While some consumers have difficulty paying for different types of insurance, they have recourse by purchasing personal lines insurance to protect them from traumas including death, injury or loss of property. They can’t afford traditional insurance with the current money coming into their home, so personal lines insurance allows people to drive cars and own homes while minimizing the risk for financial peril.
Here are the characteristics of personal lines insurance: (1) covers individuals from death, injury and property loss (2) makes driving a car and owning a home a possibility (3) allows people to determine their premiums and coverage (4) provides protection for high-risk consumers (5) protects valuable collectibles.
Personal lines insurance protects homeowners from floods and earthquakes. This product also provides consumers with life insurance, disability insurance, umbrella insurance, rental property insurance and healthcare insurance. Some consumers will face difficulties securing insurance because they pose too high of a risk. These consumers can attain an insurance policy, but their premiums will be higher.
There are factors impacting personal lines premiums. Consumers want to optimize coverage without breaking the bank. One key factor addresses the location of the consumer. If they live in a high-risk area, this will be reflected in their premiums. Flood plains are one example. Credit scores are a part of this mix as well. Higher credit scores lead to lower premiums. Finally, various occupations can impact and increase premiums. Roofers are one example. Their injuries and fatalities involve falls, slips and trips.
Essentially, personal lines insurance provides consumers with the means to reach their personal goals such as providing protection for their families that are experiencing monetary hardships. This proactive product provides protection from a wide range of hazards. Clients must prioritize their needs and determine where premiums need to be applied to their insurance policy.
While homeowners are not required to carry an insurance policy, auto insurance is required in every state except New Hampshire and Virginia. Even though auto policy holders are required to carry insurance, they should make use of personal lines coverage to mitigate the potential for financial ruin in the event of an accident. Some states require minimal coverage for both auto liability and personal liability coverage – Michigan, Minnesota and New Jersey.
For auto policies, personal lines insurance covers bodily injury liability, property damage liability, underinsured coverage, uninsured coverage, personal injury coverage, and medical payments coverage. Insurance companies are required by law to charge consumers for minimal coverage and consumers can minimize their deductible by acquiring additional coverage. Auto insurance companies calculate premiums based on the age of the driver, driving record, vehicle type, location and duration on the road.
Earlier, we mentioned personal umbrella insurance. This type of insurance protects the policy holder from liability claims that exceed the limits of the coverage. This insurance policy provides coverage for both home and auto. Policy holders are conservative, moderate, or aggressive. These categories address consumer spending patterns for insurance coverage purposes.
Conservative consumers want to protect their savings account. They pay extra money to receive more coverage by using personal umbrella insurance. Moderate consumers take on additional risk to keep their premiums at a lower level. They would forgo personal umbrella insurance to keep money in their pockets. Aggressive consumers choose higher deductibles leading to lower premiums. The higher your deductible, the less money that the insurance company has to pay out for an accident.
Determining the right insurance policy depends on what you’re looking to get out of your coverage. To determine risk level, consumers must identify the specific product that they need to cover such as a home. For example, policy holders must determine if they need protection from floods or earthquakes.
Consumers need to measure the potential for covering out of pocket expenses. After they scrutinize a policy, they need to further analyze the strengths and weaknesses of particular situations. If consumers cause an auto accident that severely damages both vehicles, they need to have enough money in their savings account to cover out of pocket expenses. Our policy holder would be considered a moderate risk in this situation because his savings account can barely cover his deductible.
To summarize, personal lines insurance safeguards policy holders from financial devastation that stems from accidents, illnesses, lawsuits and natural disasters. The extent of the coverage needs to be specific and focus on opportunities to minimize risk. Policy holders also need to flesh out the potential threats that lead to financial ruin.