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Auto Insurance

How is auto insurance premium determined?
Does my credit score affect the cost of auto insurance?
Should I get roadside assistance coverage?
Why does it cost more if I haven't had previous car insurance?

Home Insurance

What does dwelling coverage include?
Is my engagement ring covered on a standard homeowner's policy?
Do I need to have receipts to file a theft claim?
Why does the mortgage company pay the home insurance premium?

Life Insurance

Will I get approved for life insurance if I smoke?
What is cash value life insurance?
What is home mortgage protection insurance?
How does depression medication affect life insurance applications?

General Questions

Is it more expensive to have an insurance agent?
What does it mean if a company has a strong financial rating?

 


Auto Insurance

How is auto insurance premium determined?

Each car insurance company uses various factors to determine the proper rate to charge each driver but here are the factors that determine the majority of your premium:

  • Age - drivers between 30 and 70 get the lowest rates
  • Driving History - accidents or tickets in last 3 years will surcharge your rate
  • Credit History - better the credit lower the rate
  • Home Address - rates are higher in urban areas than rural locations
  • Marital status - married couples get lower premiums especially if you are under 30
  • Vehicle Make & Model - power to weight ratio plus the value of the vehicle will cost more

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Does my credit score affect the cost of auto insurance?

In most states auto insurance companies use your credit history to help determine your premium. It has been proven that someone who has a lower credit score is more likely to file a claim. This is approved by law in most states so it is in your best interest to have a high credit score. Some companies will discount your insurance by as much as 40% if you have excellent credit.

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Should I get roadside assistance coverage?

Without a doubt one of the most valuable coverages that auto insurance can provide is roadside assistance. Ask anyone whos car has broke down in the middle of nowhere if they would ever go without it. Even if you have roadside assistance with another company it is likely cheaper to add it to your auto insurance policy and it is one less phone number to know in the event you need help. Major auto insurers offer towing and roadside assistance for as little as $15-$20 per year.

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Why does it cost more if I haven't had previous car insurance?

Auto insurance companies have determined it is more costly to insure a driver who has not previously carried insurance. If you have not had continuous liability insurance for at least six months expect to pay 10-20% more until you have had auto insurance for one year or more. Drivers who show financial responsibility by continuing to have proper auto insurance for 3 or more years will get lower rates than drivers who have not.

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Home Insurance

What does dwelling coverage include?

Homeowners insurance provides coverage for the stucture of your home under "dwelling coverage" on the policy. This coverage usually includes anything attached to the home including a deck or storage unit. Most insurance companies state that the dwelling is covered for losses such as fire, wind, hail or explosion. The most common claim on homeowners insurance is wind and hail damage but the most costly damage is usually done by fire. Ask your agent what is included on your policy with regards to dwelling coverage as it varies from company to company.

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Is my engagement ring covered on a standard homeowner's policy?

Most home insurance policies do provide coverage for jewelry but it is often capped at $2000 or less. With an average engagement ring valued at $6,000-$10,000 it is recommended to get a floater for the ring. A jewelry floater is an add-on to your homeowners policy which insures the ring for the appraised value against theft and other losses. The key advantage to having a jewelry floater is most companies will cover it for misterious disapearance a.k.a losing it.

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Do I need to have receipts to file a theft claim?

No, but they do make the claim process easier. If you happen to have personal property stolen the first thing the insurance adjuster will ask for are receipts for items stolen. If you can show proof via receipts, pictures, or inventory it makes it faster and easier for the adjuster to pay you for the full value of those items. It is not necessary to have the receipts for everything but try to hold on to them for expense items such as electronics or jewelry. Store the receipts in a safe place such as a safe deposit box or waterproof safe.

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Why does the mortgage company pay the home insurance premium?

When you purchase a home it is likely that you will need a mortgage from a bank to finance the purchase. The bank will want to see proof that the home is insured and this is done by paying for the first full year premium in advance. One of the items that will usually be included in your mortgage cost is the monthly cost of homeowners insurance. By doing this the bank protects their investment and verifies that the insurance is in force or they will be notified if it cancels for any reason. If you don't have a mortgage you do not need to carry insurance but it is recommended.

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Life Insurance

Will I get approved for life insurance if I smoke?

Smoking or chewing tobacco is obviously not healthy and has been proven to cause many diseases and death which is why life insurance companies don't want to insure people who smoke. The fact is that most insurance companies will provide you life insurance but will surcharge the policy as much as 200% for having used tobacco or nicotine products in the last year. If you are trying to quit or have not smoked in almost one year wait until 12 months has passed to apply for life insurance. The company will offer you a non-nicotine rate if you have not smoked in the last 12 months.

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What is cash value life insurance?

Life insurance comes in two different types, term and permanent. Permanent life insurance usually includes a cash value account that accumulates cash from a portion of the premium. This cash account is often added to the death benefit of the policy and earns interest. These type of policies cost more than term policies because they provide a rate of return which is usually guaranteed. The cash account can be withdrawn but there are penalties if taken out early so be sure to check with your company first.

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What is home mortgage protection insurance?

Many banks will offer home mortgage protection if you purchase a home using a mortgage. This is simply a life insurance policy that tends to be good for the term of the mortgage which is often 30 years. The policy is sold to homeowners as a way to pay off your mortgage in the event you or your spouse passes prior to paying it off. Many people don't want to leave their family with the burden of paying a mortgage if they die so this offers a great way to provide that protection. You can just get a term policy and use the death benefit to pay for whateve you want including mortgage.

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How does depression medication affect life insurance applications?

If you are currently taking medication for depression or plan to in the future it is important to understand how it will affect your application for life insurance. Life insurance companies view anti-depressant medication as a higher chance someone may commit suicide or die prematurely. For this reason it is not uncommon for life insurers to deny applicants for life insurance using these medications. If you are not denied you will likely see a surcharge in rates until you stop taking the medication for at least one year.

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General Questions

Is it more expensive to have an insurance agent?

Many insurance consumers prefer to have an agent because they tend to offer better service that is more personalized than a 1-800 number. Insurance companies pay agents to service their customers and grow the insurance business but it does not neccessary mean you have to pay more for this service. Your insurance premium is determined by the company based on many factors including the commission paid to the agents. Often it is easy to find an insurance company that has low rates with the added benefit of an agent.

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What does it mean if a company has a strong financial rating?

When you hear an insurance company has an financial rating of A or AA it is a measure of their financial stability over many years. Companies are rated based on their ability to pay insurance claims and overall financial strength. A.M. Best is a rating firm that provides ratings to the insurance industry leaders. A.M. Best uses a "aaa" rating to show exceptional investment grade status.

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