Frequently Asked Questions
Why do we have insurance? Insurance policies primarily do two things; protect our property in the event of a loss and protect our assets from lawsuits in the event we are held liable. Insurance helps us remain financially whole in the event of a catastrophic loss, such as our home burning down. Insurance can also be required. In terms of auto insurance, it is state law to at least have liability coverage to operate an automobile on public roads. If you finance a home, all home lenders require proof of home insurance or they force insurance on you typically at higher premiums.
What is an insurance contract? An insurance contract is an agreement between the named insured and the insurance carrier. The insurance carrier agrees to indemnify the named insured in the event of a loss for an exchange of premium.
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Who is a named insured? A named insured is the listed person, firm, or organization in the insurance policy that coverage is extended to. The named insured is allowed to make changes to the insurance policy.
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What makes an insurance carrier better than another? Insurance companies are rated by third party companies such as A.M. Best or Moody’s. They consider the insurance company’s financial strength and likelihood the company will repay a claim. When evaluating insurance companies, consumers should only purchase insurance from “A” rated carriers. Other considerations should be customer service, price, and product. These considerations should be analyzed together to obtain the best value.
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Not all insurance is created equal. Just because you have a cheap insurance policy does not mean you have good coverage, or a company that is quick to pay out on claims. Just like having the most expensive insurance does not guarantee you have the best insurance. Your agent cannot control rates, but they can help out with claims, service, and being an advocate for you. Do your due diligence when shopping for insurance.
General
What does full auto coverage mean? Saying you are fully covered does not give a full picture of your auto coverage. Fully covered only means you at least have the state minimum liability requirements, and comprehensive and collision coverage. You could be fully covered and still have deficient liability coverages to your personal situation. Consumers should consider their total assets that they are trying to protect when considering their liability coverage.
Do all drivers in a household have to be listed on an auto policy? In short, the answer is yes. All members of a household who are of legal driving age need to be listed on the policy. Insurance is a risk-based business, and they assume everyone has equal access to all vehicles. If you fail to disclose a driver in the household it is possible the insurance carrier will not provide coverage in the event of a loss or cancel your policy. It is best practice to list all drivers or specifically exclude certain drivers on your policy.
When does your bodily injury coverage apply? Your bodily injury coverage applies when you are at fault in an accident and cause bodily injury to someone else. The insurance company will provide coverage up to your per person and per accident limit.
What does your property damage cover? Your property damage coverage applies when you are at fault in an accident and cause property damage to someone else’s vehicle or other type of property such as a building. The insurance company will provide coverage up to your liability limit per accident.
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Should you have uninsured motorist coverage? Although uninsured motorist coverage is not mandatory, all consumers should consider purchasing it. In California 15% of all drivers are not insured and even higher are underinsured. Uninsured/underinsured motorist coverage will pick up the additional cost to pay for your property damage and medical expenses in the event the person at fault does not have enough liability coverage.
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If I rent a car does my personal auto insurance cover me? Yes! Your liability coverages extend to other vehicles you borrow in the event you are at fault in an accident.
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What does your property damage cover? Your property damage coverage applies when you are at fault in an accident and property damage to someone else vehicle or other type of property such as a building. The insurance company will provide coverage up to your liability limit per accident.
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What is the difference between comprehensive and collision deductibles? Comprehensive coverage allows for repairs to your vehicle for things outside of a collision such as auto theft or vandalism. Collision coverage allows for repairs to your vehicle in the event you are at fault in a collision. The collision could be with another automobile or a fixed object such as a pole.
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If my personal items are stolen from my car does my auto policy provide coverage? It depends. You could have an endorsement on your auto policy that provides a limit of value for personal property stolen from your vehicle. If your auto policy does not include this endorsement for any personal property stolen, you can file a claim under your homeowners’ policy up to the applicable policy limits.
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Is my car insurance enough? Your auto coverage should be at a minimum enough to cover your assets. On average 15% of drivers are uninsured which leaves a lot of drivers at risk. Here is a quick breakdown of how insurance covers accidents today. State minimum liability usually covers 40% of the accidents, 50/100 usually covers 56% of the accidents, 100/300 usually covers 87% of the accidents, 250/500 usually covers 97% of the accidents you will ever be in.
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Teenage Drivers and the cost to you: Teenage drivers typically increase the cost of an auto insurance policy by about 35%. There are ways to reduce premium by making sure your young driver has taken a defensive driving class, has a 3.0 or higher and drives an older vehicle.
Auto
Am I required to purchase home insurance? It depends if you own the deed to your home or if you have a mortgage on your home. All home lenders require homeowners to maintain home insurance and proof of insurance must be provided to the lender. If you completely own your home, it is up to you to purchase home insurance. It is always recommended to carry home insurance whether you completely own your home or not. Home insurance provides coverage for more than just the dwelling. Your home insurance policy provides general liability and coverage for individually scheduled items of high value such as jewelry, art, guns, and musical instruments.
Can my lender pay my premiums? Yes. Paying your premium has never been easier. Your lender will collect your insurance premium in your mortgage payment and will make annual premium payments on your behalf.
Does my home policy cover floods and earthquakes? No. Flood and earthquake policies are separate stand-alone policies. Your regular home insurance policy has exclusions for flood and earthquake. A flood event is defined as losses sustained by water damage specifically due to flooding caused by heavy or prolonged rain, melting snow, coastal storm surges, blocked storm drainage systems, mudslide, or levee dam failure. A flood event is separate from a burst water pipe that causes flooding in a home. An earthquake endorsement may be available on your home insurance policy or a standalone policy can be purchased. Both a flood and an earthquake policy cover the dwelling and personal contents.
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Getting a new Puppy? Make sure to notify your insurance agent whenever getting a new pet. This ensures you have liability coverage for that animal and protection if a stray animal wanders onto your property and attacks someone.
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Does my home policy exclude certain dogs? Most major insurance carriers exclude certain breeds of dogs such as, Pit Bulls, Rottweilers, Doberman Pinscher, Akita, Chow Chow, English Mastiff, and other known vicious dogs. All dogs should be disclosed on your policy so liability coverage will be afforded in the event of a claim.
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Should I schedule valuable items such as jewelry? It is always a good idea to schedule items of high value. Your home policy has built in limits for certain items such as jewelry and might not cover the full replacement cost of that item. By scheduling items of value, you guarantee full replacement cost of that item if it is lost, stolen, or damaged. Additionally, no deductible will apply when filing a claim.
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Does my home insurance cover mechanical breakdown of appliances? Most home insurance policies do not cover equipment breakdown of your major appliances such as your A/C unit, water heater, etc. Most consumers purchase a separate home warranty policy that can cost $500 or more annually. The Sorensen Agency offers this coverage as an included endorsement in the homeowner’s policy we provide through American National Insurance Company.
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How do you determine the replacement cost of my home? Insurance carriers all use a replacement cost estimator that takes into consideration the size, age, features, and material of the home. The estimator produces a cost to rebuild the home to like standards prior to the loss. The replacement cost might not always be equivalent to the value of the property because the value of the land is not taken into consideration for replacement cost.
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Have you added a pool or done improvements to your home? If you have an added pool notify your insurance agent so it can be disclosed on your policy. This allows your liability and property protection to afford you coverage in the event of a loss involving the pool. Any improvements should be disclosed to your insurance company to insure the property is properly protected.
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If I don’t own a home should I get a renters policy? Even if you rent, a renter’s policy should always be considered. If a loss occurs to the dwelling, the landlord is not responsible for the loss to your personal property. A renter’s policy protects your personal belongings and also provides general liability. A renter’s policy is very economical considering the protection it provides.
Home
What is the difference between a term life and a permanent life policy? A term policy provides a defined death benefit for a period of time, typically 10, 15, 20, and 30 years for a fixed monthly premium. The premiums for a term policy are very economical. A permanent life policy is a defined death benefit for the life of the insured. Premium options are more expensive but can be variable depending on the type of policy. Permanent policies can be used to earn additional cash growth and be used to supplement retirement income while providing disability benefits prior to death.
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When should I buy life insurance? Life insurance should be considered as early in life as possible. The number one rating factor in determining premium is age. Additionally, the earlier you insure your life, the less you have to worry about future health conditions preventing you from obtaining life insurance.
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Are there any exclusions in a life insurance policy? Life insurance policies typically exclude suicide within the first two years of the policy. Additionally, they will exclude military service members’ participation in war.
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Do life insurance policies have living benefits? It is a common misconception that life insurance only provides a death benefit. Your premier life insurance carriers also provide accelerated benefits in the event they become terminally ill, critically ill, or need long term care. These accelerated benefits will allow access to the death benefit to pay for needs while the insured is still alive.
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Should I buy group life insurance through my employer? I caution the consumer buying life insurance through their employer if they are eligible in the personal market. The life insurance policy will only be in force during your time of employment and could leave you searching for life insurance at a later time. Life insurance purchased through the personal marketplace can provide you more coverage at a better premium and is portable. Additionally, life insurance purchased through the employer often has an “actively working provision” that only pays the death benefit if the employee has not been away from work for more than two days or scheduled vacation. You should review any employer sponsored plan with a licensed life insurance agent.