The truth is: Policies vary greatly. Will replacement parts be original or aftermarket? What is the valuation of your vehicle? Which drivers are covered and excluded? What happens to coverage when you cross state lines? Is customization of your vehicle covered or not?
These questions and many more must be addressed for the consumer to understand the value of their policy. I have two recommendations for shoppers. One, do not shop by price alone. Two, do not take your neighbors’ advance – the particulars of the situation make all the difference. Take the time to sit down with your insurance professional and ask questions.
2. I have complete coverage in a rental car.
The limits of your own policy still hold. You have the same coverage, same deductible and same liability limits. Differences, however, exist in how total losses are settled. The majority of policies cover only depreciated value (ACV), while rental agreements require full value or new car replacement. Read the rental agreement carefully, as a violation as to who can drive the rental or where it can go could make all insurance void. To play it safe, purchase the rental company loss or material damage waiver, which will make the rental company responsible for their car.
3. All Homeowners’ Policies are the same.
In actuality, there are eight different forms of homeowners’ policies and there are five different methods of loss settlement. Many policies depreciate the value of roof and flooring over time. Typical exclusions include flood, earthquake, mold and determination over time, to name just a few.
Always consult your agent to be sure your expectations and policy coverage match.
4. Term life insurance is always less expensive than permanent.
Not necessarily. There are two distinct types of life insurance. They have their place both individually and in combination.
Term life insurance is purchased to provide coverage for a certain period of time (the term). Usually both premium and coverage remain static throughout the term and at the end of the term the policy just ends. The premium of the term policy is less than a permanent policy but offers no living benefits unless the insured expires during the policy period.
Permanent life insurance is designed to last until at least age 100. The premium typically remains level, which pays for the death benefit. These premiums include extra funds that are deposited in a cash accumulation account portion of the policy. Over the years, as the cash grows, these moneys may be borrowed or surrendered. In many cases one may get back the entire premium while still keeping life insurance coverage in force forever.
Again, an experienced life insurance professional can help create a plan to best serve your needs and your budget and place the coverage with a strong reputable company. QCBN
Jeffrey Champ, CIC, LUTCF, of Farmers Insurance has been in operation for more than 24 years. He has two offices (Prescott and Chino Valley) fully staffed by licensed professionals. Contact him at 928-778-5854 or 928-636-2700. His offices are located at 339 W. Butterfield Road, Chino Valley, AZ 86323 and 1265 Gail Gardner Way, Suite A, Prescott, AZ 86301.