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FAQs

Q: What does homeowners insurance cover?

A: The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Often, homeowners insurance is required by the lender to obtain a mortgage.

Q: What is the difference between “actual cash value” and “replacement cost”?

A: Covered losses  can be paid on either an actual cash value basis or on a replacement cost basis. When “actual cash value” is used, the policy owner is entitled to the depreciated value of the damaged property. Under the “replacement cost” coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.

Q: What kinds of questions should I be expected to answer when I am applying for an insurance policy? Why do insurers need so much information?

A: When you apply for an insurance policy, you will be asked a number of questions. For example, the agent might ask you your name, age, gender, address, etc. In addition, you will be asked a number of other questions which will be used to determine how likely you are to make a claim.

When an insurance company is preparing a policy for a potential customer, it will want to know about the person’s previous driving record, whether they have any recent accidents or tickets, and what type of car is to be insured. Insurance companies have different programs for different customers. Adults with good driving records will generally pay less for auto insurance than will a young driver with traffic tickets. In order to determine which program you qualify for, an insurance company needs basic information about you. In addition to your age, gender and driving experience, information about the vehicle you drive–and how you drive it–helps to determine a fair price.

Q: What are the advantages to using an agent to purchase insurance?

A: By using an independent agent like First American Insurance Agency to purchase insurance, you as the policyholder receive more personal service. An agent has direct contact with you; which can be vital when purchasing a product, and is absolutely necessary when filing a claim. A local, independent agent is able to deliver quality insurance with competitive pricing and local personalized service.

Q: I have an older car whose current market value is very low–do I really need to purchase automobile insurance?

A: Most states require drivers to have at least some automobile liability insurance. These laws ensure that victims of automobile accidents receive compensation when their losses are caused by the actions of another individual who was negligent.

Q: What is the difference between collision physical damage coverage and comprehensive physical damage coverage?

A: Collision covers losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.

Comprehensive covers most other direct physical damage losses you could incur, including theft. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.

Q: What factors can affect the cost of my car insurance?

A: A number of factors can affect the cost of a auto insurance plan. The type of car you drive, the purpose the car serves, your driving record, and where the car is garaged can all affect how much your automobile insurance will cost you. Even your marital status can affect your cost of insurance. Statistics show that married people tend to have fewer and less costly accidents than do single people.

Q: What are some practical things I can do to lower the cost of my homeowners insurance?

A: There are a number of things you can do to lower homeowners insurance costs. First, get a comprehensive review of your policy and needs from your local agent.

Often quotes on homeowners insurance can vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage.

Look for homeowner insurance discounts that you may qualify for. For example, many insurers will offer a discount when you place both your automobile and homeowners insurance with them. Other times, insurers offer discounts if your home has a security system.

Another easy way to lower the cost of your homeowners insurance is to raise your deductible from $250 to $500. This will lower your premium, sometimes by as much as five or ten percent.

Q: What does homeowners insurance cover?

A: The typical homeowners policy has two main parts: Part I covers the property of the insured and Part II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Often it is required by the lender to obtain a mortgage.

Q: What is the difference between “actual cash value” and “replacement cost”?

A: Covered losses can be paid on either an actual cash value basis or on a replacement cost basis.

When “actual cash value” is used, the policy owner is entitled to the depreciated value of the damaged property. Under the “replacement cost” coverage, the policy owner is reimbursed an amount necessary to replace the article with one of similar type and quality at current prices.

Q: What should I consider when purchasing homeowners insurance?

A: There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when you purchase homeowners insurance:

  • Determine the amount and type of insurance that you need. The coverage limit of your house should equal 100% of its replacement cost. If your policy limit is less than 80% of the replacement cost of your home, any payment from your insurance company will be less than the full cost to replace your home–you’ll have to pay the rest out of your own pocket.
  • Decide if the personal property and personal liability limits are adequate for your needs.
  • Determine if you want the personal property replacement cost endorsement, an earthquake endorsement or a jewelry endorsement.

Once you have decided on the coverage you need, consult your personal representative at First American Insurance Agency. We can help determine if there are any gaps in coverage you might not have been aware of, explain the details of the policy’s exclusions and limitations as well as help you set up a policy with an insurance carrier that will live up to your expectations.

Q: Where and when is my personal property covered?

A: Personal property (except property that is specifically excluded) is covered anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you want to ship it home. Your homeowners policy would provide coverage for the named perils while the dresser is in transit–even though the dresser has never been in your home before.

Q: Do I need earthquake coverage? How can I get it?

A: The standard policy does not pay for direct damages caused by “earth movement.” “Earth movement” is a much broader term than earthquake. It includes earthquake, volcanic activity and other earth movement. This coverage may be available by endorsement for an additional charge. If you live in an area that is more likely to have an earthquake, you’ll pay more than if you live in an area that is unlikely to have an earthquake.

Q: Why would I want to buy renters insurance?

A: If you live in an apartment or a rented house, a standard renters policy protects your personal property in many cases of theft or damage and may pay for temporary living expenses if your rental is damaged. It can also protect you from personal liability. Anyone who leases a house or apartment should consider this type of coverage.

Q: What is a personal umbrella liability policy?

A: A personal umbrella liability policy increases your liability protection. This single policy acts as an “umbrella” over all of your other personal liability policies–home, auto, boat, RV, etc.–so you have a higher personal liability limit than what would otherwise be available. In certain circumstances, an umbrella policy may provide personal liability coverage that is otherwise excluded from your other policies.