Insurance Consumers

Homeowners Insurance

Questions to ask your agent when purchasing insurance:

• Is the insurance representative you are dealing with a "captive" agent (who represents only one company) or an "independent" agent (who represents many companies)?
  
  
• What are all the coverage options available (e.g. Code Upgrade coverage, Replace Value Guarantee coverage). What do these mean and how do they work? Sometimes a "Guarantee" has strict limits or caps on it.
  
  
• What are the deductible choices and premium costs for each coverage option?
  Are the liability limits being discussed sufficient to protect your family's actual financial assets? (if not, it may be of very limited value to you). Should you have umbrella coverage?
  
  
• Are the coverage limits for dwelling loss and personal property loss sufficient to cover what you are trying to insure? If not, understand that you are self insuring for the balance.
  
  
• What - exactly - is and isn't covered by way of things that can happen to your property? If you live in an area subject to hurricanes, for example, does the insurance policy cover only dry hurricanes? If the hurricane causes flooding is that excluded? Same for tornados, firestorms, earthquakes, tsunamis and other natural disasters.
  
  
• What are all the occurrence exclusions and what do they mean? E.g. are there exclusions for damage caused by acts of war, the negligence of third parties (that can include almost anything), acts of God etc.
  What are all of the deductibles and limits and how are they calculated?
  
  
• Are there any time limitations in the policy within which a legal action has to be filed if there is disagreement as to a loss? Some policies provide that an action has to be filed within one year of the "occurrence" that caused the loss. So if the claim is tied up for more than a year the insured loses his or her right to litigate the disagreement. This can create big problems.
  
  
• If you file any claims involving any of your coverages, will your policy be non-renewed or your premiums increased (This practice is known as "use it and lose it."). If so what is the type and size of the claim that will have this effect, and how much can your premiums be increased?
  
  
• Does the proposed policy contain any binding arbitration clauses requiring that you submit certain types of disputes with the insurer to binding arbitration? If so, what types of disputes have to be submitted in this way, how is the arbitrator selected and who pays what percentage of his/her arbitration fee? (N.B. Arbitration clauses almost always heavily favor the insurance company and should be avoided.)
  
  
• Are there any brochures, coverage statements, written examples of the policy you are considering or other materials available for you to take a look at? If so save them forever and ever.
  
  
• What is the Company's claims handling track record with insurance regulators? Has it recently been fined, subjected to administrative actions or ordered to modify its practices? If so, what are the details? You should be suspect of any agent who says he "doesn't know" the answer to this. This is public information and any agent who has your interests at heart would know this.
  
  
• Have there been any recent, significant, media reports or investigations, judicial actions or jury verdicts against the company involving allegations of fraud, misrepresentation or bad faith practices? If so, what are the details?
  
  
• How do the answers to the above questions involving the company under consideration compare to other companies? If the agent you are dealing with sells only one company's insurance, check in with an independent agent for the comparisons.