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Everything You Wanted to Know About Insurance


Although we like to think ourselves as the insurance experts, we also believe that the more that you know as a customer, the better it is for everyone.  So we’ve included a list of Frequently Asked Questions below, complete with answers.

Auto Insurance FAQ

Home Insurance FAQ

Life Insurance FAQ

Health Insurance FAQ

Business Insurance FAQ

If you’d like to learn more about insurance as well tips that will help you reduce your risk of loss, visit our Perspectives page where you’ll find interesting articles from HPB Insurance Group staff and tips and videos from our insurance carriers. A glossary of common insurance terms is also available.

Auto

Q: When purchasing automobile insurance, what should I consider?
A: There are several things you should consider when purchasing automobile insurance. Your independent agent will help you with the following:

  • Purchase the amount of liability coverage that makes sense and will adequately protect you.
  • Select the optional coverages you want
  • Decide on the company from which to purchase
  • Price is not the only criteria—other factors like service and claim response are extremely important in selecting the right insurance

Q: Does my insurance policy cover a friend if I loan them my car?
A: When you loan your car to a friend or an associate, they will be covered under your automobile insurance policy.

Q: What is collision physical damage coverage?
A: Collision is the loss you incur when your automobile collides with another vehicle or object like a telephone pole.

Q: What is comprehensive physical damage coverage?
A: Comprehensive provides coverage for direct physical damage losses you could incur to your car from something like a hailstorm. In addition, it also provides coverage in the event of the theft of your vehicle.

Q: How can I lower my automobile insurance rates?
A: There are several things you can do to lower the cost of your automobile insurance.

One way is to look for competitive pricing. An independent agent works with many companies and can provide you comparative rates and ensure that you are getting the same coverage.

Another way to lower the cost is to change your deductible. By raising your deductible, you may lower the cost of your automobile insurance almost 10%. You must be able to pay the deductible amount in case of a claim.

You can also look for discounts that you may be entitled to. Some examples of discounts that may be available are multiple cars under the same policy or carrying a homeowners policy with the same insurance company.

Home

Q: What is homeowners insurance? 
A: Homeowners insurance is a form of personal insurance. The typical homeowners policy has two main sections. The first covers the property of the insured and the second provides personal liability coverage to the insured.

Q:  What is a “Consent to Rate” letter?
A: For North Carolina homeowners, insurers must mail “Consent to Rate” letters to their customers asking them permission to charge premiums that are higher than allowed by the State of North Carolina’s insurance department. It is advised that homeowners who receive a Consent to Rate letter speak with an independent insurance agent (like HPB Insurance Group) to determine what alternatives there may be instead of simply granting your current carrier permission to raise your rates.

Q: What do I need to know when purchasing homeowners insurance?
A: Get the amount and type of insurance that you need. One of the most important things to do is to determine the amount of personal property insurance and personal liability coverage that is needed. It’s also important to understand whether your policy will pay a claim taking into account the “actual cash value” or “replacement cost”.  Under actual cash value, a policy owner is entitled to receive the depreciated value of damaged property. But if you’re covered to replacement cost, a policy owner is reimbursed an amount necessary to replace a damaged article with one of similar type of quality at current prices.

Q: Where and when is my personal property covered?
A: Personal property is covered as described under Part C of a homeowners policy—coverage is provided for specific causes of loss included within. Some higher-value items such as jewelry, collectibles and specialized equipment should be specifically listed on your policy. Please discuss items such as this with your HPB Insurance Group agent when your policy is being written.

Q: Should I purchase earthquake coverage?
A: Direct damages due to earthquakes are not covered under the standard homeowners insurance policy. If you live in an area that is prone to earthquakes, you may want to consider adding an earthquake endorsement to your homeowners insurance policy. This endorsement will cover damages due to earthquakes, landslides, volcanic eruptions and other earth movements.

Q: Should I purchase flood coverage?
A: If your property lies in a flood plain as determined by US Government Flood Maps, it is a good idea to ask about a flood quote. Damage caused by a flood is not covered under standard homeowners insurance policies.

Life

Q: How much life insurance should an individual purchase?
A: Rough rules of thumb suggest an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account in determining a more precise estimate of the amount of life insurance needed.

These important factors include:

  • Income sources (and amounts) other than salary
  • Whether the individual is married and, if so, the spouse's earning capacity
  • The number of individuals who are financially dependent on the insured
  • The amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan
  • Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need).

It is recommended that a person's insurance advisor be contacted for a precise calculation of how much life insurance is needed.

Q: What about purchasing life insurance on a spouse and on children?
A: In a dual-earning household, it is important to protect the income earning capacity of both spouses. Life insurance on a non-wage-earning spouse is often recommended for the purpose of paying for household services lost if this individual should pass away.

In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). Life insurance purchased on children or grandchildren can be used as a savings vehicle in some cases, and it is always helpful in the unfortunate circumstance of covering final expenses.

Q: Should term insurance or cash value life insurance be purchased?
A: Although a difficult question—the answer will vary depending on circumstances—several principles should be followed in addressing this issue. In any life insurance purchasing decision, there are at least two basic questions that must be answered:

    “How much life insurance should I buy?” and “What type of life insurance policy should I buy?”

The first question involves an "insurance" decision and the second question requires a "financial" decision.

The "insurance" question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way in which this needed amount of insurance can be afforded is through the purchase of term insurance with its lower premium or with a combination of term and whole life.

If your ability (and willingness) to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the financial decision—which type of policy to buy. Important factors affecting the financial decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.

Q: Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage loan?
A: Yes, the purchase of a new mortgage protection term insurance policy is usually not required by the lender. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured's death.

Q: Is credit life insurance a good buy?
A: Credit life insurance is frequently recommended in conjunction with the taking out of an installment loan when purchasing expensive appliances or a new car, or for debt consolidation. But credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.

Health

Q: What is the Affordable Care Act designed to accomplish?
A: The rationale behind the law was to give more people access to healthcare insurance and to add more benefits.  Many millions of people should benefit from the law; but there are of course costs to the act that will be felt by insurance companies, by some of those being insured, and by taxpayers alike. One of the primary benefits is that everyone, regardless of their current health condition, is guaranteed access to health insurance.

Q: Will it now be more expensive for me to purchase healthcare insurance?
A: This question is a difficult one to answer because there are so many variables at play.  It may be that you will have to pay a higher monthly premium, but that the coverage you receive might save you money in the long run.  Or it may be that the subsidies that you are eligible to receive might reduce your premium while providing good coverage.  Your current financial situation and the policy selected will both affect the total cost to you.

Q: If I receive a price quote from HPB Insurance Group and Blue Cross and Blue Shield of North Carolina, can I then go onto the Marketplace and purchase that exact policy at that same price?
A: It’s possible, but it is always best to look at all of your options when looking at a complex decision like healthcare insurance. HPB Insurance Group can handle the entire policy quoting and selection process, providing you rates both from within and outside the Marketplace found at www.healthcare.gov.  We’ll review your qualifications and eligibility and how they impact the set of options that you have at your disposal.  If a Marketplace-provided policy is the best option, we will work with you at no additional charge to process your application and take any guesswork out of the equation.

Q:  What types of things should I be taking into account when selecting a healthcare plan?
A:  The following items are among the things that you should be thinking about when determining the coverage that is best for you:

  • The cost of the monthly premiums
  • The amount of the deductible that you will have to pay out of pocket each year
  • The amount of the government subsidies that you may be eligible for based on your income
  • The coverage that you receive.

Because comparing plans can often be confusing, it can help to have an expert like an independent agent to help you make decisions.

Business

Q: What is fire legal coverage?
A: Fire legal coverage provides coverage for you if you rent a business space and are held responsible for fire damages to that rented space. It does not apply to all business risks.

Q: What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV)?
A: Replacement Cost is the current cost to replace property. Actual Cash Value is the replacement cost less depreciation.

Q: What does 80% co-insurance mean?
A: Insurance carriers require that an insured party insure at least 80% of the property's value in order to collect a partial loss in full. This is the way the insurance company encourages all insureds to adequately insure their property.

Q: Does my policy cover physical damage to a vehicle I rent?
A: This damage will be covered only if that type of coverage is purchased.

Q: Can other people drive my business vehicle?
A: Other people may drive your vehicle with the permission of the business owner or an officer. It is important that they be listed on your policy if they are regular drivers of the vehicle.

Q: How does an audit work?
A: At the end of the policy term, the insurance company will review the policy and either charge or credit the policyholder based upon an audit of estimated figures. Examples of estimated auditable items include sales and payroll. Audits can be performed onsite by an auditor or via mail or telephone.

Q: Why do I need certificates of insurance from sub-contractors?
A: An audit may require you to show proof that sub-contractors had their own insurance coverage. The sub-contractors' certificates of insurance will prevent you from being charged for their exposure.

Q: What is General Liability?
A: General Liability provides coverage if you are liable for damages to other individuals arising from your premises, general operations (ongoing and after completion) and products manufactured or sold.

Q: What does Products/Completed Operations mean?
A: Products/Completed Operations refers to the liability coverage for damages caused by your operation or products after the point at which you no longer have control of them.

Q: What is Business Interruption/Extra Expense coverage?
A: Business Interruption/Extra Expense provides coverage when your business is completely or partially shut down due to a covered cause of loss. This includes income loss and the expense of establishing a temporary site during repairs.

Q: What is the difference between "Named Insured,” "First Named Insured" and "Additional Insured”?
A: Named insureds are those listed by name in the relevant block of the policy's declaration page.

Although the named insured is commonly one person, partnership, corporation or other entity with insurable interests, multiple named insureds may be included.

First Named Insured is the first "named insured" listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all named insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The First Named insured may also be responsible for payment of the premiums.

Additional Insured is an entity to which a policy's coverage is extended. An Additional Insured must be added to the policy prior to a claim being paid. There must be a tied to relationship between the Additional Insured and Named Insured. Being an additional insured on another's policy does not eliminate the need for someone to have their own Commercial General Liability policy.

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Insurance:
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