Questions to Ask Your Insurance Agent
Questions to Ask Your Insurance Agent
Insurance provides immense financial protection, but only when you buy the right policy. Getting sucked into a bad policy, overpaying, or not obtaining proper coverage can backfire on you during your time of need.
Since that’s the last thing you want, it’s essential to understand the questions to ask your insurance agent before purchasing any insurance, whether car, home, or life insurance.
Knowing what to ask and what answers to look for will help you find the right policy and provide you with the peace of mind insurance should offer.
The Top Questions to Ask an Insurance Agent
Knowing what questions to ask an insurance agent can save you money on premiums, ensure you get the right insurance, and that you understand your coverage.
Think of hiring an insurance agent as a job interview. It’s your job to ask the insurance agent questions to ensure you know what to expect. This also makes comparing options easier, so you obtain the most suitable insurance policy for your needs.
Some questions you can ask an insurance agent are the same for all insurance policies, such as:
- When does my policy renew?
- How much is my premium?
- How often is the premium due?
- What payment options do I have?
- How do I file a claim?
- Who do I contact if I have questions?
Questions to Ask Your Car Insurance Agent
Car insurance is necessary in most states, as driving without car insurance is illegal. But that doesn’t mean you should focus only on the premium or get only the minimum insurance required by your state.
Car insurance protects you in many situations, including:
- Damage other than from a collision, such as a falling tree
When you have the right questions to ask your car insurance agent, you can ensure you get proper coverage.
Here’s what you should consider asking.
1. Do I Have Enough Coverage?
Knowing if you have enough coverage is essential to proper protection. First, ask your insurance agent what your state’s minimum insurance requirements are. This should be your starting point, but don’t stop there.
In most states, liability insurance is required, but the limits may not be as high as you’d want, plus there are other options for insurance coverage. Ask your insurance agent to explain the various types of coverage, including:
- Collision – If you cause a car accident, collision insurance covers the damages to your vehicle. Liability coverage only covers the other not-at-fault car
- Comprehensive – Damage caused by something other than a collision falls under comprehensive insurance and includes theft, vandalism, or damage by natural disaster.
- Uninsured/underinsured motorist – If the at-fault driver doesn’t carry enough insurance to cover the extent of your damages (or doesn’t have insurance), UM/UIM coverage would make up the difference.
Talk to your agent about the different coverage options and how they’d affect your premium to determine the right choice.
2. What Discounts Are Available?
To keep your premiums as low as possible, always ask what discounts you may get. Each insurance company differs, but some standard options include:
- Multi-car discount
- Multi-policy discount
- Good student discount
- Safe driving discount
- Violation-free discount
- Paperless billing discount
- Automatic payment discount
Ask your insurance agent to help you exhaust all options to keep your premiums low but your coverage as high as you need.
3. How Much is the Deductible?
Many people make the mistake of focusing on the premium and forgetting about the deductible.
The deductible is the amount of the claim’s cost you must cover before the insurance company covers anything. For example, if you have a $500 deductible and have a $1,000 claim, you’d pay the first $500, and the insurance company would cover the remaining $500 if it’s for a covered incident.
The higher the deductible you choose, the less premium you’ll owe. However, don’t choose the highest deductible without ensuring you can afford it. For example, if you took a $1,500 deductible for a lower premium but can’t afford the $1,500 when an incident occurs, you didn’t do yourself any favors.
The average car insurance deductible is $500, but they are available as $250, $1,000, $1,500, and $2,000 with some insurance companies.
4. What is Covered if I Get in an Accident?
Always consider the worst-case scenario when talking with your insurance agent. Ask him what would be covered if you were in an accident that totaled your car. Ask about specifics, including:
- Rental fee coverage
- Medical payments
5. What Isn’t Covered on My Policy?
Always look at the big picture, including the situations that aren’t covered by your insurance. You may want to include certain factors and will take a lower coverage amount for other insurance coverage to afford it.
Common coverage includes:
- Gap insurance – If you financed your car and didn’t make a large down payment, there’s a chance you’ll owe more than the car is worth at one point. If you total the car, this means you’d still owe the difference of what insurance didn’t cover, making it hard to get another car. Gap insurance can ‘bridge the gap.’
- Roadside assistance – If you don’t have roadside assistance from other memberships or coverage, you may consider adding 24/7 roadside to help you in any situation, including an unexpected breakdown.
6. Does My Insurance Cover the Original Manufacturer Parts?
Some insurance companies won’t pay for original manufacturer parts and will only pay for aftermarket parts because they cost less. Ask the insurance agent what they cover if this is a big deal for you or if your car’s parts are difficult to locate.
7. Do I Have Enough Coverage if I Seriously Injure Someone?
If you’re at fault for an accident and the driver or passengers of the other car need serious medical attention, you could be responsible. You shouldn’t be affected personally if your liability insurance is high enough. However, if your insurance isn’t high enough, they could sue you personally, so be sure you have enough coverage.
Questions to Ask Your Home Insurance Agent
Home insurance is another ‘must-have,’ especially if you have a mortgage because the lender will require it. Home insurance protects any loss to your home, including minor issues, like hail damage, to a total loss in a fire.
Your lender will set minimum coverage amounts you must have, but you should look at all options to ensure you have adequate coverage.
Here’s what to consider asking.
1. Does the Policy Cover Actual Cash Value or Replacement Cost Value?
When choosing homeowner’s insurance, you may have the option to choose actual cash value coverage or replacement cost coverage. The difference between coverages is significant, as are the premiums.
- Actual cash value – This coverage option costs less but could leave you with more financial obligations if you have a total loss. ACV covers the cost of your house today while accounting for depreciation. If your property is totally destroyed or needs major repairs, the ACV likely won’t be enough to cover the cost of replacing or rebuilding the loss.
- Replacement cost value – This coverage amount changes based on the replacement cost at the time of loss, so it accounts for inflation and higher costs. This will cost you less during loss but will incur higher premiums.
Most home insurance policies include RCV for the home’s structure and ACV for items inside the home, such as furniture or clothing.
2. How Much is My Deductible?
The deductible is the part of the claim you must cover before insurance will cover anything. The deductible directly correlates to your premium. The higher the deductible you choose, the lower your premiums are, and vice versa.
Most homeowners choose a $1,000 deductible, but there are options for $500 and $2,000 deductibles too.
If you choose a higher deductible, consider setting money aside for it just in case you have an unexpected claim. You carry homeowners insurance to protect yourself financially, so there’s no sense in taking a deductible you can’t afford.
3. Are My Personal Belongings Covered?
Always inquire about the personal belongings coverage to ensure it’s adequate. Every insurance company differs, but most have coverage equal to 50 to 70% of the dwelling coverage for personal belongings.
Find out how much the coverage is and determine if it’s adequate. To do this, take a home inventory, especially of your higher-priced items. If you have items that exceed the insurance limits, consider adding endorsements to insure them. Just know that your insurance company may require an appraisal to prove its value.
4. Should I Get Flood or Earthquake Insurance?
If you have a mortgage on your property, your lender will tell you if flood or earthquake insurance is required, but it’s always worth asking your agent. For example, if your home is in a flood zone where lenders don’t require flood insurance, you may still want to consider it because most insurance companies don’t cover floods in general homeowner’s insurance.
5. Do I Have Windstorm and Hail Coverage?
In some areas of the country, damage from windstorms and hail are excluded from standard policies. If that’s the case, you’d need a separate policy with its own deductible. Ask your insurance agent how windstorm and hail damage is handled to ensure proper coverage.
6. Are There Discounts Available?
Like with car insurance, you may get a discount for bundling your insurance, aka keeping insurance for your home and cars with the same carrier, but there are other ways to get discounts on your homeowner’s insurance.
Ask your agent about the following discounts:
- Paperless billing
- Security systems
- Smart home systems
- New construction home discount
- Automatic payment
- Claims free
- Gated community
7. Do I Have Enough Liability Coverage?
Liability coverage on homeowner’s insurance covers more than most people realize. It may cover damages you cause to someone else’s property or person, even while not only your property, and injuries that occur on your property. Liability insurance usually doesn’t have a deductible, but you want to ensure enough protection to cover you in a lawsuit so you don’t become personally liable.
Questions to Ask Your Life Insurance Agent
Life insurance is essential for most people, especially if you have a young family or don’t have money saved for your estate to cover your end-of-life costs. No one likes thinking about dying, but it’s imperative to ask your insurance agent the right questions so you fully understand your life insurance needs.
Here’s what to ask.
1. What Type of Life Insurance do you Offer?
You have two types of life insurance to consider — term and permanent.
Term life insurance lasts for a specific period, usually 10 to 30 years. The longer the period, the higher the premiums, but the less frequently you must renew the policy. You pay the premiums for the term, usually monthly, and if you die within the time of the coverage, your named beneficiaries receive your death benefit. Most people purchase term coverage for 10x their annual salary, but each situation differs.
Permanent life insurance doesn’t expire; it lasts for your entire life but is more expensive. There are many types of permanent life insurance, some of which invest a portion of your premiums to provide more money to live on during retirement or in emergencies. Permanent life insurance includes a death benefit, like term life insurance, but with more benefits.
2. Does the Insurance Policy Have a Waiting Period?
Many life insurance policies have a waiting period, usually two years. This means if you die within those two years, your beneficiaries won’t receive your full death benefit. Most policies offer a percentage of the benefit or a return of premiums paid plus a small amount, usually 10 percent.
3. Is a Medical Exam Required?
Most life insurance companies have a medical exam requirement to ensure you are a good risk. Life insurance companies take a chance insuring you because they agree to pay the death benefit when you die. To determine if you’re a good risk and how much in premiums they should charge, life insurance companies require a medical exam.
The exam usually consists of a urine test, a few blood tests, and basic vitals. They may also review your medical and prescription history. If you have any major health issues or high risks, it may affect your approval rate.
However, some life insurance companies offer no-medical-exam coverage. This guaranteed coverage is available to almost everyone but has much higher premiums.
4. How Much Life Insurance Should I Get?
Your life insurance agent should be able to guide you to the right amount of coverage. When deciding what you should cover, consider what you cover now and how long you want to protect your family.
Your insurance agent should be able to guide you to include the proper expenses, situations, and other considerations to ensure you purchase enough coverage while keeping your premiums affordable.
5. Are there any Exclusions?
Like any type of insurance, life insurance often has exclusions. The most common include:
- Death by suicide
- Criminal activity
- Risky hobbies
- Act of war or terrorism
- Death resulting from drug or alcohol use
6. Does the Policy Expire, and Can it be Renewed?
Permanent life insurance typically doesn’t expire (unless you don’t pay the premiums), but term life insurance expires. Always ask about the expiration date and your options to renew the policy (if any).
If you can renew the policy, find out what’s required. For example, will you undergo another medical exam, or do they increase premiums at a standard rate according to your age?
7. Are My Benefits Guaranteed?
Insurance companies may only guarantee some life insurance benefits, so it’s important to understand the big picture. For example, death benefits are usually guaranteed if you pay the premiums. However, any cash value component or amount invested isn’t guaranteed on most policies, so you could have a loss.
8. Can I Increase or Decrease My Coverage?
Life changes, so it’s important to know if you can change your coverage mid-term if necessary. Usually, you can decrease coverage, but increasing may require specific factors, such as a new medical exam and interview to discuss your lifestyle.
How Do I Interview an Insurance Agent?
Asking an insurance agent questions can feel intimidating, but you’re making a large investment and putting a lot of trust in this person, so the questions are necessary.
Here are some ways to get the most out of your conversation:
- Write down all questions so you don’t miss any
- Jot down the answers provided and compare answers from different agents
- Pay attention to body language or if any questions are avoided or talked over (red flag)
- Ask for references to see what others think of the agent
- Don’t be afraid to ask even tough questions
What questions should you ask before taking out an insurance policy?
Before taking out an insurance policy, ask your insurance agent about the premiums, deductibles, claim process, payment options, and how you contact customer service. Pay close attention to how the agent answers the questions, and don’t be afraid to ask for referrals to see if the reviews match what the agent states.
What are five things to know before taking out an insurance policy?
Buying insurance is a big undertaking, so factoring in these five things will ensure you make the right purchase.
- How much insurance do you need? What are you covering? There’s no reason to buy more than you need.
- How much is the deductible? Don’t get caught up in a low premium only to discover you can’t afford the deductible during a crisis.
- Understand the claim process. Is it online, over the phone, or some other way? How fast do they pay out?
- Is the insurance renewable, and if so, will the premiums increase? How often?
- How does the policy compare to what other companies offer?
What qualities should you consider when selecting an insurance agent?
Your insurance provides financial protection, so you should be selective when seeking an insurance agent.
Consider qualities like honesty, good communication skills, empathy, and problem-solving. You want someone that will look at your situation as a whole and not just provide cookie-cutter numbers that they provide to everyone, no matter their situation.
How important is your insurance agent?
Your insurance agent is your contact when purchasing, using, and canceling insurance. They are your advisor and should help you make the right decisions to protect your family and assets as much as possible.
Knowing the questions to ask your insurance agent is crucial to help you purchase the right policy. Insurance policies can help you during crises, but the wrong policy can break you financially.
Find a trustworthy, honest insurance agent willing to work with you to find the policy that suits your needs the most.