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Insurance 101

Think of insurance as a financial shield that protects you if something unexpected happens, like an accident or injury. An insurance policy limits your financial burden if a covered event were to occur – and protects the people and things you care about.
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The Basics: Key Insurance Terms

We know insurance can feel overwhelming. Let’s start off with a brief introduction to some common insurance terminology.
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Deductible

The amount of the money you are responsible for paying before your insurance company covers the balance on a claim.
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Policy

A formal written contract of insurance.
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Coverage

The protection your insurance company provides against financial loss within their policies.
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Premium

The amount of money you pay an insurance company to provide coverage.
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Damages

The money someone is legally required to pay to someone else.
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Claims

When you make a request to your insurance company to pay you after a loss.
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Policies That Fit Your Needs

Each of our insurance products can be personalized to match your specific needs.
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Car Insurance

When you buy a car insurance policy, you’re getting financial protection for both your vehicle and damages caused by your vehicle in case of an accident or injury. For example, if you’re involved in an accident, collision insurance would help cover the cost of the repairs. Your insurance would kick in after you’ve met your deductible and cover you up to the limit of your policy.
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Renters Insurance

Renters insurance is a commonly misunderstood and underappreciated form of insurance. Unlike homeowners insurance, renters insurance doesn't cover the structure of the home or apartment you live in — that’s the responsibility of your landlord.

What you do get coverage for, however, is all of your property within your home — or when you’re on the go — as well as liability coverage against lawsuits. For example, if someone breaks into your apartment and steals your laptop, your policy would cover the cost of replacement up to the limit of your policy after you pay your deductible.y.

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Homeowners Insurance

Homeowners insurance is protection for your home that helps cover repairs or replacements to your home’s structure, belongings and even covers you if you’re liable for injury to another person when they’re on your property or accidental damage to their property. For example, if your home is damaged by a fire, your policy would likely cover the cost of the repairs (once you’ve met your deductible).

A standard home insurance policy includes essential coverages that offer protection from a specific set of common damages. Just as every home is unique, so is every home insurance policy. And you’ll have the option to customize and purchase additional coverages as they fit your needs.

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Life Insurance

Life insurance provides financial protection in the event you were to pass away. You pay premiums to your insurance company, and in return, they will pay your beneficiaries a death benefit — which is a sum of money — when you pass away.

Term life insurance is a basic protection plan with no cash value that covers you for a fixed time period. Your premium will start low but may increase with age upon renewal. Whole life insurance builds up cash value over your entire lifetime that can be withdrawn to supplement retirement. Premiums start higher but do not increase with age. Read more about term life insurance and whole life insurance.

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Umbrella Insurance

Think of umbrella insurance as an additional financial safety net on top of your existing coverage. Sometimes the liability limits in your auto, home, boat, or recreational vehicle policy are not enough to cover the damages from an accident or judgments from a lawsuit. An umbrella policy protects your assets and future earnings from being at risk should your other liability limits not be enough.

For example, if you were in an accident that caused $1,000,000 worth of damages but your auto policy only covered up to $300,000, you’d be responsible for the remaining $700,000. But if you have an umbrella policy, you get an additional level of coverage that’ll help cover that remaining amount.

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Continue Your Research in Our Library

Use these helpful tools to understand and build the coverage you need.
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Articles

These American Family Insurance educational resources will help you better understand the factors you need to consider when planning your coverage.
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Tools & Calculators

We’re always on the lookout for innovative ways to help your family be safer. Discover tools that help you plan for and protect your hard-earned dreams.
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Insurance FAQs

Got questions? We've got answers. We're here to walk you through the complexities of insurance. Check out our FAQs today.
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Auto Insurance Definitions & Terms

Car insurance terminology is confusing. We’re here to help. Browse our insurance glossary for the knowledge to fully understand your coverage.
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Smart Home

Smart home technology, like Ring Video Doorbell and Frontpoint Security System, are great ways to keep your family safe. Learn more about how smart homes and insurance go hand in hand.
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Discounts

From markdowns for switching to American Family, to savings that reward safe habits, discover all the ways you can save.
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The information on this webpage represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Coverage features and limits vary by state and may be subject to change. Some products are not available in every state. Discount availability and eligibility vary by state and policy terms. (Discounts apply to auto and property policies.) Please check with your agent and read the policy for exact details on coverages and exclusions.

*Some functions of My Account are not available for life policies.

**Subject to policy and rider terms and conditions, including items like plan minimums and timely payment of premiums.

Policy Forms: ICC18-33 (10), ICC18-33 (15), ICC18-34 (20), ICC18-35 (30), L-33 (10)(ND), L-33 (15)(ND), L-34 (20)(ND), L-35 (30)(ND), L-33 (10)(SD), L-33 (15)(SD), L-34 (20)(SD), L-35 (30)(SD), ICC18-36 (10), ICC18-36 (15), ICC18-36 (20), ICC18-36 (30), L-36 (10)(ND), L-36 (15)(ND), L-36 (20)(ND), L-36 (30)(ND), L-36 (10)(SD), L-36 (15)(SD), L-36 (20)(SD), L-36 (30)(SD), ICC17-225 WL, L-225 (ND) WL, L-225 WL, ICC17-227 WL, L-227 (ND) WL, L-227 WL, ICC17-223 WL, L-223 (ND) WL, L-223 WL, ICC17-224, L-224 (ND) WL, L-224 WL, ICC17-228 WL, L-228 (ND) WL, L-228 WL