Insurance insights: evaluating your coverage and your needs.(Professional Resources)

Editor's Note: As a membership service, MTNA has, for the past several years, been offering quality, low-cost insurance products through the Robert H. Clarkson insurance Agency. MTNA also is committed to educating members about these products.

Many people really do not review the definitions of their insurance policies until they need to use them. The normal mindset regarding insurance by most is that insurance is something we need to have, it's very confusing and it's always expensive. The most requested insurance coverage is the automobile and homeowner's coverages. Most people are clear about the how their deductible works and how much coverage they are required to have at their loan closing or to get their auto licensed. The other details of these policies are left to their agent to determine if they really need them or not.

The definitions are provided by the IRMI/Glossary of Insurance and Risk Management. Terms for these coverages are as follows:

Automobile liability insurance--Insurance that protects the insured against financial loss because of legal liability for automobile-related injuries to others or damage to their property by an auto.

Automobile physical damage insurance--Automobile insurance coverage that insures against damage to the insured's own vehicle. Coverage is provided for perils such as collision, vandalism, fire and theft.

Some major factors driving up the cost of automobile insurance include the rising costs of medical care, vehicle repair, jury awards, automobile theft and fraud; according to the Insurance Information Institute, this will increase rates by 6 percent in 2004. The average cost of auto insurance nationwide is estimated to be $898 for 2004--an increase of $51 per vehicle since 2003.

Homeowner's insurance policy--A package insurance policy providing property and liability coverages tailored to the needs of most homeowners, condominium owners and apartment tenants. Various versions are available depending on the type of dwelling insured and the scope of protection to be covered. It is the most commonly used insurance policy protecting homes in the United States. (Basic to modified forms are determined by type of home.)