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insurance 101

YOUR GUIDE TO INSURANCE BASICS

Think of insurance as a financial shield that protects you if something unexpected happens, like an accident or injury. An insurance policy essentially limits your financial burden if a covered event were to occur — and protects the people and things you care about.

The Basics: Key Insurance Terms

We know insurance can feel overwhelming. Let’s start off with a brief introduction to some common insurance terminology.

Deductible
The amount of the money you are responsible for paying before your insurance company covers the balance on a claim.
Policy
A formal written contract of insurance.
Coverage
The protection your insurance company provides against financial loss within their policies.
Premium
The amount of money you pay an insurance company to provide coverage.
Damages
The money someone is legally required to pay to someone else.
Claims
When you make a request to your insurance company to pay you after a loss.

4 Steps to Getting the Right Coverage

1. Learn About Our Insurance Types

First, it’s important to be familiar with the different types of coverages that are available. Some of the most common coverage types are car, home, renters and life insurance.

 

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2. Get a Quote

Once you settle on the kind of coverage you want, we’ll get to know you by asking some questions that’ll help us put together a personalized quote.

 

 

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3. Select an Agent and Purchase Your Policy

Here, we’ll connect you with one of our experts to help you select the right kind of coverage and design a policy custom-built around your needs, answer any questions you have about your coverage, as well as guide you through your purchase.

 

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4. Sign Up for My Account

When you’ve purchased your policy, it’s time to head online and sign up for My Account* where you can stay on top of payments, manage your coverage, receive notifications and schedule an annual insurance review — among other great features!

 

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Policies That Fit Your Needs

Each of our insurance products can be personalized to match your specific needs. Explore them below.

  1. What Is Car Insurance?

    When you buy a car insurance policy, you’re getting financial protection for both your vehicle and damages caused by your vehicle in case of an accident or injury. For example, if you’re involved in an accident, collision insurance would help cover the cost of the repairs. Your insurance would kick in after you’ve met your deductible and cover you up to the limit of your policy.

    Why Do You Need Car Insurance?

    Two reasons. First, because accidents happen even to the best drivers. And second, it’s the law — car insurance is legally required in almost every state.

    Having car insurance offers peace of mind and ensures that your financial responsibilities are limited. In cases where you’re responsible for damage to your vehicle from an accident, the amount you owe typically won’t exceed whatever deductible you have pre-arranged with your agent for comprehensive and collision insurance. If you’re responsible for damage to another person’s vehicle or injuries, your liability coverage would help cover the cost — and that doesn’t require a deductible.

    Car insurance can also cover you against medical expenses and possible lawsuits after an accident, protect you against uninsured motorists, and often covers expenses for repairs due to theft, vandalism or natural disasters.


    Car Insurance Resources

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  2. What Is Renters Insurance?

    Renters insurance is a commonly misunderstood and underappreciated form of insurance. Unlike homeowners insurance, renters insurance doesn't cover the structure of the home or apartment you live in — that’s the responsibility of your landlord.

    What you do get coverage for, however, is all of your property within your home — or when you’re on the go — as well as liability coverage against lawsuits. For example, if someone breaks into your apartment and steals your laptop, your policy would cover the cost of replacement up to the limit of your policy after you pay your deductible.

    Why Do You Need Renters Insurance?

    Renters insurance is an easy and affordable way to protect your personal property, provide liability coverage and even has your back on the go. Keep in mind that if disaster strikes and you’re robbed or lose everything in a fire, your landlord almost certainly is not responsible for covering your belongings. By paying a little now, you can avoid the possibility of paying a lot more later. 


    Renters Insurance Resources

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  3. What Is Homeowners Insurance?

    Homeowners insurance is protection for your home that helps cover repairs or replacements to your home’s structure, belongings and even covers you if you’re liable for injury to another person when they’re on your property or accidental damage to their property. For example, if your home is damaged by a fire, your policy would likely cover the cost of the repairs (once you’ve met your deductible).

    A standard home insurance policy includes essential coverages that offer protection from a specific set of common damages. Just as every home is unique, so is every home insurance policy. And you’ll have the option to customize and purchase additional coverages as they fit your needs.

    Why Do You Need Home Insurance?

    Simply put, your home is a major investment that should be protected. Unexpected damages and losses can happen, and if you’re insured, your financial responsibility is limited — the amount you owe won’t exceed a certain set amount (your deductible) up to a certain total (your coverage limit). If you don’t have coverage, you’ll likely be on the hook for the total cost of the damages.

    So why not pay a little now to avoid the possibility of paying a lot more later? Also, while home insurance isn’t typically legally required, it is likely required by your mortgage company or bank.


    Home Insurance Resources

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  4. What Is Life Insurance?

    Life insurance provides financial protection in the event you were to pass away. You pay premiums to your insurance company, and in return, they will pay your beneficiaries a death benefit — which is a sum of money — when you pass away.

    Term life insurance is a basic protection plan with no cash value that covers you for a fixed time period. Your premium will start low but may increase with age upon renewal. Whole life insurance builds up cash value over your entire lifetime that can be withdrawn to supplement retirement. Premiums start higher but do not increase with age. Read more about term life insurance and whole life insurance.

    Another type of life insurance policy offered by American Family Life Insurance Company is MyLife Flexible Life Insurance. This product offers long-term, flexible coverage that can change as your life evolves, making it a smart choice for people who value flexibility.

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     Why Do You Need Life Insurance?

    Do you have people who depend on you financially? Would they have enough money to cover the substantial costs of a funeral? What about a mortgage, debt and other expenses you’d leave behind? Having life insurance can provide peace of mind that your loved ones will have some financial protection to cover these expenses or replace lost income if you were to pass away.


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  5. What Is Umbrella Insurance?

    Think of umbrella insurance as an additional financial safety net on top of your existing coverage. Sometimes the liability limits in your auto, home, boat, or recreational vehicle policy are not enough to cover the damages from an accident or judgments from a lawsuit. An umbrella policy protects your assets and future earnings from being at risk should your other liability limits not be enough.

    For example, if you were in an accident that caused $1,000,000 worth of damages but your auto policy only covered up to $300,000, you’d be responsible for the remaining $700,000. But if you have an umbrella policy, you get an additional level of coverage that’ll help cover that remaining amount.


    Umbrella Insurance Illustarion

    Why Do You Need Umbrella Insurance?

    Consider this scenario: You’re involved in an accident and held liable for injuries and damages, and the resulting expenses exceed your primary policy limits. Without umbrella coverage, you may have to sell your assets or even give up future earnings in order to pay the remaining cost. Umbrella insurance also provides coverage that may be covered in your other policies — such as worldwide coverage, libel or slander.


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