5 Questions to Always Ask Your Georgia Insurance Agent
You’re a Peach Tree State resident with a vague idea of what insurance is all about. You might already have coverage, especially if you own a home or car, but chances are good that you don’t have the details — or even know what questions you should ask an agent to learn more.
That’s why we’ve posted this “cheat sheet.” Some of the following five questions have relevance to only a few lines of coverage. Others address general questions you might (or should) be asking yourself about any coverage under consideration.
Let’s start with the basics.
1. Why Do I Need Insurance in the First Place?
You know enough to get by. You pay your insurance company for a guarantee that the insurer will settle valid claims if the items or actions you’re insuring suffer financial loss. Beyond that, how do you determine when those odds are high enough to justify what you’ll have to spend in insurance premiums?
Outside parties will make that decision for you, in some cases. For instance, when you apply for a loan to buy a home, your lender will only complete the transaction when you show proof of homeowners insurance. That’s so the lender will be assured of loan repayment if your home burns down.
Some landlords won’t even let you rent an apartment until you obtain renters insurance.
Similarly, the State of Georgia will only let you drive if you carry auto insurance.
Even so, in other cases, you’ll have to do the math for yourself. Would you want to start your own company without carrying various lines of business insurance? Would your lenders or investors even allow it?
The most sensible thing to do is crunch the numbers and compare the usually affordable cost of insurance against the cost of something going expensively wrong — whether that’s being sued by a customer seriously injured at your store, suffering a six-figure home loss due to fire or tornado, or totaling your car in an accident.
If any of those or other losses would cost you more than you could easily afford, you need insurance.
2. How Much Insurance Should I Carry in Georgia?
What we’re talking about now is coverage limits. Your first consideration might be simply what you can afford. So start a chat with your insurance agent and price out policies.
Again, Georgia law gives you some guidelines regarding auto insurance. The minimum required amount is liability coverage. That’s the cost of covering damages to other parties if you’re at fault. With liability, there’s no settlement for the repair or replacement of your own vehicle if you’re at fault, but at least it keeps you road-legal.
Figuring out your coverage limits can be a balancing act. A high limit will be more costly since it will cost your insurer more if they have to settle a claim. On the other hand, if you accept a too-low coverage limit, the settlement might not be nearly enough to fix or replace what you’ve lost.
Therefore, your smartest decision might be to informally audit what you want to cover. After all, it makes little sense to buy $20,000 in renters insurance if your belongings are worth no more than $10,000.
3. What Is a Deductible, and How Can I Use It to Control My Insurance Costs?
Your deductible is the amount you agree to pay for covered damages before your insurer pays the rest. If you have a $500 deductible on your car or motorcycle insurance and an at-fault accident results in $5,000 in covered damages, your insurer will pay $4,500 after you’ve ponied up that first $500.
The higher your deductible, the lower your premium, and vice versa: A low deductible equals a higher premium. So which is “better”?
That’s an issue for you, your insurer, and your checkbook to decide. If you think a claim is unlikely, and you can afford to pay more for damages if they do occur, you’ll pay less for a high deductible plan.
It is, however, important to avoid such a high deductible that you’d have a hard time coming up with that upfront cash if something happens. What would you do if you had no wheels until you could come up with $2,000 to meet your deductible?
4. How Can Georgians Save Money on Bundling?
If you’re in business, you know that you’d rather sell a customer or client more than one product or service at a time. It’s easier to “upsell” an existing customer whose trust and business you’ve already won than to constantly seek new prospects. Likewise, as a consumer, you expect to get a per-unit price break if you buy several of the same goods.
It’s the same with insurance. Let’s say you’re buying your first home. Does the same insurance company that sold you an auto policy also offer homeowners insurance? If so, your agent might be able to offer you a cost break by “bundling” all your insurance plans.
At least explore that strategy when shopping for any line of coverage. Start with the insurer that already carries one or more of your policies, and see if your agent also offers that additional line. You might save a lot.
5. Do I Need Actual or Replacement Cash Value?
This is a question to be asked before buying homeowners or renters insurance. When an insurer reimburses for actual cash value (ACV), the policyholder gets what the lost or damaged item is currently worth. Meaning, if the five-year-old computer you bought for $1,200 is stolen, your settlement will be for what that five-year-old computer is worth today — a fraction of that purchase price.
However, if you had a replacement cash value (RCV) policy, under the same circumstances, you’d be reimbursed for what the identical computer make and model costs today.
Ask your Georgia insurance agent to compare premium rates for both types of policies, and you’re likely to see that, while an RCV plan costs a little more, it’s usually justified by a more generous settlement if you must file a claim.