Why am I asked to provide my Social Security number when obtaining insurance?

Many personal lines companies offer several discounts for various things; two or more policies, good student, Accident free, paid in full… However, typically the largest discount many companies offer is that for the 'Insurance Score'. Insurance Score is the insurance term for credit score, and the better your credit score, the more likely (according to insurance company actuaries) you are to have less claims. As agents, we try to get you the coverage you ask for, at the best rates, utilizing every discount possible, including your insurance score.

What is the difference between Comprehensive, Collision, and Full Coverage on my auto?

An auto policy is made up of several components including Liability coverage, medical coverage (both required by state law), and Comprehensive and Collision coverage (these last two are NOT required by state law.) There are some additional pieces and options, but these make up the bulk of your auto insurance coverage. Full coverage refers to the Liability, Medical, AND adding in Comprehensive and Collision coverage. While these last two are not required by law, if you have a loan on your vehicle, your bank may require them! The Collision portion of your policy provides repairs to your vehicle in the event the loss is caused by you colliding with an object. Comprehensive coverage repairs your vehicle in the event something collides, or does damage to your vehicle. Deer and animals are covered under the comprehensive coverage.

Why would I need an umbrella policy?

An umbrella policy offers additional liability coverage over the limits on your policy for your home, auto, motorcycle, or other underlying (or base) policies. This usually requires that the liability limits meet certain criteria as well. Most umbrella policies start at an additional $1,000,000 and can be increased from there. Your specific requirements as to liability coverage is just that, specific to you and your situation. Visit with your agent to discuss what might be best for you.

What does 'actual cash value' mean, and how does that compare to 'replacement cost'?

It is easier to start with replacement cost; replacing the item at the cost it is today new. Actual Cash Value, or ACV, is a depreciated value. If you have a 10 year old couch with replacement cost coverage and it is destroyed, you would replace it with like kind and available quality at the new price, even if it is more than what you paid 10 years ago. Actual Cash Value would be limited to a depreciated value, likely much less than a new couch. If you have Actual Cash Value coverage and the item is destroyed, you pay the difference between the 'ACV' and the new price. The limits of your policy will also affect the benefit amount paid out; a policy does not pay more than the limits on the policy.

Some companies advertise "choosing your own rates." How is that possible?

The companies that provide 'Choose your own Rate' options are allowing you to do just that. However you will be obtaining lower limits, higher deductibles, or less options on your coverage. Yes, you may pay less, but you will also be provided with lower/less coverage. In the event of a claim, the lower priced option may be costing you significantly more in the event of a claim.

Do I have to insure all of my property?

While it is required by law that all drivers carry liability insurance (the amount is mandated by State is not the same nationwide) and this is not the same for property coverage. You may be required by the terms of a note or loan to carry property coverage, say a mortgage on your home, but the state is not requiring the coverage. Insuring property is an individual decision; you may insure certain buildings, but not others, or one car may have full coverage and another not. This is a topic you should discuss in detail with your insurance agent.

Why does my homeowners premium seem to increase each year?

While it often feels like your premiums only increase every year, this is not always the case. However, it does occur, even though the market value may have stayed the same or even decreased. How does this happen? The bulk of your homeowner's policy is made up of property coverage, the balance is personal liability. As time goes by, the cost of the materials to replace, repair, or rebuild your home increase. In the event of a loss, the insurance company is providing coverage (in the event of Replacement Cost) which includes the cost of materials at today's prices. As prices of materials increase, the premium will increase in order to cover the costs of the losses.

How does a deductible impact my insurance?

A deductible reduces the cost of your insurance. The deductible is paid by the insured (you) prior to the insurance company paying. If the loss does not exceed the deductible, then the insurance company does not pay anything. This reduces the number of smaller claims, and this savings is passed back to the customer in lower premiums. To determine what deductible is best for you requires a conversation with your insurance agent. A higher deductible does not always make the best financial sense for the customer (you) and these options should be priced and reviewed as to the benefits of lower premium vs. the cost of the higher deductible.

 

 

If you have additional questions, please forward them to contactus@lindforsagency.com and we will gladly respond with a return email or phone call.