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General FAQs
Q: What kinds of questions should I be expected to answer
when I am applying for an insurance policy? Why do insurers need
so much information?
A: When you apply for an insurance policy, you will
be asked a number of questions. For example, the agent might ask
you your name, age, gender, address, etc. In addition, you will
be asked a number of other questions which will be used to determine
how likely you are to make a claim.
When an insurance company is deciding whether or not to offer
automobile insurance to a potential customer, it will want to
know about the person's previous driving record, whether they
have any recent accidents or tickets, and what type of car is
to be insured.
Insurance companies have different programs for different customers.
Adults with good driving records will generally pay less for auto
insurance than will a young driver with traffic tickets. In order
to determine which program you qualify for, an insurance company
needs basic information about you.
In addition to your age, gender and driving experience, information
about the vehicle you drive, and how you drive it, is also needed
to determine a fair price. For example, a large luxury car costs
more to repair or replace than a sub-compact; and, someone who
commutes 30 miles each way is more likely to be in an accident
than someone who rides the bus to work and drives only on weekends.
Q: What are the advantages to using an agent to purchase
insurance?
A: By using an agent to purchase insurance, the policyholder
receives more personal service. An agent with whom there is direct
contact can be vital when purchasing a product and absolutely
necessary when filing a claim. A local, independent agent is able
to deliver quality insurance with competitive pricing and local
personalized service.
Auto FAQs
Q: What are some practical things I can do to lower
my automobile insurance rates?
A: There are a number of things you can do to lower
the cost of your automobile insurance. The easiest thing to do
is ask us to get quotes from several companies for you.
It is not uncommon to find quotes on automobile insurance that
can vary by hundreds of dollars for the same coverage on the same
car. When you shop, be careful to make sure each insurer is offering
the same coverage.
Another way to lower the cost of your automobile insurance
is to look for any discounts for which you may qualify. For example,
many insurers will offer you a discount if you insure multiple
cars under the same policy, or if you have had a driver education
class in the last five years. Be sure to ask us about their discount
plans.
Another easy way to lower the cost of your automobile insurance
is to increase the deductible. Simply raising your deductible
from $250 to $500 can lower your premium sometimes by as much
as five or ten percent.
Q: What should I consider when purchasing automobile
insurance?
A: There are a number of factors to consider when purchasing
any product or service, and insurance is no different. Here is
a checklist of things you should consider when purchasing automobile
insurance.
- Base your decision on value. This is more than simply the lowest price. The premium you pay should
be compared to the claims and policy service, protection and advice you receive. Independent agents,
and the companies we represent, deliver excellent value.
- Purchase the amount of liability coverage that makes sense to you.
- You should decide which optional coverages you want. For example, do you want optional physical
damage coverages or is the market value of your car too low to warrant purchasing them.
- Once you have decided what you want in your automobile insurance policy, you can now decide from
whom you would like to purchase the insurance from.
Q: I have an older car whose current market value is
very low - do I really need to purchase automobile insurance?
A: Most states have insurance laws that require drivers
to have at least some automobile liability insurance. These laws
were enacted to ensure that victims of automobile accidents receive
compensation when their losses are caused by the actions of another
individual who was negligent.
It is often the case that the cost of repairing the damages
to an older car is greater than its value. In these cases, your
insurer will usually just "total" the car and give you
a check for the car's market value less the deductible. Many people
with older cars decide not to purchase any physical damage coverage.
Q: Suppose I lend my car to a friend, is he/she covered
under my automobile insurance policy?
A: Whenever you knowingly loan your car to a friend
or an associate, he or she will be covered under your automobile
insurance policy.
Q: What is the difference between collision physical
damage coverage and comprehensive physical damage coverage?
A: Collision is defined as losses you incur when your
automobile collides with another car or object. For example, if
you hit a car in a parking lot, the damages to your car will be
paid under your collision coverage.
Comprehensive provides coverage for most other direct physical
damage losses you could incur, including theft. For example, damage
to your car from a hailstorm will be covered under your comprehensive
coverage.
Q: What factors can affect the cost of my automobile
insurance?
A: A number of factors can affect the cost of your automobile
insurance -- some of which you can control and some that are beyond
your control.
The type of car you drive, the purpose the car serves, your
driving record, and where the car is garaged can all affect how
much your automobile insurance will cost you.
Even your marital status can affect your cost of insurance.
Statistics show that married people tend to have fewer and less
costly accidents than do single people.
Q: What are the advantages to using an agent to purchase
insurance?
A: By using an agent to purchase insurance, the policyholder
receives more personal service. An agent with whom there is direct
contact can be vital when purchasing a product and absolutely
necessary when filing a claim. A local, independent agent is able
to deliver quality insurance with competitive pricing and local
personalized service.
Homeowner FAQs
Q: What are some practical things I can do to lower
the cost of my homeowners insurance?
A: There are a number of things you can do to lower
the cost of your homeowners insurance. The easiest thing to do
is get a comprehensive review of your policy and needs from your
local agent.
It is not surprising to find quotes on homeowners insurance
that vary by hundreds of dollars for the same coverage on the
same home. When you shop, be careful to make sure each insurer
is offering the same coverage.
Another way to lower the cost of your homeowners insurance
is to look for any discounts that you may qualify for. For example,
many insurers will offer a discount when you place both your automobile
and homeowners insurance with them. Other times, insurers offer
discounts if there are deadbolt exterior locks on all your doors,
or if your home has a security system. Be sure to ask us about
any discounts for which you may qualify
Another easy way to lower the cost of your homeowners insurance
is to raise your deductible. Increasing your deductible from $250
to $500 will lower your premium, sometimes by as much as five
or ten percent.
Q: What does homeowners insurance cover?
A: The typical homeowners policy has two main sections:
Section I covers the property of the insured and Section II provides
personal liability coverage for the insured. Almost anyone who
owns or leases property has a need for this type of insurance.
Usually, homeowners insurance is required by the lender to obtain
a mortgage.
Q: What is the difference between "actual cash
value" and "replacement cost"?
A: Covered losses under a homeowners 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 article with
one of similar type and quality at current prices.
Q: What factors should I consider when purchasing homeowners
insurance?
A: There are a number of factors you should consider
when purchasing any product or service, and insurance is no different.
Here is a checklist of things you should consider when you
purchase homeowners insurance.
Determine the amount and type of insurance that you need. The
coverage limit of your house should equal 100% of its replacement
cost. If your policy limit is less than 80% of the replacement
cost of your home, any payment from your insurance company will
be less than the full cost to replace your home -- you'll have
to pay the rest out of your own pocket. Also, decide if the personal
property and personal liability limits are adequate for your needs.
Determine which, if any, additional endorsements you want to add
to your policy. For example, do you want the personal property
replacement cost endorsement, an earthquake endorsement or a jewelry
endorsement?
Once you have decided on the coverage you want in your homeowners
insurance policy, consult us. We will be able to help you determine
if there are any gaps in coverage you might not have been aware
of, explain the details of the policy's exclusions and limitations
as well as recommend an insurance company that will live up to
your expectations.
Q: What are the policy limits (i.e., coverage limits)
in the standard homeowners policy?
A: [Note: this answer is based on the Insurance Services
Office's HO-3 policy.]
The dwelling and other structures on the premises are protected
on an "all risks" basis up to the policy limits. "All
risks" means that unless the policy specifically excludes
the manner in which your home is damaged or destroyed, there is
coverage. The policy limit for the dwelling is set by the policyowner
at the time the insurance is purchased. The policy limit for the
other structure is usually equal to 10% of the policy limit for
the dwelling.
Losses to your personal property are covered on a "named
perils" basis. "Named perils" means that you have
coverage only when your property is damaged or destroyed in the
manner specifically described in the policy. The policy limit
on the coverage is equal to 50% of the policy limit on the dwelling.
Limits for the coverage for the additional expenses that the policyowner
may incur when the residence cannot be used because of an insured
loss is equal to 20% of the policy limit on the dwelling.
The coverage limit on personal liability is determined by the
policyowner at the time the policy is issued. The coverage limit
on medical payments to others is usually set at $1000 per injured
person.
Q: Where and when is my personal property covered?
A: Personal property (except property that is specifically
excluded) is covered anywhere in the world. For example, suppose
that while traveling, you purchased a dresser and you want to
ship it home. Your homeowners policy would provide coverage for
the named perils while the dresser is in transit -- even though
the dresser has never been in your home before.
Q: Do I need earthquake coverage? How can I get it?
A: The standard insurance policy does not pay for direct
damages caused by "earth movement." "Earth movement"
is a much broader term than earthquake. It includes earthquake,
volcanic activity and other earth movement. This coverage may
be available by endorsement for an additional charge. If you live
in an area that is more likely to have an earthquake, you'll pay
more than if you live in an area that is unlikely to have an earthquake..
We can help you weigh the costs and benefits of this coverage
before you decide to purchase.
Life FAQs
Q: How much life insurance should an individual own?
A: "Rule of thumb" suggests an amount of life
insurance equal to 6 to 8 times annual earnings. However, many
factors should be taken into account when determining the right
amount of life insurance for you and your family.
Important factors include:
Income sources (and amounts) other than salary/earnings
Whether or not you are married and, if so, what is your spouse's
earning capacity
The number of individuals who are financially dependent upon you
The amount of death benefits payable from Social Security and
from an employer-sponsored life insurance plan
Whether any special life insurance needs exist (e.g., mortgage
repayment, education fund, estate planning need, etc.)
Calculating the correct amount of life insurance to buy is not
as simple as it appears. We recommend contacting us for help determining
the right amount of coverage. As independent agents, we are unbiased
advisors that will help you avoid buying too much, show you appropriate
optional coverages for your need and recommend a company that
will best serve your interests.
Q: What about purchasing life insurance on a spouse
and on children?
A: In certain circumstances, it may be advisable to
purchase life insurance on children; generally, however, such
purchases should not be made in lieu of purchasing appropriate
amounts of life insurance on the family breadwinner(s).
It is of utmost importance that the income-earning capacity
of the primary breadwinner be fully protected, if possible, through
the purchase of the required amount of life insurance. This should
be done before contemplating the purchase of life insurance on
children or on a non-wage-earning spouse. Life insurance on a
non-wage-earning spouse is often recommended for the purpose of
paying for household services lost due to this individual's death.
In a dual-earning household, it is important to protect the income
earning capacity of both spouses.
Q: Should term insurance or cash value life insurance
be purchased?
A: This is a difficult question -- one whose answer
will vary depending on your personal circumstances.
First, recognize that in any life insurance purchasing decision,
two questions must be answered:
"How much life insurance should I buy?"
"What type of life insurance policy should I buy?"
The first question should always be resolved first. For example,
the amount of life insurance that you need may be so large that
the only way you can be afford is through the purchase of term
insurance, since term insurance has a lower premium.
If your ability to pay life insurance premiums is such that
you can afford the desired amount of life insurance under either
type of policy, it is then appropriate to consider the second
question -- what type of policy to buy. Important factors affecting
this decision include your income tax bracket, whether the need
for life insurance is short-term or long-term (e.g., 20 years
or longer), and the rate of return on alternative investments
possessing similar risk.
Q: How does mortgage protection term insurance differ
from other types of term life insurance?
A: The face amount under mortgage protection term insurance
decreases over time, consistent with the projected annual decreases
in the outstanding balance of a mortgage loan. Mortgage protection
policies are generally available to cover a range of mortgage
repayment periods, e.g., 15, 20, 25 or 30 years. Although the
face amount decreases over time, the premium usually remains the
same. Further, the premium payment period often is shorter than
the maximum period of insurance coverage -- for example, a 20-year
mortgage protection policy might require that level premiums be
paid over the first 17 years.
Q: Can an existing life insurance policy be used to
provide for the repayment of an outstanding mortgage loan?
A: Yes. An existing policy, either term or cash-value
life insurance, can be used for many purposes, including paying
off an outstanding mortgage loan balance in the event of the insured's
death. Although a lender may offer a mortgage protection term
policy to you, the lender rarely requires it.
Credit life insurance is frequently recommended in conjunction
with the taking out of an installment loan when purchasing expensive
appliances or a new car, or for debt consolidation. Is credit
life insurance a good buy?
Credit life insurance is frequently more expensive than traditional
term life insurance. Further, if you already own a sufficient
amount of life insurance to cover your financial needs, including
debt repayment, the purchase of credit life insurance is normally
not advisable due to its relatively high cost.
Renters FAQs
Q: Why would I want to buy renters insurance?
A: If you live in an apartment or a rented house, renters insurance
provides important coverage for both you and your possessions.
A standard renters policy protects your personal property in many
cases of theft or damage and may pay for temporary living expenses
if your rental is damaged. It can also shield you from personal
liability. Anyone who leases a house or apartment should consider
this type of coverage.
Q: How does a renters policy protect my personal property?
A: A renters policy provides named perils coverage.
This means that the policy only pays when your property is damaged
or destroyed by any of the ways specifically described in the
policy. These usually include:
Fire or lightning
Windstorm or hail
Explosions
Riots
Aircraft
Vehicles
Smoke
Vandalism or malicious mischief
Theft
Falling objects
Weight of ice, snow, or sleet
Accidental discharge or overflow of water or steam
Freezing
Sudden and accidental damage from artificially generated electrical
current
Volcanic eruptions (but this doesn't include earthquake or tremors)
Renters coverage applies to your personal property no matter where
you are in the world. This means you're covered when you are on
vacation as well as at home.
Q: Why do some apartment complexes require tenants to
have renters insurance?
A: Owners of apartment complexes buy insurance policies
for their liability and to cover their buildings and personal
property. However, these policies do not cover any of the tenant's
property or liability. By requiring their tenants to have renters
insurance, the apartment owner is assured that the tenants will
not mistakenly believe the apartment complex owner's policy will
provide coverage for a tenant's property or personal liability.
Although this type of requirement benefits that apartment complex
owner, there are benefits to the renter as well. We recommend
that you purchase renters insurance regardless of what your landlord
requires.
Q: What if I share my apartment with a roommate? Do
we both need to have renters insurance?
A: Standard renter's policies cover 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 to provide you liability coverage for your own actions.
Umbrella FAQs
Q: What is a personal umbrella liability policy?
A: The 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 -- home, auto, boat, RV, etc. -- so you have a higher
personal liability limit than what would otherwise be available.
In certain circumstances, an umbrella policy may provide personal
liability coverage that is otherwise excluded from your other
policies. For example, an umbrella policy provides coverage anywhere
in the world, whereas your auto policy usually provides coverage
in the US and Canada only.
Q: How do I know if I need a personal umbrella liability
policy?
A: It used to be that the only people who needed personal
umbrella liability policies were wealthy individuals who had sizable
amounts of personal assets that would be at risk in a lawsuit.
However, in our very litigious society, even individuals with
modest incomes and assets are often subjects of large lawsuits.
Since they are even less able than a wealthy individual to pay
large damage awards, they recognize the need to have coverage
limits greater than what can be obtained from their homeowner
or auto policies.
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Tuesday, March 16, 2010
