Frequently Asked Questions For Home and Auto Insurance In Tyler, Texas

A. Personal Lines FAQs

Why is home replacement cost so much higher than market value or what I could sell my house for?

Market value is the price you pay for your home. Replacement cost is the price or cost to rebuild your home in the same spot, same size and same quality of construction, at today’s prices.

Unlike your home’s replacement value, its market value is influenced by factors beyond the materials and labor cost of repairs or reconstruction, such as proximity to good school, local crime statistics and available of similar home.

Does my homeowner policy cover flood or earthquake damage?

Unfortunately your homeowner’s policy does not cover flood, rising water or wind driven rain. Flood coverage can be purchased on a separate policy and sometimes is required by the mortgage company. Earthquake coverage is not covered on a standard Tyler, Texas, home insurance policy. Some insurance companies offer an endorsement for this coverage.

If I let a friend drive my car would they be covered if involved in an accident?

Yes, they would be covered by your auto insurance as long as they have a valid driver’s license and you have given them permission to borrow the vehicle.

How long do claims or tickets stay on my driving record?

It varies from company to company and can affect your insurance premiums for 3 to 5 years.

When do I need to add my child to my auto policy?

You do not need to add your child to your auto policy until they are fully licensed to drive on their own.

What is the purpose of an umbrella policy?

An umbrella policy provides additional liability coverage over and above what a home, auto, watercraft, ATV or golf cart policy can provide in the case of a claim. This policy protects you from having your home, savings and other assets depleted.

B. Coinsurance FAQs

Commercial Property:

What is coinsurance and how does it work?

Most commercial property policies contain a coinsurance clause. The basic principle behind coinsurance is to make sure that the insured is insuring their property to an adequate value. If the insured carries an inadequate amount of insurance, they will be required to bear a portion of the loss themselves.

Each coinsurance clause contains a level that is considered adequate by the insurance company and can be stated in a percentage. 80% is common.

The reason insurance companies require adequate values is to ensure there is enough premium dollars to cover a loss. If an insured only covered a portion of their property, and they had a loss that was within the policy limit, the insurance company would not have collected enough premium to cover the potential loss. Normally, a total loss is rare so it is tempting for an insured to insure only to the amount they feel may be affected by a loss.

The basic formula for determining adequacy of limits is:

(Actual Amount of Insurance/Required Amount of Insurance) x Amount of Loss = Amount Insurance Company Will Pay

If you had a building valued at $100,000 with contents valued at $150,000.  The total insurable value is $250,000.  Under an 80% coinsurance clause, an insured would be expected to insure to 80% of the value or $200,000.

Consider the following:

If the insured only carried $150,000 in coverage and had a $50,000 loss:

($150,000/$200,000) x $50,000 = $37,500 (less deductible)

The insurance company will only pay $37,500 leaving the insured to cover the remaining $12,500.

If the insured carried the full $200,000 required by his policy:

($200,000/$200,000) x $50,000 = $50,000 (less deductible)

The insured would get a full recovery under his insurance policy.

C. Commercial Lines FAQs

Extended Hire-Non Owned

My husband has a company owned vehicle furnished for company business and his personal use.  We have one owned vehicle insured on a personal auto policy. Is there an endorsement that can be added to our personal auto policy to cover me if I drive the company vehicle for personal use?

There is an endorsement that can be added to the personal auto policy referred to as the Extended Non-Owned Coverage for Named Individuals.  Each family member having a drivers license should be named on the endorsement. The endorsement provides liability coverage only.

Contractor’s Equipment

Can I borrow contractors equipment (example a dozer) from a friend? Is it covered if something happens to it while I have it?

Most equipment floaters cover, for the perils stated in the policy, owned, leased and rented equipment used for your business but, do require a written contract and the item be scheduled. Most policies don’t cover borrowed. You may be able to add this coverage to your policy. You need to request your agent add this coverage if you have this exposure.

D. Health Care Reform FAQs

Is there a tax penalty in 2014 and beyond if a person is required to have health insurance?

Answer: Yes

Call us at (903) 266-1699 today for further specific details on what these penalties are.