Homeowners Insurance FAQ's

What is Homeowners Insurance?

Homeowners insurance is a form of personal lines insurance. The typical homeowners policy has two main sections: 1) covers the property of the insured and 2) provides personal liability coverage to the insured.

What do I need to know when purchasing Homeowners Insurance?

• Get the amount and type of insurance that you need.

• Determine the amount of personal property insurance and personal liability coverage that you need.

• Select any additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement?

What is "actual cash value" or ACV?

When "actual cash value" is used in a policy, a policy owner is entitled to the depreciated value of the damaged property. A more detailed description of actual cash value can be found in our insurance glossary

What is replacement cost?

When "replacement cost" coverage is used in a policy, a policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices. A more detailed description of replacement cost can be found in our insurance glossary.

Should I purchase earthquake coverage?

Direct damages due to earthquakes are not covered under the standard homeowners insurance policy. If you live in an area that is prone to earthquakes, you may want to consider adding an earthquake endorsement to your homeowners insurance policy. This endorsement will cover damages due to earthquakes, landslides, volcanic eruptions and other earth movements.

Should I purchase flood insurance coverage?

Direct damages due to flood are not covered under the standard homeowners insurance policy. If you live in an area that is prone to flooding, you may want to consider a flood policy. Contact us or click here for more information about flood coverage.

Renters & Apartment Insurance FAQ's

I rent my home. Am I covered for losses under my landlord's insurance policy?

No. Your landlord cannot insure your personal property against destruction or loss. Renters insurance, however, will give you both property and liability insurance. This often overlooked coverage is actually quite affordable, typically costing only $200-300 per year. (That's less per month than most cable bills. More information is available on our Renters Insurance page, or contact us with questions or for a flood insurance quote.

Flood Insurance FAQ's

Doesn't my homeowners insurance cover flooding?

No. Flood Insurance is not typically covered by a homeowners insurance policy.

If my home is flooded, won't federal disaster assistance pay for my damages?

No. Federal disaster assistance often comes in the form of a low interest loan to help cover flood damage, not compensation for your losses. Even then, those loans are only available if the president formally declares a disaster.

Auto Insurance FAQ's

When purchasing automobile insurance what should I consider?

There are several things you should consider when purchasing automobile insurance that your independent agent will help you with. Here are a few:

• Purchase the amount of liability coverage which makes sense for you.

• Select the optional coverages you want.

• Decide which company to purchase insurance from.

• Don't base your decision solely on price. Other factors like service and claim response are extremely important in selecting the right insurance.

Does my insurance policy cover a friend if I loan him/her my car?

When you loan your car to a friend or an associate, he or she will be covered under your automobile insurance policy.

What is collision physical damage coverage?

Collision coverage pays for damage to your covered vehicle (up to its actual cash value), less the deductible amount, for losses caused by collision with a physical object, such as another vehicle or structure like a building or telephone pole.

What is comprehensive physical damage coverage?

Also known as "Comp" or "Other than Collision," this car insurance coverage pays for damage to your covered vehicle (up to its actual cash value), less the deductible amount, resulting from incidents other than collision, such as damage caused by: fire, theft, glass breakage, riot, windstorm, hail, and contact with an animal.

How can I lower my auto insurance rates?

There are several things you can do to lower the cost of your automobile insurance. One way is to look for competitive pricing. An independent agent works with many companies and can provide you comparative rates and insure that your are getting the same coverage.

Another way to lower the cost is to change your deductible. By raising your deductible you may lower the cost of your automobile insurance almost 10%. (Remember, You must still be able to pay the deductible amount in case of a claim.)

You can also look for discounts that you may be entitled to. Some examples of discounts that may be available are: multiple cars under the same policy, carrying a homeowners policy with the same insurance company, and clean driving history.

Please contact us with additional questions. More coverage information is available on our Car Insurance page, or you may complete our secure online form to receive a competitive auto insurance quote.

Life Insurance FAQ's

How much life insurance should an individual own?

Rough "rules of thumb" suggest an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account in determining a more precise estimate of the amount of life insurance needed. Important factors include:

• Income sources (and amounts) other than salary/earnings.

• Whether or not the individual is married and, if so, what is the spouse's earning capacity.

• The number of individuals who are financially dependent on the insured.

• 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.

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 before contemplating the purchase of life insurance on children or on a non-wage earning spouse. In a dual-earning household, it is important to protect the income earning capacity of both spouses. Life insurance on a non-wage earning spouse is often recommended for the purpose of paying for household services lost at this individual's death.

Should term insurance or cash value life insurance be purchased?

Although a difficult question--one whose answer will vary depending on circumstances--several principles should be followed in addressing this issue. It must first be recognized that in any life insurance purchasing decision, there are at least two basic questions that must be answered:

• "How much life insurance should I buy?" and

• "What type of life insurance policy should I buy?"

The question contained in (1) involves an "insurance" decision and the question contained in (2) requires a "financial" decision.

The "insurance" question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way in which this needed amount of insurance can be afforded is through the purchase of term insurance with its lower premium.

If your ability (and willingness) 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 "financial" decision--which type of policy to buy. Important factors affecting the "financial" 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.

How does mortgage protection term insurance differ from other types of term life insurance?

The face amount under mortgage protection term insurance decreases over time, consistent with the projected annual decreases in the outstanding balance of a mortgage loan. Mortgage protection policies are generally available to cover a range of mortgage repayment periods, e.g., 15, 20, 25 or 30 years. Although the face amount decreases over time, the premium is usually level in amount. Further, the premium payment period often is shorter than the maximum period of insurance coverage--for example, a 20-year mortgage protection policy might require that level premiums be paid over the first 17 years.

Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage loan?

Yes; the purchase of a new mortgage protection term insurance policy is usually not required by the lender. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured's death. Credit life insurance is frequently recommended in conjunction with the taking out of an installment loan when purchasing expensive appliances or a new car, or for debt consolidation.

Is credit life insurance a good buy?

Credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.

Business Insurance FAQ's

What is property damage legal liability coverage?

Property damage liability covers the insured's legal liability for damage to property of others caused by the insured's negligence. As an example, this coverage would protect you if you rent a business space and are held responsible for fire damages to that rented building.

What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV)?

The short answer: Replacement Cost is the current cost to replace property. Actual Cash Value is the replacement cost less depreciation. Go to ACV vs. RC for a much more detailed description.

What is co-insurance?

In property insurance, a condition of the policy requiring the insured to maintain insurance at least equal to a stipulated percentage (80%, 90%, 100%, etc.) of value in order to collect partial losses in full. If the insurance is less than the minimum required, a penalty is applied to the amount of loss based on a proportionate formula of the amount of insurance carried divided by the amount of loss required to be carried.

Example: A recent appraisal has estimated the replacement cost of your building to be $1,000,000. Your property insurance policy contains a co-insurance clause requiring 80% co-insurance. Therefore, you are required to insure the building to at least 80% of its value, or $800,000. As long as you maintain coverage of at least 80% of the buildings value, then you would be able to collect full reimbursement for a claim up to the policy limit of $800,000.

However, if you do not meet the requirements of the co-insurance clause, then you would be subject to a co-insurance penalty in the event of a loss.

Exapmple: The value of your building at the time a loss is still $1,000,000 with an 80% co-insurance clause. However, you only have the building insured for $400,000, instead of the required $800,000. A fire causes $200,000 worth of damage to your building. When you file a claim for the damages, the insurance company informs you that you are in violation of the co-insurance clause and cannot collect the full amount of the claim. The amount of your payment is determined by the following formula:

(Amount of Insurance Carried / Amount of Insurance Should Carry) x Loss Amount = Payment

Therefore, in our example the insured would be paid:

($400,000 / $800,000) x $200,000 = $100,000 - only 50% of the total claim.

How does an audit work?

At the end of the policy term, the insurance company will review the policy and either charge or credit the policyholder based upon an audit of estimated figures. Examples of estimated auditable items include sales and payroll. Audits can be performed onsite by an auditor or via mail or telephone. A premium is charged for audit estimations.

Why do I need certificates of insurance from sub-contractors?

An audit may require you to show proof that sub-contractors had their own insurance coverage. The sub-contractors' certificates of insurance will prevent you from being charged for their exposure.

What is General Liability Insurance?

General Liability provides coverage if you are liable for damages to other individuals arising from your premises, general operations (ongoing and after completion) and products manufactured or sold.

What does Products/Completed Operations mean?

Products/Completed Operations refers to the liability coverage for damages caused by your operation or products after the point at which you no longer have control of them.

What is business interruption/extra expense coverage?

Business Interruption/Extra Expense coverage provides coverage for income loss and the expense of establishing a temporary site during repairs due to damages related to a fire or compensable loss.

What is the difference between "Named Insured", "First Named Insured" and "Additional Insured?"

Named Insureds are those listed by name in the relevant block of the policy's declaration page. Although the named insured is commonly one person, partnership, corporation or other entity with insurable interests, multiple named insureds may be included.

First Named Insured is the first "named insured" listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all named insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The first named insured may also be responsible for payment of the premiums.

Additional Insured is an entity to which a policy's coverage is extended. An additional insured must be added to the policy prior to a claim being paid. There must be a tied to relationship between the additional insured and named insured. Being an additional insured on another's policy does not eliminate the need for someone to have his/her own Commercial General Liability policy

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