Insurance Basics

Auto Insurance

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.


Auto insurance provides property, liability and medical coverage:

  • Property coverage pays for damage to or theft of your car.
  • Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
  • Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.


An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have insurance requirements. These coverages are as follow:

  • Bodily Injury Liability
  • Medical Payments or Personal Injury Protection (PIP)
  • Property Damage Liability
  • Collision
  • Comprehensive
  • Uninsured and Underinsured Motorist Coverage


Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

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Homeowners' Insurance

Home insurance provides financial protection against disasters. A standard policy insures the home itself and the things you keep in it.


Homeowners insurance is a package policy. This means that it covers both damage to your property and your liability or legal responsibility for any injuries and property damage you or members of your family cause to other people. This includes damage caused by household pets.


Damage caused by most disasters is covered but there are exceptions. The most significant are damage caused by floods, earthquakes and poor maintenance. You must buy two separate policies for flood and earthquake coverage. Maintenance-related problems are the homeowners' responsibility.

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Commercial Insurance

The success of a business, whether it's a tiny enterprise run out of a basement or a large corporation, is largely dependent on hard work and ingenuity. However, no matter how industrious you are, one disaster can wipe out all your profits and even destroy your business. The key to making sure that all the effort and money you have invested in a business doesn't disappear when a disaster strikes is to protect it with the appropriate insurance.

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Life Insurance

Along with your savings and investment strategy, life insurance should be part of your long-term financial planning.

You may not like to think about it, but your death can be costly to your loved ones. At the very least, there will be funeral and burial costs. There may also be estate taxes and outstanding debts to pay, such as medical expenses not covered by health insurance. If you have dependents, they will have to cope with these costs while no longer having your income to rely on. The proceeds from a life insurance policy can be of tremendous value at this time. It will provide economic assistance to your family so they can pay off the mortgage, college tuition and other ongoing expenses and maintain their current lifestyle.

There are many choices when it comes to life insurance and over 1,500 insurance companies to choose from, so it is important to work with a knowledgeable insurance agent or company representative.

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Long-Term Care

What Is Long-Term Care?


Long-term care insurance is designed to protect you and your family from the potentially catastrophic costs of extended care and assistance. Long-term care services help people with chronic illnesses or other disabling conditions remain independent.

Care may be needed while recovering from an accident or illness, during an extended period of disability, or simply as a result of the normal aging process. Home health care, adult day care, assisted living, respite care, and nursing home care all fall into the category of long-term care.


Services range from custodial help with activities of daily living (ADL’s), such as bathing, eating, dressing, etc., to occasional nursing care, to skilled nursing services provided to people who are physically or mentally unable to provide independent care for themselves.

Accidents or diseases like those listed below can happen regardless of your age:


• Slip or Fall • Car Accident • Stroke • Heart Attack

• Diabetes • Parkinson's • MS • Alzheimer's


If it happens to you, how will it affect your life?

  • Can you stay at home as long as possible and get care there?
  • Will you spend all of your savings on your care?
  • How will your children react to changes your needs make in their lives?
  • Can you choose your caregiver and/or the facility you need for care?
  • Will you leave a legacy of good memories or of tragic burdens?
  • Will you be able to leave assets to your family or church as planned?


There are only four options to pay for your long-term care:

  • You can rely on others (spouse, children, etc) to provide the help needed. This option is only available to those with a support system in place and if the amount and type of care required is possible for them to provide;
  • You can self-insure and pay for your own long-term care with your own assets and income;
  • You can spend down your assets and then qualify for Medi-Cal; or
  • You can transfer a predetermined amount of risk of long-term care to an insurance company by purchasing long-term care insurance.

    When you consider that the cost of one year of skilled care is often more expensive than 20 or 30 years of long-term care insurance premiums, this may be one of the most important investment decisions you will ever make.1

    1. "Long-Term Care - Your Financial Planning Guide", Phyllis Shelton, April, 2003.


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