THE BASIC COVERAGES
What is it? When you are found legally responsible for an accident, your Bodily Injury coverage will pay for the injuries of others which is usually the other driver and their passengers but it could also a pedestrian or passengers in your own vehicle. This coverage is available in 2 ways: “Split limit” and “combined single limit”. A split limit is more common and has 2 parts (e.g. $100,000/$300,000). The first number is the most your policy will pay per any one person in a single accident; the second number is the most your policy will pay for the whole accident regardless of how many people are injured.
Do I Need it? Yes! This is one of the two parts of your insurance that’s required by law.
What’s NOT covered? Your own medical expenses and any loss income due to the accident that you caused
for Example Michael is driving down Grand Ave. Phone rings…it’s his wife. Michael knows he shouldn’t answer the call because he knows she’s less than happy with him because he left the house AGAIN without taking out the garbage! Michael also knows he isn’t supposed to answer his phone because he’s in the city and Billings has the no-hand-held-device ordinance. Guess what Michael does? Yep, he picks up the phone and blam-o! He didn’t see Tana, who’s stopped at the light. Tana’s neck hurts and she smashed her knees into the dash. Michael’s bodily injury coverage pays up to the limits of his policy for the Tana’s medical expenses. Now Tana’s mad at Michael too.
What is it? When you are found legally responsible for an accident, your Property Damage coverage pays for the damage you cause to the property of others. The most your policy will pay (limit), is a “single limit” such as $100,000.
Do I need it? Yes! This is the second part of your insurance that’s required by law.
What’s NOT covered? The cost to repair your own vehicle due to the accident that you caused.
For Example When Michael rear-ended Tana’s car, it damaged the rear bumper and broke her tail lights. Michael’s property damage pays for the damage to Tana’s vehicle, up to the policy limits.
What is it? When you’re involved in an accident that is caused by somebody else and that person doesn’t have insurance or not enough insurance, your uninsured/underinsured bodily injury coverage is what pays for your injuries and that of your passengers up to the limits of your policy. It works much the same way as your bodily injury coverage in that it’s usually represented as a split limit such as $100,000/$300,000.
Do I need it? Yes, you should carry this coverage. Even though this is part of your “liability” coverage, it’s not always required by law but if you opt out of this coverage, you must sign a waiver to reject this coverage.
What’s NOT covered? The costs associated with damage caused to your own vehicle when it’s the other driver’s fault and they don’t have insurance.
For Example Randy ran a red light and t-boned Michael. Michael’s neck is injured, he now has terrible head aches and his whole left side is very sore. Randy doesn’t have insurance. Michael’s uninsured coverage pays for his own medical expenses. Michael’s having a bad month! Michael’s insurance company goes after Randy to recover the money they paid because Randy didn’t have insurance. Randy’s having a bad month too!
What is it? Uninsured property damage coverage pays for direct and accidental loss to your car resulting from physical contact with an uninsured vehicle. It’s usually represented as a single limit such as $25,000 or $50,000. This coverage is optional and is not available through all insurance companies.
Do I need it? As mentioned above, it’s an optional coverage. We recommend it because it’s a on policy level so it applies to all vehicles on your policy even if they have liability only.
What’s NOT covered? Damage to your vehicle that didn’t involve direct contact with an uninsured vehicle.
For Example Michael was t-boned when Randy ran that red light. Michael’s vehicle is damaged on the drivers side but with this vehicle, Michael doesn’t have collision coverage. The uninsured property damage would pay for the damage to Michael’s vehicle up the limit.
What is it? Regardless of who’s at fault, this coverage pays for your injuries and those of your passengers up to the limit of your policy. Medical payments also cover funeral expenses and your own medical expenses if you’re injured as a pedestrian.
Do I need it? Technically, this is not a required coverage but it’s affordable and can be used for a variety of expenses.
What’s NOT covered Medical expenses involving people outside of your vehicle or expenses which are more than your limit.
For Example Ronda loves dogs, always has, always will. It’s a rare occasion for her to go anywhere without her loyal Balto at her side. As she was driving along one morning, Balto spotted a cat walking on the sidewalk. In his excitement, Balto stepped onto Ronda’s lap to get closer to the feline action but his right paw caught the steering wheel and Ronda’s face bounced off the steering wheel when she hit a parked car. Ronda’s medical payments coverage pays for her medical expenses, even though she was at fault. Ronda still loves dogs.
What is it? Comprehensive coverage pays to repair the damage to your car if it’s stolen or damaged caused by a non-collision type incident. Other examples of comprehensive losses are vandalism, fire, hitting a deer or a racoon that crawled through an open window and completely freaks out because it cannot get back out and thrashes anything and everything that’s soft inside your vehicle, the seats, dash, center console and carpet. Comprehensive is also known as “other than collision”. Comprehensive has a deductible which is the amount you pay before the insurance kicks in.
Do I need it? If your vehicle does not have a loan or lease, this is an optional coverage. If you do have a loan or lease, chances are good, your lender will require that you carry this coverage. Not only does this coverage pay to repair the damage to your vehicle, in the event of a total loss, it pays you what the vehicle is worth, minus your deductible.
What’s NOT covered Damage to your vehicle caused by collision. This coverage also does not pay for damage to another person’s vehicle.
For Example Michael had an extra spring in his step as he headed out the door. He was high fiving himself for remembering the trash but his spring was quickly sprung when he discovered the empty spot in the driveway that used to occupy his pick-up. Because Michael decided to keep comprehensive coverage on his truck after he paid it off, his policy paid him what his vehicle was worth minus his deductible. Michael’s wife thinks he’s the smartest man alive!
What is it? Collision is when your vehicle is damaged because you ran into someone else or something like a guard rail, a big rock or some trees. Or, say you slide off the road because you hit some black ice and your vehicle rolled down the side of the road. This is the coverage on your policy that pays for the damage to your own vehicle. It comes with a deductible which is the amount you pay before your insurance kicks in.
Do I need it? If your vehicle does not have a loan or lease, this is an optional coverage. If you do have a loan or lease, your lender will more than likely require that you carry this coverage. Not only does this coverage pay to repair the damage to your vehicle, in the event of a total loss, it pays you what the vehicle is worth, minus your deductible
What’s NOT covered? Damage to your vehicle that didn’t happen while you were driving like hail, theft or vandalism. This coverage also does not pay for damage to another person’s vehicle.
For Example Michael rear-ended Tana, it caused damage to the front bumper, grill, and headlights of his truck. Because Michael also has collision coverage on his policy, it’ll pay for the damage to his vehicle minus the deductible.
What is it? The dwelling is the house itself and anything that physically touches it such as a deck, attached garage or a car port. If you have a home owners policy, a landlord policy, or, depending on how your condo association’s bylaws read, a condo policy, you have this coverage. If you’re renting and you have a renters policy, you do not have this coverage.
This coverage is calculated by insurance companies with using software that calculates the replacement cost. This software takes the zip code in which the home is located and then takes the various features of the home like how many square feet, number of bathrooms, style, age of roof, etc and says that based on these features, in the event of total loss, it would cost “X” for labor and materials to rebuild this house to the way it is today. This dollar amount if often confused with what you owe the bank or what the house is worth if you were to sell it.
This coverage is the start of a home policy because several other coverages are a percentage of this amount.
Do I Need it? Yes, for a couple of reasons. If you owe the bank, they’re going to require that you have at least as much of dwelling coverage as what you owe. The other reason (and in our humble opinion) this coverage is what provides you with money to rebuild your home if it’s a total loss or repair your home if it’s a partial loss like your roof and siding getting damaged in a hail storm. Often times, people who have paid off their home will want to NOT carry home owners insurance anymore. Can you imagine having made your last mortgage payment and now it’s you and only you who own your home, no more bank, or mortgage or escrow and your home burns to the ground. Without home owners insurance (or enough cash in the bank or a mason jar buried in your back yard), you would have to start all over again including getting a new mortgage.
What’s NOT covered? Detached buildings, fencing, your personal belongings like your clothes and furniture, and your liability.
For Example– It’s been hot, really hot for the past 3 days in a row. Finally, some reprieve from the heat. Late in the afternoon, the wind picks up, the rain starts to fall and all the sudden it sounds like rocks are hitting your house. You don’t even have to look out the window to know it’s hail. After it all stops, you walk out your front door to discover dents all along the west side of your house; the siding, window frames, and even the gutters and downspouts look like a flattened golf ball. You can only imagine what your roof looks like! The part of your home owners or landlord policy that pays for this kind of damage is found in the Dwelling coverage.
What is it? This coverage is for any other building that is on your property but not physically attached to your house. Often times, it’s the detached garage, a storage shed, or the that beautiful six-foot vinyl privacy fence you had installed last summer. The dollar amount is always 10% of what your home insured for. So, if your home is insured for $200,000, you automatically have $20,000 in coverage for your other structures.
Do I Need it? Most insurance companies make this decision easy for you…they do not give you a choice, most insurance companies automatically include this coverage. In most cases, you do not have the choice to reduce or remove the coverage. However, if you need to increase the amount of coverage, you may for an additional premium but it’s usually very nominal.
What’s NOT covered? The house itself, your personal items and your liability. This coverage is ONLY for structures on the property that are not physically touching the house.
For Example the wind is gone, the hails done falling, you’ve assessed the damage to your home but what about that beautiful vinyl fence you had installed last year? It looks like swiss cheese! “Other Structures” is where you’ll find the coverage to pay for the damage to your fence.
What is it? This is all your stuff. Your clothing, furniture, tools, electronics. Rugs, towels, dishes…the list goes on and on. Toothbrushes, shoes, the kids toys, even all those little treasures in the junk drawer in your kitchen. Most insurance companies offer Replacement Cost on your personal property but some only offer Actual Cash Value. When Replacement Cost is offered, we highly recommend you take it.
Do I Need it? Again, easy decision. You really don’t have choice, most insurance companies include this coverage on a home owners policy. It too, is a percentage of what your home is insured for. Most insurance companies offer somewhere between 50 and 75%.
What’s NOT covered? The house, the fence and your liability. A word of caution: this coverage has some internal sub-limits. What does that mean you ask? It means that there are certain items that are limited in how much the insurance company will pay. Examples of these items are jewelry, furs, fine art, firearms, metals like goldware, silverware and pewterware, musical instruments, computers, and cameras. Company ABC may say, the most we’ll pay for jewelry is $2,000 where Company XYZ says the most they’ll pay is $3,000. If your wedding ring is worth $5,000 and it were stolen, the most ABC would pay is $2,000. You can remedy the shortfall by adding a Personal Articles Floater to make up the difference.
For Example The sofa you bought 10 years ago, you know the one, it’s soft brown leather with big cushy arm rests that are the exact level of your head when you get horizontal with the world. It’s the kind of couch that calls your name after a long day. Some call it wear-and-tear but you call it character. And although you’d be hard pressed to admit it, you affectionately refer to her as Mabel. A pipe froze, then burst. Gross, nasty water was everywhere when you got home after a long weekend. With Replacement Cost on your home policy, it doesn’t matter that you paid $1,000 for it back then, just replace the sofa and the insurance company will reimburse you for it. If your policy has Actual Cash Value, the insurance company would value it at today’s price probably somewhere around $100 at a garage sale…even though you call Mabel’s condition “character” they’re calling it “wear and tear”.
What is it? On a home owners policy this is the coverage that pays for your housing while your home is being repaired or rebuilt after a covered loss. On a landlord policy this is what pays you for loss of rents if your rental property is uninhabitable by your tenant due to a covered loss. On a renters policy, it works the same way as a homeowners. If the apartment or house you’re renting becomes uninhabitable, this pays for your rent elsewhere.
Do I Need it? In most cases, regardless of the policy type (home owners, landlord, or renters), this coverage is included on the policy.
What’s NOT covered? Damage to the dwelling and your personal property as well as your personal liability.
For Example It’s Christmas Eve and you’ve got the whole family coming over. You took the afternoon off so you can go home and cook up a storm. Your oven is working overtime, producing those mouth-watering aromas wafting through the air. So mouth-watering in fact, you don’t notice the fire that started in the oven due to all the grease built up on the bottom. You turn around and see flames shooting through the door which ignite the towel hanging on the oven door. You grab the fire extinguisher to put out the flames but it’s already grown unmanageable. You call 911 and soon the fire department is at your house. They quickly extinguish the fire. Although the kitchen isn’t completely charred, it severely smoked damaged as is the living room and there is water everywhere. Not only is dinner at your house not going to happen, you won’t be living in your house for the next 3 months while they repair the damage. Thanks to this coverage, there’s money to pay for your rent while you’re still making your mortgage payment.
Merenz Insurance Agency
812 Central Ave
Billings, MT 59102
Office: (406) 294-9114
Fax: (406) 281-7090
Mon-Fri: 8:00 am – 5:00 pm