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?

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 car 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.

 


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

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.

 

Auto

I have an older car whose current market value is very low – do I really need to purchase automobile insurance?

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.

What is the difference between collision physical damage coverage and comprehensive physical damage coverage?

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.

Homeowner

What are some practical things I can do to lower the cost of my homeowners insurance?

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.

What does homeowners insurance cover?

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.

What is the difference between “actual cash value” and “replacement cost”?

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.

What factors should I consider when purchasing homeowners insurance?

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.

  • 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 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.

    Life

    How much life insurance should an individual own?

    “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:

    • 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 from 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. Guardian Tower Insurance, LLC recommends contacting us for help determining the right amount of coverage. As independent agents, we are unbiased advisers that will help you avoid buying too much, show you appropriate optional coverage for your need and recommend a company that will best serve your interests.

    What about purchasing life insurance on a spouse and on children?

    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.

    Should term insurance or cash value life insurance be purchased?

    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:

    1. How much life insurance should I buy?
    2. 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 afford it 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.

Why do some apartment complexes require tenants to have renters insurance?

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. Guardian Tower Insurance, LLC recommends that you purchase renters insurance regardless of what your landlord requires.