Auto, homeowners, and liability insurance are contracts between you and the insurance company in which you agree to pay a monthly premium and the insurance company agrees to pay a specified amount for any losses according to the amounts specified in the policy. You should have these insurance policies to protect yourself from a catastrophic accident or lawsuit that would cause severe financial hardship to you and your family.
The four basic parts of an auto insurance policy are (1) liability coverage, (2) medical payment coverage, (3) uninsured/underinsured motorist coverage, and (4) comprehensive physical damage coverage.
Exclusions are clauses in your contract that limit the insurance company’s liability to pay for specific claims. An example of an exclusion is when an individual purposely damages a car. In this case, the insurance company would not be responsible to pay for any damages.
The four basic components of a homeowners insurance policy are (1) the main dwelling, (2) other structures, (3) personal property, and (4) loss of use.
An umbrella liability policy is an insurance policy that adds additional protection to the protection provided by your homeowners and automotive policies. An umbrella policy becomes effective only after the limits of your homeowners or automotive policy have been reached.
