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Frequently Asked Questions

Below are some of our frequently asked questions.  If you have any other questions or concerns, please feel free to contact us via the web, or come and visit us at a location near you.

  1. What kinds of questions should I be expected to answer when I am applying for an insurance policy? Why do insurers ask all of these questions?
  2. My child is heading off to college this fall. What insurance issues does this raise?
  3. What do I give up by not using an agent to purchase insurance? Am I at risk if I don't use a licensed agent?
  4. What should I consider when purchasing automobile insurance?
  5. What are some practical things I can do to lower my automobile insurance rates?
  6. I have an older car whose current market value is very low - do I really need to purchase automobile insurance?
  7. Suppose I lend my car to a friend, is he/she covered under my automobile insurance policy?
  8. What is the difference between collision physical damage coverage and comprehensive physical damage coverage?
  9. What is homeowners insurance and who should buy this type of coverage?
What kinds of questions should I be expected to answer when I am applying for an insurance policy? Why do insurers ask all of these questions?

When you apply for an insurance policy, you will be asked a number of questions. For example, your name, age, sex, address, etc. In addition, you will be asked a number of other questions which will be used to determine what type of risk you are.

For example, when an insurance company is deciding whether or not to supply automobile insurance to a potential policy owner, it will want to know about the person's previous driving record, whether there have any recent accidents or tickets and what type of car is to be insured.

All of this information will be used for two purposes.

  1. Based upon the responses to these questions, the insurance company will decide whether the profile of the applicant is consistent with the type of risks the insurer is trying to attract. Some insurers specialize in offering insurance to only very safe drivers and therefore will only accept applications from people who fit the profile of a safe driver. While others may base their policies on those who are considered a higher risk, and charge accordingly.
  2. Once the insurer has decided that your risk profile is consistent with the types of risks it accepts, the answers to the questions will be used to determine which rate catagory should be applied. For example, the insurance company will decide whether you should be offered insurance at the high risk driver rate or the low risk driver rate.

Collectively, this entire process is known as the underwriting process and every insurance company has one. The primary function of the underwriting department in an insurance company is to decide whether or not to offer insurance to a person who has completed an application.

If the answer is yes, then the underwriting department seeks to determine the "quality" of that risk so that the proper premium can be charged. That is, high risk people should pay more than low risk people because of the greater possibility of experiencing a loss.




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My child is heading off to college this fall. What insurance issues does this raise?

As you send your children off to college, you probably have a lot of things on your mind - whether they'll eat right and get enough sleep, how to pay the tuition bills, what to do with that empty bedroom, etc. For most people, insurance concerns are pretty low on the priority list. But there are some important issues you should consider.

Issue #1: Health insurance - make sure your child is covered.
Your medical plan probably covers your children until they're somewhere between 20 and 24 years of age, regardless of whether or not they live at home. But if the plan is an HMO and your child's college is far from home, accessing an approved provider may prove difficult. As an alternative, consider purchasing health insurance coverage through your child's college. Many colleges and universities offer low-cost health insurance for students. Cost and level of coverage vary greatly from one school to the next, but school-subsidized health insurance is often less expensive than continuing coverage through your existing health plan. And since health care is typically provided on-campus, it may be easier for the student to access.

Issue #2: Homeowner's/Renters insurance - make sure your child's possessions are covered.
If your child lives in a dorm or other university housing, their personal property is typically covered under your homeowners insurance policy. Check your policy for coverage limitations on computers and stereos, if your child can't live without these. Once a student moves out of the dorms and into an apartment, they are usually no longer covered under your policy. Off-campus students should purchase a renters insurance policy to cover their possessions.

Issue #3: Auto insurance - make sure the car is covered.
If your child will be taking a car to school, make sure the car is properly insured. If the child owns the car, then the insurance policy must be in the child's name as well. If the child is "borrowing" a car from Mom and Dad, the child must be listed on the insurance policy. Some insurance companies may require the child to be listed as the primary operator, since the car is in the child's possession and not the parents'.



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What do I give up by not using an agent to purchase insurance? Am I at risk if I don't use a licensed agent?
The disadvantage of not using an agent to purchase insurance is that the policyholder does not receive as much, or often any, personal service. A licensed agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim. Without an agent to act as your personal advocate during the claims process, you are left to take care of the details on your own... not sure who to contact at the insurance company or who you can really trust to help you during the times in life when you need help the most. Without an agent you are on your own to absorb the frustration and expense of resolving your problems.

Many "direct writing" insurance companies/providers fail to tell you that the "call center personnel" who will take your information and issue the policy ARE NOT licensed to sell insurance, therefore lacking the professional knowledge to guide you toward an acceptable level of protection. These companies are conducting business using a loophole within the law which allows the company to have 1 license while everyone else works without it. Going this route can place your financial future at risk because unlicensed personnel are trained to simply sell you a policy without being aware of what "real" protection means.

For instance, imagine you own a $150,000 home and your auto insurance policy's liability limits are $50,000. When you purchased the policy you were told this was plenty of protection considering your state's minimum requirement for liability is $20,000. Yet if you have an accident and are sued for $200,000 your policy is only going to pay out $50k, leaving you responsible for the remaining $150k. Since your home would cover the difference, a court judgment could force you into selling your home as a way to settle the suit. If your policy's liability limits had protected you at a minimum of $200,000, the policy would be paying for the total suit.

Because direct writers are typically located hundreds (if not thousands) of miles from where you live, many won't hesitate to sell you a policy with low liability limits as a way to simply make the policy cheaper while convincing you to buy it. Leaving you extremely vulnerable to financial disaster.



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What should I consider when purchasing automobile insurance?

There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when purchasing automobile insurance.

  1. Don’t base your decision on price alone. Base your decision on value – what you get for what you pay. Consider the quality of the company’s claims service and consumer education.
  2. Purchase the amount of liability coverage which makes sense for you.
  3. You should decide which optional coverages you want. For example, do you want optional physical damage coverages or is the market value of your car too low to warrant purchasing them.
  4. Once you have decided what you want in your automobile insurance policy, you can now decide who you would like to purchase the insurance from. For example, you may decide you like the idea of purchasing insurance from a mutual company rather than a stock company.


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What are some practical things I can do to lower my automobile insurance rates?

If you do shop around, be careful to make sure each insurer is offering the same coverage. Many insurers use the ISO policy forms, but this is not always the case. While other insurers will lessen certain protections in order to make the policy cheaper, so you'll buy it. It's in these times where we need to remind ourselves that cheaper does not mean better. The best advice is not to buy insurance based on anyone's quote, but wait until any new policy is issued before comparing your new policy to your old one... and make sure you received the coverage you wanted before canceling your old policy.

Look for any discounts you may qualify for. For example, many insurers will offer you a discount if you insure multiple cars under the same policy, or if you have had a driver education class in the last five years. Be sure to ask us about discount plans.

Another easy way to lower the cost of your automobile insurance is to increase the deductible. Simply raising your deductible from $250 to $500 can lower your premium sometimes by as much as five or ten percent. However, you should be careful to make sure that you have the financial resources necessary to handle the larger deductible.



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I have an older car whose current market value is very low - do I really need to purchase automobile insurance?

Most states have enacted compulsory insurance laws that require drivers to have at least some automobile liability insurance. These laws were enacted to ensure that victims of automobile accidents receive compensation when their losses are caused by the actions of another individual who was negligent.

Except for the minimum liability coverages that you may be required to purchase, many people with older cars decide not to purchase any of the physical damage coverages. It is often the case that the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just "total" the car and give you a check for the car's market value less the deductible.



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Suppose I lend my car to a friend, is he/she covered under my automobile insurance policy?
Whenever you knowingly loan your car to a friend or an associate, he or she most-likely will be covered under your automobile insurance policy. In fact, even if you do not give explicit permission each time a person borrows your car, they most-likely are covered under your automobile insurance policy as long they had a reasonable belief that you would have given them permission to drive the car. If your not sure what your policy's exact responsibilities are under these conditions, you will want to review the "definitions" section of your policy.

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What is the difference between collision physical damage coverage and comprehensive physical damage coverage?

Collision is defined as losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.

Comprehensive provides coverage for most other direct physical damage losses you could incur. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.

It is important to know the differences between the collision and comprehensive coverages for a couple of reasons.

  1. In order to make an informed purchasing decision about these optional coverages, you need to know the difference between them.
  2. The deductibles under the collision and comprehensive coverages are often different in amount.


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What is homeowners insurance and who should buy this type of coverage?
Homeowners insurance is one of the most popular forms of personal lines insurance on the market today. The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage to the insured. Almost anyone who owns or leases property has a need for this type of insurance. And most often, homeowners insurance is required by the lender as part of the requirements in obtaining a mortgage.

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         Main Office:   9700 Westland Dr, Suite 102, Knoxville, TN 37922
Nashville Office:   c/o Industrious, 1033 Demonbreun St, Suite 300, Nashville, TN 37203
 
This website is intended to stimulate dialogue about your protection and does not alter or interpret your insurance policies. Always refer to your policy for details about your coverage.