Homeowner Insurance Questions
What is in a standard homeowner’s insurance policy?
Are there different types of policies?
How much homeowner’s insurance do I need?
How can I save money?
How do I take a home inventory and why?
Should I purchase an umbrella liability policy?

 

Automobile Insurance Questions
What is covered by a basic auto policy?
How can I save money?
How much coverage do I need?
What determines the price of my policy?
Should I purchase an umbrella liability policy?

Q:  What is in a standard homeowner’s insurance policy?

  • A:  A standard homeowner’s insurance policy includes four essential types of coverage.
    They include:

    • Coverage for the structure of your home.
    • Coverage for your personal belongings.
    • Liability protection.
    • Additional living expenses in the event you are temporarily unable to live in your home because of a fire or other insured covered cause of loss.
  • The structure of your house.
    This part of your policy pays to repair or rebuild your home if it is damaged or destroyed by fire, wind, hail, lightning or other insured perils listed in your policy.  It will not pay for damage caused by a flood, earthquake or routine wear and tear.  When purchasing coverage for the structure of your home, it is important to buy enough to rebuild your home.
    Most standard policies also cover structures that are detached from your home such as a garage, tool shed, gazebo or fences.  Generally, these structures are covered for 10% of the amount of coverage you have on your home.  If you need more coverage, talk to our representative about purchasing more insurance.
  • Your personal belongings.
    Your personal items are covered if they are stolen or destroyed by fire, wind or other insured perils.  Most companies provide contents coverage for 40% to 60% of the amount of insurance you have on your home.  If you have $100,000 worth of insurance on the structure of your home, you would have between $40,000 to $60,000 worth of coverage for your belongings.  The best way to determine if this is enough coverage is to do a home inventory.
    There is coverage for your personal property away from the insured premises, but most companies limit the amount to 10% of the amount of insurance you have for your belongings.
    Expensive items like jewelry and furs are covered, but there are dollar limits if they are stolen. Generally, you are covered up to $500.  For an additional premium, this limit can be increased to $5,000.  To insure these items to their full value, and all risk coverage, purchase a special personal property endorsement or policy and insure the item for it’s appraised value.
  • Liability protection
    Liability covers you against lawsuits for bodily injury or property damage caused.
    The liability portion of your policy pays for both the cost of defending you and court awards up to the limit of your policy.
    While you can purchase lower limits, we recommend that you purchase at least $300,000 worth of protection.  Many of our clients feel more comfortable with even more coverage.  You can purchase an umbrella liability policy which provides broader coverage. The premiums for a umbrella liability policy are surprisingly inexpensive.
    Your policy also provides no-fault medical coverage.  In the event a friend or neighbor is injured on your premises, he or she can simply submit medical bills to your insurance company.  This way, expenses are paid without a liability claim being filed against you.  You can generally get $1,000 to $5,000 worth of this coverage.
  • Additional living expense
    This pays the additional costs of living away from home if you cannot live there due to damage from a fire, storm or other covered peril.  It covers hotel bills, restaurant meals and other living expense, within reason, while your home is being rebuilt.  This coverage is normally limited to 20% of the amount of insurance you carry on the home structure.

Q:  Are there different types of policies?

  • Texas has changed its position on homeowner policies over the past few years.  Currently each company has the right to file their own unique form with the Texas Department of Insurance.  While many of the policies are similar in protection and cost, it is important to know which policy best fits your needs and budget.
    It is our recommendation that you deal with an Independent Insurance Agent that represents numerous companies so they can compare the type of coverage that best fits your lifestyle at a premium you can afford.  Preferred Guardian is an Independent Insurance Agent representing many quality companies with a staff of licensed representatives to assist you in the selection of your coverage.
    Coverages that you will want to compare are:

    • Policy Form
    • Endorsements
    • Water Damage
    • Foundation

Q:  How much homeowner’s insurance do I need?

  • A:  You need enough insurance to cover the following:
    • The structure of your home but not less than your mortgage.
    • Your personal possessions
    • The cost of additional living expenses if your home is damaged and you have to live elsewhere during repairs.
    • Your liability to others
  • The structure
    You need enough insurance to cover the cost of rebuilding your home at current construction costs. Do not include the cost of the land, but do add back 10% for debris removal. Do not base your rebuilding costs on the price you paid for your home. The cost of rebuilding could be more than the price you paid or you could sell it today.
    Most lenders require you to buy homeowners insurance to cover the amount of your mortgage.  If the limit of your insurance policy is based on your mortgage, make sure it is enough to cover the cost of rebuilding.
    The responsibility for determining the correct coverage to carry on your home ultimately falls on the homeowner, however PGI will run a program which will estimate the cost of reconstruction.  Factors that will influence the cost of rebuilding your home are:

    • Local construction costs
    • The square footage of the structure
    • The types of exterior wall construction are frame, masonry (brick or stone) or veneer
    • The style of the house (ranch, colonial)
    • The number of bathrooms and other rooms
    • The type of roof and materials used
    • Other structures on the premises such as garages, sheds, gazebos
    • Fireplaces, exterior trim and other special features like arched windows
    • Improvement to your home adding an additional bathroom, enlarging the kitchen or other additions that have added value to your home

    Standard homeowner’s policies provide coverage for covered perils such as damage due to fire, lighting, hail, explosions, theft, vandalism and wind.  They do not cover damage caused by floods, earthquakes or damage due to lack of routine maintenance.  Flood Insurance is available from Preferred Guardian Insurance Agency.

  • Replacement cost policies
    Most policies cover replacement cost for damage to the structure.  A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.  There is no deduction for depreciation, however, property will need to be replaced to receive full replacement cost.
  • Your personal possessions
    Most homeowner’s insurance policies provide coverage for your personal possessions for 40% to 60% of the amount of insurance you have on your home.  The limits of the policy appear on the Declarations Page under Section 1, Coverage, A, Dwelling.
    To determine if this enough coverage, you need to do a home inventory.  This is a detailed list of everything you own and information related to the cost to replace these items if they were destroyed by an insured event. If you think you need more coverage, contact Preferred Guardian Insurance Agency and ask to discuss higher limits for your personal possessions.
  • Insuring expensive items with floaters/endorsements
    There may be limits on how much coverage items such as jewelry, money, or other collectibles.  This limit normally is $100 but can be increased.
  • Additional living expense
    This pays the additional costs of living away from home if you cannot live there due to damage from a fire, storm or other covered cause of loss.  It covers hotel bills, restaurant meals and other living expense, within reason, while your home is being rebuilt.  This coverage is normally limited to 20% of the amount of insurance you carry on the home structure.
  • Liability protection
    Liability covers you against lawsuits for bodily injury or property.
    The liability portion of your policy pays for both the cost of defending you and court awards up to the limit of your policy.
    While you can purchase lower limits, we recommend that you purchase at least $300,000 worth of protection.  Many of our clients feel more comfortable with even more coverage.  You can purchase an umbrella liability policy which provides increased and broader coverage.  The premiums for a umbrella liability policy are surprisingly inexpensive.
    Your policy also provides no-fault medical coverage.  In the event a friend or neighbor is injured on your premises, he or she can simply submit medical bills to your insurance company.  This way, expenses are paid without a liability claim being filed against you.  You can generally get $1,000 to $5,000 worth of this coverage.

Q:  How can I save money?

  • A:  The price you pay for your homeowner’s insurance can vary by hundreds of dollars depending on the size of your house and the insurance coverage you buy.  Do not make your decision on price alone.  You want an agent and agency that represents numerous insurance companies and will shop for you based on your needs and budget.  You want someone that answers your questions and assists with the claims process.  Select an agent that takes the time to answer your questions and returns your calls.
    Here are some ways or save money:
  • Raise your deductibles
    A deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim.  The higher your deductible the more money you save on your premium.  We normally recommend a deductible of 1% of the insured value of your home. Most policies have two deductibles, one for wind/hail, and one for all other causes of loss.
  • Buy your home and auto policies from the same insurer
    Most companies that sell homeowners insurance also sell auto insurance.  Most insurance companies will reduce your premium if you buy both auto and home insurance policies from them.  But make certain this combined price is lower than buying the coverage from separate companies.  An Independent Agent will make this comparison for you.
  • Ask about discounts for home security devices
    You can usually get a discount of 5% to 20% if you have a monitored security system. Before installing a system ask your agent about the discounts available from their insurance carriers.

Q:  How do I take a home inventory and why?

  • A:  Would you be able to remember all the possessions you have accumulated over the years if they were destroyed by a fire?  Having an up-to-date home inventory will help you get your insurance claim settled faster and help you purchase the correct amount of insurance.
    Start by making a list of possessions, describing each item and noting where and when you bought it, its make and model.  Clip to your list any sales receipts, purchase contracts and appraisals you have.  For clothing, count the items you own by category – pants, coats, shoes, for example – making notes about those that are especially valuable.  For major appliance and electronic equipment, record their serial numbers usually found on the back or bottom.
  • Don’t be put off
    If you are just setting up a household, starting an inventory list can be relatively simple.  If you have been living in the same house for many years, however, the task of creating a list can be daunting. Still, it is better to have an incomplete inventory than nothing at all.  Start with recent purchases and then try to remember what you can about the older possessions.
  • Big ticket items
    Valuable items like jewelry, art work and collectibles may have increased in value since you received them. Value the items and then check with your agent to make sure you have adequate insurance for these items.  They may need to be insured separately. Most policies limit the amount of insurance for items such as cash, jewelry, silverware, and other collectibles.
  • Take a picture
    Besides the list, you can take pictures or video of rooms and important individual items.  On the back of the photos, note what is shown and where you bought it or the make.  Don’t forget things that are in closets and drawers. We will be happy to store the photos for you at our office.
  • Storing the list, photos and tapes
    Regardless of how you do it (written list, floppy disk, CD, DVD, photos, tape), keep your inventory along with receipts in your safety deposit box or at a friend’s or relative’s home.  That way you will be sure to have something to give your insurance representative if your home is damaged.  When you make a significant purchase, add the information to your inventory while the details are fresh in your mind. These may also be scanned and stored at our office.

Q:  Should I purchase an umbrella liability policy?

  • A:  If you are sued, your standard homeowners or auto policy will provide you with liability coverage, up to a limit set in the policy.  However, you may want have an extra layer of liability protection. That’s what a personal umbrella liability policy provides.
    An umbrella policy provides coverage when you reach the limit on the underlying liability coverage in a homeowner’s, auto or boat policy.  The premium for an umbrella is surprisingly reasonable.
    Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage.  Most insurers will want to have about $250,000 of liability on your auto policy and $500,000 on your homeowner’s policy before selling you an umbrella policy for a $1,000,000 or more of additional coverage. There is usually a $1,000 deductible on most umbrella policies.

Q:  What is covered by a basic auto policy?

  • A:  Your auto policy includes several coverages.  Each coverage is priced separately.
    Bodily Injury Liability
    This coverage applies to injuries that you, a designated driver, or policyholder, cause to someone else due to an accident.  You and family members listed on the policy are also covered when driving someone else’s car with their permission.
    It is very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money.  Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
  • Medical Payments and Personal Injury Protection (PIP)
    This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP can cover medical payments, and other lost wages, or the cost of replacing services normally performed by someone injured in an auto accident.  It may also cover funeral costs. Medical payments cover medical expenses only.
  • Property Damage Liability
    This coverage pays for damage that you or an insured may cause to someone else’s property.  Usually, this means damage to someone else’s car, but also includes damage to lamp posts, telephone poles, fences, buildings or other structures caused by a covered vehicle.
  • Collision
    This coverage pays for damage to your car resulting from an accident with another car or object. Collision coverage is sold with a deductible generally ranging from $250 to $1000—the higher your deductible the lower your premium. Collision coverage applies even if you are at-fault for the accident. Your collision coverage will reimburse you for the costs of repairing your car, minus the deductible Comprehensive
    This coverage reimburses you for loss due to theft or damage caused by something other than a collision, such as theft, fire, hail, flood, vandalism, contact with animals, or damage to glass.
    Comprehensive insurance is usually sold with a $100 to $500 deductible, the higher the deductible the lower the premium. A vehicle alarm will also lower your comprehensive premium.
    While legally it is not required that you purchase collision or comprehensive coverage, a lender may require you carry the coverage until your loan is paid in full.
  • Uninsured and Underinsured Motorist Coverage
    This coverage will reimburse you or a covered driver if you are hit by an uninsured or underinsured driver. Unlike bodily injury coverage, this coverage can be paid to an insured on the policy.
  • Towing
    This coverage will pay the cost of towing your disabled vehicle up to the limit purchased.   Rental Reimbursement
    This is paid when a covered auto is damaged due to an accident or comprehensive loss. The coverage provides a daily limit with a maximum of 30 days.

Q:  How can I save money on my auto insurance?

  • A:  The price you pay for your auto insurance can vary by hundreds of dollars, depending what type of car you have and the limits of coverage you purchase.
    Do not make your decision on price alone.  You want an agent that represents numerous markets and will shop for you based on your needs and cost.  You want someone that answers your questions and handles claims fairly and efficiently.  Select an agent that takes the time to answer your questions and returns your calls.
  • Before you buy a car compare insurance costs
    Before you buy a new or used car, check your insurance costs.  Your premium is based in part on the car’s sticker price, the cost to repair it, its overall safety record, and the likelihood of a loss. These include air bags, anti-lock brakes, daytime running lights and anti-theft devices.  Texas gives you discounts for cars equipped with air bags and anti-lock brakes.
    Deductibles represent the amount of money you pay before your insurance company pays toward the loss.  By requesting higher deductibles, you can lower your costs substantially.  For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15% to 30%.  Going to a $1,000 deductible you could save even more.
  • Reduce physical damage coverage on older cars
    Consider dropping collision and/or comprehensive coverages on older cars.  It may not be cost-effective to this coverage. Auto dealers and banks can tell you the worth of a car, or you can look it up online at Kelley Blue Book.
  • Buy your homeowners and auto coverage from the same insurer
    Many insurers will give discounts if you buy two or more policies from them.
  • Multi-Car Discount
    You will also get a reduction in premium if you have more than one vehicle insured on the same policy.
  • Maintain good credit
    Your credit rating or insurance score may affect what you pay for insurance. All companies use this information differently, with some weighing other variables more heavily. While the use of insurance scoring varies from state to state and company to company, credit is a widely-used indicator to determine pricing.

Q:  How much coverage do I need?

  • A:  To best answer this questions, seek the advice of an insurance professional. The more you have in assets, the more coverage you will need.
    Almost every state requires you to buy a minimum amount of liability coverage.  Chances are that you will need more liability insurance than the state requires because accidents cost more than minimum limits.  If you are found legally responsible for bills that are more than your insurance protection, you will have to pay the difference out of your own pocket.  These costs could wipe you out!

Q:  What determines the price of my policy?

  • A:  There are many factors that influence the price you pay for auto insurance. Your premium may be higher or lower depending, in part, on:
  • Your driving record
    The better your record, the lower your premium.  If you have had accidents or traffic violations, you will pay more than if you have a clean driving record.
  • The number of miles you drive each year
    The more miles you drive, the greater chance of an accident.
  • Where you live
    Some companies base rates on county while others base off of zip code. The benefit of Preferred Guardian is we offer companies that use both county and zip codes to determine rates.
  • Your age
    Different companies consider the age of drivers differently. At Preferred Guardian, we have great rates for everyone from teenagers to seniors.
  • The car you drive
    Some cars cost more to insure than others.  Variables include likelihood of theft, the cost of the car, the cost of repairs, and the overall safety record of the car.
  • The amount of coverage
    Of course, like anything else, the more coverage you have, the more you pay for it.

Q:  Should I purchase an umbrella liability policy?

    • A:  An umbrella policy is designed to protect your assets should you have a serious loss. Umbrellas rang in dollar amount from $1,000,000 to $10,000,000 or higher.
      An umbrella policy provides coverage when you reach the limit on the underlying liability coverage in a homeowner’s, auto or boat policy.  The premium for an umbrella is surprisingly reasonable. Most umbrellas have a deductible as well.
      Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage.  Most insurers require $250,000 of liability on your auto policy and $300,000 on your homeowner’s policy.