General FAQs
Auto FAQs
Homeowner FAQs
Renters FAQs
Umbrella FAQs
General FAQs
Q: What kinds of
questions should I be expected to answer when I apply for an insurance
policy? Why do insurers need so much information?
A:
When you apply for an insurance policy, you'll be asked a number of
questions. Among other things, the agent might ask you your name, age,
gender, and address. You'll also 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, they 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 a
young driver with traffic tickets will. 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, they will also need information about the vehicle you drive
and how you drive it 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 policy holder 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.
Return to top
Auto FAQs
Q: I have an older car that currently has a very low market value. 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's 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.
Return to top
Q: What's the difference between Collision Physical Damage Coverage and Comprehensive Physical Damage Coverage?
A: Collision Physical Damage Coverage 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 Physical Damage
Coverage provides coverage for most other direct physical damage losses
you could incur, including theft. For example, damage to your car from
a hailstorm would be covered under your comprehensive coverage.
Return to top
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 you can't.
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.
Even your marital status can affect your
cost of insurance. Statistics show that married people tend to have
fewer and less costly accidents than single people do.
Return to top
Homeowner FAQs
Q: What are some practical things that 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's 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 to look into these discounts for you.
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.
Return to top
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.
Return to top
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.
Return to top
Q: What factors should I consider when purchasing homeowners insurance?
A: Here's 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've decided on
the coverage you want in your homeowners insurance policy, consult us.
We'll be able to help you determine if there are any gaps in coverage
you might not have been aware of and explain the details of the
policy's exclusions and limitations, as well as recommend an insurance
company that will live up to your expectations.
Return to top
Q: What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
*Note: this answer is based on the Insurance Services Office's HO-3 policy.
A:
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 policy owner 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
policy owner 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 policy owner
at the time the policy is issued. The coverage limit on medical
payments to others is usually set at $1000 per injured person.
Return to top
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.
Return to top
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 renter's 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.
Return to top
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.
Return to top
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.
Return to top
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.
Return to top
Umbrella FAQs
Q: What is a personal umbrella liability policy?
A: 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 (home, auto, boat, RV, etc.)
so that 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 U.S. and Canada only.
Return to top
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.
Return to top