Questions and Answers About Insurance
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, and so forth. In addition, you will be asked a number of other questions that 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 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. 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. 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 of using an agent to purchase insurance?
A: By using an agent to purchase insurance, you can receive 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 can deliver quality insurance with competitive pricing and personalized service.
Auto Insurance Questions
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 Wescom Insurance Services 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.
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.
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.
Q: What factors can affect the cost of my automobile insurance?
A: A number of factors can affect the cost of your automobile insurance. You can control some, but not all, of these factors.
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. Statistics show that married people tend to have fewer and less costly accidents than do single people.
Homeowner's Insurance Questions
Q: What are some practical things I can do to lower the cost of my homeowners insurance?
A: You can do a number of things to lower the cost of your homeowner's insurance. The easiest thing to do is get a comprehensive review of your policy and needs from your local Wescom Insurance Services 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 you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowner's 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 homeowner's 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.
Q: What does homeowner's insurance cover?
A: The typical homeowner's policy has two main sections:
Q: What is the difference between "actual cash value" and "replacement cost"?
A: Covered losses under a homeowner's 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.
Q: What factors should I consider when purchasing homeowner's insurance?
A: Here is a checklist of things you should consider when you purchase homeowner's insurance.
Q: What are the policy limits (that is, coverage limits) in the standard homeowner's 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 policyowner 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 policyowner 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 policyowner at the time the policy is issued. The coverage limit on medical payments to others is usually set at $1,000 per injured person.
[Note: This answer is based on the Insurance Services Office's HO-3 policy.]
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 homeowner's 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.
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.