Frequently Asked Questions
does my agent ask so many questions when I’m applying for
A: An insurance agent needs to ask for
your name, age, gender, date of birth, address, etc. to properly
identify the person or people who will be covered under the policy.
Your agent will also ask questions that will help determine the
likelihood you will file a claim. For instance, they may ask
about your past driving record, whether you have had any tickets
or accidents, or what type of car you are planning to insure.
Based on industry statistics, a young male driver with a history
of speeding violations who is driving a sports car with a high powered
engine is more likely to be involved in an accident than a middle-aged
woman driving a minivan.
Q: Why should I buy insurance
from an agent when I can get a quote and buy a policy online directly
from an insurance company?
A: An agent is there to provide personalized
service to the policyholder. Your insurance agent is there
to act as an advisor, to explain the various types of coverage and
make recommendations based on your unique needs. This direct
contact is important when you are trying to make an informed decision
about your coverage,
but it is especially helpful in the event you need to file a claim.
This is an emotional and stressful time for most policyholders and
having a local agent or customer service representative to talk
to can make a difficult time a little more bearable.
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Automobile Insurance FAQ’s
Q: I have an old clunker
of a car that isn’t worth much – do I really have to
buy auto insurance?
A: The state of Texas, along with other
states you may drive to, have laws that require drivers to have
at least some minimum limit of automobile liability insurance.
The purpose of these laws is to ensure that the victims of automobile
accidents receive some compensation when the accident was the result
of negligence on the part of another individual.
Often the cost of
repairing an older vehicle is more than the value of that
vehicle. In this case, your insurance carrier will likely
declare the vehicle a total loss and present you with a check for
the market value of the vehicle less any deductible that might apply.
Many people who own older cars choose not to insure them for physical
damage, unless they are classified as “antique” autos.
Q: What do the terms “collision”
and “comprehensive” mean with regard to physical damage
A: Collision, from an insurance standpoint,
is defined as a loss which occurs when your vehicle runs into another
car or object. For instance, if you are pulling out of a parking
space at the Post Office and hit the vehicle waiting behind you,
the damage to your vehicle would be paid under your collision coverage.
Comprehensive coverage would apply to most other forms of direct
physical damage to your vehicle, including theft. For instance,
if your vehicle is damaged as the result of a hailstorm, the claim
would be paid under your comprehensive coverage.
Q: What factors can cause my
automobile insurance premiums to go up or go down?
A: Several factors can affect the cost
of your automobile insurance, not all of which are within your control.
The type of car that you drive, where you park it at night, and
how you use the car can all be factors, as well as your driving
record. Even whether or not you are married can affect your
premium. Studies have shown that married people tend to have
fewer and less costly accidents than do single people.
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Homeowners Insurance FAQ’s
Q: Are there any things I can
do to help lower the cost of my homeowners insurance?
A: Yes, there are several things a homeowner
can do to lower their insurance premiums. The first and easiest
step is to have your local agent do a thorough review of your policy
and assess your insurance needs.
You may be surprised to find that 5 homeowners
insurance quotes from 5 different insurance carriers will result
in 5 different premiums. Premiums can vary by hundreds of
dollars from one company to the next. Not all coverage forms
are the same; however, so the insurance consumer needs to be careful
that they are not giving up valuable coverage for the sake of saving
money up front. When shopping for quotes, be sure you are
getting a truly “apples-to-apples” comparison.
Another good way to reduce the cost of your
homeowners insurance is to ask if there are any discounts you may
qualify for. Many insurance companies will offer a “companion”
discount if you insure both your home and your automobiles with
them. Some insurance companies offer additional credits if
you have additional security features at your residence, such as
deadbolts on exterior doors or a security system. Raising
your deductible can also lower your premium, but be sure not to
increase it so high that it will put you in a financial bind when
it comes time to file a claim.
Q: What exactly does my homeowners
A: Most typical homeowners policies are
divided into two main sections: Section I covers the property
of the insured and Section II provides personal liability coverage
for the insured. Almost everyone who owns or leases property
needs this type of insurance. Homeowners insurance is often
required by the lender in order to approve a mortgage loan.
Q: What is the difference between
“Actual Cash Value” and “Replacement Cost”?
A: Losses covered by a homeowners policy
can be paid on an actual cash value basis or on a replacement cost
basis. When “Actual Cash Value” is used as the
valuation method, the named insured is entitled to receive compensation
for the depreciated value of the damaged property. When “Replacement
Cost” is the valuation method, the named insured will be compensated
the amount necessary to replace the damaged property with something
of like kind and quality at today’s prices. What valuation
method will be used is determined at the time the policy is issued.
An older property in poor condition may not qualify for replacement
cost coverage, or the insured may decide they don’t want to
pay the higher premium if their property were insured for replacement
Q: What are some important factors
I should consider as I shop for homeowners insurance?
A: You should:
1. Determine the amount
and type of insurance you need. The amount of coverage you
purchase on your home should ideally equal 100% of its replacement
cost, but not less than 80%. If your coverage amount is less
than 80% of the replacement cost of your home, any claim payment
from the insurance company will be less than the full cost to replace
your home. In that
situation, the difference between the cost to replace your home
and the claim payment you receive from your insurance company will
have to come out of your own pocket.
2. Decide which, if any, endorsements you want
to add to your policy. Do you want to add the personal property
replacement cost endorsement, or an endorsement to cover your jewelry,
fine art, or musical instruments?
3. Once you have decided on the coverage you
would like to have in your homeowners insurance policy, be sure
to consult with your insurance agent. We will be able to inform
you of any potential gaps in coverage you might not be aware of,
and make recommendations to help close those gaps.
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Renters Insurance FAQ’s
Q: Who should buy renters insurance?
A: If you are a tenant in an apartment
or a dwelling, you need to purchase renters insurance to protect
both you and your personal property. The typical renters insurance
policy provides coverage for your personal property if it is damaged
in a fire, for instance, or if it is stolen. Many policies
can also provide coverage for personal liability or temporary living
expenses if you are forced to relocate due to a loss.
Q: What kind of damage is covered
by my renters insurance policy?
A: Renters insurance policies provides
coverage for the following named perils:
- Fire or Lightning
- Windstorm or Hail
- Vandalism or Malicious Mischief
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water
- Sudden and accidental damage from artificially
generated electrical current
- Volcanic eruptions (this does not include
earthquakes or tremors)
Renters insurance covers your personal property
even when you are traveling or on vacation.
Q: What if my roommate already
has renters insurance—do I still need it?
A: Unless your roommate is a relative,
the answer is yes. If your roommate is not a relative, you
will each need to purchase a renters insurance policy to protect
your own personal property as well as provide personal liability
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Umbrella Insurance FAQ's
Q: What is a personal umbrella
A: The purpose of a personal liability
policy is to increase your liability protection. This policy
provides an extra layer of liability coverage over your existing
liability policies—auto, home, RV, watercraft, etc.
In certain situations, your umbrella policy may even provide personal
liability coverage that is excluded under your other liability policies.
Q: Who needs a personal liability
A: It used to be that only the very wealthy
purchased umbrella policies, since they needed the added coverage
to protect their substantial assets in the event they were sued
as the result of a claim in which they were personally liable.
However, in today’s society, people of more modest means can
still find themselves as the subject of a lawsuit. Since they
are even less able to pay a large damage award, having a personal
umbrella policy can help.
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Commercial Insurance FAQ's
Q: What kind of insurance do
I need to cover my business?
A: Commercial insurance, like personal
insurance, breaks down into two main categories; coverage to protect
your tangible property, and coverage for your liability. Your
particular business may not need every kind of commercial insurance
available, so consulting with an independent insurance agent can
help you sort through the various types of coverage and decide what
you really need. Your agent will make recommendations, but
it is still your responsibility to select the options to adequately
cover your business exposures.
Q: How much insurance do I need
to purchase for my commercial building?
A: A separate limit of insurance must
be purchased for each building or structure, as well as for any
business personal property contained within. Most insurance
companies require you to insure your property for either the replacement
cost value or the actual cash value of the property. The actual
cash value takes into consideration the depreciation of the building’s
value due to age and upkeep, whereas replacement cost is the cost
to repair or replace the building without regard for depreciation.
The building limit should also include the
added value of permanently installed fixtures, machinery and equipment,
such as fire extinguishing equipment, heating and air conditioning
systems, and refrigeration equipment. Be sure to consider
these items when determining the value of the building. If
your building is underinsured at the time of a loss you may be subject
to a co-insurance penalty, which can substantially reduce the claim
settlement you receive.
Q: My building was damaged by
a fire and a local ordinance required an upgrade to meet code requirements
during the rebuilding process. Why didn’t my property
insurance policy pay for this additional expense?
A: The standard insurance policy is designed
to compensate an insured for the cost (subject to policy limitations
and deductibles) to repair or replace property damaged by a covered
cause of loss. Again, this applies to property that has been
damaged in the loss. The situation described above
resulted in an increased cost of construction due to an ordinance
or law enacted after the property was built. Unless specifically
endorsed, most policies do not provide coverage for this situation.
This coverage, usually called Ordinance or Law Coverage, is offered
by most insurance companies for an additional fee. This is
one more factor to be considered when deciding how much coverage
you need to purchase.
Q: An inspector from the insurance
company came out to look around my property. A couple of weeks
later I received a list of “recommendations” that needed
to be addressed or I could face non-renewal of my policy.
Is this legal?
A: The short answer is yes. The
insurance company is agreeing to provide coverage for losses that
occur at your business location or as a result of your business
operations. The insurance company has a vested interest in
limiting exposures that could lead to a loss wherever possible,
so they have a right to make recommendations that will improve the
safety of your premises for clients, tenants and employees.
While it may seem like a nuisance, the goal is to keep you loss
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