Q: What factors can affect the cost of my Automobile and Homeowners Insurance?
A: A number of factors can affect the cost of your automobile insurance -- some of which you can control and some that are beyond your control.
Factors you have some control over include your credit score, your claim history, where you live, the type of car you drive, and maintenance of your home.
Factors you cannot control include the number of claims that occur in your geographic area, your age, increasing labor and parts/material costs, questionable lawsuits, and other drivers' poor driving skills.
Q: What is the difference between "replacement cost" and "market value"?
A: Homeowners Insurance policies are written to cover the "replacement cost" of your home. Replacement cost is how much it would cost to rebuild your home if it was destroyed (such as in a fire) from the ground up with today's labor and material prices. This includes the cost of removing the debris of the destroyed home. Generally the replacement cost increases over time since labor and material prices increase with inflation. This value is used for insurance purposes, not real estate purposes.
"Market value" is the price for which you would sell your home. Market value is different than replacement cost since it is based on the desirability of your neighborhood, the quality of the police and fire department, the quality of area schools, and the price at which similar homes in your neighborhood have recently sold for. This value is used for real estate purposes, not for insurance purposes.
Q: How much life insurance should an individual own?
A: "Rule of thumb" suggests an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account when determining the right amount of life insurance for you and your family.
Important factors include:
Calculating the correct amount of life insurance to buy is not as simple as it appears. We recommend contacting us for help determining the right amount of coverage. As independent agents, we are unbiased advisors that will help you avoid buying too much, show you appropriate optional coverages for your need and recommend a company that will best serve your interests.
Q: What are some practical things I can do to lower the cost of my insurance?
A: For Automobile Insurance, you can reduce your insurance costs by maintaining a good driving record. Traffic violations that are considered minor by the general public such as "casual" speeding have significant impacts on your insurance rates. By paying attention to your surroundings and the rules of the road when you drive can significantly reduce your chances of being involved in an accident.
For Homeowners Insurance, maintaining your home in good order helps prevent claims and, in turn, reduces your insurance premiums.
For all lines of insurance, it is best not to file small claims especially if you already have any claims that have happened during the past 5 years. It is best to discuss any potential claim with your agent before submitting a claim.