Otterstedt- Frequently Asked Questions & Answers
1. How do I make a claim?
If you have a claim, please call us so we can help you through the process of reporting the claim and advising you on the best way to proceed. If we are not available to help you, click here for a listing of insurance companies’ phone numbers and website addresses. With some of these, you can even report a claim online.
2. Can the company refuse to renew my auto/homeowners policy?
Yes, a company can refuse to renew a policy for almost any reason. An insurer must give you 30 days notice and the specific reason for their refusal to renew.
3. What is actual cash value (ACV) vs. replacement cost coverage?
Actual cash value is determined by obtaining the replacement cost for an item of like kind and quality minus depreciation, which is usually expressed in a percentage. For example, your 32” LCD HDTV which you purchased in 2009 was destroyed by fire. To figure out how much you would receive from your insurance company, you would see what the cost would to replace that TV and then subtract the depreciation. In this example, electronics are typically depreciated by 10% for each year owned. So if the replacement cost of a like kind and quality TV is $500, then, after subtracting 10% for depreciation, you would receive $450. Replacement cost coverage is just that – the cost to replace the item with one of like kind and quality without any deduction for depreciation. So in the above example, you would receive the TV’s replacement cost of $500.
4. Can an insurance company cancel my auto or homeowner’s policy?
Yes. If an auto policy is involved, they can cancel if the consumer fails to pay the premium or if the consumer’s license has been suspended or revoked during the term of the policy. If a homeowner’s policy is involved, they can cancel if the consumer fails to pay their premium, if there is a fraud or serious misrepresentation when completing the insurance application, if the consumer is convicted of a crime or if changes are made to the property that increase the risk of loss. An insurance company can cancel a new policy for almost any reason within 60 days of the issue date of the new policy.
5. I have an older car whose current market value is very low – do I really need to purchase automobile insurance?
Most states have enacted compulsory insurance laws that require drivers to have at least some automobile liability insurance. These laws were enacted to ensure that victims of automobile accidents receive compensation when their losses are caused by the actions of another individual who was negligent.
7. Suppose I lend my car to a friend, is he/she covered under my automobile insurance policy?
Whenever you knowingly loan your car to a friend or an associate, he or she will be covered under your automobile insurance policy. In fact, even if you do not give explicit permission each time a person borrows your car, they are still covered under your automobile insurance policy as long they had a reasonable belief that you would have given them permission to drive the car.
8. What coverage does my automobile insurance policy provide me when I rent a car?
The answer to this question is not as easy as it once was. In the not-too-distant past, most automobile insurance policies would extend coverage to rental cars whenever you rented one. A personal auto insurance policy (PAP) usually extends damage protection to rental vehicles, but only if it’s a “full coverage” plan, meaning it insures against losses due to collision, rollovers, and a host of hazards (like flood, fire, and theft) collectively called “other than collision” (a.k.a. comprehensive). A bare-bones PAP, that provides only liability and uninsured motorist protection, will be useless if the rental car is damaged or stolen. PAP liability protection pays only for damage to other vehicles and property. PAP coverage may be limited to the value of the car the renter owns, not the one rented.
The best way to find out what rental car coverage you have under your automobile policy is to call us.
9. What should I do if I have an accident?
The duties you need to perform after you have an accident are prescribed both by state law and by the terms of your contract. Obviously, the first thing you should do is make sure everyone is all right and call an ambulance if one is needed.
Second, for most accidents in most states, the police should be notified.
Third, if possible you should give the other driver(s) involved in the accident your name, address, telephone number, and the name of your insurance company and/or your insurance agent. You also need to get this same information from the other driver(s).
Fourth, at the first opportunity, you should contact either your insurance agent or your insurance company to notify them that you have been involved in an accident.
Finally, there are a number of conditions in the insurance contract that you must satisfy in order to receive compensation from your insurer. For example, you need to cooperate with your insurer during any investigation undertaken during the claims settlement process. Failure to complete any of these actions can, and sometimes does, result in non-payment by your insurance company for losses that otherwise would have been covered.
10. Why does the premium for my automobile insurance go up if I have an accident or if I get a ticket?
Actuaries and statisticians who have studied the claiming behavior of people involved in accidents have long known that people who have either had an accident or received a ticket recently are more likely to have another accident in the next couple of years than people whose recent driving record has been incident free.
Insurance companies use this information not to punish people who have had an accident, but to charge them the premium that most accurately reflects their likelihood of having an accident. People who are more likely to have accidents should reasonably be expected to pay higher premiums.
11. What is no-fault insurance?
Most people believe that the insurance company of whoever caused the accident should pay the medical bills of whoever is injured. While that would seem to make sense in terms of fairness, and that is how it used to be 40 years ago, that is not how it works in New Jersey. No-Fault means that medical bills will be paid regardless of fault, under a first party system. The reason No-Fault came about was in part due to the pressure of doctors and hospitals who did not want to wait for a determination of who caused an accident in order to get paid. Under the current No-Fault system, the medical pills get paid quickly because fault doesn’t matter, and that allows injured parties to receive prompt medical care.
12. Can I sue the other party if I have been injured and the accident was not my fault?
In New Jersey, at the time you obtain automobile insurance coverage, you have the option of selecting whether or not you can sue another party if you are injured in an auto accident. This is known as choosing between the Limitation on Lawsuit Threshold and No Limitation on Lawsuit Threshold. If you select the Limitation on Lawsuit Threshold, in order to receive compensation for your pain and suffering from an auto accident, you must sustain bodily injury that results in one of the following: loss of a body part; significant disfigurement or significant scarring, displaced fracture; loss of fetus, death or a permanent injury. (An injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment.) Under the Limitation on Lawsuit Threshold, the permanent injury must be proven by objective medical evidence, which includes medical testing along with a series of other requirements. However, it is enough to know that the Limitation on Lawsuit Threshold makes it extremely difficult to obtain compensation for your auto accident related injuries.
If you select the No Limitation on Lawsuit Threshold option, there is no limitation on your right to sue, regardless of what kind of injury you sustained. So why would someone choose to limit their right to sue? The answer is simple: selection of the No Limitation on Lawsuit Threshold option carries a much higher premium than selecting the Limitation on Lawsuit Threshold.
13. What factors can affect the cost of my automobile insurance?
A number of factors can affect the cost of your automobile insurance – some of which you can control and some which are beyond your control. The type of car you drive, the purpose the car serves, your driving record, your age and gender and where you live and drive can all affect how much your automobile insurance will cost you.
Even your marital status can affect your cost of insurance. Statistics show that married people tend to have fewer and less costly accidents than do single people.
14. What should I consider when purchasing automobile insurance?
There are a number of factors you should consider when purchasing any product or service, and insurance is no different.
- First, purchase the amount of liability coverage which makes sense for you. Liability insurance covers the damages caused by your vehicle, whether bodily injury or property damage. The amount of coverage varies by policy and by the kind of damages covered. Important note: liability does not pay for damages to your or your car.
- Second, you should decide which optional coverages you want. For example, do you want the optional physical damage coverages in Part D or is the market value of your car too low to warrant purchasing them? If you car is financed or leased, you will have no choice but to purchase this coverage.
- Finally, talk to an Otterstedt representative about how we can best protect you and on of your most valuable assets.
15. My child just got a learner’s permit. Do I have to notify my insurance company?
All drivers, whether on a learner’s permit or basic license, are required to comply with the State’s financial responsibility law. As long as the driver in-training has your permission to drive the car, the insurance company should not refuse to pay a claim. However, once a basic license has been issued, you must ask your agent to add the child to your auto policy, unless she or he has her or his own vehicle with a separate policy of insurance on it.
16. If I am sued because of an auto accident can I lose my house?
Maybe. For example: you have $100,000 of auto liability insurance, you are involved in an accident which is your fault, you get sued and a jury awards the other party $150,000. Once the insurance company pays the policy limit of $100,000, you are personally responsible for paying the balance of $50,000. A judgment for that amount entered in the New Jersey Superior Court Law Division serves as a lien against any real estate owned by you in the State of New Jersey from the time the judgment is properly recorded. In addition, that lien can also attach to property to which you acquire title subsequent to the entry of judgment. You are then unable to convey clear title to the real estate without satisfying the judgment lien. The lien lasts for 20 years, and may be renewed for an additional 20 years upon motion to the Court. In addition, New Jersey permits a judgment creditor to garnish your wages until the debt is satisfied. Although you can’t be forced by a creditor to sell your house, a wage garnishment could make it impossible for you to pay your mortgage, leaving you with no option but to sell.
Something to consider is to insure yourself adequately with proper limits and the purchase of a umbrella policy. The additional cost of more liability insurance is typically small in comparison to risk of being underinsured. Ask an Otterstedt representative about an umbrella policy . It can save you a lot of headaches later.
17. Where can I learn more about purchasing flood insurance?
Many flood insurance related questions may be answered by visiting FloodSmart.gov. You may use the tools under the Insurance Center to determine policy coverage, estimate rates, and find an agent in your area. Contact an Otterstedt representative to discuss this most important and often under-purchased coverage.
18. Why Do People Purchase Long Term Care Insurance?
According to a study by Health Insurance Association of America, the most important reasons to purchase long term care insurance include the following:
- Avoid Dependence 25%
- Protect Assets 23%
- Protect Living Standards 15%
- Guaranteed Affordability 12%
19. Won’t the Federal Government Pay for My Long Term Care?
While many people think the federal government pays for long term care expenses, nationally, over 30% of all nursing home expenses are paid out-of-pocket by individuals and their families. (see graph below.) Neither Medicare, Medicare Supplement Insurance nor the major medical health insurance provided by employers is designed to pay for long term care expenses.
Distribution of Funding for Freestanding Nursing Home Expenditures for All Payers, CY 2000 Medicaid remains the largest single payer of nursing home care.
20. What services are covered by long-term care insurance?
- Assisted living
- Adult day care
- In-home assistance:
- Health monitoring
- Meal preparation
- Medication management
21. Are some services not covered by long-term care insurance?
Most insurers do not cover services for treatment previously obtained in a government facility, self-inflicted injuries or illnesses caused by:
- Substance abuse
- Declared or undeclared acts of war
- Cognitive disorders (other than Alzheimer’s disease or dementia)
Long-term care policies vary by insurer, so before you purchase a policy, it is critical that you clarify your policy’s specific benefits, exclusions and limitations with your insurance company.
22. How can I find out more about Long Term Care Insurance?
Contact an Otterstedt representative today.
23. Should I Insure My Personal Possessions?
What would it cost to replace the contents of your home with new items if everything was destroyed? Start adding up the costs of everything from home electronics to furniture to tools to clothing — you might be surprised at the total. Replacement coverage pays for the current cost of a comparable, new item. Without replacement coverage, you would only be reimbursed for the actual cash value of the used item.
24. What are the coverages I need to consider for my motorcycle?
There are several. The State of New Jersey requires that all motorcycle operators carry minimum liability coverage of $15,000 for bodily injury per person, $30,000 bodily injury per accident and $5,000 property damage per accident. Higher limits can be purchased. Other coverages to consider: fire, theft, comprehensive and collision, accessory coverage for customized parts and equipment, paint, helmet coverage, safety apparel and trip interruption, and roadside assistance
25. Why do I need renter’s insurance?
You need renter’s insurance to cover you if any of your furniture, electronics, books, or other belongings get damaged or destroyed. Renter’s insurance also covers you in the event that someone else is injured in your apartment or someone’s personal property is damaged and sues you.
26. Do I need renter’s insurance even if my landlord has insurance?
Yes, you need renter’s insurance even if your landlord has insurance. Although your landlord almost certainly has property and liability insurance, your landlord’s policy doesn’t cover the items that you keep inside your apartment, and it doesn’t protect you if a guest is injured and sues you for liability.
27. Why Do I Need Life Insurance?
Life insurance provides a death benefit, money that your beneficiary or beneficiaries can use for whatever purposes they choose, helping to:
- Pay your last expenses, which may include estate taxes and burial costs
- Replace your income and helping to maintain your family’s standard of living
- Protect your family’s home by enabling them to pay off the mortgage and other debts
- Pay others to do some of the tasks you do routinely, such as caring for an aging relative or a child, maintaining the yard or home, etc., or having the option to take time to do these things him- or herself
- Ensure a child can go to college
- Provide supplemental retirement income for your spouse or partner
- Provide funds to help settle an estate
- Pay expenses incurred to keep your small business in the family
28. How Much Life Insurance Should I have?
There’s no single right answer. “Rules of thumb” can range anywhere from 2 to 10 times your annual gross salary—provided you have an income. But estimates provide only ballpark figures, which may be inappropriate for a particular family’s needs and goals, especially if your family or spouse relies on you for more than just income.
29. Should I Purchase Life Insurance for My Child?
There are two reasons you may want to consider purchasing life insurance for your child*:
- You can purchase the life insurance at the lowest possible premium. If your child were to purchase the same amount of coverage as an adult, the annual cost would be much higher.
- You can ensure that he or she has life insurance protection.
Statistically, a child is healthier and tends to get a better underwriting class than an adult. If the child develops health problems as an adult, he or she could become uninsurable and may not be able to obtain life insurance coverage.
*Subject to limits
30. How Does My Health Affect the Amount I Pay for Life Insurance?
Underwriting is the evaluation of factors—including your height, weight, current health, medical history, family history, occupation, hobbies, driving record, and whether you have ever smoked or piloted a plane—that may affect your eligibility for life insurance at the time you apply. Through this evaluation, we can determine whether you are eligible and offer you a fair price for the risk we assume to provide you with coverage. Most people can qualify for insurance. The premium you pay is based on your overall health. If you are not in perfect health—and most people are not (only 30% of our policies are issued with our very best rates)—you can still get life insurance at an affordable price. Even individuals with health impairments such as coronary artery disease, cancer, diabetes, or a history of stroke may be eligible for insurance.
The foregoing is for informational purposes only. It provides general information and not legal advice or opinions regarding specific facts. For more information, contact a licensed Otterstedt representative.