Here are some frequently asked questions related to insurance, with their answers:
Car Insurance
Q. Why do I need insurance?
A. It is mandated by law to hold at least the minimum coverage while driving a vehicle. If you do not have the minimum coverage, your license can be suspended.
Q. I don’t have a registration number. Can I get a quote?
A. There are many cases when you do not have a registration number of the car that you are trying to insure. One case may be that you want to buy a car, and wish to acquire a quote beforehand. For this reason, you can easily get a quote even if you do not have a registration number.
Q. What does Bodily Injury Insurance cover?
A. In case you are legally responsible in a road accident, this coverage will help you pay for the bodily injury that you cause to others. It does not pay for any injury that happens to you.
Q. If I undergo a collision, and it is the other driver’s fault, will property damage coverage offer coverage to repair my auto if the at-fault party has no coverage?
A. No. If you cause any damage to others’ property, then it is covered by property damage coverage. In case you want your own vehicle to be repaired, then you should get collision coverage.
Q. How do I reduce my premiums?
A. There are many discounts offered by insurance companies. Take advantage of them. Some of the discounts are good driver’s discount, good student’s discount, non smoker’s discount, and many more.
Health Insurance
Q. Can a US citizen buy international health insurance plan?
A. Yes, but you have to make sure that when you acquire an international health insurance plan, you are not living in the US. You can get a plan and come back to US.
Q. Are there any coverage plans for mental illness and substance abuse?
A. Generally, mental illness and substance abuse is covered in medical insurance, but the coverage extent depends upon the treatment.
Q. Although most medical coverage plans cover a broad range of health issues, but there are some costs that have to be handled by the insured. Which costs are these?
A. These costs include the deductible, and certain medical expenses which seem to be over the ‘reasonable charges’.
Q. What is the coinsurance clause?
A. Also called percentage participation. This clause mandates the insured person to share the medical expenses. For an x/y coinsurance provision, x percent will be covered by insurance company, and y will be covered by the insured.
Q. What is a pre-existing clause?
A. It is a medical condition that requires treatment during a given time, before the date of coverage. This duration can vary from case to case, and generally is about 3 to 6 months.
Life Insurance
Q. What type of a life insurance policy should I buy?
A. Go for cash value insurance if you are looking for long term coverage. In case you are looking for a policy for short duration, then term insurance would be more suitable for you.
Q. How much insurance should I buy?
A. It depends from person to person. Generally 5 times your annual income would make a good amount. It is better to talk to an insurance representative to get accurate figures.
Q. What is cash value life policy?
A. It covers you for lifetime. Premiums are at a flat rate during the payment period. It has many benefits apart from the standard ‘payment upon death’ advantage.
Q. Is it true that term insurance costs the least?
A. Term insurance does offer lowest premium rates, but every time you renew the policy, your premium amount will increase. It does not continue for a lifetime, so you need to weigh your options.
Q. What will happen if I miss a premium payment? Will my insurance coverage be lost?
A. There will be no loss or penalty if you pay it within the grace period.
Home Insurance
Q. How much insurance should I get for my home?
A. Do not insure your house for the current market value that your property holds. Keep in mind that rebuilding costs are generally lower than market prices. Insuring for market price means over-insuring, and wasting money.
Q. Can I lie ‘just a bit’ to get lower premiums?
A. A small white lie can invalidate the contract, and you could be losing all your money. There are many people who think little white lies won’t hurt, but breaching the terms leads to harsh consequences.
Q. What is covered by property damage coverage?
A. This policy covers all losses that happen to the property, or the structure of the house.
Q. Should I get insurance if I live in rented apartment?
A. If you want to buy insurance, you should have insurable interest. So whatever you are insuring must belong to you. So you cannot insure the rented building, but you can insure your belongings.
Q. What exactly is included in household contents?
A. Anything that you would carry along, when you move. For example, your fireplace is not household content, but your furniture is.