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Questions, facts and information

Posted September 11, 2013 in Advice Column, Greene County

Check your insurance term skills with the following quiz..  Answers are listed below.
1. Your policy coverages begin and end on a certain date. What is this referred to as?
2. You own the home, but you rent it to others. What type of policy do you need?
3. You were in an accident that is not your fault. The other party either has no insurance or refuses to pay. Your insurance company pays for your damages and then has the right to go after the liable party for compensation. This is referred to as what?
4. A bunch of items are stolen from your vehicle ($4,800 value).  Under what type of policy listed would this loss be covered?
5. The medical payments portion of your automobile policy (Coverage B) provides protection for whom?
6. The declarations page of your auto policy states that your liability coverages are 100 300 100.  What coverage does the last figure represent?

What are your auto liability limits?
Why should you carry higher liability limits? Example: You are not paying attention, run a red light and smash into four cars in the middle of a busy intersection. (Ever drive in Ames or Des Moines?) There were three passengers in one car, two in another and five in another. The fourth car only had a driver. You are found to be responsible for four property damage losses and 14 bodily injury losses (four drivers and 10 passengers). The limits you chose for your policy is $25,000/$50,000 for bodily injury (per person/total per accident) and $50,000 for property damage. Everyone gets attorneys and all four cars are totaled. No one is happy about it, but they all go through their own insurance policies to get their cars fixed. When their companies are finished with the payments, they will look to your company for reimbursement, which is called subrogation.

Having coverage for your own vehicle is important even if you are not at fault, like the cars in the intersection in this example. They may have to pay their deductibles, but their cars can get fixed and then the insurance companies retain the right to be reimbursed. As for the injuries, you better find yourself a good attorney who can work out a payment program. Once the insurance company has exhausted its limits in liability (property damage and bodily injury), they are no longer obligated to defend you. This situation is called an “excess situation,” and many times the companies defense attorneys, and plaintiff attorneys will attempt to come up with a “pro-rata” plan that indemnified their clients or policy holders the best that they can.  This is why it is important to have higher liability limits or to combine limits into an “umbrella policy.”

Answers: 1. Policy period. 2) Dwelling Fire. 3) Subrogation. 4) Homeowner’s. 5) You and your passengers. 6) Property damage.

Information provided by Jill VonStein, MacDonald Insurance, 110 E. State St., Jefferson, 515-386-8185.

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