Frequently Asked Questions

One of our jobs is to translate Insurance Speak into Common, Clear English.  We feel that it is of paramount importance that you understand what you are buying.  Aside from being a legal contract, an insurance policy is a commodity that you purchase to perform a specific function in your life, namely protect an asset.

Select a link to hone your search:

• General Insurance Questions
• Automobile
• Homeowner's
• Commercial
• Life and Health

• Traditionally, it has been the amount you pay before the insurance company pays anything on a claim.  More recently, it has become viewed as the amount of risk you are willing to assume before you submit a claim to the insurance company. 

• The answer is pretty complex.  The most important question to ask yourself is "What is my net worth?"  We feel that liability limits should be purchased in excess of this figure.

• In case you haven't heard, Insurance companies now use a Credit Score to rate you as a risk.  The better the credit score, the better the rate the company gives you.  The company that does the credit scoring, Choice Point (among others) uses your social security number to provide this information.  Providing your Driver's license number gives the insurance underwriters your driving record, which will not necessarily show up on your credit score.

• Traditionally, it has been the amount you pay before the insurance company pays anything on a claim.  More recently, it has become viewed as the amount of risk you are willing to assume before you submit a claim to the insurance company. 

• In case you haven't heard, Insurance companies now use a Credit Score to rate you as a risk.  The better the credit score, the better the rate the company gives you.  The company that does the credit scoring, Choice Point (among others) uses your social security number to provide this information.  Providing your Driver's license number gives the insurance underwriters your driving record, which will not necessarily show up on your credit score.

• Comprehensive coverage pays for damage to your car which is caused by events other than a collision.  It covers damages up to actual cash value for repairs to your vehicle after it has been stolen or damaged as a result of a covered event under comprehensive. Some examples are fire, flood, theft, vandalism, windstorm, hail, or falling objects.  A common comprehensive claim can be a windshield.  Collisions with an animal are also covered under the comprehensive coverage.
   

• Collision coverage pays for the repairs of your car at the actual cash value regardless of whether you are at fault of not concerning a collision with another object.  After you have paid your chosen deductible, repairs are made on an actual cash value.  Examples of a collision type claim can be hitting a pole, a rail, a bumper block,  parking lot accidents, hit & run.

• The state of Illinois requires that you have a minimum state liability limit of $20,000 bodily injury for one person/ $40,000 per accident for 2 or more persons and $15,000 property damage.  This  covers damage to others who may be involved in the accident.  This covers the injuries and/or repairs to their property.  Medical payments can also be included for anywhere from $1,000 up to $25,000.  Each company has its own limit.  When choosing your liability limits you need to make sure that you have adequate limits to cover damages that may be sustained in the event you are sued; you want to be sure that your assets are protected adequately.

• Uninsured motorist property damage will pay for damages to your vehicle if you are involved in an accident and you do not have collision coverage.  You are not at fault and the other vehicle does not have insurance.  This will not apply to a hit & run vehicle as the other party must be apprehended to determine if there is no insurance.  A deductible of $300 usually applies.

Is water damage in my basement covered?

• Water damage in the basement will only be covered if you have sewer backup/
  sump pump endorsement on your policy.  You would have your coverage up to a
  limit that you have purchased.  Water must enter through drains or sump
  pump.  Damage is not covered if water enters through cracks or crevices of
  the foundation.  Flooding is not covered unless you have a specific flood
  policy.
   

• Mysterious disappearances are covered if you have the item scheduled on your policy.  In order to schedule an item, you must provide a receipt and appraisal with a description of the item you want to insure.  You will have coverage up to the receipt appraisal amount and usually no deductible will apply.  Unscheduled items have limited coverage on your homeowners policy.

• This varies from state to state.  In Illinois, sole proprietors and partners are not included for workers compensation coverage unless they choose to be covered by signing an inclusion form.  If  you elect this coverage, there is a flat charge for sole proprietors regardless of the actual payroll.

• The corporate officers are automatically included for coverage and have to sign an exclusion form to be removed from coverage and to remove their payroll.  Corporate officers are charged on a weekly payroll of $300 minimum and a maximum of $2,300 per week.  The classification assigned depends on the type of work that a person does.

What is an umbrella policy and what does it cover?

• An umbrella policy provides an additional limit of liability over and above the underlying insurance polices such as automobile, commercial lines liability, workers compensation, etc.  An umbrella policy provides higher limits, usually in increments of $ 1,000,000.00.

• This depends on the way the policy is written.  The coverage is written to include payroll, but you can choose to exclude or limit this amount of coverage by endorsement.

• If you do suffer a loss and you cannot operate your business for a period of time, having coverage for payroll will keep your key people on the payroll.  When you do re-open for business, you will have a head start on finding and training new help.

What is an experienced modification, and how does it affect my Workers Compensation premium?

• The experienced rating plan is administered by the National Council Compensation Insurance (NCCI).  It is designed to allow discounts for good experience for employers who generate $5000 or more of average premium for three consecutive years.  As they develop loss experience which may be better or worse than the average an experienced modification can be generated and applied by the NCCI to increase or decrease the amount of manual premium that an employer would pay.  The NCCI uses past experience of the employer as a basis for projecting future losses.  Three years of audited premium losses are used to determine your factor, not counting the current year.

• Coinsurance is figured on all property policies and is designed to protect both the insurance company and the insured.  It can be a penalty that is applied to a loss because the insured has not carried the proper amount of coverage on either the building or on personal property according to the policy terms.  If coverage is written on Replacement Cost basis of 80% coinsurance, the insured is receiving a reduced rate for the coverage.  If a loss would occur this is how it would apply:
   

  Value Of Property	$250,000
  Coinsurance Percentage	80%
  Limits of Insurance	$100,000
  Deductible	$250
  Amount of Loss	$40,000

  • Multiply the value of the property ($250,000) x the coinsurance factor (80%) =$200,000 (the minimum amount of coverage you should have carried)
  • Divide the limit of insurance ($100,000) by the figure above ($200,000) =
    .50 (penalty for underinsured)
  • Multiply the total amount of loss ($40,000) by the factor determined above
    (.50) = $20,000.

• Subtract the amount of the deductible ($250) = amount of loss paid $19,750.

• This explains why it is important to be insured to value.  It should be noted that if there was a total loss, the policy would pay at the full value of $100,000.

• There are many, many different types of Life insurance policies.  The most basic type is Term Life Insurance.  Individual Insurance companies call it by many different names.  Basically you can purchase term insurance for a specified number of years and maintain a regular premium or an increasing premium or a decreasing term amount.  If you stop paying the premium, and all coverage ceases.
• Universal life, on the other hand accumulates cash at a much better rate of interest within the cash value account than the traditional life policy.  Specifically you have to determine what your needs are first in order to determine what amount and what type of life insurance would be satisfactory for you.

• Health insurance consist of permanent and short term hospital insurance
  policies.  If you lose your group health insurance or individual health
  insurance you do have an option.  With very few medical questions, you can
  purchase a short term major medical policy at a substantially reduced
  premium over traditional individual permanent hospitalization insurance.
  This will then give you time to at least have catastrophe coverage and allow
  the insurance company time to underwrite a major medical policy on a group
  or individual basis for yourself and your family or your group. A Specific
  consultation is needed to determine the type and amount of insurance that
  should be purchased.
• You can obtain an individual health insurance quote on our website by going to the Unicare link in the Links section.  There you can get a real time quote, and you can even apply on line.  If you do, we would still be your agent, and able to respond to your future questions.
• Many of the other websites in our links section provide you with additional information that can be very useful for you in planning your future.