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  • Writer's pictureJeremy Yorke

Savy Shopper - 4 Questions to Ask When Shopping for Insurance

Let's face it, shopping for insurance isn’t fun.  Even though we know we need it, paying for insurance can feel like throwing money away.  Because of this, companies use catchy slogans, with emphasis on discounts and savings, to get your business.  Sure cost is important, but the true cost of your insurance program isn’t what you pay upfront in premiums, but what you might have to pay when you have a problem.  Let’s look at 4 questions you should ask when shopping for insurance to make yourself a savvy shopper. 

What is my Liability coverage? 

Liability coverage is the foundation of most insurance policies, yet far too often, customers are unfamiliar with this portion of insurance.  Liability insurance is critical for those who may be held liable for injuries to others, or damage to someone else's property.  Insurance companies usually offer various limits of liability.  If you are found liable for someone else’s injuries or damaged property and your liability limits are insufficient, you could be personally responsible for the excess expense.  Be sure to ask for an explanation on how to much liability coverage you have.  

What are my Deductibles?

A deductible is the amount of money the policyholder pays out of pocket before the insurance coverage kicks in and the insurance company starts paying. 

For homeowners policies, insurance companies are becoming increasingly creative in their deductible options.  Things like percentage-based deductibles or deductibles by perils are becoming more common.  For auto insurance, different deductibles apply depending on how the vehicle is damaged.  For example, damage due to a fallen tree would have a different deductible than damage due to rear-ending a stopped car.  Ask your agent or insurance provider to explain their deductibles and what options you may have.  

What is my Loss Settlement?

Loss Settlement is a financial term used to denote the amount of a property insurance settlement.  Insurance companies have gotten very creative in this part of their policies.  You may have heard terms like replacement cost or actual cash value but what do these terms mean?  There are many different loss settlement options, some more expensive than others.  That being said, an inadequate loss settlement option would be problematic at claim time.  Think of insuring the value of your property when considering loss settlement options.  Ask your agent or insurance provider to explain what loss settlement you have regarding all of your property. 

What are my covered Perils?

A peril is a specific cause of damage or loss.  There are 16 basic peril types that are commonly covered by a “named perils” insurance policy.  However, this isn’t universal and what is or isn’t covered in your policy can vary based on the insurance company, your insured location and the type of policy you bought.  Be sure to ask what perils you have covered, or better yet, what is excluded.

Cheap rates, discounts and savings are important, but not as important as adequate protection.  All insurance companies differ and their products vary.  Asking the right questions upfront will help avoid headaches when problems happen.  Familiarizing yourself with some of these concepts will make you a savvier insurance shopper. 

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