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F.A.Q.

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?

YES – IT IS COMPULSARY IN THE STATE OF NJ.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. 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.

14. 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.

15. 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 a Franchino representative about an umbrella policy . It can save you a lot of headaches later.