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FAQ

Questions regarding Homeowners Insurance:

What is the difference between Hazard Insurance and PMI Insurance (Private Mortgage Insurance)?

Hazard Insurance is another term for Property or Homeowner's Insurance. PMI Insurance (Private Mortgage Insurance) is what a bank carries should you default on your loan. PMI insurance is not homeowner’s or property insurance.

Why is my insurance company insuring my home for more than I paid for the home or more than what it would sell for in our real estate market?

In order to extend replacement cost coverage on your home, the insurance company requires that your home is insured for usually 100% of the estimated replacement cost. When an insurance company gives you a replacement cost figure, it is usually higher than the market value because factored into the numbers are debris removal, cost of rebuilding to meet today’s codes, etc.

What deductible should I carry on my home and what are my options?

Deductibles on homeowners insurance today usually start at $500 and can be raised to as high as $10,000. The higher your deductible, the lower your premium. When thinking about what would work for you, think about at what amount you would turn in a claim and what amount you could pay towards repairs on your home. If you wouldn’t turn in a claim under $1000, but could pay that expense yourself, it should be something to consider.

Why do I have to cover my home for so much?

Most companies in today's insurance world write a "replacement cost guarantee" homeowners policy. They guarantee that if your house is a "total loss", it will be completely rebuilt. To qualify for this coverage the home has to be initially insured for what it would take to rebuild it. Some companies do write what they call a "Repair Cost Policy" or an "Actual Cash Value" policy for older homes. Those policies could have a lower coverage, but usually have a higher premium. Their promise is to repair or replace damage based on material, supplies, and workmanship readily available in current construction methods, not the way they may have been originally built.

Questions Regarding Automobile Insurance:

What is the difference between Uninsured and Underinsured coverage?

There are two coverages on your auto policy that look very similar, but work in different ways. Uninsured covers you, or any passenger in your vehicle for their damages or expenses incurred (such as medical bills) when an accident is the fault of a driver with no insurance. Underinsured covers you for the same losses but applies if the other driver has insurance, but your damages are more than their limits.

What is the difference between comprehensive and collision deductibles?

Comprehensive is coverage that is usually considered non accident related, such as weather, vandalism and theft. Collision covers you if you hit anything or anything hits you.

My bank sent me a letter that they have taken out insurance for me and they are putting it into my loan.

If you receive a letter stating that your lender has taken out coverage for you, be sure it is not "forced placed" insurance. Call your lender and ask what type of coverage they are referring to. Forced placed coverage is much more expensive than standard auto insurance, and only covers your lender (not you) for physical damage to your vehicle. There is no liability coverage, or coverage that would help you repair the vehicle.

What is an "Umbrella" and why should I have one?

An "umbrella" policy is an excess liability policy which protects the insured against liability losses that could exceed their primary coverages on their auto, homeowners, boat, motorcycle or farm policies. In today’s world of litigation increases and lawsuit settlements, an "umbrella” policy could be invaluable to protect assets, future earnings, and peace of mind.