For independent adults, insurance policies are necessary in several key areas of life. If you own a home or rent an apartment, you should have some form of coverage to protect your property. If you own a vehicle, you are required by law to have liability coverage. If you have a family, you should also have a life insurance policy. The following article covers some of the most important questions to ask insurance agents.
General Questions to Ask an Insurance Agent
There are various accidents and unforeseen circumstances that may or may not be covered by a seemingly applicable insurance policy. When you speak with an insurance agent, ask the following questions:
How long have you been in the business?
When you first inquire about insurance policies, ask the agent about the number of years that he or she has been in the business. Ideally, you should only work with an agent who has at least four or five years’ experience. That way, you’re more likely to get the right kind of policy for your needs, income and situation.
Granted, the length of time an agent spends in the industry cannot exactly serve as a measure of the agent’s ethics or integrity. However, an agent who has already spent several years in the field will generally be more knowledgeable and have a more nuanced understanding of all the available policy options.
2. Have you handled clients that fit my profile?
In order to get the type of insurance policy that best suits your needs, any agent who takes you on as a client should have prior experience with applicants from your community and income bracket. If an agent has primarily dealt with applicants from backgrounds that sharply differ from your own, that agent might not have the expertise needed to find you a suitable policy.
Regardless of the policy in question, your insurance should match your needs as a customer. If you live in a community with no prior history of natural disasters, it probably won’t be necessary to pay an extra $100 per month for earthquake protection, especially if you live in a modern one-story home with limited material possessions. Beware of an agent who tries to oversell you on policies, as that could be based on his or her experience representing affluent clientele who over-insure their properties.
3. What happens if…?
When you speak with an insurance agent, make sure that he or she explains every contingency of a given policy in full detail. These days, most insurance policies exclude various events, particularly when it comes to disaster coverage. Unless an agent gives you a direct and detailed answer to a question regarding the extent of a given plan, look elsewhere.
Some of the worst policies are sold by agents who offer vague answers regarding the extent of a given plan in certain crucial areas. For example, if you ask an agent whether a prospective homeowner’s policy will cover the cost of roof damage in the aftermath of a storm, that agent should tell you “yes,” “no,” or “partially” and then expand on that answer with more detail. If the agent simply glosses over the question with a vague answer, you probably don’t have a good offer on the table.
4. What will coverage encompass under certain situations?
Before you choose a policy, make sure that the coverage will remain in effect despite certain changes down the line. For example, will your car insurance be affected if you change out the engine or reupholster the interior? When you buy a policy for your home, will the coverage require reconsideration if you remove or add a room?
A policy could possibly fall into a gray area if changes are made to an insured piece of property. For example, if you remove one of the side walls on your house to add a new room or expand a pre-existing one, you might not be covered if a storm sweeps through town before completion of your new wall. Ask your agent about how your coverage would work in light of fringe cases like these.
5. What size deductible do you recommend?
The deductible is one of the most crucial insurance factors to determine in advance of choosing a new policy. If you have a low deductible, you will pay higher premiums and be rewarded generously if the need arises to file a claim. If you have a high deductible, your premiums will be lower but you will also be required to foot more of the costs should the need arise to file a claim.
In most cases, agents who favor consumers over companies will advise that you take a high deductible, as it will save you money for the time being. After all, your insurance is a precautionary expense that you might never need to “cash in on,” and even if you do, the situation may only arise once during the lifespan of a given policy. Therefore, your choice in a deductible should be based on how much you can afford to pay on your premiums alongside the kind of expenses you could theoretically bear should you ever file a claim.
6. What discounts am I eligible for?
When you speak with an insurance agent, explore their range of discount options. If there are items that could be trimmed from your policy for money-saving purposes, have your agent clarify the risks and the benefits so you can make an informed decision. For example, could you upgrade from collision to comprehensive auto insurance and still save money by leaving out the more unlikely perils?
Auto insurers will often offer a range of policy extras that you may or may not need, depending on the value of your vehicle. For example, you might wish to ensure your car against wild bear attacks if you own a Ferrari and live on a remote country estate, but not if you own a secondhand Mazda and live in the city.
7. Can you provide a full list of products?
An interesting, if not vital, factor to consider is whether you are dealing with an independent or captive insurance agent. An independent agent will generally be able to cut you an insurance deal with several possible providers. A captive agent, by contrast, is typically beholden to a single company and can only offer deals and products associated with that one provider.
While you will not necessarily get a better deal if you choose an independent agent over a captive one, it could make a difference if the captive agent is with a company that only offers insufficient coverage that favors the company over you, the policyholder.
Home Insurance Questions To Ask
Home insurance agents will typically cover the basics of a policy, but many details might still be left unexplained. Two of the most important questions to ask home insurance agents include the following:
1. Do I need additional insurance if I’m remodeling?
When you remodel your own home, the changes will alter the value of your property. If you make improvements to your home and property, such as new rooms and a swimming pool, you could boost your property’s value on the resale market if you ever choose to sell your home. If you intend to remodel your home in the foreseeable future, you should have a clause in your homeowner’s insurance policy that allows you to adjust your coverage to accommodate such changes.
Another factor to consider is the rebuilding cost of your home, which might be an issue in the event of a natural disaster. If your home is damaged to such an extent that it would need to be demolished and rebuilt, the cost for that labor would differ from the actual price of your home. Damage repairs are covered under dwelling coverage, which should always be based on the rebuilding cost of your home, not the purchasing price.
2. Does my home have a history of claims?
To determine the kind of coverage that you will likely need for your home, request a report on past claims filed by prior owners of the property. If the home has a long history of claims, that could be an indicator that you will need extensive coverage as the current occupant. For example, if the house has a history of sewage problems, you should have an insurance plan that will cover the cost of water backup should the issue arise in the future.
If the neighborhood has long been plagued with natural disasters and inclement weather, you will need to inquire about the nature of these disasters and have a policy plan to cover the full parameter of possible damage. For example, if the neighborhood has endured several hurricanes or tornadoes over the past few decades, you will need to have special coverage to account for that possibility.
Questions To Ask About Auto Insurance
An auto insurance policy may or may not have you covered in the event of an accident — it all depends on the extent of your coverage. Some of the most important questions to ask an auto insurance agent include the following:
1. How are my car insurance claims calculated?
When you file an insurance claim, the payout will typically be based on the value of your car just prior to the accident. If your car has depreciated since you first insured the vehicle, the payout might not be the same as it would have been, had the accident occurred earlier on in your ownership of the car.
With the exception of gap insurance, you typically won’t get a payout if the anticipated repair costs exceed the value of the vehicle. Therefore, if you have a collision in a car of low value and the repair costs would surpass the amount you paid for the vehicle secondhand, your claim will likely be refused on the grounds that the car is beyond repair.
Overall, auto insurers generally keep coverage rates below a vehicle’s actual value to avoid giving payouts in excess of full value. In order to get coverage that would cover the cost of a new car, you will need to negotiate a more comprehensive policy.
2. Will my job affect my coverage?
As you negotiate an insurance policy on your vehicle, be sure to ask whether your line of work will affect the policy. With auto insurance, the rate of your premiums will generally be based on your use of the vehicle in question. If your daily commute consists of distances of more than 50 miles to and from work each day, you will likely pay higher premiums than someone who only drives 10 miles on a given workday.
Your insurance may exclude coverage in certain instances if you use your vehicle in the line of work. Most policies, as a general rule, exclude coverage for damages incurred when a vehicle is used for outbound sales or delivery. For example, if you use your car on a delivery route and the back or side gets dented by a colliding cyclist or motorist, the damage will not normally be covered unless you have special protections written into your policy.
What You Should Ask About Life Insurance
A term life insurance policy is a crucial form of coverage for anyone with dependents. Make sure the following topics are covered when you speak with a life insurance agent:
1. I just entered the workforce; what do I need?
If you have recently left school and are now living alone for the first time, you should have a form of coverage to protect your belongings, just as your parents have had in the form of a homeowner’s insurance policy. If you intend to live in an apartment for the foreseeable future, you should have a renter’s insurance policy. That way, your property will be covered in the event of a burglary, fire or piping disaster.
Liability auto insurance is the bare-minimum coverage required by law, but it leaves you with nothing if your vehicle incurs damage. If you now own a car, you should have collision insurance, as that will cover any repairs that your vehicle might need in the wake of an accident. The next level up is comprehensive insurance, which covers all the non-collision perils but is only necessary for newer, high-value vehicles. If you get financing on a new car, you will generally be required to have a comprehensive coverage policy.
If your parents co-signed on your college loans, consider getting a life insurance policy. That way, your parents will not inherit your college loan debt if you predecease either parent.
2. My family is growing; what coverage do I need?
If you now have a home and family, you will need to have a homeowner’s policy to cover your house and belongings. Moreover, you should initiate a life insurance policy to serve as a safety net for your dependents. This way, your children and significant other will be financially protected if something happens to you while the policy is in effect. For example, if you buy a policy for $1 million, your dependents will get that money if you die while the policy is active. That money could help pay for their living expenses and put your children through college.
3. How will interest rates affect my whole life insurance policy?
As you pay into a whole life insurance policy, your premiums could add up free of interest. However, if interest rates drop, you might need to pay more money into the policy. In the past, agents from certain providers incorrectly told buyers that premiums would vanish due to interest rates, but this proved false.
Insurance Plans From Reisinger Insurance Agency Inc.
When you go about selecting an insurance policy, the process can be confusing if you are unable to understand the terms of a given plan. Therefore, it’s best to consult your local insurance agent for the most up-to-date policy and coverage options to fit your needs.
If you are in the market for insurance products, contact Reisinger Insurance Agency Inc. for a free quote today.