Insurance 101

Having health insurance typically means you pay a premium every month and, in return, your health plan pays part of the bill when you need a service from a doctor or another provider to keep you healthy or treat a disease. Health insurance usually covers doctors' visits, prescription drugs, and medical or surgical services.

According to the Kaiser Family Foundation, in 2018, North Dakotans accessed health insurance in one of three ways: 

• Employer-sponsored health insurance - 57% participated in a group health insurance plan offered by their employer. This includes employees of large and small private companies, federal, state and local government employees and active military.
• Public health care programs - 25% received healthcare benefits through Medicare, Medicaid and the Children’s Health Insurance Program (CHIP). These programs are regulated by the North Dakota Department of Human Services.
• Individually purchased - 8% purchased health insurance on their own through the marketplace (Healthcare.gov) or an agent.

Other Types of Health Insurance

• Short-term, limited duration insurance - covers some of the same types of services as most other health insurance plans but is not required to offer a full set of essential health benefits. The plans typically cover a smaller share of the cost of services than comprehensive health insurance. That means you may pay less in premiums, but enrollees pay more when they need health care services. The plans may deny applicants or charge them more if they have pre-existing health conditions.
• Basic hospital expense coverage - covers a period of usually no less than 31 days of continuous in-hospital care and certain hospital outpatient services.
• Basic medical-surgical expense coverage - covers costs associated with a necessary surgery, including a certain number of days of in-hospital care.
• Hospital confinement indemnity coverage - pays a fixed amount for each day that you are in the hospital.
• Accident only coverage - pays a lump sum when the enrollee experiences death, dismemberment, disability, or hospital and medical care caused by an accident.
• Specified disease coverage - covers diagnosis and treatment of a specifically named disease or diseases, such as cancer.
• Long-term care insurance - usually pays for skilled, intermediate and custodial care in a nursing home, as well as care in other settings, such as the home, adult daycare center, or assisted living facility. The policy usually pays a fixed amount per day while a person is receiving care.
• Other limited coverage - you may purchase insurance covering only dental or vision or other specified care.

Other Coverage That is Not Insurance

• Health care sharing ministries - under these arrangements, members pay a monthly fee. When they have health care expenses, members can request that the ministry or other members share part of the cost. However, the ministry is not legally obligated to pay for members' health care costs. State insurance regulators generally do not provide oversight of health care sharing ministries.

Check Out a Health Insurance Provider
Before you purchase health insurance, research the company selling the plan. Here are factors to consider:

• Licensing status - call the North Dakota Insurance Department to find out if an insurance company is licensed to do business in North Dakota.
• Cost - premiums for health insurance will vary greatly because there are no standard plans. When you compare premiums from several companies, you will also need to look carefully at the benefits offered. Keep in mind that the actual cost for your health insurance will be determined after you submit information about your health.
• Complaint history - has the company had an unusually high number of consumer complaints?
• Financial stability - the financial stability of a company will determine whether it can pay its claims. The Insurance Department establishes requirements that each company must follow and continually monitors the financial stability of insurance companies operating in North Dakota. Independent organizations also rate the financial stability of insurance companies. Keep in mind that these ratings are opinions only and do not guarantee that a company is financially sound.
• Customer service - how does the company service its policyholders? Does the company have a toll-free customer service number, email address or online chat feature on their website?

Questions to Ask When Shopping for Health Insurance
Coverage:

• What does the plan pay for?
• What does the plan exclude?
• What are the limits on pre-existing medical conditions? Will the plan pay for preventive care, immunizations, birth control, well-baby care, substance abuse, organ transplants, vision care, dental care, infertility treatment, durable medical equipment or chiropractic care?
• Will the plan pay for prescriptions?
• Does the plan have mental health benefits?
• Will the plan pay for long-term physical therapy?
• Is my doctor in network and how are visits covered?

Premiums:

• Do rates increase as you age?
• How often can rates be changed?
• How much do you have to pay when you receive health care services (copayments and deductibles)?
• Are there any limits on how much you must pay for health care services you receive (out-of-pocket maximums)?
• Are there any limits on the number of times you may receive a service (lifetime maximums or annual benefit caps)?

Customer service:

• Has the company had an unusually high number of consumer complaints?
• What happens when you call the company's consumer complaint number?
• How long does it take to reach a real person?

More information about health insurance can be found here. 

Additional resources may also be found by visiting the National Association of Insurance Consumers (NAIC) website.

Auto insurance is a contractual agreement between an insurance company and an insured, which, in exchange for a premium, provides financial protection for risks associated with driving or owning an automobile. Auto insurance is one of the most commonly used types of personal insurance. Most states require that you purchase insurance coverage to drive legally in the state. Auto insurance can be divided into two basic coverage areas: liability and property damage.

• Liability damage coverage - most auto insurance policies contain three major parts: liability insurance for bodily injury, liability insurance for property damage and uninsured/under-insured motorist coverage.
  • Bodily injury liability insurance protects you against the claims of other people who are injured in an accident for which you were at fault. Their claims for bodily injury may include medical expenses, lost wages, and pain and suffering.
  • Property damage liability insurance pays for any damage you cause to the property of others. This includes not only damages to other vehicles, but also other property such as walls, fences and equipment. 
  • Uninsured motorist coverage protects the policy holder directly. This coverage pays if you are injured by a hit-and-run driver or a driver who does not have auto insurance.
• Property damage coverage - may include both collision coverage and comprehensive coverage.
  • Collision coverage pays for physical damage to your car as the result of your auto colliding with an object, such as a tree or another car. This coverage is optional and not required by law. However, collision insurance may be required by your lending institution or lessor. In the case of an accident involving an older car, the cost of repairing the car can quickly exceed the worth of the car. In this case, insurers will “total” the car and pay you what the car was worth rather than fixing it.
  • Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. Comprehensive coverage also will cover broken glass, such as windshield damage. You are not required by law to carry comprehensive coverage.

Two factors determine what you pay for auto insurance. The first factor is underwriting, where insurance companies assess the risk associated with an applicant. The second factor is rating; the rating assigns a price based on what the insurer believes it will cost to assume the financial responsibility for the applicant’s potential claim.

There are three distinct parts of an auto insurance policy - the Declaration Page that lists what coverages are in effect and the dollar amount of coverage, the Text of the contract that tells you who and what is covered and not covered, and the Endorsements section of the contract that changes, limits or modifies the Text.

What is a deductible?
A deductible is the amount of the claim that you agree to pay or the part that is deducted from your claim check. Comprehensive and collision coverages generally have deductibles.

Do I have to buy auto insurance?
North Dakota state law requires that all motor vehicles registered and operated in the state carry certain minimum insurance coverages.

The coverages and minimum limits mandated by law are:

• Bodily injury liability - $25,000 per person (the maximum amount payable to one person)/$50,000 per accident (the maximum amount payable to all people injured in one accident). Bodily injury liability provides coverage for claims brought against you for bodily injury caused to another person through the operation of your vehicle.
• Property damage liability - $25,000 per accident. Property damage liability provides coverage for claims brought against you for damage caused to someone else's property through the operation of your vehicle. Also covers damage to a car you rent for personal use on a short-term basis.
• Uninsured motorist coverage - $25,000 per person/$50,000 per accident. Uninsured motorist provides you coverage for a bodily injury claim you would have against another driver who does not have insurance. This coverage does not pay for physical damage to your vehicle.
• Underinsured motorist coverage - underinsured motorist coverage must be equal to the uninsured motorist coverage. Underinsured motorist provides you with coverage for a bodily injury claim you would have against another driver whose liability coverage is less than your underinsured coverage.
• Basic no-fault - $30,000 per person. Basic no-fault provides you with coverage for economic loss (such as medical expenses and work loss) as a result of an accidental injury without regard to fault. Basic no-fault is also known as Personal Injury Protection (PIP).

What is the penalty for not complying with North Dakota state law regarding auto insurance?
Driving without liability insurance is a class B misdemeanor and is punishable by a mandatory fine of at least $150. Additionally, if you are involved in an accident, the state will assess 14 points against your driver's license, resulting in a suspension of your license.

What coverages, other than the minimum requirements, can I buy?
Companies selling auto insurance offer higher liability, uninsured, underinsured and no-fault benefits as an option. You can also purchase the following non-mandatory coverages:

• Collision coverage - provides coverage for physical damage to your vehicle that is caused by colliding with some other vehicle or object, or on overturning the vehicle. It pays regardless of who causes the accident.
• Comprehensive coverage - provides coverage for physical damage to your vehicle caused by items other than collision such as theft, fire, vandalism, hail, falling objects or hitting an animal.
• Towing - provides coverage to reimburse you for towing expenses involved in an emergency.
• Death and dismemberment - provides accidental death and dismemberment coverage.
• GAP coverage - provides payment to your lender for the difference between the amount of your auto loan and the actual cash value payment, if your vehicle is either stolen or a total loss.

Does my auto insurance policy cover a car that I rent?
North Dakota law requires that the property damage liability coverage of your personal auto policy provide coverage in the event you cause damage to a vehicle you have rented for less than 30 days. Therefore, it would not be necessary for you to purchase the coverage for physical damage offered by the car rental agency.

Does my auto insurance policy cover me if I drive in another country?
Almost all auto policies limit coverage to the U.S., its territories or possessions, Puerto Rico and Canada. You should always check with your agent in advance of driving in another country. It may be necessary for you to purchase more coverage.

Can I get coverage for an antique automobile?
Yes. Some companies specialize in providing coverage for antique automobiles. A good place to start when looking for this coverage is to contact your agent or an antique car club or association.

More information about auto insurance can be found here.

Additional resources may also be found by visiting the National Association of Insurance Consumers (NAIC) website.

Homeowners insurance is a financial protection policy that pays a lump sum if your house is damaged or destroyed by fire, weather, theft or other disasters. Homeowners insurance is an important purchase for many people. There are two major reasons to buy homeowners insurance:

• Protect your assets - homeowners insurance covers the structure of your home and your personal property, as well as your personal legal responsibility (or liability) for injuries to others or their property while they’re on your property.
• Satisfy your mortgage lender - most mortgage lenders require you to have insurance if you have a mortgage and to list them as the mortgagee on the policy. If you let your insurance lapse, your mortgage lender will likely have your home insured. Compared to a policy you would buy on your own, the premium might be much higher, and the coverage will be limited to damage to the structure of your home. The lender can require you to pay this higher premium until you get your own homeowners insurance again.

Policies do vary, however, in what events (perils) you are protected against. There are two general approaches: a named peril basis, which insures against a list of perils, and an open peril basis, which insures against all perils except those specifically excluded.

• Basic coverage perils - fire, lightning, windstorm, hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief, theft and breakage of glass.
• Broad coverage perils - all of the above basic coverage perils and volcanic eruption, falling objects, weight of ice, snow or sleet, collapse of building, accidental discharge of water or steam, sudden or accidental tearing apart, cracking, burning or bulging, freezing, or sudden or accidental damage from artificially generated electrical current.

There are three distinct parts of a homeowners insurance policy - the Declaration Page that lists what coverages are in effect and the dollar amount of coverage, the Text of the contract that tells you who and what is covered and not covered, and the Endorsements section of the contract that changes, limits or modifies the Text.

Do I have to buy homeowners insurance?
North Dakota state law does not require you to carry homeowners insurance. However, the financial institution that holds the mortgage on your home will require you to cover the property (collateral) in the event of a loss.

What are the types of homeowners policies?
The most commonly sold types of policies are (not all insurers use the same terms to describe their policies, but the coverage will be similar):

• A basic policy (HO-1) insures your dwelling, detached structures and personal property against loss or damage by basic coverage perils.
• A broad policy (HO-2) insures your dwelling, detached structures and personal property against loss or damage caused by the broad coverage perils.
• A special policy (HO-3) insures your dwelling and detached structures against loss or damage from any peril except for the ones specifically excluded. The policy insures your personal property against loss or damage caused by the broad coverage perils listed. HO-3 policies are the most commonly sold type of homeowners policy in North Dakota.
• A comprehensive policy (HO-3/HO-15 or HO-5) insures your dwelling, detached structures and personal property against loss or damage from any peril except for the ones specifically excluded. This policy provides the broadest coverage available but is not offered by all companies and is usually more expensive.
• A modified coverage policy (HO-8) provides insurance for dwellings that are older or do not meet all the underwriting standards applicable to other forms of homeowners policies. It insures your dwelling, detached structures and personal property against only the basic perils listed. The coverage provided by a HO-8 policy is intended to restore a dwelling to a livable condition, not necessarily the same condition that it was prior to damage. A HO-8 policy may be suitable for homes that have suffered significant depreciation or have a replacement cost that is significantly higher than their market value.
• A tenants/renters (HO-4) policy insures your personal property on a broad coverage peril basis. Like all homeowners policies, tenants' policies also provide for medical expense, additional living expense and liability coverage.
• A condominium owners policy (HO-6) insures your personal property; walls, floor and ceiling coverings; and any accessories not originally in the unit when it was purchased. The HO-6 policy will also provide coverage for medical expense, additional living expense and liability.

What is not covered by a homeowners policy?
The basic and broad coverage peril-based policies cover only the items listed. Therefore, if it is not listed, it is not covered. Some exclusions are water damage from a flood, sewer backup or seepage, earthquake, war, nuclear accident, neglect, intentional loss, mold, wear and tear, pollution, settling and more. Always read your policy to see what is excluded.

What types of property are covered by a homeowners policy?
On your residence premises, the real property will be covered. This includes the dwelling and any unattached structures, including fences. Personal property is also covered. This includes the contents of your dwelling, clothing, furniture, appliances and all other normal personal belongings. Some items of personal property like jewelry, guns, furs, golf equipment, etc., may have a limit on the amount of coverage. It may be necessary to put additional coverage on these items by scheduling them to the policy. Automobiles are not covered.

How much coverage should I carry on my home?
The amount of coverage you should carry can vary depending upon the type of policy you take, whether the coverage is provided on a replacement cost basis or an actual cash value basis and what your bank may require.

Is homeowners insurance the same as renters insurance?
Homeowners insurance and renters insurance both provide financial protection for policyholders against property damage, legal liability costs, medical payments to others and the costs of living out of home. However, the main difference between these two types of policies lies in the types of property damage covered. Homeowners insurance is for those who own their home or apartment, and it covers both the structure of the home and their personal belongings. Renters insurance is purchased by tenants, and it covers damage to or theft of their personal property, but not damage to the building itself.

More information about homeowners insurance can be found here.

Additional resources may also be found by visiting the National Association of Insurance Consumers (NAIC) website. 

Life insurance can be an important part of you or your family’s long-term financial planning. However, shopping for the right coverage can be intimidating. The good news is that all life insurance policies have one thing in common - they’re designed to pay money to the “named beneficiaries” when you die. The beneficiaries can be one or more individuals or even an organization.

In most cases, policies are purchased by the person whose life is insured, but life insurance policies can be taken out by spouses or anyone who is able to prove they have an insurable interest in the person.

Decide How Much You Need
The first step in purchasing life insurance is to decide how much coverage you need, for how long and what you can afford to pay. Keep in mind the biggest reason for you to buy life insurance is to cover the financial effects of an unexpected or untimely death. Life insurance can also be a way to plan for the future.

Questions to ask yourself before buying life insurance are:

• Does anyone else depend on me financially, such as a parent, grandparent, brother or sister? If I were to die, how would my survivors make ends meet?
• How will my family pay final expenses and repay debts after my death?
• Do I have family members or organizations to whom I would like to leave money?
• Will there be estate taxes to pay after my death?
• Do I have children for whom I'd like to set aside money to finish their education in the event of my death?
• How will inflation affect future needs?

When considering your coverage, be sure to factor in the life insurance you currently have, including group insurance from your place of employment or veteran's insurance. Don't forget to include benefits from Social Security or survivor's benefits from a pension plan.

The Right Kind of Policy
All policies are not created equal. Once you have determined how much coverage you need, it's time to find out more about the types of policies available. There are many different types of life insurance policies. However, they fall into two classes of life insurance products: term and cash value. Take time to explore your options and potential needs with a trusted advisor or agent before you make a commitment.

• Term Life Insurance - a policy that is purchased for a period of time (a term). The policy pays money to the named beneficiaries if the insured dies during the term. Term life insurance is intended to provide lower-cost coverage for a specific period. Term life policies may include a provision that allows coverage to continue (renew) at the end of the term, even if your health status has changed. However, those premiums may be higher than the original policy. Ask what the premiums will be before you renew. Also, ask if you lose the right to renew at a certain age. If the policy is non-renewable you will need to apply for coverage at the end of the term. Some of these policies also have conversion options available in that you can convert them to a cash value based policy.
• Cash Value Life Insurance - this policy is different because you can keep it for as long as you need it. These policies also have savings or investment features, which make it possible for policy owners to get money from the policy while they’re still alive. Whole life, universal life and variable life are types of cash value policies. Review those provisions closely when purchasing the insurance as it may decrease future death benefit.

Before You Buy
After you’ve decided what kind of life insurance is best for you, compare similar policies from different companies to find which one is likely to give you the best value for your money. A simple comparison of the premiums is not enough. Remember that no one company offers the lowest cost at all ages for all kinds and amounts of insurance. Other things to consider are: 

• Do premiums or benefits vary from year to year?
• How much do the benefits build up in the policy?
• What part of the premium or benefits is not guaranteed?
• What is the effect of interest on money paid and received at different times on the policy?

Stop. Contact. Confirm.
Finally, before buying, be sure you are dealing with a reputable insurance agent and company. The North Dakota Insurance Department recommends you stop before signing anything or writing a check and call the Insurance Department to confirm that the insurance agent or company is licensed to sell insurance in North Dakota.

More information about life insurance can be found here.

Additional resources may also be found by visiting the National Association of Insurance Consumers (NAIC) website for more information and resources.