuclear accidents, war and earthquakes.

4. Homeowners-4 and Homeowners-6

HO-4 or tenants policies or contents broad form and HO-6 or unit owners policies pay for damages to the apartment’s contents, condominium or cooperative units and personal liability.

5. Homeowners-5

HO-5 or comprehensive form policies pay for damages and losses due to the same perils covered in HO-3. In addition, it covers all risks of physical loss. All of this coverage can also be obtained when purchasing a HO-3 policy that comes with the Special Personal Property endorsement.

6. Homeowners-8

HO-1 is simply the modified version of HO-1. It is also referred to as the market value policy. This policy pays for the actual cash value in lieu of the building’s replacement cost coverage.

The Coverage Limits

Generally, consumers can choose how much coverage they want when they first get their homeowners insurance. It is important to keep the coverage cost equal to the total home cost replacement. Also, consumers have to make it a habit to check their dwelling coverage to ensure that the policy’s value does not drop below the home’s replacement cost. The insurance company may reduce the amount of the claim when the cost goes below 80 percent of the full home replacement cost.

Typically, the personal liability and medical payments depend on the consumer’s choice. Meanwhile, the other structures’ limit of coverage is 10 percent of the dwelling coverage. Personal property coverage should be 50 percent of the dwelling coverage and loss of use of at least 20 percent of dwelling coverage.

Deductibles

Like the other types of insurance policies, homeowners insurance policy holders who opt for higher deductibles will also enjoy lower premiums. Depending on the property’s location, there are catastrophic deductibles that can also help consumers lower their premiums.

Optional Coverage

Most homeowners insurance policies do not offer protection against floods. Fortunately, the U.S. government created the National Flood Insurance Program that offers this coverage at a lower cost. Any properties located in communities that participate in the NFIP program can take advantage of this flood insurance coverage. Many federally-regulated mortgage lenders require this for consumers who have existing loans for properties located in high risk flood zones. Although not mandatory, the federal government also recommends flood insurance policies for those who have properties located in moderate risk flood areas.

Another kind of optional policy is guaranteed replacement cost coverage. This coverage pays consumers the complete amount to rebuild their homes. Alternatively, they can go for the personal property replacement cost endorsement that will fully replace their personal property.

There is also another option called the inflation guard endorsement. This type of coverage ensures an increase in the dwelling’s coverage limit on a yearly basis in relation to inflation.

Consumers can also opt for ordinance or law endorsement coverage that will pay for extra amounts needed to rebuild the home. However, this is only applicable for homes built in accordance with new building codes and related laws or ordinances that were not implemented at the time when the home was first built.

There is also another option called the scheduled personal property endorsement to cover the stamps, jewelry, fur, antiques, computers, guns and other items. It is also referred to as the personal article floater. In addition to these choices is the personal umbrella liability insurance that boosts liability coverage above the maximum amount covered in the policy. All of this coverage need to be purchased separately on top of the basic homeowners or renters insurance policy.

Sources:

New York Department of Financial Services
http://www.dfs.ny.gov/insurance/hmonindx.htm

NAIC
http://naic.org/

Renters Insurance: A Guide To The Basics

For one reason or another, many of today’s renters feel that they have nothing of value and that they simply don’t need any kind of liability coverage when moving into a new apartment or rental home. Instead of purchasing this kind of insurance coverage, they’ll simply leave all of their possessions subject to chance, assuming that they can affordably replace everything in their home even during the worst case scenario. Other renters actually believe that a landlord’s insurance products will cover the repair or replacement of their belongings in the event of a major disaster that ruins them. This, too, is a misguided view.

In both cases, renters who decline to purchase insurance coverage for their personal belongings are doing themselves a great disservice. Renter’s insurance coverage is exceedingly affordable, very robust in terms of the coverage it provides, and easy to buy from any number of major insurance companies. For those renters who do decide to take the plunge an secure liability coverage, as all renters should, there are some pretty basic guidelines to be aware of when purchasing this type of coverage.

Renters Insurance: What it is and Why it Matters So Much

Those consumes who are currently renting a home or an apartment in a complex need to understand one key thing about their living situation: Any personal items located in that dwelling are simply not covered by any other liability coverage that has been taken out on the structure. Even if a private landlord owns the complex, a renter’s possessions are not covered under any type of homeowner’s insurance. If the apartment is part of a complex, even the company’s business insurance will not cover those personal items. In the event of a disaster, they will be completely lost and irreplaceable unless renter’s insurance is secured.

Renter’s insurance products are available to cover virtually everything owned by a renter, no matter the type of rental they currently pay for each month. Policies vary in price according to coverage amounts and deductibles, but they provide the total coverage of things like electronics and computers, clothing, precious documents, and even the furnishings that make the apartment into a home. These policies are very affordable for renters because they specifically do not cover damage to the actual dwelling. Their focus is solely on possessions, lessening the financial burden on major insurance companies.

How to Buy: The Process of Getting Proper Renters Insurance Coverage

With the need for renters insurance now clearly explained, most renters might be reconsidering their tough stance against purchasing the product and incurring an additional monthly expense. Before rushing off to secure coverage, though, it’s worth noting how to pursue coverage in the best way possible. Remember that renters insurance, like all liability coverage products, requires things like the right deductible, the right coverage limit, and the right kind of coverage, to be effective when it is needed most. Consumers should follow a few simple steps to make sure they have the policy that works best for their needs.

Step 1: Assess the Value of a Home’s Possessions

As mentioned earlier, many renters are young and feel that they simply don’t have the kind of possessions that amount to a very high dollar value. because they feel that they don’t really own anything of value, they’re reluctant to purchase these policies. These same feelings can cause many renters to actually undervalue the scope of the insurance policy that they need to buy. They’ll often pick a coverage level that won’t adequately cover the repair and replacement of all of their possessions in the event of an emergency.

Before securing a renters insurance policy, take inventory of a home’s possessions. Estimate the value of, quite literally, every single thing in the house. Remember the price of things like dinnerware sets and couches, note the value of laptops, tablets, smartphones, and televisions, and estimate the total value of the household’s clothing and personal items. The total may come as quite a surprise, as it’s likely to be in the tens of thousands of dollars in many cases.

With the rough value of the home’s possessions accounted for, be sure to buy a policy that gives a little margin of error. That means most renters should buy a policy that offers a bit more coverage than they think they actually require.

Step 2: Document Every Possession in the Home

Insurance companies are designed to help customers replace their personal items, but they’re not responsible for replacing things that they simply can’t prove were ever in the home at the time that a major emergency or disaster actually occurred. For this reason, renters should document everything in their home so that they can quickly and efficiently replace it during a worst-case scenario.

Be sure to take pictures of things like a home’s electronics, clothing items, furniture, and anything else that will need to be replaced if the home is severely damaged or even destroyed. This will be the first line of defense and proof when a claim is filed with the insurance company chosen to provide the policy.

Step 3: Research Additional Services Offered by the Coverage

One of the great things about many insurance policies targeted to renters is that they actually offer complimentary liability coverage on other items as well. In many cases, this is borne out by the coverage of luggage during travel, or the coverage of some items in a car during travel that might not be covered by a typical vehicle insurance policy.

These services aren’t really essential to the renter’s insurance policy itself, but they do provide a way for customers to add extra value to their monthly fee and give themselves added peace of mind in a wide variety of life’s most common situations. By understanding the additional coverage offered with the policies, customers can more accurately determine whether or not they’re getting the best deal on liability coverage from their insurance company.

Step 4: Compare Companies and Choose a Policy

Finally, consumers should always engage in a side-by-side comparison of the renter’s insurance policies being offered by major insurance companies. These policies are all similar, but not identical, and their different terms or monthly rates may be a big deal to renters. When looking for a policy, always be sure to compare a few things offered by each major insurance company:

– The amount of coverage offered
– The amount of a deductible that must be reached in order to invoke reimbursement
– The monthly fee
– Additional services
– Any restrictions on coverage or reimbursement / replacement

With a clearer idea of the differences between coverage options, consumers will be able to enjoy a lower rate, better coverage, and more robust additional services, for each dollar they spend on a monthly basis.

The Key: Attention to Detail and Preparation for the Worst

Renters insurance is all about preparing for the worst possible scenario while renting an apartment or a house. Each renter owes it to himself or herself to secure a robust insurance policy that will cover everything they might lose, from their favorite sweaters to their valuable television and computers. With the right coverage, those things and more will be both easy and affordable to replace during an emergency situation.

What Consumers Should Know About Flood Insurance

Many people may not realize the importance of having flood coverage. Others see it as impractical and unnecessary. However, only a few inches of water can cause serious damage to a home or property. When this happens, home and business owners have to spend a lot for restoration and repair. With flood insurance, all these will never be a problem.

According to the National Weather Service, 30-year flood loss averages have already reached $7.82 billion in damages. Flash floods cause the majority of this damage. It is the number one natural disaster in America. Fortunately, the government has established the National Flood insurance Program. The organization provides residents with flood insurance at reasonable rates.

Residential and commercial buildings at high risk areas with pending mortgage loans from lenders or other federally regulated financial providers must have flood insurance. This is because there is a 1 percent or more chance that flooding occurs in these areas every year. This equates to a 26 percent probability of having a flood duringa 30-year mortgage.

Meanwhile, homes and buildings built in moderate to low risk areas with existing mortgages from insured lenders need not purchase flood insurance. Nevertheless, the NFIP still recommends buying a flood insurance policy because homes anywhere in the U.S. are vulnerable to flooding. Consumers in these areas may be eligible for 20 percent of NFIP claims.

The following are the different types of floods that the USGS defines. All these types of floods may be covered with NFIP flood insurance:

• Storm-Surge Floods

Onshore winds usually trigger storm-surge flooding. It pushes water towards dry land. The worst storm-surges occur when they are accompanied by high tides.

• Flash Floods

Flash floods are the fastest occurring type of flood. They can happen in a few seconds to an hour with little or no warning at all. What makes them incredibly dangerous for humans and properties is their velocity and incredibly fast water rise.

• Regional Floods

Regional floods usually happen during spring or winter when the rain pours as the snow melts. With this, the river basin gets full quite fast. The ground is often still frozen, and this means reduced soil infiltration and worsened run off.

• Landslide, Debris and Mudflow Floods

The accumulation of rocks, debris, mud or logs that form temporary dams can cause landslides or debris floods.

• Ice-Jam Floods

Ice-jam floods usually occur in rivers that are either partially or totally frozen.

• Dam and Levee-Failure Floods

Although dams and levees are specially designed to prevent floods, water may rise very high and go over these structures. They may be washed out and form flash floods.

Benefits of Flood Insurance

No matter what type of floods occur, people with flood insurance can be confident that they can get back what they have lost. According to the U.S. Department of Homeland Security Federal Emergency Management Agency, flood insurance has the following benefits.

• With flood insurance, policy holders may be eligible for insurance claims even if the president does not declare it a disaster.

• Even consumers outside Special Food Hazard Areas can file a claim. In fact, the NFIP has paid about 20 to 25 percent of all claims coming from those areas.

• Flood insurance can be renewed. It is continuous.

• There is no need to repay a loan like with some federal disaster relief packages.

• There are agents who can help speed up the claims process. With this, consumers don’t have to worry about dealing with an unlivable property as they can have it repaired right away.

Flood Insurance Coverage

Building Property Coverage
• Insured building including its foundation.
• Detached garages may qualify for up to 10 percent building property coverage. However, areas other than the garage may need to be insured with a separate policy.
• Permanently installed cabinets, bookcases, wallboard, paneling and carpeting over an unfinished floor.
• Built-in appliances like dishwashers and cooking stoves and refrigerators.
• Heating and central air conditioning systems.
• Plumbing and electrical systems.

Personal Property Coverage
• Personal possessions like clothing, electronic equipment and furniture.
• Valuable items like furs and artwork worth a maximum of $2,500
• Food freezers and food items inside
• Clothes dryers and washers
• Carpets that are not included in building property coverage
• Portable dishwashers and microwave ovens
• Curtains

Exceptions
• Self-propelled vehicles and their parts including cars.
• Income loss due to damaged insured property or interruptions in business operations.
• Living expenses
• Any items and property outside the insured building like patios, decks, walks, septic systems, swimming pools, wells, plants and trees.
• Precious metals, currency and valuable documents like stock certificates.
• Avoidable damages such as those caused by mildew, moisture and mold.

Types of Flood Insurance Policies

Properties located in low, moderate or high risk flood zones can be eligible for NFIP flood insurance. However, they should be included in the participating community. The following are the two types of flood insurance policies that consumers may take advantage of.

• Preferred Risk Policy

In order to qualify for PRP, the property should be located in a low to moderate risk flood zone. The applicants’ credit score and driving record will not affect the coverage’s cost.

• Excess Flood Insurance Coverage

Consumers who already have purchased the PRP may realize that the coverage provided does not fully cover their possessions. They may need to purchase more than the maximum coverage of $100,000 for personal property and $250,000 for buildings. Consumers may buy this additional coverage if they think they have to.

Other Important Things to Know

Consumers can only secure flood insurance through an agent. They can never buy it straight from the federal government. They may have to search for insurance agents in the area who are familiar with the NFIP.

Also, consumers must understand that there are some items that the policy may or may not cover. They have to bear in mind that flood insurance policies are only applicable when the damage comes about directly as the result of flooding. Otherwise, they may not be able to qualify for a claim.

Moreover, separate deductibles apply for building and contents. Consumers have different choices when it comes to amounts. Apparently, those who opt for a higher deductible will end up paying lower premiums. Lenders can help determine the maximum deductible amount applicable for each consumer.

The federal government demands that all residential and commercial properties located in high risk flood areas with existing mortgages have flood insurance. On the other hand, the government recommends that property owners located in moderate risk areas get insurance.

This is because NFIP is a federal program that is only made available through leading insurance providers. This means the rates remain the same with all insurance companies or agents. However, there are some factors that may influence the rates. This includes the property location and its date and type of construction. Nevertheless, all policies have ICC Premium and Federal Policy Fees.

In addition, consumers may be eligible for up to a 45 percent discount if they come from communities that participate in the Community Rating System. This is applicable even if they are located in high risk flood areas. Meanwhile, those that come from low to moderate risk areas may get up to a 10 percent discount.

Typically, policy holders have to wait for 30 days after the purchase before the new policy takes effect. However, there are a few exceptions. This includes choosing an additional insurance amount as an option on the renewal bill. Another exception is when the lender finds out that a loan requires flood insurance. Flood insurance also takes effect before the 30-day waiting period when a building has been designated in the SFHA where the policy was purchased within 13 months after the map revision. There is also an exemption when the insurance was purchased for the purpose of making, renewing or extending a loan.

NFIP
http://www.floodsmart.gov/floodsmart/

USGS
http://ks.water.usgs.gov/pubs/fact-sheets/fs.024-00.html

The Risks Of Being Under Insured

Having insurance for your health, vehicle and even for the property you own can help to ease your mind when you are faced with an accident or an unexpected crisis. When you have insurance you may believe that you and your entire family are protected from potential dangers and incidents that may occur. However, holding an insurance policy does not necessarily guarantee that you are fully insured and protected for any type of accident or natural disaster you may face. Understanding the risks of being under insured and the type of insurance you currently have will help you to keep everything you own and your loved ones safe regardless of what you encounter in the future.

Health Insurance Risks

If you do not have proper healthcare insurance for you and your family, you run the risk of being denied the services and treatments you may need without paying for them up front. Be sure to read all health insurance policies you choose to take out for yourself and your loved ones before you relax and begin to rely on the insurance in case of an emergency. Being under insured with health insurance is risky regardless of your age and whether or not you have any medical issues. Having enough health insurance coverage is a way to ensure yo can visit traditional doctor’s offices, specialists and even the emergency room in the hospital without worrying about not being covered or provided the care you need to regain your health.

Property and Vehicle Insurance Risks

When you are under insured with your property or vehicle, there are additional risks that can interfere with your finances and everyday life. If your property is under insured, you run the risk of losing all of your belongings whether you have been the victim of a burglary or if you have struggled with a recent natural disaster. Purchasing flood and natural disaster insurance on top of your homeowner’s insurance can help to guarantee the protection you need regardless of the surrounding circumstances.

Risks of Not Purchasing Travel Insurance

If you are planning on traveling out of the country, purchasing traveler’s insurance is highly recommended. When you are out of the country and you have an accident or come down with an illness, there is a chance that your health insurance provider will not help with covering any medical costs, treatments or medications you need when you are diagnosed in a foreign country. Purchasing travel insurance is a way for you to ensure you are protected regardless of where you are planning to travel around the world.

Losing Your Home and Properties

When you are under insured in any area of your life, you run the risk of losing your personal belongings and even any homes or properties you may have invested in. Insuring your home and properties properly will help you to protect your valuables, furniture, personal belongings and the space you live in even if you are burglarized or if your home is damaged or ruined by weather or another natural disaster. Having the right type of home insurance can also protect from vandalism, arson from others and even house fires whether they are intentional or set by accident.

Handling the Loss of a Pet

Pet insurance and emergency veterinarian insurance for your animals can help to save their lives if they are diagnosed with an illness, disease or if they have recently been involved in an accident which may have caused them physical harm. Because veterinarian costs are expensive for most who may be on a budget, investing in pet insurance for your extended family members will help you to keep your pets around for years to come worry free.

Leaving Bills Behind After a Death

Having a life insurance policy in your name is recommended if you do not want to leave your family with your bills and even funeral costs after you are gone. Reviewing your life insurance policy and all that it will cover in case of an untimely death will help you to feel reassured that you are not putting the burden on your loved ones if this is the case.

Before Settling With the Insurance Plans You Have

Before you settle with the decisions you have made with the insurance policies you have, it is important to read and review each policy you have taken out in depth. Reviewing your insurance policies with a professional insurance agent is also highly recommended and will help you to understand just how much coverage you currently have in different areas of your life based on your policies and the premium you are paying for them.

Sources:
Healthcare.gov: The Basics of Insurance
http://www.healthcare.gov/using-insurance/understanding/basics/index.html

101 Ways To Save On Insurance

Insurance helps you deal with disaster, but until that disaster comes, you might spend a fair amount of time being annoyed at the cost. Your monthly insurance payments are not fun, and if you are wondering how you can reduce the costs, there are a number of different options for you to consider. Consider these tips which will help your insurance cost drop to a manageable level.

1. Research all of the plans available to you.

2. Talk to a real person, don’t go through the internet.

3. Ask around.

4. Go through an employer.

5. Lower the premium. While a lower premium does mean a higher deductible, it might be worth it for the monthly savings. [http://www.edmunds.com/car-reviews/top-10/top-10-ways-to-lower-your-car-insurance-bill.html]

6. Put in a car alarm.

7. Move. Some neighborhoods are simply safer than others.

8. Put lights on your home.

9. Skip the trampoline.

10. Skip the pool.

11. Bundle your policies.

12. Don’t speed.

13. Contest unfair tickets.

14. Avoid reckless driving. Reckless driving is the number one thing that raises your car insurance.

15. Install a security system.

16. Go in for physicals. If you have improved your health in any way, whether by dropping in your cholesterol level or simply becoming more active, tell your insurance company, and ask for a break.

17. Ask for a discount. You don’t necessarily need a reason; just ask. [http://abcnews.go.com/blogs/business/2012/07/6-ways-to-cut-your-car-insurance/]

18. Pay on time. This allows you to avoid nasty penalties.

19. Take a class on defensive driving. This keeps you out of accidents.

20. Buy a practical vehicle. Practical vehicles cost less to insure.

21. Park in a closed garage. A closed garage has far less chances of theft.

22. Take the bus. If you don’t drive your car that much, your insurance rates can be dropped significantly.

23. Fix your credit score. If your credit score is in shambles, it can cause the insurance companies
to think that you are a high risk.

24. Never let your coverage lapse. Lapsed coverage can mean that your coverage may be raised whenever you go back.

25. Pay annually and biannually. Many people do not know that there is an administrative fee for paying every month.

26. Be careful about discounts. Some companies offer high discounts to conceal the fact that they have the highest rates.

27. Look for group insurance discounts.

28. Skip collision and comprehensive coverage on old cars. In the case of an accident, chances are good that you will want to junk the car anyway.

29. Insure your house, not your land. Unless the land is integral to your job, do not get it insured.

30. Stop smoking. This lowers both your health insurance and your home owner’s insurance.

31. Think about whether you need the actual replacement cost or a cash value return.

32. Buy a new home instead of an older one.

33. Buy a new car instead of an older one.

34. Service your car every six months.

35. Have your home inspected. A clean home inspection can reduce your home rates significantly.

36. Live near a fire station.

37. Adjust what is covered. Don’t cover more than exists in your home.

38. Ask for senior citizen discounts.

39. Look for longevity discounts. .

40. Be ready to change insurance companies if rates are raised.

41. Go electronic. It can save you a small amount by getting you out of the administrative fee necessary for paper payments.

42. High fences drop your rates as it keeps unwary children off of your property.

43. Live in a gated community.

44. Put in new wiring.

45. Install impact resistant roofing.

46. Join a home owner’s association.

47. Skip the claims. Having few to new claims entitles you to some hefty discounts.

48. Newer is better for cars and houses.

49. Mention your school. Some insurance companies offer reduced costs to people who went to certain schools.

50. Motion sensors offer your home a great degree of security.

51. Install water sensors.

52. Go generic for drugs.

53. Be sure a procedure is necessary before you agree to it.

54. Be willing to negotiate. Sign on for a longer term to get a lower price.

55. Avoid having a “dangerous” dog breed. Dog breeds like pit bulls have a bad reputation, and this causes insurance companies to discriminate against them.

56. Keep strangers off of your property. Strangers could sue you for injuries that occur on your property, making your insurance company liable.

57. Get an appraisal from the insurance company.

58. Compare quotes. The more information you have, the better.

59. Ask insurance companies to match each other’s price.

60. Ask to speak to someone higher up the ladder. If you are not getting the service you need, work your way up the ladder until you do.

61. Add an older person to the insurance if you are under 25.

62. Drive with exceeding care. A clean record can reduce your insurance costs greatly.

63. Park carefully. Parking is when many minor issues occur.

64. Don’t modify your car beyond security improvements.

65. Lock the car’s wheel with a security device if you park on the street.

66. Get a new appraisal with every move.

67. Ask for free insurance with a new car.

68. Keep shopping around for better even if you already have a policy.

69. Keep insurance records.

70. Contest strange charges, as mistakes do happen.

71. Ask others not to smoke in your home.

72. Ask for discounts on multiple cars.

73. Ask for discounts for fewer drivers.

74. Get a new quote every year.

75. Put a woman down as the main driver.

76. Get new insurance after your 21st birthday and your 25th birthday.

77. Find out your auto insurance company’s milage rules and drive little enough to put yourself in a lower bracket.

78. Renovate your home.

79. Live in a house rather than apartment.

80. Decide on whether to insure the house or simply the contents.

81. Insure only the contents in an apartment.

82. Avoid areas prone to wildfires.

83. Avoid areas prone to tornadoes.

84. Avoid areas prone to mudslides.

85. Do not buy a house on a floodplain. Flood risk can add as much as 400 dollars to your yearly fee.

86. Put on a new roof.

87. Choose a house with new plumbing.

88. Choose a low crime area. Look up the crime reports from the local news outlet.

89. Keep the property well-maintained.

90. Choose a property that has been kept up.

91. Fence off the pool.

92. Ask your insurance agents lots of questions about deductions.

93. Get your home and auto insurance from the same place [http://publications.usa.gov/epublications/12ways/12ways.htm]

94. Add storm shutters to your home to protect the windows.

95. Have a basement.

96. Build with brick if there is no earthquake risk.

97. Update the HVAC system.

98. Buy a home close to a fire hydrant. This gives the fire trucks better access and better pressure.

99. Research the property’s previous claims.

100. Take classes and get past driving infractions removed from your record.

101. Get your car serviced before winter. This prevents you from having expensive breakdowns in the middle of January.

Natural Disasters, Are You Covered By Your Insurance?

People usually only realize how important it is to have natural disaster insurance when they strike. Thousands of people who lost their homes, cars and other property after Hurricane Sandy. Some of them were able to recover their losses from their insurance while others were left with nothing.

The National Association of Insurance Commissioners reported that almost half of U.S. residents are not prepared for disasters. About 48 percent never did an inventory of their belongings. While there are others who claimed they had the checklist, 32 percent of them had not taken any pictures of these possessions, and 58 percent did not have proof that can validate ownership like receipts.

The Rocky Mountain Insurance Information Association found that 2005 was the most costly year for insurance companies when it comes to natural disaster claims. About 27 major tropical storms hit the country, and 15 were hurricanes. Hurricane Katrina was among the most expensive storms with $48.4 billion in insured losses that year.

Meanwhile, one of the strongest and the most costly earthquakes that hit the U.S. was the Northridge earthquake in 1994. It shook California and measured 6.8 on the Richter scale. This natural disaster resulted in the destruction of over 8,000 homes, 12,000 injuries and 60 deaths.

The NAIC also revealed that about 55 percent of consumers do not have sewer line break insurance, 56 percent do not have water line insurance, 65 percent do not have flood coverage, and 69 percent do not have earthquake insurance. The organization pointed out that there are many vulnerable consumers who live in disaster-prone areas and do not have the right type of insurance coverage.

Preparing for the Disaster

When choosing the right kind of natural disaster coverage, consumers should take their location into account. They should be familiar with the type of natural disasters that may occur. This may include hurricanes, tornadoes, wildfire, floods, earthquakes or sinkholes.

Every state provides specific guides for residents. In Colorado, the state Department of Regulatory Agency or DORA provides information about disaster insurance that residents should be prepared for. In New York, the NYS Department of Financial Services also provides residents a guide for preparing for disasters

According to these government departments, consumers should make it a habit to review their renters or homeowners policy before any disaster strikes. Rebuilding homes and securing new properties can be very expensive and time consuming. With comprehensive insurance coverage, people can be sure that they are protected all the time.

Before a disaster strikes, consumers have to do the following:

· Keep an inventory.

Homeowners should be able to list all of their belongings. They have to include all furniture, artwork, electronics, large and small appliances, linens, silverware, dining tables, collectibles, curtains, vanity, exercise equipment, bicycles and anything else of value. It is best that they keep the list in a safe place or better yet send it to their emails or to their closest friends or relatives.

· Assess properties.

Homeowners have to make sure that their insurance policies are up to date. They should also double check to make sure their valuables are covered.

· Keep insurance documents electronically.

There is no safer way to keep documents than doing so electronically. To make sure that these important documents never get lost in cases of disaster, have them scanned and emailed. Aside from the insurance documents, properties and any items’ receipt should also be kept as proof of ownership.

Are you covered?

When purchasing natural disaster insurance, consumers should make sure that they are getting the right protection. The following are the available natural disaster insurance coverage policies they may buy.

· Flood

Generally, homeowner’s insurance does not cover flood damage. With this, the U.S. government came up with the National Flood Insurance Program that will help residential and commercial property owners protect their assets. The NFIP has a website that offers flood insurance for home and business owners including renters. However, they have to be located in areas that participate in the program. These communities are those that actively help reduce the risk of flooding in the area.

NFIP flood insurance covers the whole building including its foundation, detached garages, permanently installed cabinets, paneling, bookcases, wallboards and carpeting. It also includes window blinds, built-in appliances, cooking stoves, refrigerators, water heaters, furnaces, central air conditioning systems and the building’s foundation. The insurance also covers debris removal in addition to valuable personal items such as furs and original artwork up to $2,500, food freezers including content, dryers and washers, carpets, portable and window air conditioners, curtains, electronic equipment, furniture, clothing and other personal belongings.

· Wind

Wind coverage is typically a part of standard insurance policies. However, there are some parts of the U.S. that require consumers to purchase this separately. This includes the states of Florida and Texas. According to the Consumer Federation of America, many consumers may not know about hurricane deductibles. There are actually special deductibles applicable when the National Weather Service declares a storm to be a hurricane. These are usually one to five percent of the property’s value. Deductibles in states like Florida can go up even higher.

· Earthquakes

Damages due to earthquakes are not a part of a standard homeowner’s insurance. Consumers need to have a freestanding policy. In California, consumers buy earthquake insurance from the California Earthquake Authority. Unfortunately, consumers often end up complaining about the hefty deductibles. This is because they have to pay 10 to 15 percent of the home’s value. With this, some residents find it impractical. As a solution, experts recommend that homeowners who wish to protect their homes and properties against natural disasters like earthquakes have to carefully assess their needs while taking into account the property’s soil condition, the house’s age and how it was built.

· Fires

Generally, a standard homeowner’s policy already includes fire coverage. The only difference is the extent of coverage. With this, policy holders should review their policies to make sure they get all the coverage they need. Doing so will make them aware of what else they need to purchase to ensure full coverage. Nevertheless, the claims process remains the same.

The insurance company’s adjuster will assess the damage that will be used as a basis for reimbursement. The company will offer an amount to the policy holder. Consumers who are dissatisfied with the assessment may use a public adjuster instead. This professional will evaluate the damaged property’s value and negotiate with the insurance provider. However, they usually charge 10 to 15 percent of the claim. Alternatively, consumers may seek help from the state insurance commissioner’s office. With this, they can be sure of getting a good deal.

Should you get additional coverage?

The value of homes and other belongings changes almost every year. There are some possessions that may have become more expensive than when it was bought. Homes that undergo improvements definitely have higher value while the same is not true for computers and other major appliances. With this, it is important that consumers know when they need to increase or cut down on their coverage. They also have to be aware of the coverage limits. They can purchase more coverage if the existing policy does not meet the home and its content’s value. Doing so ensures consumers that they are fully protected no matter what kind of natural disasters strike.

Sources:

DORA
http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22Are+You+Covered%3F+Disasters+and+Insurance.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251815248857&ssbinary=true)

California Earthquake Authority
http://www.earthquakeauthority.com/index.aspx?id=1&pid=1

National Flood Insurance Program
http://www.floodsmart.gov/floodsmart/pages/residential_coverage/whats_covered.jsp

Reasons To Get Travel Insurance

Because many unforeseen events may occur during a vacation, travel insurance is important for one’s safety and financial well-being. Not having adequate insurance while traveling may mean being denied at a hospital in case of an emergency, being stuck with a large bill due to an accident or not being compensated for loss or theft of one’s property. There are different types of travel insurance, each covering different areas and circumstances, and they may be provided separately or together depending on the plan.

Health insurance is absolutely needed when traveling, especially when traveling overseas. A traveler should check his or her health insurance policy at home to find out if coverage is provided when traveling, and, if so, what level of coverage is provided when traveling. Oftentimes, health insurance policies do not cover medical expenses when traveling or overseas. According to the U.S. Department of State, hospitals in some foreign countries may refuse to treat those who lack cash or insurance. Having travel health insurance can therefore mean the difference between life and death. It is therefore strongly recommended that all international travelers carry proof of insurance as well as a claim form.

According to the Centers for Disease Control and Prevention, those traveling to Third World countries or to remote locations lacking the standard of care provided in the United States should consider medical evacuation insurance, which covers the transportation costs to get a traveler to an adequate medical facility in case of an emergency. The CDC recommends that this type of coverage provide a 24-hour physician support center. This can be a part of a travel health insurance policy or can be purchased separately.

Travel insurance policies typically cover lost, stolen or delayed baggage while traveling. Baggage can easily get lost or stolen at airports. According to a study conducted by NerdWallet.com, a personal finance website, those who travel in December and January are more likely to lose their luggage at airports due to the increased volume of passengers during the holidays. The study found that mishandled baggage at airports may increase by as much as 35 to 45 percent in these months. Delayed baggage may cause a traveler to have to purchase clothing or other essential items while waiting for the baggage to arrive.

Travel insurance policies may also reimburse a traveler in case of theft. In some countries, pickpocketing is very common, with criminals in bus or train stations seeking to prey on naive tourists. In such cases, criminals may not only steal money but also important documents. Replacing these documents will cost the traveler money. The insurance company may require a police report as evidence that theft has occurred, in order to reimburse the traveler.

Trip cancellation insurance will cover the expense if a person has to cancel a trip due to an emergency. This type of insurance may cover a canceled flight, cruise, train or bus trip. This coverage is particularly useful given that airlines and cruise lines will show no mercy when it comes to reimbursing travelers who cancel a trip and have no insurance. A cancellation may occur due to forces beyond the control of a traveler, as when a delayed flight causes a traveler to miss a cruise. A major storm, such as a hurricane or blizzard, may force an evacuation of a vacation area or a cancellation of travel plans.

Depending on how comprehensive a traveler’s policy is, coverage may be provided in case a traveler accidentally injures or damages the property of another person and becomes liable. This can happen while driving, especially since the roads and signs may be unfamiliar to the traveler. Certain plans may also cover legal expenses in case a traveler is to get into legal trouble in another jurisdiction. An international traveler may break the laws of another country without realizing it or recognizing the gravity of it, given the differences in customs and laws between the countries.

Though travel insurance provides obvious protection in case of these and other circumstances, it is invaluable in the peace of mind it gives to travelers. Travelers will be able to enjoy themselves without worrying that an emergency will ruin them financially or cause them to lose their lives in unfamiliar terrain.

Other source:
http://articles.latimes.com/2012/oct/28/business/la-fi-1029-travel-briefcase-20121029

Auto Insurance: What Is A Premium?

Simply put, an insurance premium is the money that a company will charge for actively covering the policyholder’s automobile. The amount that a person will pay in premiums, which may also be referred to as the rate, takes several different factors into consideration, which include health, age and location, though every company has its own particular formula. Either way, when the premium goes unpaid, the policy often becomes void and the company will not honor a claim.

Premium Coverage

Generally, the premium will cover everything that the insurance policy lists. In addition, the exact services that the company provides also depends on what the policy entails.

In the case of auto insurance, most premiums will cover the damages made to the policyholder’s vehicle, roadside help, medical bills that arise from an accident as well as damages made to another vehicle in the accident. In the case of another kind of motorized vehicle, such as a boat or a motorcycle, the insurance policy will typically have the same kind of services available.

How Rates are Calculated

Figuring out how much to charge for an insurance premium largely depends on considering statistics, although the specific individual’s history and driving habits can affect whether the rates are higher or lower. For example, a 45 year old woman driving a family sedan will easily have lower premiums as opposed to a 23 year old male who just purchased a luxury sports car.

Neither may have a history of collisions and both may take safe precautions on the road, but the insurance company will consider the younger and faster of the two to be more likely to get into an accident. Because of this, it is common to see these two have very different insurance quotes provided to them.

The area in which one lives will also cause the premium for insurance to vary as previously mentioned. When it comes to covering an automobile, the insurance companies that offer service in urban cities or places that are known to have more frequent car accidents in comparison to other regions will typically charge its policyholders more money than if they lived in an area where there are not that many accidents. If a company considers someone to be too risky, they may decline a policy.

Providers will generally provide varying costs for premiums, which is why all of the insurance experts will always tell people to shop around and look for as many quotes as possible before coming up with a decision on the policy. Keep in mind, however, that sometimes the lowest premium price quoted can be a real bargain but it may not offer nearly the same level of coverage as someone else that requires a higher premium.

Why Rates Change

Although there are several factors to consider when it comes to premium rates, one of the most common reasons that a company will change the rate of its policy is having a rather high number of claims. An insurer takes into consideration how much it will need to pay for the policyholder over the life of the policy. Given that an auto insurance company is a business, it will try its best to pay out less money than the policyholder is going to send to the company via premium payments. If a person regularly files a claim against the policy, then the company will need to pay out some money and put a limit on how much it profits. This will cause the premiums to rise in order to recoup the money.

With the same line of thinking, the auto insurer may want to raise its premium rates even if it expects that there will be an increase in claims. For example, should a policyholder who is normally healthy suddenly gets into a car accident and suffers permanent injuries from the collision, then the auto insurance company may raise the rates of his premiums since the company expects it may impair later driving. Of course, the rates can raise due to a simple increase in service price or to keep in line when it comes to inflation.

On the other hand, while insurance companies are well known for raising the premiums for any number of reasons, it is still possible to have this rate lowered as well. For example, there are some companies who will provide a discount to drivers who continuously have a good, safe driving history, and some discounts may even be available to a student who maintains a high report card in school. Improvements to a car can also help lower the price, such as installing a new passive alarm system or other similar safety features; a car with more airbags will generally not cost as much to insure as if it had no airbags.

Missed Premiums and Payments

Depending on the policy, an insurance premium can be paid on either a monthly, semi-yearly or yearly basis. A policyholder can often also combine the policy with other fees for some services or even combine other policies with the same company in order to have lower fees overall for services the policyholder would need anyway. For example, combining auto insurance and health insurance from the same company can provide discounts with both policies.

Should a policyholder ever fail to make a payment as planned, then the company may decide to outright cancel the plan. This is known as a lapsed policy where the customer may need to pay off the insurance premium balance to restore the policy or else it will be voided entirely. It is common for some holders of policies to forget to pay before the policy lapse due to the simple fact that the billing cycle can be larger than normal. In most cases, people cannot make policy claims after missing a premium payment.

It is also not possible to receive money paid for an insurance payment refunded, even if the individual never has to make a claim on the policy for its lifetime. One may believe this is a waste of money but a single claim can quickly make up the difference of paid premiums. For most people, this peace of mind makes the policy worth it.

Insurance Fraud

One problem that many auto insurance companies face is the instance of auto insurance fraud, which is an effort to unlawfully receive extra money from a policy by staging accidents or purposely changing facts to further benefit from them. This is far more common than one may think, which is why those who provide auto insurance policies are very cautious when it comes to reviewing claims. Policyholders would do well to know what kind of claims raise the biggest red flags even when legitimate. Having an insurance agent can help prove a claim as legitimate and have it processed effectively and totally.

When a person files a claim against his insurance policy, he should be as forthcoming, complete, honest and as accurate as possible. Should there be any kind of questions about the claims process, then one should look to speak with an insurance agent in order to learn more about the process and obtain information. Do not worry if a company has an investigator come out; this is often routine. It is helpful to provide documentation and police reports to help verify the accuracy of a claim. However, as long as the claim was made in good faith, there should be no problem.