Should I Put That On My Lawn?
By Lorie Ham
Every profession has its own language and the insurance world is no different. While people in the profession may understand what different terms mean, the rest of us probably won’t. For example, if your agent recommended 15/30/5 coverage, it may sound more like something to put on your lawn than insurance. So this month we are asking Mennonite Insurance agent Yolanda Hernandez to explain some of that language in regards to auto insurance.
Q: What do these types of terms mean 15/30/5 or 100/300/50?
Yolanda: They mean: $15,000 coverage per person for bodily injury, including death, that you cause to others; $30,000 in bodily injury per accident, and $5,000 in property damage. With the higher limits: $100,000/$300,000/$50,000. If a person has a higher net worth, it is recommended they carry higher limits.
Q: What is the range of auto liability limits and what are the considerations in picking limits? Do the limits impact any other insurance?
Yolanda: Depending on the company there are various limits of liability available. Common limits include 30/60/25, 50/100/50, 100/300/100, 250/500/100 and 500/500/100. Here at Mennonite Insurance the minimum we recommend for anyone is 100/300/100, more so if you are a homeowner. Ultimately you want to protect your assets or future earnings in case of a loss. The higher the coverage limits, the more protection for you and your assets.
Q: What do comprehensive, and collision mean?
Yolanda: Comprehensive is also known as “other than collision” and it is a coverage that helps pay for damage to your vehicle caused by non-collision events such as theft, vandalism, fire, falling objects, glass breakage, windstorm, flood, hail, and hitting an animal. Collision helps pay for repairs or replace your car if it is damaged in an accident with another vehicle or object, such as a fence or tree. On both of these coverages, you are usually subject to a deductible that a client chooses.
Q: Do I have to carry comprehensive and collision on my vehicles? Should I?
Yolanda: Carrying comprehensive and collision is optional, unless you are financing the car, then you are required to carry both to satisfy your loan requirements. Ultimately the client needs to determine if they can or would be able to replace their car out of pocket in case of a total loss.
Q: Underinsured motorist coverage (UIM) sounds like I am buying liability insurance for the other cars that might crash into me. Is that true?
Yolanda: Uninsured motorist (UM) coverage protects you if you’re hit by a driver who has no auto insurance. Underinsured motorist coverage (UIM), which is usually offered alongside uninsured motorist coverage, protects you if you’re hit by a driver who doesn’t have enough coverage to pay for the damages or injuries they caused. Both coverages are highly recommended. You must be offered the coverage when purchasing auto insurance. We usually recommend these limits match the Bodily Injury (BI) section.
Q: What does “full coverage” and “all risk” mean?
Yolanda: We don’t use “full coverage” in our office. Full Coverage insurance is a general term that many agents, lenders, and car dealerships use to describe a policy that includes certain coverages. It is NOT an actual type of coverage or policy. We prefer not to use this term in our office.
Added note on this from Jerry Linscheid, Chief Executive Officer for Mennonite Insurance Services/Mennonite Aid Plan : There is no such thing as “full coverage” or “all risk”, even though those terms still get used. Even “comprehensive” is often now referred to as “other than collision” because insurance companies don’t want to give the false impression that every bad thing that happens is covered.
Q: What does insurance not cover?
Yolanda: An auto policy does not cover normal wear and tear of a vehicle. It is NOT a maintenance policy.
We hope that this was helpful, but of course, it only touches the surface as far as understanding insurance terminology. There are also many resources on the internet. A few of those can be found on this list of Insurance for Dummies on GeneralI.com, another great list can be found on TD Insurance in the article called “How to Speak Insurance”, and there is a glossary of insurance terms on NAIC.org.
The agents at Mennonite Insurance Services/Mennonite Aid Plan are also happy to answer any of your questions just give them a call at (559) 638-2327 or reach out on their Facebook page.
[By the way, don’t put 15/30/5 fertilizer on your lawn. 30% Phosphorus is way too high and it will burn the lawn.]
