Questions to Ask Your Insurance Agent
Important Things to Know Before Buying an Insurance Policy
Sep 22, 2009
Insurance policies can be dauntingly complicated documents to read and understand. Consumers need to protect themselves by asking their insurance agent specific questions before purchasing an insurance policy.
The first question consumers should ask is this one: How will the agent help if the insured has trouble filing a claim? This is important because claims are handled by insurance adjusters. An insurance adjuster's job is to settle the claim for as little money as possible. Consumers need to find out if and how the insurance agent can help them in the event of a dispute.
Questions to Ask About the Insurance Policy
How are the policy's deductibles applied?
Surprisingly, some insurance companies apply the deductible to the value of the policy, not the claim. On a home that has been insured for $100,000 with a 20% deductible, most consumers would expect the insurance company to pay 20% of the damages. If those damages were $10,000 the consumer would pay $2,000 and the insurance company $8,000, right?
The answer is no; not if the deductible is applied to the value of the policy. If that's the case then the insurer would only pay after the consumer has paid the first $20,000 in damages. Look for deductibles expressed in flat figures, not percentages.
What is NOT covered by the policy?
Insurance agents often spend more time extolling the virtues of the insurance policy and what it does cover but consumers need to know what it does not cover so there are no unpleasant surprises. For example: although storm damage is often included in homeowners' policies, water and flood damage are often excluded. If a storm rips the roof off a house and water damages the walls, floors, and furniture, only the roof will be covered.
Questions to Ask About the Insurance Company
What are the insurer's procedures for renewing policies and raising premiums?
Some policies are renewed by the insured. Others are automatically renewed by the insurance company and the premiums can be raised automatically for any reason. Consumers should ask their insurance agents about their rights, and ask for a guaranteed-renewable policy with a premium guarantee.
How much money will the insurance company pay?
When purchasing homeowners insurance, consumers should ask if the house will be insured for market value at the time of the loss, or the market value at the time the policy was purchased, or for full replacement cost regardless. Consumers need to find out what it would cost to rebuild their home in compliance with current zoning laws and then insure their homes for full replacement cost.
Will I be required to give a disposition when I file a claim?
When consumers make a claim they are required to fill out lengthy forms itemizing where and when each item was purchased, providing proof of each purchase. The insurance company can take the disposition under oath and grill the insured about the lost items and their value. The insurance company can refuse to cover items if the insured doesn't provide receipts and then settle the claim for the least amount of money possible.
To protect themselves and their assets, consumers should make a videotape or photo inventory of their personal possessions. They can then give a copy of the video as well as copies of photos and receipts to insurance agent who will file them with their insurance records.
The answers to these questions will tell consumers what they need to know about an insurance policy before they buy. Knowing the details of a policy upfront will help consumers choose the right insurance policy for their needs and can save them a lot of money by preventing costly mistakes.
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