Five Questions to Ask Your Insurance Agent

/ Batchelder Bros. Insurance/

Everyone is looking for a deal, but be cautious about the differences in coverage when shopping around.  This goes for both homeowners insurance and auto insurance.  There are 5 questions that you should be asking your agent when going over a quote.

  • Replacement Cost
    • When discussing homeowner's insurance, ask if the policy includes replacement cost for both your home and contents.  The second you wear a pair of jeans, or plug in your new TV, the value of that product drastically falls.  So if your policy offers "actual cash value" you would only get the depreciated value for that product, say $20 for a $100 pair of jeans, or $300 for a $1,000 TV in the event of a loss.  The same would be the case for your roof or siding.  Replacement cost would give you the full amount to go out and purchase the same (or similar) product again at full price.
  • Extended Dwelling Value
    • Every homeowner's policy or quote will list a dwelling limit.  This is a loose estimate based on average local labor and material costs that is far from a perfect science.  Ask for a minimum of 25% over the listed dwelling limit, and more if you can.  There are even a few companies out there, such as The Andover Companies, that offer guaranteed replacement cost.  This ensures that if your home were to exceed, or in the case of guaranteed replacement cost, far exceed, the listed dwelling limit to rebuild a like, kind, and quality home, you would be fully compensated for the cost.
  • Insurance Company's Financial Strength 
    • There are a number of factors that anyone should be aware of regarding the insurance company they are placed with, but none more important than financial strength.  The leading ratings agency, A.M. Best, classifies insurance companies by financial strength on a scale from A++ to D.  You want to make sure that the company has a strength of A or better.  This ensures the ability for a company to meet or exceed its financial obligations.  If there were to be a major catastrophe in any given area, this means they would be able to compensate everyone as agreed in the insurance contract.  This can generally be used as a barometer of how good a company is overall. 
  • Auto Liability Limits of At Least $100,000/$300,000
    • Depending on which state you reside in, your minimum legal liability limit will vary, however you should always make sure to have a minimum of $100,000 per person/$300,000 per accident liability limits.  Typically the lion share of your auto premium is derived from collision coverage.  Most of the cost of liability comes from just having it at any amount of coverage and as you increase limits it tends to add a relatively small amount to your premium.  Make sure to ask your insurance agent to quote at least $100,000/$300,000 and ask what it would look like for even higher limits, say a combined single limit of $500,000, and make a decision from there based off your personal circumstances.
  • Agreed Value for Scheduled Items
    • Depending on the company you can add a scheduled item, also known as a floater, for most unique items.  The most common ones we see are for engagement rings and other high value jewelry such as collectible watches, and we often see artwork, cameras, musical instruments, and other items that are not part of daily essential living.  Something that is not commonly known is that insurance companies will replace a lost or stolen engagement ring for you and not actually write a check for the value of the item.  If you would like to have the flexibility to find just the replacement you are looking for, ask your agent about agreed value.  With agreed value, if you have an appraisal for $10,000, you will be compensated $10,000.  Without agree value its likely the insurance company will utilize one of their own vendors to find a like, kind, and quality replacement for it.