Personal Lines of Insurance
Personal lines insurance includes property and casualty insurance products that protect individuals from losses they couldn’t afford to cover on their own. These types of insurance lines make it possible to do things like drive a car and own a home without risking financial ruin.
Personal lines insurance includes products such as homeowners insurance, flood insurance, earthquake insurance, renters insurance, automobile insurance, life insurance, disability insurance, umbrella insurance and health insurance. These insurance products protect individuals and families against potentially crushing financial losses caused by fire, theft, natural disasters, death, accidents, lawsuits and illness.
Some types of personal insurance, such as automobile liability insurance, are often required by law in most places in America. Required minimum levels of automobile liability insurance, for example, is common and can vary by jurisdiction. Other types of personal lines insurance, such as comprehensive and collision automobile insurance and homeowners insurance, can be required by lenders when property is collateral on a loan. The amount of insurance coverage you can get generally depends on how much an individual is willing to pay in premiums; the more someone is willing to pay, the more insurance they can obtain. Individuals can usually tailor each policy’s coverage and deductibles to strike the right balance between the amount of coverage and the cost of premiums. Premiums can also vary according to where you live.
Basic personal auto insurance is mandated by most states and provides you with some financial protection in case of an accident. But is it enough? What are the options? Learn how car insurance works and what types of coverage are available.
Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy.
Auto insurance provides coverage for:
- Property – such as damage to or theft of your car
- Liability – your legal responsibility to others for bodily injury or property damage
- Medical – the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses
Basic personal auto insurance is mandated by most U.S. states, and laws vary. Auto insurance coverages are priced individually (a la carte) to let you customize coverage amounts to suit your exact needs and budget.
Policies are generally issued for six-month or one-year timeframes and are renewable. The insurance company sends a notice when it’s time to renew the policy and pay your premium.
Your auto policy will cover you and other family members on your policy, whether driving your car or someone else’s car (with their permission). Your policy also provides coverage if someone who is not on your policy is driving your car with your consent.
Your personal auto policy only covers personal driving, whether you’re commuting to work, running errands or taking a trip. It will not provide coverage if you use your car for commercial purposes—for instance, if you deliver pizzas.
Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a ride-sharing service such as Uber or Lyft. Some auto insurers, however, are now offering supplemental insurance products (at additional cost) that extend coverage for vehicle owners providing ride-sharing services.
A standard homeowners insurance policy insures your home’s structure (house,) and your belongings in the event of a destructive event, such as a fire.
In addition, homeowners insurance policies are generally “package policies.” This means that the coverage includes not only damage to your property, but also your liability—that is, legal responsibility—for any injuries and property damage to others caused by you or members of your family (including your household pets).
Insurance for condominiums and co-op- apartments generally covers your belongings, liability and certain parts of the interior structure as defined in the by-laws or proprietary lease.
Renters insurance provides similar property and liability protections to those who don’t own their home.
All forms of home insurance also provide additional living expenses (ALE) coverage for the extra costs of living away from home if it is uninhabitable due to damage from an insured disaster.
If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgements against you and your attorney’s fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability protection. That’s what a personal umbrella liability policy provides.
An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander.
For about $150 to $300 per year you can buy a $1 million personal umbrella liability policy. The next million will cost about $75, and $50 for every million after that.
Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.
If you rent a house or apartment and experience a fire or other disaster, your landlord’s insurance will only cover the costs of repairing the building. To financially protect yourself you will need to buy renters or tenants insurance.
Renters insurance protections
Like homeowners insurance, renters insurance includes three key types of financial protection:
Coverage for personal possessions
Additional living expenses (ALE)
The big difference is that renters insurance doesn’t cover the building or structure of the apartment—that’s the landlord’s responsibility.