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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.
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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.
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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.
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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.
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Purchase the amount of liability coverage that makes sense to you.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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?
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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.
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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 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.
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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.
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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.
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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:
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Income sources (and amounts)
other than salary/earnings
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Whether or not you are
married and, if so, what is your spouse's earning capacity
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The number of individuals who
are financially dependent upon you
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The amount of death benefits
payable from Social Security and from an employer-sponsored life
insurance plan
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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 coverage's for your need and
recommend a company that will best serve your interests.
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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.
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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:
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"How much life
insurance should I buy?"
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"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.
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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.
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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.
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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.
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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:
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Fire or lightning
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Windstorm or hail
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Explosions
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Riots
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Aircraft
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Vehicles
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Smoke
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Vandalism or malicious
mischief
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Theft
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Falling objects
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Weight of ice, snow, or sleet
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Accidental discharge or
overflow of water or steam
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Freezing
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Sudden and accidental damage
from artificially generated electrical current
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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.
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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.
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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.
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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.
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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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