Frequently Asked Questions

Q:  Why does my agent ask so many questions when I’m applying for insurance coverage?

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 coverage?

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 insurance cover?

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 cost values.

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
• 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 (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 coverage.

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Umbrella Insurance FAQ's

Q:  What is a personal umbrella policy?

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 policy?

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 free.    

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