Insurance Analysis

Frequently Asked Questions

General FAQs
Auto FAQs
Homeowner FAQs
Renters FAQs
Umbrella FAQs

General FAQs

Q: What kinds of questions should I be prepared 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.

For example, when an insurance company is deciding whether or not to offer automobile insurance to a driver, they want to know about the person's previous driving record, whether they have any recent accidents or tickets, and what type of car they’ll be insuring.

Insurance companies have different programs for different customers, based upon a variety of criteria. Adults with good driving records will generally pay less for auto insurance than younger drivers 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, they will also need information about the vehicle you drive and how you drive it to determine a fair rate for your policy. For example, a large luxury car costs more to repair or replace than a sub-compact.  Also, a person who commutes 30 miles each way to work every day is more likely to be in an accident than someone who drives a shorter distance or someone rides the bus to work and drives only on weekends.

Q: What are the advantages to using an agent to purchase insurance?

A: When you use an agent to purchase insurance, you’ll receives more personal service. An agent who knows you by name, whom you can contact directly, can be supremely helpful when purchasing insurance – and absolutely vital when you need to file a claim. A local, independent agent is able to deliver quality insurance with competitive pricing and personalized service.

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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 laws requiring drivers to have a minimum amount of 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. 

For older cars, it’s often the case that the costs of repairing damages can exceed the total value of the car.  In these cases, insurers will typically "total" the car and give the insured a check in the amount of the car’s market value, less the insurance deductible.  That is, it’s more cost effective to pay the insured the value of the damaged car than to invest in repairing the car.  It’s not uncommon for people with older cars decide to forgo insurance for physical damage to the vehicle.

 

Q: What's the difference between collision physical damage coverage and comprehensive physical damage coverage?

A: Collision physical damage coverage insures your losses 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 insures most other direct physical damage you could incur. For example, comprehensive physical damage insurance would cover you if your car was stolen or if it was damaged in a hail storm.

 

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 which you cannot.

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, as statistics show that married people tend to have fewer and less costly accidents than single people do!

For more information on options, visit our auto insurance page or give us a call at 814-629-5607 or visit our auto insurance page.

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Homeowner FAQs

 

Q: Are there any 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 simplest thing for you to do is get a comprehensive review of your 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 – that is, that you’re comparing “apples to apples.”

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 offer a discount when you purchase both your automobile and homeowners insurance from them.  Having deadbolt exterior locks on all your doors or a home security system are other factors for which an insurance company may offer you a discount.  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. For example, increasing your deductible from $250 to $500 will lower your premium – often 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 a new one of similar type and quality, at current prices.

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, payment from your insurance company will not provide you with enough to replace your home, and you’ll have to pay the balance out of your own pocket. Also, make sure the personal property and personal liability limits are adequate for your needs.  We can help you with these assessments!

  1. 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, and/or a jewelry endorsement?  Remember: If you’re not sure what you need, we can help you!
  2. Once you've determined the coverage you’re looking for in your homeowners insurance policy, consult us. We'll be able to help you find any gaps in coverage you might not have considered and explain the details of any exclusions and limitations in the policy.  We can also recommend the right insurance company that will live up to your expectations, based upon your individual needs.
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" refers to the ways your home can be damaged and be covered under your policy.  The policy limit on the coverage is equal to 50% of the policy limit on the dwelling. The coverage limit for additional expenses that can arise when the residence cannot be used due to an insured loss is equal to 20% of the policy limit on the dwelling itself.   

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 typically 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 your purchase a dresser while you were out of town and had it shipped to your home.  Your homeowners policy would provide coverage for the named perils while the dresser is in transit, even though the dresser had never before been in your home.

Q: Do I need earthquake coverage, and how can I get it?
A: The standard insurance policy does not pay for direct damages caused by “earth movement,” which is a much broader term than "earthquake.”  Earth movement includes earthquakes, volcanic activity, and other movements of the earth.  This coverage may be available by endorsement for an additional charge. If you live in an area more likely to experience an earthquake, your insurance will cost more than if you live in an area that is unlikely to have one. We can help you weigh the costs and benefits of this coverage before you decide to purchase.  For additional details on earthquake insurance, click here.

For more information, visit our homeowners insurance page.

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Renters FAQs

Q: Why should I consider 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.  It may also pay for temporary living expenses if residence you’re renting is damaged. It can also shield you from personal liability. Renters insurance is highly recommended for anyone who leases a house or apartment.

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 the specific ways 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 your property is 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 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.
 
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.

For more information, visit our renters insurance page.

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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 (i.e., home, auto, boat, RV), giving you 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 only in the U.S. and Canada.

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 highly litigious society, even those with modest income and assets are often subject to large lawsuits. As they are less able than wealthy individuals to pay large damage awards, they recognize the need to have coverage limits above and beyond what can be obtained from their homeowner or auto policies.

For more information, visit our umbrella insurance page.

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