Frequently Asked Questions
- If I have a claim, will my insurance premium go up?
- If I have Replacement Cost Coverage on my contents, do I have to replace them?
- If I change my heating system, do I need to report this?
- What is "Liability"?
- What are Voluntary Medical Payments & Voluntary Property Damage?
- Why do I pay more for my policy than someone who has a similar amount of coverage?
- My "package" policy includes outbuildings which I don't have - why can't I remove this?
- Why can't I just insure my home for any amount I want?
One claim of a normal nature and average amount will not usually mean an increase in your insurance rate. A series of losses or a claim of an unusually high amount might mean your rating category may change from "preferred/select" to "standard/non select" and/or your policy deductible may rise. However, many carriers now give discounts for being "claims free" (3 or more consecutive years) and you would likely lose this extra discount if you made a claim. It is not usually worth it to make an insurance claim if the amount of your loss is only a little more than the policy deductible. It is a good idea to discuss this aspect with your agent before proceeding with presenting a claim under your policy.
In order to take advantage of the "new for old" aspect of the Replacement Cost coverage, you DO have to replace. If you elect to take a cash settlement on all or some of the items, depreciation will be applied to those items.
It is a good idea to call your insurance agent to check. Generally, if you go from one form of approved central heating to another, there is no coverage change to your policy. There might be a slight premium difference. However, if you install a non-approved form of heat or a solid fuel heating system, either primary or auxiliary, this could affect your insurance seriously, so always contact your insurance agent, preferably before deciding on the installation.
Liability is the legal responsibility you bear for bodily injury or property damage to others caused by your accidental negligence. Please don't confuse this with "disability", which is a completely different subject!
These coverages are an extension of the Liability mentioned above. Rather than have to go to the expense of proving negligence for small amounts of bodily injury or property damage, the carrier agrees to make "voluntary" payments up to a certain limit to avoid high legal or court costs.
There are many variables and coverage differences between policies such as: the presence of various discounts (claims free, mature) or surcharges (wood heat, multiple family), the perils insured (standard vs broad vs comprehensive), the fire protection of the area (within 1,000 feet of hydrant or beyond or totally unprotected) or the optional coverages chosen (earthquake damage, personal floaters, liability extensions, secondary or seasonal residences). If you feel there is a great difference with no apparent reason, check with your insurance agent for an explanation.
Package policies are created to be cheaper as they include "automatic limits" for certain things that the average person needs. In this way, the insurer can rate simply on the building limit and the entire process can be automated. This saves money, which is passed onto the policyholder, as the need to tailor policies, which is time consuming and expensive, is eliminated.
In order to develop insurance rates which will be adequate to pay for anticipated losses, coverage limits within each "class" or type of policy must be consistent. For example, most homeowners would need to have their home rebuilt if it was damaged or destroyed. An assumption of insurance to value for rebuilding all homes in the class must be made in order for an insurance company to calculate what amount in losses it will pay and establish an adequate rate structure. You can see that if many people only insured their homes for much less, the premium brought into the "pool" might be inadequate to pay for the rebuilding of homes suffering total losses.