Choosing auto insurance that fits your needs and the needs of your family is important, so get to know the basics. Here you’ll find information about auto insurance and answers to some common questions.
What is auto insurance?
Auto insurance is meant to protect you if you cause injuries to others or damage their property in an auto accident. It can also provide protection if your car is damaged in an accident or is stolen. What protection you have is spelled out in your auto insurance policy.
An auto insurance policy is a contract between you and an insurance company. You, the customer, pay a certain amount (“premium”) to the insurance company in exchange for a set of coverages you selected. Your policy sets forth what the insurance company will or will not cover.
What does auto insurance cover?
At a high level, auto insurance typically provides four basic things – liability coverages (for injuries to others and damage to their property), coverage for damage to your car or cars, coverage for medical expenses and uninsured motorist coverages (for situations where someone without enough insurance injures you or a family member). There are a variety of coverage options available; they may vary by state and company.
What are the common auto insurance coverages?
Below are some simplified descriptions of common auto insurance coverages. All coverages are subject to the limits, terms and conditions of the actual policy you purchase.
Bodily injury liability coverage generally pays damages for bodily injuries to the driver and passengers of the other vehicle when you are responsible for an accident. It also provides coverage to defend you if you are sued because of an auto accident.
Property damage liability coverage generally pays for damages to another person’s property (e.g. their car) when you are responsible for an accident. It also provides coverage to defend you if you are sued because of an auto accident.
Medical payments coverage generally covers you, household relatives and your passengers for medical expenses that result from injuries sustained in an auto accident. It also covers you as a pedestrian if you are hit by a vehicle.
Some states have personal injury protection (PIP) in place of, or in addition to, medical payments coverage. This is also known as no-fault coverage. PIP can generally pay for medical expenses, funeral expenses, loss of income and other expenses for injuries or death due to bodily injury sustained as the result of a car accident.
Uninsured or underinsured motorist bodily injury coverage generally pays for damages for bodily injury to you and your passengers when caused by another in an auto accident and the person legally responsible either has inadequate or no insurance. This coverage varies greatly by state. In some states it may be a combined coverage, while other states may offer it as two separate coverages (e.g. one for uninsured motorists and one for underinsured motorists).
Collision coverage generally pays for damage to your car if it hits another car, object, or overturns. A deductible applies to this coverage.
Comprehensive coverage generally pays for damage to your car if it is stolen or damaged by certain causes other than collision, such as fire, theft, hail or vandalism. A deductible applies to this coverage.
What should I consider when purchasing auto insurance?
When purchasing auto insurance, make sure you find coverage that fits your needs. Think about you and your family’s specific circumstances, including your risk tolerance and your budget. If you aren’t sure what type of things you should consider, read below. Or, get help by working with an insurance agent or by calling an insurance company directly. You could also use our Auto Coverage Guide. Below are a few simple questions to help you start evaluating your needs.
- What is my household salary? What are my assets? How much in savings and equity do I have? Generally, the higher your salary and net worth, the more you stand to lose if you are ever found liable for an accident. The more assets you have, the more coverage you might want to consider.
- How old is my car and how much is it worth? Do I own my car outright or is it leased or financed? The model year and original cost of your car helps determine the approximate value of your car today. If the value of the car is low and you own it outright (i.e. no loan or lease), you may want to think about whether you really want comprehensive or collision coverages. On the other hand, if you lease or finance your car, your lender or car dealership probably requires comprehensive and/or collision coverage.
- How much am I willing to pay out-of-pocket? Deductibles are applicable to certain coverages, such as comprehensive and collision coverages. In the event of a loss, a deductible is the amount that you must pay out-of-pocket before your insurance kicks in. A higher deductible could lower your premium.
- Do I have health insurance? Auto insurance can include medical payments coverage for you and your passengers. If you don’t have your own health insurance, you should consider purchasing some type of medical payments coverage on your policy.
- Do I have children of driving age? Children are generally more inexperienced drivers and can present a greater risk on the road. If you have children of driving age, you might want to consider purchasing higher limits of liability coverage.
What does an auto insurance policy consist of?
An auto policy generally consists of three main parts, which together, form your auto policy:
- Declaration page – the declarations page (or “declarations” or “dec page”) displays information specific to you and your policy. This will usually include the name of the policyholder, your policy number, the policy term, limits of liability and deductibles you selected and the policy premium. It can also display other items such as discounts applicable to your policy, other drivers on your policy and specific vehicles insured. In addition, it will show the other documents that form your policy (in other words, it will tell you what base policy and endorsements make up your policy). The declarations page is usually longer than just one page.
- Base Policy – this document spells out the basic provisions of the insurance coverage and the responsibilities of the insurance company. It also sets forth your responsibilities, which include paying your premium and telling the company when you are in an accident.
- Endorsements – endorsements alter the base policy, just like an amendment alters a contract. Endorsements can add, broaden, limit or delete coverage or change the base policy in any other way.
It is important to read your declaration page, base policy and any applicable endorsements together, as they collectively form your insurance policy.
Note, auto ID cards, which generally arrive with your policy, do not actually form part of the policy. Rather, they provide a convenient way to show that you have insurance. They contain some basic details about your policy, such as your policy number, policy effective date and the specific vehicle insured. Some states require that you keep these in your car as proof of insurance.
Homeowners insurance provides financial protection in the event that your home or its contents are damaged. It also provides protection if you or a family member are held legally responsible (liable) for the injuries to others or damage to their property. It’s also required by most mortgage lenders.
There are different types of insurance policies that cover your home. They range from a basic policy, to those that will provide a much broader ranger of protection. Not all policies and coverages are available in all states.
What’s covered; what’s not
Most homeowners insurance policies will cover damage caused by such perils as fire, windstorms, hail, lightning, theft or vandalism. There are other homeowners policies that cover additional perils as well. Typically, floods and earthquakes are excluded. It’s important to talk to your agent or Travelers representative to learn what your policy may and may not cover. And for those perils that are not covered, there may be supplemental insurance you can purchase.
What most standard homeowners policies provide
- Dwelling coverage. Pays to repair or rebuild your home – including electrical wiring, plumbing, and heating and air conditioning – if damaged by a covered cause of loss. It’s important to buy enough dwelling coverage to cover the cost to rebuild. Learn more about cost to rebuild.
- Other structures coverage. Pays for damages to detached structures like garages, sheds, fences and cottages on your property.
- Personal property coverage. Reimburses you for the personal items in your home that may be damaged or destroyed by a covered cause of loss, which could include your furniture, clothes, sporting goods and electronics. Learn more about Travelers Personal Property insurance.
- Loss of use coverage. Pays your additional housing and living expenses if you must move out of your home temporarily while it’s being restored. Learn more about Travelers Loss of Use insurance.
- Liability insurance. Helps protect your assets and cover your defense costs in the event of a lawsuit because you or your family members are responsible for causing injuries or damage to other people or their property. Learn more about Travelers Liability insurance.
- Additional home coverages. There are a number of additional coverages you can add on to your homeowners policy to help you meet your insurance needs. Learn more about Travelers’ optional home coverages.
Be confident in your insurance choices. Contact your agent or Travelers representative today. We’ll work with you to develop a homeowners insurance policy that fits your needs and your budget.
Condominium coverage is available to condominium and co-op owners, and bridges the gap between your condo association’s master policy (which insures property owned by all unit owners) and your property and personal liability protection.
The master policy includes coverage for the actual building in which you reside, as well as common property like a pool or gazebo.
Your condominium owners policy offers you the following important protection:
- Personal property coverage
- Optional property coverages
- Personal liability protection
- Additional living expenses
- Additions and Alterations
- Loss assessment coverage
Personal Property Coverage
A condominium owners policy provides coverage for your furniture and personal possessions against such covered hazards as fire, lightning, windstorm, hail, explosion, collapse, smoke or vandalism. This is also called Contents Coverage and it ensures that your damaged or destroyed property is protected…up to the amount of insurance protection you purchase.
Theft protection: the condominium owners policy also protects your property against practically every type of theft loss in your condo or anywhere in the world. Also included is coverage for thefts from your unattended car or boat, even if there is no evidence of forced entry.
Special coverage for important possessions: Most condo policies offer special amounts of coverage for certain types of property. For example,
- $200 for money and coins
- $1,000 for theft of jewelry, watches or furs
- $2,000 for theft of firearms
- $2,500 for business property at home.
You can choose to increase these amounts if you like.
Optional Property Coverages
Every home is different. You may require special coverages for your individual needs. The following coverages can be purchased separately:
- Broadened Coverage for Contents: provides “all-risk” protection for your possessions. This means that your personal property is covered in most situations, regardless of the cause of loss.
- Contents Replacement Cost: pays full cost to repair or replace most personal property in your condo with no deduction for depreciation.
- Valuable Items Plus: provides higher limits and worldwide protection for special property such as jewelry, silverware, fine art, furs, cameras, firearms, musical instruments, and home computers for an extended variety of losses. For your convenience, no appraisal or listing of insured items is required.
- Additional Coverage Endorsement (ACE): extends protection or increases limits on special types of property (for example: jewelry, firearms, or silverware). This coverage also increases personal liability coverage by $100,000 and includes coverage for personal injury.
- Coverage for other structures: you may own other structures that are not part of your basic condo unit (such as a carport, detached garage or storage shed). If these structures are not considered to be common property, they are not covered under your Association’s Master Policy. This add-on coverage would insure these other structures.
Personal Liability Protection
Liability coverage is important protection in the event that you are sued for accidentally hurting other people or damaging their property. Personal liability helps to cover the associated legal costs and related damages. Most condo owners policies provide $100,000 (minimum) of financial protection against liability claims and lawsuits brought by others for accidental bodily injury or damage to their property:
- while in your condo
- caused by your personal activities, including most sports
- caused by your children or pets.
Medical payments: Most policies will pay up to $1,000 per person in medical bills — regardless of your legal responsibility — when an accident involves bodily injury to others. Higher coverage amounts are available.
Damage to property of others: Should you accidentally damage someone else’s personal property while that property is in your care, your condo owners policy will pay up to $500 for each occurrence.
Condo Additional Living Expenses
If your unit is damaged and you have to move out while it’s being repaired, you’re covered! The policy pays for all necessary living expenses (hotel, meals, laundry, etc.)…up to 40% of the contents coverage amount you selected.
Additions and Alterations
Once we move into a new home, we often make improvements. According to your condominium declaration and/or bylaws, you may be responsible for interior parts of your unit such as glass, walls and doors.
Additions, alterations and other improvements made to your unit are also covered. For example, if you or a previous owner installed built-in appliances, wall-to-wall carpeting, upgraded kitchen cabinets, etc., they are insured up to $2,500 (however, you can choose to increase this amount).
Loss Assessment Coverage
Condominium coverage provides up to $1,000 of protection against financial loss if damage to commonly owned property exceeds the amount of coverage in the Master Policy. If your condo association is forced to assess all unit owners for the additional loss (or for personal liability claims against the association), you’re covered!
Choosing Your Condo Deductibles
A deductible is the amount of loss you agree to assume before your insurance coverage takes over. The higher your deductible, the lower the cost of your policy premium. The deductible applies to property losses only. Liability protection does not require a deductible.
While your landlord has homeowners insurance coverage for the physical dwelling, as a renter, you need insurance to cover your personal property, such as clothing, furniture or electronic equipment, in the event of loss from fire or theft or other perils.
Renter’s insurance will also protect you if you are responsible for bodily injury or property damage to others, for example, if a visitor trips over a rug and breaks a leg.
The more you have, the more protection you need
The more your earning power and assets increase, the more you have at risk, and therefore, the more you need to protect.
If you think you need at least a million dollars of additional protection above your current homeowners or automobile liability limits, you can purchase something called excess liability. Often referred to as an umbrella policy, excess liability is the additional protection you need in case a judgment against you exceeds the liability limits of your existing auto or homeowners policy. Available in amounts ranging from one to five million dollars, excess liability coverage increases your personal liability limits by adding protection to your current auto, boat or homeowners policies.
Why liability coverage from your homeowners and auto policy may not be enough
Homeowners insurance provides a minimum of $100,000 liability coverage (the coverage that protects you when people are injured or property is damaged due to circumstances in which you or your family are responsible). Although it varies widely by state, the typical minimum liability protection for auto insurance is around $25,000 per person and $50,000 per accident.
With both of these coverages you can purchase higher limits (or amounts) of liability protection…but the most that can be purchased is $500,000 for homeowners policies or $250,000 per person, $500,000 per accident for auto insurance. Again, this may not be enough protection in today’s lawsuit frenzied environment where million dollar judgments are fast becoming the rule rather than the exception, even for seemingly minor situations.
To understand more about what excess liability coverage is, and how it can help you, please review the following topics:
- What is Excess Liability?
- Coverage provided
- How it works
- Some definitions
- How much is enough?
- Money-saving discounts
What is Excess Liability?
Available in amounts ranging from one to five million dollars, excess liability coverage increases your personal liability limits by adding protection to your current auto, boat or homeowners policies. Also, if something is not covered in your homeowners policy (like libel), and it’s not specifically excluded in the excess liability policy, you’re covered.
Excess liability coverage provides:
- Protection for covered claims by others for personal injury or property damage caused by you, members of your family/household, or hazards on your property for which you are legally liable
- Personal liability coverage for occurrences on or off your premises
- An additional layer of protection above your primary auto policy against auto-related liabilities
- Protection against non-business related personal injury liabilities such as slander, libel, wrongful eviction or false arrest
- Legal defense costs for a covered loss. Lawyer fees and associated court costs are covered
- Worldwide coverage – no matter where you go, with the only exception being situations involving foreign ownership of dwellings or cars
How it works
Depending on the type of accident, your homeowners, auto or boat policy liability limits are used up first, then the excess liability policy covers all remaining costs (up to the amounts of coverage you purchased). For example, if your neighbor dove into your swimming pool and broke his neck, your homeowners liability coverage would pay for the first $100,000 in damages. Your excess liability policy would cover the rest (including associated legal fees) up to the one million dollar policy amount that you had purchased.
Most companies require that you carry certain limits on your primary insurance policies (homeowners, auto and boat) in order to receive excess liability coverage. For example, a company may require the following primary liability limits: $100,000 for homeowners, $250,000 per person/$500,000 per accident for auto and $300,000 for boat/yacht coverage.
Insurance products tend to get loaded down with legal-sounding jargon, especially a product that specifically deals with circumstances for which you are legally responsible. Therefore, a few common definitions might help clear up any confusion:
Coverage for damages that you are legally liable (responsible) for. This includes incidents occurring at your home and/or caused by you, residents of your household or your pets. Here are some common examples: your dog bites someone, a guest falls down your front steps, your teenage son rough-houses with his buddy and accidentally breaks that friend’s leg!
This all-inclusive definition covers many predicaments. Personal injury can take many forms, including: bodily injury, shock, emotional distress, mental anguish, sickness or disease, or death arising from any of the above. Personal injury also means false arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, humiliation, libel or slander, defamation of character or invasion of privacy.
Accidental damage to the property of others caused by you, residents of your household, or your pets.
Often, insurance policies are defined not by what they cover, but by what they don’t. This is especially true for excess liability products. If something is not specifically excluded, you’re covered. Exclusions vary widely by company. Here are some common exclusions:
- damages expected or intended by insured.
- damages arising out of business or professional pursuits.
- liability assumed under contract or agreement.
- liability arising out of ownership, maintenance, use, loading or unloading of aircraft.
- liability arising out of ownership, maintenance or use of non-traditional watercraft such as jet skis, air boats or air cushions.
- liability arising out of ownership, maintenance or use of most recreational vehicles. Only snowmobiles and golf carts are covered.
- damages to property you take care of, own or use.
- damages covered under a Workman’s Compensation policy.
- liability arising out of war or insurrection.
How much is enough?
Obviously, determining how much coverage is right for you is a personal decision. Much depends on the value of the current assets you have to protect. However, there are also other factors to take into consideration. What will the value of your future assets be? Are you involved in activities that put you at greater risk? Do you have teenagers? Do they drive? Your local independent agent or Travelers representative can help you determine the coverage amount that works best for you.
Money-saving discounts are available in most states if your car, home or boat is already insured with the same insurance company. Additionally, some companies are beginning to offer an endorsement (add-on coverage) to existing homeowner policies that increases your liability limits to the millions! Your independent agent or Travelers representative can help you determine whether this endorsement is available, as well as help you determine the best money-saving coverages available.
Valuable Items coverage supplements coverage for possessions of higher monetary value, such as a diamond engagement ring, your grandfather’s pocket watch, artwork, or a valuable collection. While most homeowners policies have limits on the dollar amount and type of loss that can be recovered, Valuable Item coverage will provide the protection you need for your most valuable possessions in the event of loss through theft, accident or natural disaster.
Learn more about Valuable Items coverage by reading the following:
- When would a Valuable Items policy be needed?
- What kind of property can be covered?
- Broad coverage
- Scheduling your property
- Newly acquired property
- Loss Settlement
- Loss to a pair or set coverage
- The best precaution is prevention
When would a valuable items policy be needed?
The protection provided for personal property under the typical homeowners policy is very broad, and includes coverage for your furniture, clothing, and appliances. In addition, it provides limited coverage for such items as jewelry, silverware, furs, and firearms. However, it may not cover some types of loss that may be important to you, such as the stone falling out of your diamond ring, your antique statue that is accidentally broken, or a flooded basement that damages your personal computer. In fact, most homeowners policies set dollar limits on the amount of protection offered to cover the theft of items such as jewelry or furs ( usually only up to $1,000), firearms (up to $2,000), or silverware (up to $2,500). Optional add-on coverage to the homeowners policy (like our Valuable Items Plus endorsement) is available to enhance coverage by providing higher limits (up to as high as $50,000 in some cases, but limited to $10,000 per item) and expanded protection for special property. This usually provides most homeowners with enough coverage.
However, if you own extremely valuable items, this still may not be enough coverage. For example, if you own a diamond ring valued over $10,000 or a collection of fine arts valued over $50,000, you need more protection and should consider buying separate Valuable Items policy.
What kind of property can be covered?
Many different types of possessions can be accommodated by the Valuable Items policy. Here’s a quick listing of some of the items typically covered:
- cameras (video or still) and related equipment
- china and crystal
- coins (rare and current)
- golfer’s equipment
- musical instruments
- personal computers
- stamps (rare and current)
- works of fine art, including paintings, etchings, pictures and other bona fide works of art (such as oriental rugs, statuary, rare books, manuscripts and bric-a-brac) of rarity, historical value or artistic merit.
If you own something of value that is not listed above, it may still be eligible for coverage. You may want to discuss this with your local, independent agent or a Travelers representative.
A Valuable Items policy allows you to purchase better protection for your special property than would be available under the typical homeowners policy. In addition to being able to purchase higher limits of coverage, more perils are covered, and you receive worldwide coverage, including protection against mysterious disappearance. (Please be aware, however, that fine arts are only covered within the United States and Canada.) The policy also may be expanded to include loss due to breakage, something that is not available under the terms of a homeowners policy. That means, if you accidentally break something of a delicate or fragile nature, you’re automatically covered! Although no deductibles apply to many types of losses, a $100 deductible may be applied to breakage caused by certain perils.
Scheduling your property
Once you’ve contacted your local agent or Travelers representative to begin Valuable Items coverage, you will be asked to list all the items that you’d like to insure. Smaller items, in many cases, need not be listed individually and what is called “blanket” coverage may be required. This list, or “schedule,” would include a detailed description of each item and the appraised value. In some instances, a copy of a current appraisal, conducted within the past three years, may also be required. This detailed schedule is attached to your policy. Your premium is then based on the total amount for which your special property is valued.
Though it isn’t required for your policy, you may want to photograph each piece in your collection and store the photos in a safe place. If your entire collection is stolen or damaged, it will be easy to remember each item for your claim report.
Newly acquired property
Your Valuable Items policy automatically insures most newly purchased possessions up to 25% of the total amount of insurance already scheduled (or $10,000, whichever is less ) for up to 30 days from the date of acquisition. In the case of fine arts, you have up to 90 days to notify your agent. The benefit: you don’t have to worry about insuring your new item the moment you receive it. However, because this automatic coverage is only good for a short time, don’t wait too long, you might forget later!
Let’s say that you purchase an expensive new lens to add to your currently insured camera collection. One day later, and before you have had a chance to ask your agent to add it to your policy, your camera and new lens is stolen. With a Valuable Items policy, both items are covered!
Since items of this nature vary so widely, losses are settled differently, depending on the type of property insured. For jewelry and fine arts, in the case of a total loss to a scheduled, appraised item, you are reimbursed for the agreed value shown on your policy.
For other classes of property on the policy (such as furs, silverware, cameras, and personal computers) the value is not already agreed upon, and the value of your property will be determined at the time of the loss. You will then be reimbursed for either the:
- actual cash value of your property, or
- cost to reasonably repair your property to its previous condition, or
- cost to replace your property with a substantially identical item, or
- the applicable amount of insurance.
- whichever of these is less.
You should read your policy for the exact loss settlement provisions.
Loss to a pair or set coverage
Should you lose a jewelry or fine art item that belongs to a pair or set, you’ll receive the full amount for the complete pair or set as long as you agree to return the remaining parts to your insurer. Slightly different options may exist for lost pairs or sets of other types of property. You should read your policy for the exact loss settlement provisions.
The best precaution is prevention
In addition to insurance and depending on the value of your property, certain security measures for your residence, such as an alarm system, may be required.
A Business Owner’s Policy (BOP) is recommended for most small businesses, as it is often the most affordable way to obtain broad coverage. Combining both property and liability insurance, a BOP will cover your business in the event of such things as property damage, suspended operations, or lawsuits resulting from bodily injury or property damage to others.
A business owner’s policy offers a myriad of options to meet your specific insurance needs. Some businesses may find the BOP alone to be sufficient, while others may wish to tailor Travelers BOP by increasing key coverages, adding other options, or eliminating unnecessary coverages.
We offer the following industry segments:
- Apartment: Designed for owners of buildings used exclusively as apartment houses, including cooperatives.
- Building: Designed for lessors of commercial buildings occupied by offices, mercantile and retail establishments.
- Business: Designed for businesses providing personal consumer services, businesses repairing light consumer goods and businesses engaged in printing.
- Condominium: Designed for owners of buildings used exclusively as condominiums.
- Contractors: Designed for primarily small residential, special trade contractors.
- Garage: Designed for independently operated or franchised automotive service and repair businesses.
- Manufacturers: Designed for manufacturers of electronics, food products, leather goods, instruments, metal goods, paper products, plastic goods, rubber products, textiles and wood products.
- Office: Designed for a variety of firms providing medical, legal, financial or other professional services for their clientele.
- Religious: Designed for small churches and other houses of worship not affiliated with operating educational institutions.
- Restaurant: Designed for various food service establishments. Restaurant Pac is designed for fast food and family-style restaurants. Restaurant Pac Plus is designed for fine dining establishments, banquet and reception facilities and caterers, as well as the larger family-style restaurants.
- Store: Designed for a wide variety of retailers primarily engaged in brick-and-mortar commerce.
- Technology: Designed for technology firms providing computer consultation and a variety of technology services for their clientele
- Wholesalers: Designed for distributors of various types of durable and non-durable domestic goods.
There are a large number of built-in coverages important to protecting your small business, including:
- Business personal property (optional for some businesses)
- Building coverage (optional for some businesses)
- General liability
- Product liability
- Business income and extra expense (optional for some businesses)
- Employee dishonesty
- Equipment breakdown coverage
Small business insurance-specific coverage options are also available, such as:
- Increased fine arts coverage
- Accountants endorsement
- Lawyers endorsement
- Medical and dental office endorsement
- Eating establishment endorsement
- Spoilage coverage
- Bailees customers goods coverage
We are dedicated to the small business marketplace and we are sure that you will find an insurance product that is well suited for your business.
A commercial automobile policy provides coverage for legal liability for others’ bodily injury or property damage arising out of the use of your business automobiles. Physical damage coverage protects your vehicles in case of accident or damage caused by fire, hail, and other risks. You can designate coverage for owned vehicles as well as leased, hired and/or borrowed vehicles. More coverage options are also available.
With an umbrella liability policy in place, there are fewer worries about depleting valuable business assets or future income to cover catastrophic liability claims. An umbrella liability policy supplements your existing policy’s general liability, auto liability and employers liability limits.
Travelers Workers Compensation Coverage is an available coverage that is available to be added to a variety of policy types to round out your insurance protection. Workers compensation insurance provides benefits to employees for work-related injuries. Coverage includes medical care and a portion of lost wages when the employee is unable to work. This insurance also provides benefits for the employee’s dependents if the employee dies during work-related duty.