FAQ

What can I do to reduce my insurance costs?

Many times there are changes that can be made in your deductibles and coverages, as well as your life style that can reduce your costs. An independent agent may propose safely measures that help you earn discounts or tell you how to combine coverages or policies to save money.

Why does the premium on my older car keep going up?

The reason is because most accidents are not total losses. It’s always more expensive to rebuild an entire vehicle part-by-part than it would be to buy a new one mass produced. Years ago it was told that a brand new car costing $10,000 would cost $40,000 to replace it part-by-part!

Why are some cars more expensive to insure than others?

The reason is one of two things: greater likelihood of loss, and greater expense when damaged. Certain cars, like sports cars and convertibles, are more subject to theft or vandalism than others. Crash tests show different cars sustain different amounts of damage, even in identical circumstances. These differences must be reflected in the premiums.

Why do premiums go up when I have an accident or ticket?

The public seems to feel those who have accidents ought to pay more. Otherwise the rates for those who never have accidents would be higher. Many companies now offer “first accident forgiveness,” so rates don’t go up the first time you have an accident.

Most companies don’t raise the rates of an existing customer who may have received a ticket or two, but are more cautious in accepting new business. Numerous studies have shown people with tickets are more likely to be involved in accidents.

How much will my premium go up if my child starts to drive?

At this point boys still are involved in more accidents than girls, although statistics are changing, so the premium for them is more. The amount of the increase depends on many factors, including the age and value of the car, how it is used, whether the son or daughter is a good student and whether or not they passed driver education.

As a rule of thumb we tell our customers to expect the premium to double on any vehicle a newly licensed son begins to drive occasionally. For girls it will be a bit less.

What are some things to look for in an insurance company?

Financial strength.

You need some assurance your company will have the money to pay claims in catastrophic events. Check the AM Best rating, which should be at least A+, A, or A-.

Claim service.

Your state department of insurance can tell you which companies have the most complaints against them, and which companies resolve their complaints effectively. Beware of companies which direct you to their own “approved” body shops, or ask you to come to their drive-in claim centers. The best companies will send the adjustor to you.

Marketing system.

You should deal with an agent – not an (800) number or a mailbox. Independent agents have more options for you, at competitive prices, than agents representing just one company.

How should I determine the insurable value of my home?

First, don’t confuse the amount of insurance you should have on your insurance policy with the market value of the house. Market value can vary considerably based on the size of the lot, location, what someone is willing to pay, and other factors. The cost to replace it, however, remains fairly constant in a geographic area. Your house should be insured for its replacement cost – not what you could sell it for. There can be a big difference between the two. Many insurance agencies have software which can help determine replacement cost of your home, and they would be happy to help you with it.

Should I carry full coverage on my older car?

The purpose of insurance is to protect you against financial catastrophe. If the value of a car is low enough so you can afford to replace it out of pocket, it probably isn’t wise to pay a premium to have it replaced if its wrecked. Some financial analysts recommend not paying an annual premium more than 15% of the value of the car (or $300 for physical damage coverages on a $2000 car). Stick with liability, uninsured motorists, and medical coverages in that case. Remember, you can kill someone as easily in an old car as you can a new one, so there is no reason to reduce or eliminate these coverages even if the car is old. The law might prohibit that as well.

How large should my deductibles be?

The higher the deductible is on a policy or coverage, the lower the premium. Generally, however, the savings if the deductible is higher than $500 is not as significant – for personal insurance. For business / church insurance it usually is. Check into increasing all your deductibles to $500 or $1,000, and you may notice a substantial savings on your annual insurance bill.

How much liability insurance should I carry?

It is impossible for your insurance agent to answer this question. No matter how much is recommended, you could always be sued for more. Remember, though, higher limits are comparatively inexpensive. Most people should carry at least a $l,000,000 Umbrella policy. Unless you own several vehicles or pieces of real estate an Umbrella should cost less than $200 per year.