Many times when people call our office for a quote, they will say “give me the cheapest price”. Throughout our many years of experience, we have found that cheapest is not always the best.
Let me explain what we do, how we do it and why.
What our insurance brokers do is this: We collect information from you. The information we collect will differ, of course, depending on what type and kind of insurance you are looking for. We try to collect enough information from you, about you and about your family, what you are looking to insure along with why you are looking for insurance. What are you expecting an insurance policy to protect? Is it fire, theft, liability, windstorm, explosion, water damage or all of the above?
For automobile insurance, some people simply want to be “legal” on the road. We often hear, “Give me the bare bones minimum coverage. I don’t want to pay for anything else. I only spent $1,500 on this car”. So…what does the bare bones minimum mean to you?
You may be surprised at how many times people call and ask for the minimum coverage and think that fire and theft is included in that. Have you had that thought before? If you have, you would not be alone!
When you buy the bare bones coverage, fire and theft ARE NOT included. But…many people think it is. That is why we ask, if your car caught on fire or if it were stolen, did you want your policy to kick in? If you do, it is not the minimum insurance you are looking for. You need Specified Perils (fire and theft) or Comprehensive (which would include fire, theft and glass along with other coverage).
Also, if you were involved in an accident that was your fault and your vehicle were a write off, did you want or need some money to go towards buying another vehicle? If you do, you would need to purchase collision coverage. You may be one of the fortunate people who can access enough cash to come up with money to buy another vehicle, or at least enough for a down payment on another. Again, if you want your insurance to respond in your time of need, you will need to discuss more than the minimum coverage with your broker.
The cost of buying and selling homes can vary greatly. The age of the home, the location, the size and market demand always keeps the cost of home buying constantly changing.
So you buy your home. Like the vast majority of us, you now have a mortgage. Welcome to being a homeowner! In order to complete the transaction, you need to buy home insurance. You call your broker. You tell us you paid $100,000 for your home and you are looking for a price based on that. We could give you a policy and a price based on that, but again, that is usually not what people really want when it comes to coverage. That is where we come into the equation and advise you how the property insurance works.
At Pearson Insurance, we collect a lot of details about your home. We put these details in a calculator to let us know roughly what the rebuilding cost should be. We then work out the coverage and pricing for your home and discuss this with you thoroughly.
One of the most common statements we hear is “it does not cost that much money to replace my home” or “I could build it for a lot less than that”, and especially “I could never sell it for that”. Anyone could argue any of those points, but what we are here for is to let you know that if you lost your home, how your home policy would respond or not respond.
We ask questions such as, if your home cost $200,000 to rebuild and you tell us that you only want to buy the amount of insurance to cover your mortgage or what you paid for it; in this case, it is $100,000. Most home insurance coverage comes with a co-insurance clause. We explain it this way. If you have a partial loss like a fire in the kitchen and it is going to cost $50,000 to repair, you would have only carried half of what the rebuilding amount should be. It boils down to you only buying half the amount of insurance you needed. So, in this case, you personally insured half of the building so you will have to pay half of the loss which would be $25,000. That is a lot of money to come up with out of pocket for any of us!
This is just one of the important items you and your broker need to discuss. Finding out you do not have enough insurance at the time of the loss will just put more stress on you and your family.
There are policies out there that are cheaper, but when they do not cover things such as debris removal, additional living expenses or coverage for contents, you will find out quickly that the cheaper policy has just cost you a lot more money.
Please visit our website, send us an email or give us a call. We would be happy to discuss the options you have and get a policy that you understand and fits your own needs.