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Personal Lines of Insurance: A Complete Guide (Updated 9/4/21)

Buying insurance for your home, automobile, motorcycle, boat or other personal assets seems like one of those routine, necessary things that everyone must do but no one wants to do.  You are bombarded with messaging telling you that it is all about the price, the convenience, the time and the name.

No one is telling you that the difference between a policy that meets your needs and one that misses the mark is in the coverage details and how you choose to make the policy fit your needs.  In this article, we’ll discuss the common “personal lines of insurance and give you straightforward and realistic information to help you buy the right insurance for you.

Homeowners Insurance

Your home is likely the largest purchase you will ever make.  There is a broad range of coverage available out there today with tremendous variation in coverage, each one being sold under the same label as a Homeowners Insurance Policy.

To add to the confusion, there are different types of Homeowners Policies for different types of ownership situations.  The chart below illustrates the various types of Homeowners Policy forms.

Form Known As Used For
HO-3, HO-5 Homeowners Policy Fee simple ownership (you own the land and the dwelling). Must be owner occupied.  May be one or two family structure.
HO-4 Homeowners Policy

Tenant Homeowner

Rental Policy

Tenant in an apartment, house, room, or condominium that they do not own.
HO-6 Homeowners Policy

Condo Unit Owners

Those who reside in a condominium unit that they also own. In some cases, this form may be used for an owner of a condominium that is occupied by a tenant.

Moreover, there are many versions of each form, some standardized and some carrier specific.  It is very difficult to determine if the policy being sold to you as a “Homeowners” Insurance Policy meets your needs or not unless you delve into the specific coverages in more detail.  For purposes of this article, we will focus on the HO-3 and HO-5 forms for fee simple ownership.

Keep in mind that the Homeowners Policy is built to serve the average homeowner.  An average policy probably has too much coverage for half of the people and too little for the other half.  Let’s break down what coverage is included in the Homeowners Policy.

Coverage on the dwelling is typically stated on the declarations page.  Most insurance companies will increase this limit each year to keep up with inflation in building materials and costs. One of the most important issues in designing a Homeowners Policy is to determine the correct limit to carry on the dwelling.

This section of the policy covers the actual building and all the items attached to the building such as electric wiring and fixtures, pipes, fixtures, flooring and more.  It is most often insured on a Replacement Cost basis – which means that the insurance is intended to pay for the cost to replace the damaged property or item with no penalty for the physical depreciation of that property.

It is important to remember that replacement cost has little or no relationship with the market or sales value of the property.

What Is Replacement Cost?

Replacement Cost coverage does not mean what most people think.  This is a form of settlement that is outlined in your insurance contract.  In its simplest form, Replacement Cost means you get “new” for “old”.  To be more technical, it is a payment without a penalty for physical depreciation.

Most insurance contracts, including homeowners policies, include an insurance to value clause that forces you to insure for some percentage of the actual replacement value of the structure in order to receive full benefits from the insurance policy at the time of a loss.  For most homeowners policies, the important threshold is 80%.  So, if you do not insure for at least 80% of the replacement value your loss will have a depreciation factor applied.

Let’s review an example of how this works.  Say that you have a home that is about 3,000 square feet in area.  Based on the type of construction, your State and county, the age of the house and other physical characteristics we calculate that the full replacement cost of the house is $750,000 (or $250 per square foot).

However, your homeowners policy shows a limit of coverage for the home of $550,000.  In a strong gust of wind during a rainstorm, your 20-year-old roof is damaged and must be replaced.  The estimate you receive to replace your damaged roof is $10,000.  If you insured the house for at least 80% of replacement cost, your loss settlement would be at replacement cost and you will receive $10,000 less your deductible.

Because you did not insure for at least 80% (which would have been $600,000), your loss settlement is at a depreciated value (we call this ACV or actual cash value).  A 20-year-old roof is probably through two-thirds of its expected life (if your roof has 30-year rated shingles), so the loss settlement will be $10,000 less two-thirds, or $3,300 less your deductible.  Imagine the effect on this if you have a partial fire loss of $100,000 or more.

It is important to carefully consider the amount of insurance that you purchase.  Keep in mind that when it comes to insurance, you are dealing with construction costs and not market value.  Market values tend to fluctuate and can go up and down depending on the economy and many other factors.

Construction costs generally trend upward based on inflation, but they rarely ever go down.  It is not unusual in these times to see a home where the construction or replacement values is much higher than the market value.  We also remember times when the opposite was true, and you could insure a home for much less than the purchase price.

Questions on Replacement Cost & How to Pick the Limit on Your Homeowners Insurance

Most “on-line” quotes you receive will be for a HO-3 Form.  We prefer to use a HO-5 form whenever possible.  The HO-3 form includes Special Perils for the Building and Broad Perils for Personal Property (contents).  Special perils are better, and the slight price difference is usually worth it!

If you spill fingernail polish on your hardwood floors, your sofa and on your expensive oriental rug is it covered?  Under a HO-3 form only the hardwood floors are covered.  If you purchase a HO-5 form, all those items are covered.

Deductibles: Watch Out For The Hidden Ones!

It is normal to have a deductible of $1,000 or higher for property losses on your Homeowners Policy.  There are some excellent points to consider even higher deductibles.  We do caution you for two types of deductibles that you may not even know that you have (and you may have to dig down to the very fine print on the on-line quote you received).

Hurricane Deductible.  This is a higher deductible that applies only to damage done because of a named storm or hurricane.  Often these deductibles are 2 - 5 percent of the coverage limit on the dwelling or higher.  If your home is insured with a limit of $700,000 on the dwelling, that could be a deductible as high as $35,000.  Some carriers place hurricane deductibles on all New Jersey and most Pennsylvania policies regardless of proximity to the coast.

Age of Roof Penalty.  While not listed as a deductible, some carriers are sneaking into their quotes a limitation on replacement cost coverage for older roofs.  In this case, you receive a depreciated value rather than the replacement value for the damage.  For example, if you have a roof that is 30 years old with 40 year rated shingles, you may only collect 25% of the cost of the new roof because of depreciation.  This acts like a 75% deductible on your roof.  You would certainly want to be aware of this limitation in advance.

Jewelry & Other Special Items

Most Homeowners Policies have limitations for loss by theft on jewelry and other valuable items such as silver, gold, silverware, guns, stamps, coins and money.  There are different ways to increase the limits of these items either by adding specific coverage for each item or by adding to the overall limit of coverage on the type of item.

We suggest that you consider adding a special coverage endorsement (sometimes called a rider) on these items to get both full value for the item and broader causes of loss.

More Info On Jewelry & Special Items Coverage, Plus Why A Rider Makes Sense

There are certain categories of property that are limited in your homeowners policy. Some types of property are limited to a dollar amount for all perils while others may be limited to a dollar limit for only theft.

For example, there is no limitation for jewelry for the peril of fire, but you may only have $2,500 of coverage for the peril of theft. All policies are different, so make sure to read yours to review these limits, but here is a chart that may be useful to identify the kinds of property that are generally limited.

Property (limited for all perils) - Money, bank notes, bullion, gold, accounts, deeds, letters of credit, passports, tickets, stamps, watercraft, trailers, property used for business purposes, electronic apparatus and accessories while in or upon a motor vehicle.

Property (limited for theft) - jewelry, watches, furs, precious stones, firearms, silverware, goldware, platinumware, pewterware, and gold, silver, platinum, or pewter plated items.

Why Purchase A Rider?

You may add coverage for all the items listed above on an endorsement we often call a “rider” or “floater”. There are many advantages to do this. You may expand the coverage – the actual perils that are covered for that property. A rider is usually an economical way to get the higher limits of coverage that you need on a cherished item.

In addition to the items listed above, it may be advisable to consider special coverage for collectibles, glassware, antiques, fine arts, paintings, musical instruments taken off the premises and sporting equipment. In general, think about any personal property that has a high value, special meaning or you cannot replace and consider a customized coverage solution.

Coverage For Your Finished Basement

You will find huge variations in the coverage offered by different insurance companies for Water Back Up Coverage.  This is a very important coverage if you have a finished or partially finished basement.  We routinely see policies that exclude this coverage.

Most policies will allow you to purchase some limit of coverage for this – a typical limit may be $10,000.  We have options as low as $5,000 of coverage up to an unlimited amount (subject to the building coverage limit).  This is an area where it is important to make sure the policy fits your needs.

There are many other important coverages that are not often included in the quote you may receive when you are offered a cookie cutter solution for your home insurance needs.  We think these are some of the very important ones.

Service Line Coverage

This is a special coverage to cover damage to underground utilities and appliances for which the homeowner is responsible. This is a relatively new coverage that has become available.

Items targeted by this coverage are water, sewer, and electric lines that may run under your property to the municipally owned connection point. We have had many cases where an insured is reimbursed for thousands of dollars of damage to such an underground line.

Equipment Breakdown

Equipment Breakdown coverage fills a gap that is not otherwise covered by property insurance. This contemplates the breakdown of mechanical or digital systems that may be subject to unusual losses.

Some examples of this would include electrical arching, explosion or tearing asunder of a pressure vessel (boiler, hot water heater, etc.), or breakdown of an air conditioning compressor. This coverage is not a product warranty and generally does not coverage normal wear and tear or aging.

Flood Coverage

Flood is a peril that is excluded from homeowners and other forms of property insurance. There is a federally backed system of flood insurance available in the United States which you may purchase through our agency. The cost of flood insurance varies greatly depending on the location of the property.

There is a federal program of flood zone mapping that largely determines the cost of flood insurance and may determine if a flood insurance policy is required by your mortgage company. We have strong relationships with flood insurance programs for federal coverage, private carrier coverage and excess flood coverage.

It is important to note that each year there are millions of dollars of flood damage to homes not in a flood zone. We suggest that you review the benefits of a flood insurance policy regardless of the requirements of your mortgage company.

Earthquake and Earth Movement Coverage

Earthquake and earth movement are excluded causes of loss in the typical homeowners policy. Depending on the location of your home, we may be able to add this coverage for an additional premium to your policy.

Did you know that New Jersey is near a major fault line?

Sinkhole Collapse Coverage

Sinkholes are another excluded cause of loss from the homeowners policy. The issues of sinkholes are usually a geographic concern as they seem to be more prevalent in some areas of the country than others.

There have been instances of isolated sinkhole issues which have generally been traced to mining operations and abandoned mine shafts nearby. If you live on Coppermine Road, or Mine Street – you may want to think about adding this coverage to your policy.

The Homeowners Policy Also Provides Very Broad Personal Liability Coverage

The Liability coverage does what you think it does – protects you if someone gets hurt or injured on your property.  But it also provides protection if you cause bodily injury or property damage away from the premises during your personal (not business) activities.

For example, if your child is playing golf and accidentally hits another golfer causing some injuries that result in needed medical attention, loss of work, and ongoing treatment – the Homeowners Policy provides coverage (defense and settlement/judgement up to your liability limits).

Make Your Liability Coverage Fit For You

We think it is important to make sure that your Liability coverage includes some extra coverage that you can add to your policy – you’ll be surprised at the low cost of these enhanced coverages.

Personal Injury Liability

Personal Injury liability extends your liability coverage beyond Bodily Injury and Property Damage. Typically included in Personal Injury coverage is slander, libel, false arrest, and wrongful eviction. Often, this coverage is included for first dollar protection on a personal umbrella policy.

We think that in our litigious society, it is important to add Personal Injury Liability to your coverage program either through your homeowners policy or a personal umbrella policy.

Incidental Farm Liability

The typical homeowners policy excludes liability coverage from any and all business operations. Farming, even if not for a profit, is considered a business operation. Therefore, it is critical to make sure that your homeowners policy includes liability for farming if you have any farming exposure.

Farming exposure would include any or all the following:

  • You get a farmland tax exemption from your municipality or township
  • You raise, breed, or board any animals
  • You grow, raise, or sell crops, hay, eggs, fruit, vegetables, animals, or any other farm product to others
  • You lease land to others for farming purposes
  • Ownership of tractors or other equipment for farm use
  • Anything else that looks like farming

Not all insurance carriers will add this specialized liability coverage to a homeowners policy and many small farms may need another form of insurance called a Farmowners Policy for adequate coverage.

We have more than 30 years of experience in agricultural insurance. Call us if you are not sure if you need farming liability coverage.

Short-Term Rental Liability Coverage

If you are using any portion of your home or your premise for short-term rental (such as Airbnb, or VRBO) you may not have liability coverage for this portion of your exposure. Some of the rental platforms may include limited coverage for the property owner but we urge you to consult your attorney to gauge the adequacy of any coverage provided.

Some insurance carriers will endorse your policy for an additional premium to pick up this liability exposure.

Personal Automobile Insurance Policy (PAP)

It is no secret that New Jersey ranks quite high in the nation for the cost of personal automobile insurance. We spend a lot of time working with and for our clients to make sure that they have the best possible deal for their automobile insurance. But it is worth a few minutes to consider the coverage represented by this significant expenditure. We are outlining the major sections of the Personal Automobile Insurance policy with some special emphasis on important coverage details.

Liability Coverage

Liability insurance is mandatory for all registered automobiles in New Jersey. We call liability insurance a “third party” coverage in that you are purchasing insurance that ultimately pays benefit to a party other than you, the person who purchases the policy. There are two major categories of injuries that we are concerned with in automobile liability insurance, and they are bodily injury and property damage.

Bodily injury is the responsibility that you have if your negligence in an automobile results in injury to another person or persons. Property Damage relates to your responsibility for another’s property arising from an automobile accident.

A very important consideration in liability insurance is the cost to defend yourself from allegations of negligence. You may get sued for bodily injury or property damage, even if you are not responsible for the damages. We call this “Defense Costs”, and it is included in the Personal Automobile Insurance policy with no dollar limitation. It's also outside of your selected limits of coverage.

Limits for liability on a Personal Automobile Insurance Policy may be written on either a single limit or a split limit basis. A single limit includes damages for all bodily injuries and property damage within the limit. Split limits separate the coverage into a limit for bodily injury to any one person, a limit for bodily injury for all people injured in the accident, and a limit for property damage.

What Limit Should You Purchase?

The minimum limits for liability in New Jersey as mandated by State Law are $35,000 on a single limit basis and $15,000/$30,000/$5,000 on a split limit basis. We believe that these minimum limits are probably much too low for most established adults or families.

Here’s an exercise to help you understand the consequences of low limits. The next time you stop at a red light, estimate the value of the car in front of you, the car behind you, and the car next to you. This gives you a concept of what sort of limit you may need for just property damage.

Our recommendation is to purchase a limit that is enough to qualify you to purchase a Personal Umbrella Policy. That would give you a limit of at least $1,000,000 plus your personal automobile limits. Typically, you need to purchase a liability limit of $300,000 (single limit) or $250,000/$500,000/$100,000 (split limits).

Automobile owners with little or no personal assets should also consider limits more than State required minimums because it is possible for a judgement over your automobile insurance limits to be paid over a twenty-year period from future earnings.

We have seen young drivers have wages garnished to satisfy a judgement that came in higher than their insurance limit. In other words, having a low limit does not excuse you from meeting the standard of responsibility for damages that is established by a court.

An example of this would be if a driver, who is just starting a first job after college, rear ends a vehicle when approaching a traffic light. If that vehicle happens to be a new Mercedes Benz and the driver has State minimum split limits, the insurance company is only responsible to pay up to $5,000 for damages to the Mercedes. The driver may be responsible for paying the balance even if they have no assets to speak of. If the damages to the Mercedes are $30,000, the driver faces the prospects of starting a first job now being $25,000 in debt. That doesn't even include any college loans, etc.

Uninsured Motorist Coverage

This is another mandated coverage in New Jersey and most other States. Uninsured Motorist is a coverage that steps in when you are hit by an uninsured vehicle. Your damages are then paid by your policy which fills in when the responsible party has no insurance.

There are a high percentage of uninsured vehicles on the road in most highly populated regions in our country. We recommend you match your Uninsured Motorist Coverage to the same limits that you purchase for Liability.

In NJ, our Uninsured Motorist Coverage also includes what we call Underinsured Motorist Coverage as well. This provides coverage when the party that hits you has lower limits than you and your policy serves to fill that gap.

Personal Injury Protection

New Jersey is called a “No-Fault State”. That simply means that if you are involved in an automobile accident, your medical coverage is provided by your automobile insurance coverage regardless of who is at fault.

There are two ways to purchase Personal Injury Protection (PIP) coverage in New Jersey.

You may purchase this with a Lawsuit Limitation, which is the most common way to purchase the coverage. When you do this, you are agreeing to waive your rights to sue the other party to collect your benefits. There are thresholds that, if met, allow you to bring suit even when you select this more restricted coverage.

The other way to purchase this coverage is with No Lawsuit Limitation, which gives you the right to collect benefits and sue the other party with no restrictions. This is a more expensive option.

There are many more options regarding the benefits under PIP which are outlined in your Buyers Guide, which you receive with your insurance policy each year. We are happy to review all these options for you. A more detailed description of PIP will be provided in a future article.

Physical Coverage Damage – Coverage For Your Scheduled Vehicles

This is an optional coverage from the State’s perspective. If you have a loan on your vehicle, the lender will certainly require you to have both Comprehensive and Collision coverage. This is a “first party” coverage since the insured is the one who receives the benefit or payment from the policy in the event of a loss.

There are several types of Physical Damage Coverage.

Comprehensive Coverage

Comprehensive Coverage is a very broad coverage for damage to the vehicle arising from an accident that includes pretty much everything other than a Collision. The way the policy is written, this coverage includes everything unless they specifically excluded it in the policy.

The major perils that fall under Comprehensive include theft, fire, vandalism, hitting an animal, and glass damage. You purchase this coverage with a deductible.

Collision Coverage

Collision Coverage is for damage resulting from a collision (hitting another vehicle or object) or upset or overturn. This coverage is purchased with a deductible.

Both Comprehensive and Collision coverage are settled based on the vehicle’s Actual Cash Value or book value. The important thing to understand is that it incorporates the depreciation in value over time for the vehicle.

Towing Coverage

This is typically available if you purchase Comprehensive coverage. Towing coverage provides coverage for towing or roadside labor you need for the vehicle because of mechanical breakdown or other causes. Typically, you do not need to be involved in an accident for this coverage to apply.

Rental Coverage

Rental Coverage is extra coverage that you purchase to pay for the use of a rental vehicle to replace your covered automobile if it is damaged in an accident. You may select the limits for this coverage, and we suggest you review current daily rental rates in your area when you choose this limit.

Other important Physical Damage coverages usually added to your policy with an endorsement include:

Stated Amount Coverage

This is an endorsement that some insurance carriers add to your policy. But remember, it is not a coverage. It is a limitation!

Normally, for physical damage, the policy pays you the lesser of the cost to repair or the Actual Cash Value (book value). When you have a Stated Amount Endorsement, you get whichever is less between the dollar limit on the State Amount Endorsement, the cost to repair, or the Actual Cash Value.

We find that often when this endorsement is used, the limit shown on the endorsement is less than the projected book value of the vehicle. We rarely recommend the use of this endorsement.

Replacement Cost Coverage

Some insurance companies offer a replacement cost endorsement for certain vehicles. Generally, these vehicles need to be newer and in good condition. This endorsement eliminates the depreciation factor from the loss settlement. Under this endorsement, you get new for old. Contact us if you are interested in this coverage.

Gap Coverage

We have spent some time describing the effect of depreciation on the loss settlement on a vehicle. It is quite possible to owe more for a car loan than the car is worth on an Actual Cost Value (depreciated basis).

We call the difference between what you may owe on a vehicle and what the vehicle is worth the “gap”. Many of our insurance companies offer this coverage as an endorsement to the policy. This gap coverage can apply to either a loan or a lease. Keep in mind, when you negotiate the purchase or lease of a new vehicle, you can often get the finance company to include Gap Coverage for no additional cost.

Purchasing The Right Auto Insurance Coverage Is Important

While your home may be the largest investment you make in your life, driving an automobile may be the most hazardous activity that you do. Most of our lifestyles are driving-centric and our cars are literally our home away from home.

We believe that you should pay close attention to the coverage you have on your policy and carefully consider your limits. For a small extra premium, you can more adequately protect yourself from the threat of financial ruin arising from an activity that most of us take totally for granted.


first person closeup view of handshake

How, And From Whom, You Buy Your Insurance Matters

We are inundated each day with branding, messaging, and advertising. With the advances in technology and social media, it seems to be everywhere all at the same time. And it works.

We cannot help but be influenced by a catchy jingle, a compelling story, or the assault of repetition of a message that we hear dozens and dozens of times each day. But with insurance, the story that you are hearing, the messages that you are receiving, and the brands that come to mind may not be telling you the entire story.

You should note that I am not objective in this matter. I am an independent insurance agent with almost forty years of experience–so I have a definite point of view. I ask that you read further to hear me out–my budget for social media, branding, and advertising is virtually non-existent, so this is my only way to tell our side of the story.

What Is An Insurance Agent?

In basic terms, an insurance agent is any person who is licensed to review, discuss, and effect insurance coverage in each State (yes, insurance is regulated by the States). In practice, even though all agents are licensed with the State in the same manner, there are a variety of types of insurance agents.

Captive Agent

A captive agent is a licensed insurance agent who represents a single insurance carrier. These agents are typically the sales arm of the insurance company. Mostly, these agents may only sell you products from their “captive” insurance carrier.

Direct Agent

A direct agent is a licensed insurance agent who is an employee of an insurance carrier. These agents, much like the captive agents mentioned above, are generally the sales arm of the insurance company for whom they work and limited to offering you products from only their employer insurance company.

Online Representative

An online representative is someone working for an insurance provider, typically an insurance company, but perhaps a technology or other company involved in the distribution of insurance products who walks you through an automated process to purchase insurance coverage. They may license these representatives in your State, or they may work “under” a licensed insurance agent. They typically offer products and services from a single insurance company.

Independent Agent

An independent agent is a licensed insurance agent who represents multiple insurance carriers because of appointments (contracts) that are entered with each carrier that outline the specific duties and responsibilities of the agent and the insurance company.

These agents may offer you a range of products from all the insurance companies with whom they are contracted. The Agency often consists of many licensed insurance agents who work together to provide ongoing service to their clients.

Over my career in insurance, I have met competent and professional practitioners of insurance from each category and type of insurance agent. Each consumer will make their selection of how they wish to purchase insurance based on their own needs and goals from the process.

A Real Life Case Of How Purchasing Insurance Matters

We recently worked with a homeowner who was being cancelled by their insurance company because of too many claims during a five-year period.

In NJ, each insurance company files guidelines for eligibility (with the State) that they must follow. All of them include a specific number of claims over a period that allows them to terminate insurance coverage. It is typical for carriers to have a guideline of three claims over either three or five years as the tipping point.

In this case, the homeowner had three claims over a five-year period. One claim was from wind damage and the insurance company paid out $1,200. The second claim was reported by the homeowner for water that seeped into their basement during a period of heavy rainfall. This claim was declined by the insurance carrier because this type of loss is typically not covered by a homeowner policy. The third claim was for storm damage and the insurance company paid out over $40,000 for the damage. The third claim during the period for that insurance company generated a non-renewal notice, and this homeowner needed to find new insurance coverage.

There are many points we can gather from this real-life situation.

  1. The second claim perhaps should not have been reported. A competent agent would know that this is not covered. Many carriers will count every claim inquiry, including declined claims, as a reported claim. By the way, the homeowner told us that there was no damage to either the building or to their personal property. They were just wondering if their policy would pay for waterproofing to repair this condition to their home so that there would not be damage in the future.
  2. This homeowner reported the claim directly to the insurance company because their agent (in this case a captive agent) directed them to the insurance carrier’s website for claims. Sometimes direct reporting may not be optimal for the best results. As an independent agent, we believe that helping our clients at claim time is a primary duty and responsibility. It gives us an opportunity to explain how the claims process works to our client. It gives the client an opportunity to explain exactly what happened to an advocate rather than a report taker. It also gives us the chance to explain the consequences of the claim and what that claim may do to their ability to purchase insurance in the future or to their cost of insurance.
  3. Here, the homeowner had a policy with a very low deductible. We generally recommend a range of deductible limits to our clients with the express purpose to help them avoid tiny claims which may cause them to be cancelled in the future if they have larger, more substantial claims. Here, if the homeowner had a deductible of $1,000, they may not have wanted to report a claim that would only pay them $200.

By the end of our conversation, the homeowner appreciated our point of view and asked if we were able to obtain a policy for them. We knew that all our insurance carriers would decline this account because they had been non-renewed for claims activity, but we contacted one of our insurance company underwriters, explained the second claim that should never have been a claim, and that carrier agreed to offer a policy for the homeowner.

This new client has expressed to us that they wish they had worked with an agent on a “consultative” basis before they had to learn the hard way that it matters how (and from whom) you purchase your insurance.

Key Insurance Buying Takeaways

  • Work with an agent who is going to ask you a lot of questions and work with you to design an insurance policy that works for you.
  • Expect ongoing service from the person who understands your account and knows your needs for claims, payment issues, new and improved coverage, and alternative competitive quotes for your coverage.
  • The convenience of websites and toll-free telephone numbers for service is lovely but may not always get you the best advice.
  • Work with an agent that you trust and who will tell you what you need to hear, which may not always be what you want to hear.

We think that being an independent insurance agent puts us in the best position to help you get the most from your insurance program.


older couple on swing

Navigating the World of Medicare

Written By: Jacob Bobick, Account Executive

Few topics garner as much attention for new (or experienced) retirees as the federal Medicare program. When I got my start in the financial services world over 20 years ago, my firm specialized in helping people transition into their “non-working” years. We set up pensions, rolled 401(k)s, managed IRAs, that type of thing.

The number one question I got, without fail, was: “what am I going to do about my health insurance?” I realized early on that I had better learn the ins and outs of Medicare to help my clients figure this out!

A New Generation of Retirees and Insurance

It used to be common for a retiree to secure lifelong healthcare benefits for themself, their spouse, and their dependents upon retirement - often after decades of diligent service. Few careers or companies offer that type of retirement package these days. There are several reasons for this, but the most common one is simple: expense.

We have all seen the skyrocketing costs of healthcare, and simply put, employers are no longer interested in footing this bill. That leaves retirees looking at $1,000 or more every month in health insurance premiums. A husband and wife can easily be over $2,000/month just to cover the two of them. Enter, Medicare.

Happy 65th Birthday!

It is a funny thing about birthdays… we all look forward to them every year, as it is our special day. But what we do not look forward to is that number climbing as we get older! I can remember as a kid being excited about my 16th birthday so I could get my driver’s license, then turning 18 so I could stay out a little later, and of course many look forward to turning 21 for obvious reasons… but after that, there aren’t really any more numbers we’re excited about hitting - except, maybe, 65.

Age 65 is generally the trigger for Medicare eligibility so that’s one birthday which sometimes can’t get here soon enough because it saves us money on our health insurance costs.

All the Parts to Medicare

There are four parts to Medicare: Parts A, B, C, and D. Part A covers hospitalization, part B covers doctor visits, and part D covers prescriptions. Most people with “original” Medicare have those three parts. But what about part C? Part C is a managed-care option and does not mix with the others - more on that soon.

If you have a Medicare card, look at it. It will show the dates that parts A and (if applicable) B became effective. Commonly, they are the same date. It is often the 1st of the month in which you turned 65 so if it is your birth month, that is not a coincidence! Sometimes, the part B date would coincide with your retirement, especially if you continued your “work coverage” after turning 65.

If you do not have Medicare yet, there are a few things you will need to consider soon, but the most important is this: it is imperative to start the process before or during the “Initial Enrollment Period”. This seven-month window includes your birth month and the three months immediately before and after. Failure to do so can cause delays, gaps in coverage, and even penalties.

If you are still working and not collecting Social Security, there is some wiggle room, and there will not necessarily be penalties, but I have seen many cases where people waited too long to get the ball rolling and had to go without coverage. That is not something you want to start your golden years with.

If you are unsure about any of this, give us a call! It is something you only get one crack at, so we want to make sure you get it right the first time. I hate to be the bearer of bad news when someone must pay a penalty and/or is going to have coverage denied. For people who get a late start, there are “special enrollment” periods, “general enrollment” periods, and “open enrollment” periods. That is a little too technical for our purposes today, but it is something we are always willing to discuss!

Does Medicare Cover Everything?

Not exactly. Just like they did not intend Social Security to be a sole source of retirement income, they did not design Medicare to be an all-inclusive healthcare plan. There are certain gaps, deductibles, and copays that the participant must pay. That is where Medicare Supplement plans and the Medicare Advantage plans come in.

This is another topic that is technical, so I will give you the basics as we circle back to the “parts” mentioned above. Remember, I said people with original Medicare had parts A, B, and D. That is where a Medicare Supplement plan generally makes an appearance.

If your doctor accepts Medicare, he must accept your supplement plan regardless of the provider. This option is the ultimate in flexibility because there is no network; the coverage works anywhere that Medicare does. Depending on the specific plan, your supplement will pay some or all the deductibles and co-insurance amounts.

A Medicare Advantage plan, on the other hand, comes with a “network” which is a list of participating providers. There is no guarantee that your doctor will accept the plan, even if they accept Medicare patients. That is where it can get a little sticky, as networks can add/drop physicians at any time.

Typically, the premiums are a little more favorable with the Advantage plans, but they have that specific network of providers. This can be especially troublesome for snowbirds who may spend time in different states at different times of the year. Sometimes the copays can exceed the costs saved with the lower premium. As is often the case, “cheaper” is not always better.

Which Plan Is Best For Me?

I hate to say it, but it depends. Everyone’s situation is a little different, and many variables will come into play. Your health, finances, geography all are part of the equation when figuring out what is best.

What I can tell you is that we are here to help! I have been working with my clients on these decisions for over 20 years, and I’m happy to evaluate your situation and give you my advice. Even if you are in a plan that you think you like, but you are not sure, we can review that for you and compare it to what else is out there.

If you have original Medicare with a supplement, you do not even have to wait until the open enrollment period in October to make a change. You are free to explore changes at any time of the year!

Do Not Wait to Start the Process

Especially if you have a triggering event coming up (retirement, turning 65, etc.), make sure you look into this as soon as you can. As mentioned, it is important to have your proverbial ducks in a row. Sooner is always better than later with Medicare!

Do not hesitate to give us a call if you have any questions at all, regardless of age. You could be a Medicare veteran at this point; it still makes sense to review your current plan from time to time- just like any other type of insurance.


Hand holding iPhone with Lyft Logo on screen

Are You Covered By Your Personal Auto Policy for Business Use of Your Vehicle?

Ride Sharing, Pizza Delivery, and More Examples of Using Personal Automobile for Business

Jane uses her Honda Accord a few evenings a week while she drives for Uber.

Jim, Jr. uses his mother’s Ford Escape during the weekends for his pizza delivery job at the local pizzeria.

Sarah uses her Dodge Minivan to deliver packages for an internet-based retail delivery service five days each week until she finds a new management position.

Nick drives his Chevrolet Blazer a few days each week while he does delivers for Door Dash until his music gigs begin again as bars and restaurants reopen.

Each of these are examples of people using their personally owned automobile in a business centered around transportation of people or objects.

While some of these could be called a part of the “new economy”, there are also hosts of old school situations that are still current like driving a carpool, using your vehicle to drive people to nearby airports for pay, home delivery of newspapers, magazines, and other products, or using your own vehicle to run errands for your boss, make sales calls, or for other work-related uses.

Your automobile insurance policy may handle each of these situations differently–and that there is significant variation by specific insurance company and by state in what they may cover and how it may be covered.

Let us break down some of these business exposures and discuss how they are covered by your personal automobile policy.

Using Your Personal Vehicle on Behalf of Your Employer

Many of us will use our own car from time to time to run errands for our employer, visit a client, or attend an out of the office seminar. If you get into an accident while using your personal automobile on behalf of your employer, it is likely that your Personal Automobile Policy will protect you for both injuries you cause to others (third party claims) and damages to your vehicle (first party).

In addition, your Personal Automobile Policy will provide primary coverage to your employer if someone named them in a negligence suit as a responsible party for the damages to others. Your employer may also have coverage under their business insurance to protect them for these claims in excess of your coverage. It is unlikely that you will be a covered party under your employer’s policies for your use of your own automobile.

Since your policy may dilute your limits providing coverage to your employer (you will share your limits), you should consider having an automobile policy with high limits of liability and extending those limits by purchasing a Personal Umbrella Policy.

This conversation would be much different if the business of your employer relates to delivery of goods or services or the transportation of people.

Transportation Network Platform Use or Ride Sharing

If you really want to freak out your children (or in my case grandchildren), ask them if they know where there is a pay phone so you can call a taxi to get a ride home from a restaurant!

Companies like Uber and Lyft have become ingrained in our public consciousness. These are now massive transportation companies who do not own any vehicles–unfathomable to comprehend just a few years ago.

Driving for one of these services can be a substantial income augmenting part-time job with very little up-front costs and total flexibility in your work schedule. However, it is important to understand that using your own automobile for one of these companies is not without risk.

Most Personal Automobile Policies will exclude coverage for all sections of your policy while you are driving on behalf of a ridesharing service. Many carriers have adopted special “Transportation Network Platform” exclusions to restrict your coverage under your policy from the time you log on to the network to the time you log off the network.

It is likely that the service provides you with some level of coverage while you are on the platform, but perhaps not nearly as much coverage as you have under your own policy.

A typical scenario is that while you are logged into the system but do not have a client, you receive a low level of liability coverage from the service. We have seen coverage as low as $50,000 for Bodily Injury per person/$100,000 Bodily injury per accident/$50,000 Property Damage for this phase of operations.

Once you pick up a client, the coverage may increase to a larger limit–we have seen this as high as $1,000,000 per occurrence. Once you drop off the client and are again in between rides, you would revert to the lower limit of liability.

The insurance typically provided by the ride sharing service is only for Liability to others. This does not include coverage for damages to your car or injuries sustained by you while in the car, while your Personal Automobile Policy likely excludes all these coverages.

While Uber and Lyft may be the best known of the ride share companies, there are many others and they may include the transportation of food or other items instead of people. The exclusions in your Personal Automobile Policy include all such transportation network platform services, regardless of what you are transporting.

To fill in the gaps created by driving for a ride sharing operation, it is necessary for you to purchase a special Ride Share Coverage Endorsement from your Personal Automobile insurance company. Not all carriers offer this coverage, and it is not available in all States.

If your carrier does not offer it, it may be possible to purchase standalone Ride Share coverage. If neither of these options are available, you may need to purchase a Business Automobile Policy for the vehicle that is being used in a ride sharing business.

Newspapers, Pizza, and Other Deliveries

There are jobs that may include delivery services that do not use a transportation network platform. Delivering newspapers, pizza, or other take away food, products or services are the most common jobs that we see where folks routinely use their personally owned vehicle for delivery services for an employer.

The coverage for these situations is much less well defined. Most policies contain an exclusion that states, we do not cover the insured’s liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. The policy gives no further definition of the meaning of public or livery conveyance.

Livery generally refers to the transportation of goods or people. Clearly using your vehicle for a taxi service, limousine, or school bus would not be covered by your Personal Automobile Policy.

Occasional deliveries or things like take out food are less clearly contained in the generally accepted definition of these terms and would be open to interpretation by your insurance carrier and ultimately the courts.

We are not big fans of depending on court rulings and lawsuits to get coverage from your insurance carrier. Most insurance underwriters and claims adjusters will tell you that none of these situations are covered by your policy and all are considered public or livery conveyance.

A glance at the results of court cases on this issue are not as clear, with courts in many jurisdictions granting coverage for newspaper delivery or pizza delivery under the Personal Automobile Policy (keep in mind that this would only apply if the driver were not engaged by a transportation network platform).

Our recommendation is that you treat any delivery use of your vehicle as being excluded from your policy and purchase Ride Share coverage as mentioned above.

What Should You Do About Your Auto Policy?

  • Call your insurance agent if you have questions on specific situations that you may have with using your personally owned vehicle for business use.
  • If deliver services are a part of a job, ask your employer what insurance coverage the company provides to you for injuries to others, damage to your vehicle, and injuries that you incur while operating the vehicle.
  • Be very careful with any job where you are paid as an Independent Contractor.

Please contact us if you have questions regarding your personal automobile insurance.


family of five on the beach

A Complete & Simple Guide to Life Insurance Coverage

Written by: Jacob Bobick, CSA

Do You Need Life Insurance?

September is Life Insurance Awareness Month!

It’s probably not marked on your calendars - because it doesn’t sound all that exciting - but it’s a good reminder of the importance of covering ourselves and our families.

Most industry estimates suggest that half of Americans don’t have enough life insurance, and that’s a scary proposition.

I know, I know - it’s easy to say “I’m young, I’m healthy, I’m in great shape”; but not having adequate coverage could have severe consequences on the well-being and future of our loved ones.

Protect the Ones Who Matter Most

We all know that it’s expensive to live in New Jersey.  With the cost of food, shelter, taxes, clothing, college, etc., sometimes it seems like more is going out than coming in.

Insurance is never an “exciting” purchase; it obviously can’t compare with a new car, a pool, or even a new pair of shoes.  Insurance, however, is a relieving purchase.

When set up correctly, our insurances protect us if the worst happens - so at least we’re prepared for it.

Just as we have insurance to protect our homes, our cars, our businesses, our health, and our toys, it’s important to consider the impact of a lost income due to an untimely death.

Back to those expenses for a second… heaven forbid, if part of the household income is lost due to the passing of a family member, life insurance can ensure those bills are paid and the family stays afloat.

Life insurance replaces the lost income.  Life insurance keeps a terrible situation from becoming even worse.

Easier Than it Used to Be

With the timing of the global pandemic, I’ve gotten more questions than ever about life insurance.  It makes sense, as people are more “aware” of the number of lives being lost, so they consider their own mortality.

Believe it or not, the life insurance companies have made it easier for most of us to get coverage.

Because of distancing guidelines, many carriers are doing “non-med” underwriting, which means the applicant might not require an in-person exam to get approved.

For those candidates in good to excellent health, we can get policies issued in a week or two, which is comforting in these uncertain times.  If you’ve had some health challenges, we can still get you covered as well- it just might take a little longer.

The bottom line, as in all insurance planning, is to make sure you are fully covered before something happens!

Two Cups of Coffee

People ask us all the time “how much does it cost?”, which is a difficult question to answer.

Every situation is different, so we have to quote it specifically to the needs of the individual, but the fact of the matter is it’s relatively inexpensive to at least have some coverage.

For example, a healthy 40-year-old man could get a $250,000 policy for less than $12/month.  A 40-year-old female could get it for even less.

At those rates, it’s hard to justify “I can’t afford it”- that’s basically two cups of designer coffee to cover the cost.  We can get you some specific quotes to meet your needs in just a few minutes, so just call us - that is what we are here for!

It is Not Just for Families

While “personal” life insurance might be the most common, life insurance for business planning is equally important.

When there are multiple owners of a business, traditionally there is a “buy-sell agreement” in place.  Essentially, this agreement dictates what happens when one of the partners leaves the business or passes away.

Because an untimely death is often sudden, unlike a retirement, this could cause a strain on the surviving owner(s) to buy out the deceased’s share of the business.

Life insurance is one of the most common ways (and the cheapest) to protect the ownership for the survivor and the family of the deceased.

Example: Matt and Max each own 50% of a business valued at $1,000,000.  They each take out a $500,000 life insurance policy listing each other as beneficiaries.  If Matt passes away, the proceeds of the policy are paid to Max, who uses those funds to buy out Matt’s heirs.  Max now has 100% ownership of the business, and did not have to mortgage a home or the business to make it happen.

Nursing Home Costs

Long-term care planning has become a hot topic over the past few decades.

Understandably, most families don’t want to see their hard-earned money lost to a nursing home or assisted living facility, so long-term care insurance policies have grown increasingly popular as a planning tool- designed to offset the costs of care and shelter you from dipping into your savings.

Many of these policies are built on a life insurance platform to retain as much value and flexibility as possible, giving your family options (and protecting your assets) should extended care services become necessary.

Clever Alternatives

Aside from the “traditional” products mentioned above, companies are creating some “clever” ways to help families amass wealth.

Because of some of the tax advantages of life insurance, we can use it in products designed for retirement to create an income stream when you stop working (while keeping a death benefit intact in case you pass away).

Alternatively, we’ve set up “survivorship” policies, also known as “second-to-die” policies, which are a fantastic way to pass on money to your heirs.

Policies like these give some comfort to retirees who sometimes are afraid to spend their money, knowing they want to leave as much possible behind to their children and grandchildren.

We use a small percentage of their “total assets” to fund the policy, and Mr. and Mrs. Smith can utilize the remainder of their money, without fear of spending down the inheritance.

When they pass away, the lump sum is left to their beneficiaries, tax-free!  In the right situation, it’s a perfect wealth-building tool that allows a family to enjoy their retirement.

Necessary Decision

We can all agree that there is not much excitement in a conversation about life insurance.  But we can probably also agree that it’s a necessary component in a family’s financial plan, however informal that plan may be.

We’ve got the experience to guide you to the right coverage, and the insurance companies have made the entire process more streamlined, so really - there’s no excuse to not get this taken care of.  Your family [literally] depends on it!

Jacob Bobick is our newest associate at G. S. Newborn & Associates, Inc.  Jake has over twenty years of experience helping clients with life insurance, business perpetuation planning, and retirement planning.  Jake is a member of the Society of Certified Senior Advisors.

Contact Jake at jake@newborninsurance.com for more information


Life insurance agent headshot

Welcome to the Team, Jake Bobick: Life Insurance Expert

Jacob Bobick, CSA joins G. S. Newborn & Associates with more than twenty years of experience in the insurance industry.  He is licensed in Life, Health, and Property/Casualty Insurance and holds both the Series 6 and 63 licenses as a Financial Advisor.

Jake has built a career on providing for the needs of his clients in the financial services and insurance arena and has built specialties in the following areas:

Retirement Advisory Services

  • Social Security, Pension, and Income Planning
  • 401(k) Rollovers
  • Medicare Supplemental Insurance Programs
  • Legacy planning
  • Long-term Care Planning

Business Perpetuation

  • Funding of business continuation plans (buy/sell)
  • Key-Person Insurance
  • Tax-Qualified Retirement Plans – 401(k), IRA, etc.
  • Non-Qualified Deferred-Compensation Plans
  • Disability Insurance
  • Employee Benefits
  • Business Insurance

Individual Needs

  • Full range of insurance programs including life, long-term care, disability, automobile, and home
  • Financial Advising and Investment Review

Jake is a graduate of The Pennsylvania State University and resides in Milford, New Jersey.  In his free time, he enjoys playing and watching sports, completing projects around the house, and spending time in the great outdoors.

To get in touch with Jake regarding any of your insurance needs, we encourage you to fill out this form.


Tropical Storm Isaias: Filing an Insurance Claim

Today, many of you were hit by Tropical Storm Isaias, and some of you have been left without power and potential property damage.

If you’ve experienced property damage, we want to provide you with what to do next. See below:

  • Contact your carrier
  • Document everything with pictures and video
  • Make necessary repairs to reduce further damage

While you are doing this, please make sure you are doing so safely. If you have minor damages, are not sure if you should call your carrier or still have questions, you can always contact us by:

We are here to help, so please stay safe and take care!


Car rental sign at the airport

Rental Car Coverage: What Coverage Do You Need?

Renting a car? It seems that every week we take a phone call from a client asking us what they need to do when they rent a car. It can be a long conversation.  Here is an in-depth look at the insurance concerns for rental car coverage and what protection you need.

Signing the rental agreement = entering a contract!

Renting a vehicle is a business transaction and your obligation as the renter is guided by the terms you agree to by signing the rental agreement.  Keep in mind that you don’t have much of a choice, if you want the car you must sign the agreement.  The signing of the agreement is presented as part of the transaction, but don’t be fooled – this is a contract full of indemnifications, assumptions of risk and highly in favor of the party who drafted it in the first place.

Let’s start with the coverages in your personal automobile insurance policy that apply to a rented vehicle.  Disclaimer here:  we are assuming that you have a standard policy (ISO version) without any strange and unusual endorsements or exclusions.  You should note that not all policies are the same and there are many carriers who do not use the standard, ISO version of the policy.

How am I protected by my policy for accidents in the rental car?

Liability coverage for bodily injury and property damage protects you for allegations or claims that you have caused damage to another party.  Most rental agreements provide very limited liability coverage for the renter (you).  This is typically limited to the State minimum limits for liability in that jurisdiction.

Your liability limit from your personal automobile policy follows you around for most vehicles that you may drive or use, including a rental car.  It may not apply to a truck that you rent for business purposes of any type but that is a discussion for another day and article.  It is important to note that the liability coverage provided by your personal automobile policy only applies within the policy territory outline in the policy (the United States, its possessions, and Canada).

If you have a personal umbrella policy, the coverage will apply to a rental car.  If you rent a car outside of the policy territory on your automobile policy, a personal umbrella will usually provide first-dollar coverage less a retention limit as outlined in your policy.

What about damage to the rental car?

Most rental agreements require you to be responsible for damage to the vehicle you have rented.  You provide this physical damage to a car by buying comprehensive and collision coverage.  If you have Comprehensive and Collision coverage on at least one of the vehicles on your personal automobile policy, this coverage will apply to a rented car as well.  If you do not have physical damage coverage on your policy – you will not have this coverage for a rented car.

Be careful of the fine print!

It is important to note that there are some types of damage to a car that are not covered by either comprehensive or collision that you may still be responsible for under the rental car coverage agreement.  I’ll outline these types of losses:

  • Mechanical breakdown, wear and tear, war/riot/civil commotion, road damage to tires, car-sharing services, and delivery services (business use).  These types of damage are not typically covered by an automobile policy and therefore the coverage would not transfer to a rented car.
  • You are likely responsible for the rental company’s loss of revenue for the time period that they do not have the use of the vehicle because of the damage for which you are responsible.  We call this, Loss of Use and it is usually not covered by your personal automobile policy.
  • You are likely responsible under the rental agreement for the reduction in value of a vehicle that has been involved in an accident for which you are responsible.  This would apply even if the accident or damage is not legally your fault because this is responsibility that you are accepting under a contract not through common law.  We call this, Diminution of Value and it is usually not covered under your personal automobile insurance policy.

So, what do you do?

Based on this information, we suggest to our clients that, if they have adequate limits of liability on their personal automobile policy, they do not need to purchase any additional liability protection from the rental car company.

We have a much different recommendation regarding your responsibility to the car that you rent under the rental agreement.  Because your personal automobile policy provides Collision and Comprehensive but does not provide Loss of Use or Diminution of Value, we strongly recommend that you purchase coverage through the rental agreement for Physical Damage of the rental vehicle.

This is typically called the Collision Damage Waiver or the Damage Waiver.  This is not really insurance, but you are buying out your responsibility for the rental car from the rental car company.  Some of these provisions may contain a deductible or a limit that you are responsible to pay before the waiver kicks in.

They have your credit card!

Keep in mind that you probably give the rental car company a credit card for payment.  The final amount of the charge for the rental is open-ended since you may have to pay an additional amount due to the level of gasoline, tolls assessed to the car during your rental, the time you return the car or the mileage driven during the rental period.

Understand that damage to the vehicle for which you are responsible could result in a charge made against your card as well.  In short, they probably won’t ask your permission they will probably just charge you for your obligation to them under the rental agreement which could include the cost to repair the vehicle, the loss of use of the vehicle and the reduction in value of the vehicle because of the damage.

Do I have coverage under my credit card?

Speaking of credit cards, some credit card programs may include some coverage for rental car situations.  I have seen tremendous variations on these programs and each program has its own provisions, waivers, terms and conditions.  Please read the program carefully before depending on a credit card program to handle all the obligations you assume under a rental car agreement.

I’ve had some bad luck with rentals myself…

I have been fortunate to have done some traveling over the years.  We have rented cars throughout the United States and in several foreign countries.  We always purchase the Damage Waiver and have, unfortunately, needed to use it on several occasions.

Our most recent misadventure took place this year in New Zealand.  Someone (I’ll never tell), forgot to put the car in park when running into the grocery store.  They drive on the wrong side of the road there and the car is set up backwards too – driver on the right side of the car.  This makes some of the controls wrong handed.  Not fun to come out of the store to see your rental car in the middle of the parking lot having run into another car while you’ve been shopping for snacks!

It is a nice feeling to turn in the car at the rental counter and know that my responsibility under the rental car agreement has been satisfied.  For us, the cost of deductibles, time, and aggravation that we otherwise would have spent because of our rental car coverage mishaps have far outweighed the collective cost of the Damage Waivers that we have purchased.

Rental car coverage checklist:

  • Check your liability limits – you should have limits that you are comfortable with based on your net worth, social responsibility and ability to sleep at night.
  • Purchase an Umbrella Policy to give you higher limits of liability and give you worldwide protection for rental car situations.
  • Try and read your rental car agreement.
  • Review your credit card programs to see what if any protection they provide for rental car situations.
  • Consider purchasing the Damage Waiver next time you rent a car.