FAQs
General
When applying for an insurance policy, companies ask several questions—for example, your name, age, gender, and address. In addition, companies can ask additional questions 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 generally pay less for auto insurance than young drivers with traffic tickets.
In addition to your age, gender, and driving experience, information about your vehicle 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.
The policyholder receives more personal service by using an agent to purchase insurance. A local, independent agent can deliver quality insurance with competitive pricing and local, personalized service. An agent with whom there is direct contact can be vital when buying a product and necessary when filing a claim.
Most states have insurance laws that require drivers to have at least some automobile liability insurance. These laws ensure that victims of automobile accidents receive compensation when the actions of another negligent individual cause their losses.
It is often the case that the cost of repairing the damages to an older car is higher 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.
Collision is losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the company that underwrites your policy will pay for the damages to your vehicle under your collision coverage.
Comprehensive coverage covers most other direct physical damage losses you could incur, including theft. For example, the damage to your car from a hailstorm will be covered under your comprehensive coverage.
Several 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 single people.
You can do several things to lower the cost of your homeowner's 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.
Look for discounts you may qualify for to lower the cost of your homeowner's insurance. For example, many insurers will offer a value when you place both your automobile and homeowners insurance. 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 homeowner's insurance is to raise your deductible. Increasing your deductible from $250 to $500 will reduce your premium, sometimes by as much as five or ten percent.
The typical homeowner's policy has two main sections: Section I covers the insured's property, and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property requires this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.
Covered losses under a homeowners policy can be paid on either an actual cash value basis or 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 a similar type and quality at current prices.
You should consider several factors 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 total cost to replace your home — you'll have to pay the rest out of your 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 a personal property replacement cost endorsement, an earthquake endorsement, or a jewelry endorsement?
- Once you have decided on the coverage you want in your homeowner's insurance policy, consult us. We will help you determine if there are any gaps in coverage you might not have been aware of, explain the policy's exclusions and limitations, and recommend an insurance company that will live up to your expectations.
[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 expressly excludes how your home is damaged or destroyed, there is coverage. The policy owner sets the policy limit for the dwelling when the insurance is purchased. The other structure's policy limit is usually 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 only have coverage when your property is damaged or destroyed as described in the policy. The policy limit on the coverage is 50% of the policy limit on the dwelling. A policy owner may incur coverage limits for additional expenses when the residence cannot be used because an insured loss is equal to 20% of the policy limit on the dwelling.
The policy owner determines the coverage limit on personal liability when the policy is issued. The coverage limit on medical payments to others is $1000 per injured person.
Personal property (except expressly excluded) is covered anywhere in the world. For example, suppose that you purchased a dresser while traveling and want to ship it home. Your homeowner's 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.
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 earthquakes, volcanic activity, and other earth movements. 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
"Rule of thumb" suggests an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be considered 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 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. As independent agents, we are unbiased advisors who help you avoid buying too much, show you appropriate optional coverages for your need, and recommend a company that best serves your interests. We recommend contacting us for help determining the right amount of coverage.
In certain circumstances, it may be advisable to purchase life insurance for children; generally, however, such purchases should not be made instead of purchasing appropriate amounts of life insurance for the family breadwinner(s).
It is of utmost importance that the income-earning capacity of the primary breadwinner is fully protected, if possible, by purchasing the required amount of life insurance. This should be done before contemplating the purchase of life insurance for children or on a non-wage-earning spouse. Life insurance on a non-wage-earning spouse is often recommended to pay for household services lost due to this individual's death. In a dual-earning household, it is essential to protect the income-earning capacity of both spouses.
This is a difficult question, and the answer will vary depending on your 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?"
First, decide how much coverage you need. For example, the amount of life insurance you need may be so large that you can only afford it by purchasing term insurance since term insurance has a lower premium.
Suppose your ability to pay life insurance premiums is such that you can afford the desired life insurance under either type of policy. In that case, it is then appropriate to consider the second question — what kind 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.
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. 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. Mortgage protection policies generally cover a range of mortgage repayment periods, e.g., 15, 20, 25, or 30 years.
Yes. An existing term or cash-value insurance policy 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 you a mortgage protection term policy, the lender rarely requires it.
Credit life insurance is frequently recommended with an installment loan when purchasing expensive appliances, a new car, or 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, purchasing credit life insurance is usually not advisable due to its relatively high cost.
If you live in an apartment or a rented house, renters insurance provides necessary coverage for 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.
A renters policy provides named perils coverage. For a renter, the policy only pays when your property is damaged or destroyed in any of the described ways. 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 unexpected damage from artificially generated electrical current
- Volcanic eruptions (but this doesn't include earthquakes or tremors)
Renters coverage applies to your personal property no matter where you are. This means you're covered when you are on vacation and at home.
Owners of apartment complexes buy insurance policies for their liability and to cover their buildings and personal property. However, these policies do not cover 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 the apartment complex owner, there are benefits to the renter as well. We recommend that you purchase renters insurance regardless of what your landlord requires.
Standard renter's policies cover only you and relatives that live with you. If your roommate is not a relative, you will need your renter's policy to protect your property and provide you with liability coverage for your actions.
The personal umbrella liability policy is designed to increase your liability protection. This single policy acts as an "umbrella" over 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 only provides coverage in the US and Canada.
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 to pay significant damage awards than a wealthy individual, they recognize the need to have coverage limits more significant than what can be obtained from their homeowner or auto policies.
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Did You Know?
Did you know only about 43% of homeowners have an inventory of their personal belongings, according to a 2020 report? For the other 57%, this small oversight could cost them thousands.
Don't guess. Let our team help you protect what matters most.
