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Frequently Asked Questions

Below are some of our frequently asked questions. 

If you have any other questions or concerns, please feel free to call, contact us via the web, or come and visit us.

  1. Auto: What is the MCCA charge on my policy?
  2. Auto: Why do I have Wage Loss coverage when I am retired?
  3. Auto: Does my auto policy cover a rental car?
  4. Auto: When I rent a car, do I need to by the coverage offered by the rental company?
  5. Auto: Should I buy GAP Insurance?
  6. Auto: What is mini-tort?
  7. Auto: What are the three forms of collision on a Michigan auto policy?
  8. General: Why did my premium go up when I've had no claims?
  9. Home: What is the difference between Water Backup Coverage and Flood Coverage?
  10. Home: Why is my home insured for so much more than its value?
  11. Home: What is the difference between "actual cash value" and "replacement cost"?
  12. Life: How much life insurance should an individual own?
  13. Life: Should I purchase term insurance or cash value life insurance?
  14. Renters: Why should I buy renters insurance?
  15. Renters: What if I share my apartment with a roommate?
  16. Umbrella: What is a personal umbrella liability policy?
Auto: What is the MCCA charge on my policy?
MCCA stands for Michigan Catastrophic Claims Association.  The MCCA is a special fund set up by state law.  Michigan's no-fault auto insurance system provides unlimited medical benefits for those injured in an auto accident.  A single injury can cost millions of dollars.  The MCCA reimburses insurance companies for these large losses after they reach a certain amount.  Insurance companies are required to charge an assessment for each car on each auto policy that is paid directly to the MCCA.  You could say the MCCA charge on your policy is your share of the cost for catastrophic injuries resulting from traffic accidents.

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Auto: Why do I have Wage Loss coverage when I am retired?
All Michigan drivers are required to have Personal Injury Protection (PIP) insurance as part of their auto insurance policy.  PIP includes unlimited medical benefits and loss of income protection when an auto accident results in an injury.  PIP can not be removed from the policy.  However, when retired and not earning an income, the premium you pay can be substantially reduced.

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Auto: Does my auto policy cover a rental car?
Most auto insurance policies cover a rental car the same with the same coverage you have on the car that is temporarily being replaced.  Check your policy or call your agent before renting to see how YOUR policy applies.

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Auto: When I rent a car, do I need to by the coverage offered by the rental company?
Most auto insurance policies extend the same coverage you have on your own car to a rental car.  However, we recommend purchasing insurance offered by the rental car company.  If the rented car is damaged or stolen, the rental company can charge you their maximum rental rate for each day their car is out of service.  Also, if damaged, they can charge you for the diminished value of their car.  Your insurance will not cover these expenses.  The insurance you purchase from them will usually waive or cover these expenses which can be substantial.

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Auto: Should I buy GAP Insurance?
The value of a new vehicle drops dramatically as soon as it driven off the dealer's lot.  If the vehicle is stolen or totaled in an accident, the value of the vehicle can be less than the amount owing on the loan or lease.  GAP Insurance pays the difference between the actual value of the vehicle at the time of loss and the amount owing on the loan or lease.  Be sure to read the financing paperwork as some loans and leases include GAP coverage so you would not need to purchase it as part of your auto insurance.

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Auto: What is mini-tort?
You can recover up to $500 ($1,000 beginning 10-1-2012) for vehicle damage not covered by insurance.  You can sue the other driver if you are no more than 50% at fault in an accident.  If you were partially responsible, however, any court award in your favor would be reduced proportionately.  Most often, mini-tort claims are handled between the parties involved in the accident or their insurance companies.  Otherwise, they are handled in Small Claims court by the motorists involved.

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Auto: What are the three forms of collision on a Michigan auto policy?
Standard (or basic) collision pays for collision damage to your vehicle regardless of fault but YOU always pay the deductible.

Broad collision pays for collision damage to your vehicle regardless of fault but waives the deductible if you are less than 50% at fault.  If you were more than 50% at fault, YOU pay the deductible.

Limited collision pays for collision damage to your vehicle ONLY if you were less than 50% at fault.  There is no coverage if you are 50% or more the cause of the accident. 

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General: Why did my premium go up when I've had no claims?
Insurance premiums are based on a large base of claims expenses and trends.  Your individual premium is based on the bigger picture, but is adjusted for your individual experience and risk factors.  If the larger base reflects changes in claim costs, your premium is affected.

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Home: What is the difference between Water Backup Coverage and Flood Coverage?
Water Backup Coverage is for instances where water backs up from a sewer or drain, or overflows because of sump pump failure.  Most insurance companies allow a homeowner policy to be endorsed to provide coverage for this exposure.

Flood is defined as external surface water that affects at least two properties and flows over the foundation walls into a home.  Flood Coverage is NOT available on any homeowner policy.  It can only be purchased on a separate policy backed by the government NFIP.  It is fairly inexpensive if your home is in a moderate to low risk flood area.

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Home: Why is my home insured for so much more than its value?
While home market values have fallen and homes are being sold for less, homeowner's insurance is based on the cost to rebuild or replace - not what the home would sell for.  The cost of labor and materials have not decreased like the market values.  Insurance agents usually have access to a Replacement Cost Estimator that helps determine the proper amount of insurance.

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Home: What is the difference between "actual cash value" and "replacement cost"?
Covered losses under a homeowner's policy can be paid on either an actual cash value basis or on a replacement cost basis.  When "actual cash value" is used, the policy owner is entitled to the depreciated value of the damaged property.  Under the "replacement cost" coverage, the policy owner is reimbursed an amount necessary to replace the item with one of similar kind and quality at today's prices - not the price originally paid.

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Life: How much life insurance should an individual own?
Many factors should be taken into account when deciding on the right amount of life insurance.  A rule of thumb suggests an amount of life insurance equal to 6-8 times annual earnings.

Important factors include:
  • Income sources other than salary/earnings
  • Whether or not you're married and, if so, what your spouse's earning capacity is
  • The amount of death benefits from an employer-sponsored life insurance plan
  • Whether any special life insurance needs exist, like mortgage debt, education, estate planning needs, etc.

It is not easy to calculate a correct amount.  We recommend contacting us for assistance.  As independent agents, we can help you avoid buying too much, show you appropriate coverage options and recommend an insurance company that will best serve your interests.



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Life: Should I purchase term insurance or cash value life insurance?
This is a difficult question which can only be answered depending on your personal circumstances.

In any life insurance purchasing decision, there are two questions that must be answered:
  1. How much life insurance should I buy?
  2. What type of life insurance policy should I buy?

Question #1 should always be resolved first.  For example, the amount of life insurance you need may be so large that the only way you can afford it is through the purchase of term insurance because term insurance has a much lower premium.

Question #2 - If you have the ability to afford the desired amount of life insurance under either type of policy, it is then appropriate to consider what type of policy to buy.  Important factors affecting this decision include your income tax bracket, whether your need for life insurance is short-term or long-term, etc. 



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Renters: Why should I buy renters insurance?
If you rent your living space, renters insurance provides important coverage for both you and your possessions.  A standard renter's policy protects your personal property from many causes of loss and can pay for temporary living expenses if your rental is damaged.  It also includes personal liability protection.  See Justin's amusing but informative video.

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Renters: What if I share my apartment with a roommate?
A standard renter's policy covers only you and relatives that live with you.  If your roommate is not a relative, each of you will need your own renter's policy to cover your own property and provide each with liability protection.

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Umbrella: What is a personal umbrella liability policy?
A personal umbrella liability policy is designed to increase your liability protection.  This single policy acts as an "umbrella" over all of your other personal liability policies (auto, home, boat, RV, snowmobile, etc) so that you have a higher coverage limit.  In some circumstances, an umbrella policy may provide liability coverage that is not covered by your underlying policies.  For example, an umbrella policy provides world-wide coverage, whereas your auto policy usually covers you in the U.S. and Canada.

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake