General Questions

What kinds of questions do you ask and why do insurance companies need so much information?
In order to develop the proper rate for the risk you'll be asked your name, age, gender, address, etc. Depending on the type of policy you're inquiring about you will be asked other questions that will help the insurance company determine how likely you will be to make a claim and what their potential costs might be. In the questions and answers below you'll see what some of those factors can be depending on the type of policy.

What are the advantages to using an agent to purchase insurance?
The primary advantage to using an agent is the personal service they provide. My direct contact with you gives me the understanding of your personal needs. This helps ensure that you have all the coverage you need, without either mistakenly under insuring or over insuring your situation. When you need to make a claim, the services of an agent will be invaluable in completing a normally stressful process with the least amount of trouble. While some companies sell their policies over the phone, or via an internet application, claiming to save you a commission cost, the reality is that cookie-cutter, automated policies often don't take your unique personal circumstances into consideration. An agent can help tailor a policy to your specific needs, often for a similar cost. And if you suffer a loss, the "standard" policies often sold by phone or computer may not cover something you've overlooked that an agent could have helped you consider. If you have to pay for a portion of your loss from your own pocket, that increases the cost considerably.

Auto Insurance

What are some sensible things I can do to lower my automobile insurance rates?
The most important thing is to make sure you have the proper coverage first. It's not uncommon to find quotes on automobile insurance that vary by hundreds of dollars. This happens because the coverage from one policy to the next is not the same. When you shop, make sure each insurer is offering exactly the same coverage in all areas of the policy. Many consumers just look at the limits of liability and think that is the coverage. Read your contract terms this is the meat of the equation. Policies have different features depending on the company as well. My job is to help you sort this out.

Remember if a car is a car is a car? Then what is the difference between a VW Bug and a Mercedes Benz? Why pay more for one than another?

Another step is to look for any discounts for which you may qualify. For example, many insurers offer a discount if you insure multiple cars on the same policy. There are many discounts available and an agent can help you find those you qualify for. Be sure to ask what discounts are offered when making your application a good agent ask the question to qualify you for all available discounts.

Another way to lower your premiums is to increase the amount of your deductible. Raising your deductible from $250 to $500 can often save as much as 5 to 10 percent. How much risk are you willing to accept? Ask your agent however if it is economical to do so.

I have an older car that has a very low current market value. Do I really need to purchase automobile insurance?
Yes; Washington State and most states now require by law that all drivers have at least basic liability insurance. Remember any damage award over that you are still responsible for. You owe it. Transfer that risk to an insurance company. These laws were enacted to ensure that victims of auto accidents receive compensation when their losses are caused by the actions of a negligent individual.
Often the cost of repairing the damages to an older car is greater than it's current (ACV) value. In those cases, the insurer will deem the car a "total loss" and write a check for the car's current market value, less the deductible. Many persons with older cars decide not to purchase physical damage coverage for the vehicle itself. However, give us a call to quote this coverage as the cost is often negligible.

What is the difference between collision coverage, and comprehensive coverage?
Collision coverage is for losses incurred when your vehicle collides with anything, another vehicle, or object. For example, if you hit another car in a parking lot, the damages to your car will be paid under your collision coverage. For example, if you hit a pothole or ditch...the damage to your car would be paid under your collision coverage.

Comprehensive coverage is for ALL other covered physical damage incurred when your car is NOT moving and includes such losses as fire, vandalism and theft. For example, damage to your car from a hailstorm will be covered under comprehensive coverage. The exception is glass damage and hitting an animal or bird.

What factors can affect the cost of my automobile insurance?
There are a number of factors, some you can control, and some are beyond your control.

The type of car you drive, the purposes the car serves, your driving record, personal credit history and where the car is garaged can all affect how much the policy will cost. Even your marital status can affect the cost. Statistics show that married people tend to have fewer, and less costly, accidents than single people.

Another factor can be where you live. Some areas have a higher incidence of vandalism or theft, and rates will reflect the higher risk.

Homeowners Insurance

What are some sensible things I can do to lower the cost of my homeowner's insurance?
The easiest, and most important, thing to do is have an agent do a comprehensive personal review of your policy and property. One of the most common mistakes in homeowner policies is improper coverage.

It is not uncommon to find quotes for homeowner's insurance that vary by hundreds of dollars for what appears to be the same coverage. When you shop, be careful to ensure that each insurer is offering exactly the same coverage, features, and benefits..

Another method to lower homeowner's insurance costs is to ask about any discounts you might qualify for. As an example, many insurers will offer a discount when you place both your automobile and homeowner's policies with them. Other items of note are deadbolt locks on exterior doors, or home security systems.

Be sure to ask about all available discounts when making your application.

Another effective method of lowering your homeowner's insurance costs is to raise your deductible. Increasing your deductible from $500 to $750 or $1000 can lower your premium as much as 5 to 10 percent.

What does homeowner's insurance cover?
The normal homeowner's policy has two main sections. Section I covers the dwelling or physical structures of the insured and personal property. Section II provides personal liability coverage for the insured. Nearly anyone who owns, rents, or leases property, has a need for this form of insurance. Mortgage lenders usually require homeowner's insurance when you purchase a home.

What is the difference between "actual cash value" and "replacement cost"?
Covered losses under the terms of a homeowner's policy can be paid on either the actual cash value basis or on a replacement cost basis. Under "actual cash value" terms the policy owner is entitled to the replacement cost and then adding depreciation cost. Under the "replacement cost" terms the policy owner is reimbursed the amount necessary to replace the article with one of similar type and quality at its current price. Most companies require you to replace the item to get the full replacement cost.

What factors should I consider when purchasing homeowner's insurance?
When purchasing any product or service there are always multiple considerations, insurance is no different.

Here are some important considerations specific to homeowner's insurance.

• Determine the amount and type of insurance you need. Coverage limits on your house should be equal to 100% of its replacement cost, what you want is a new home not what you purchased it for. Anything less than its replacement cost will have to be paid from your own pocket. Also determine if the personal property and personal liability limits are adequate for your needs.
• Determine if any additional endorsements need to be added to your policy. As examples; do you need a personal property replacement cost endorsement, or a jewelry/collectibles endorsement.
• Once you've decided on the coverage you believe you need, contact us to help you review your assessments. We will help you determine if there are any gaps, or missed coverage that you are unaware of. We will explain the details of the policy exclusions and limitations, and there effects on your situation. We will help you fashion a policy that will be both cost effective and give you secure coverage to meet your needs.

What are the policy limits in the "standard" homeowner's policy?
While not all policies are the same, these are customary limits that most policies adhere to.

The dwelling and other structures on the premises are protected on an "all risks" basis up to the policy limits. "All risks" means that the policy covers any risks not specifically excluding the manner in which the home is damaged or destroyed. Policy limits for other structures is equal to 10% of the dwelling amount.

Losses to personal property are covered on a "named perils" basis. "Named perils" means that your property is covered only when damaged or destroyed in a manner specifically described in the policy. The policy limit on this coverage is normally equal to 70-75% of the limit on the dwelling. Additional expense limits that may be incurred by the property owner when the residence is unusable because of the insured loss are equal to 20-50% of the limit on the dwelling or a time limit such as actual cost for 12 months.

The policy owner determines the personal liability limit at the time the policy is issued. However, $100,000 is usually standard on all policies. Many companies now offer $1,000,000.00 limits. The limit on medical payment coverage to others is usually set at $1000 per injured person with higher limits possible.

Where and when is my personal property covered?
With the exception of property specifically excluded by the terms of the policy, personal property is covered anywhere. As an example, while traveling you purchase an item that you want to ship home. The homeowner's policy would provide coverage for the named perils while the item is in transit, even though it's never been in your home before.

Do I need earthquake coverage and how can I get it?
The typical "standard" insurance policy does not pay for direct damages caused by "earth movement". "Earth movement" is a much broader term than earthquake and includes other perils such as volcanic activity and other forms of earth movement. This type of coverage may be available as an independent policy. In areas more likely to suffer earthquakes the costs will likely be higher than where earthquakes are rare. Ask us to help you weight the cost to benefit factors.

Life Insurance

How much life insurance should an individual own?
An amount of insurance equal to 6 to 8 times annual earnings is a normal "rule of thumb". Many factors should be taken into account when determining the right amount of life insurance for you and your family though. However, when it comes to insuring and protecting the future of your family ANY life insurance policy is better than carrying no coverage at all! Of course properly insuring your family is critical, but you must be able to afford the coverage for it to be effective. Call us today for a complete analysis of your family's life insurance needs.

Why Do People Buy Life Insurance?
Most people buy life insurance to pay debt and replace the income of a lost family member. This coverage often buys the peace of mind needed to get through extremely difficult and emotional situations.

Here are some important factors:

• Sources of income, and amounts, other than salary/earnings.
• Whether married of not, and what is your spouse's earning capacity.
• How many individuals are financially dependent upon you.
• What death benefits are payable from Social Security and employer sponsored life insurance plans.
• Note any special life insurance needs such as mortgage repayment, education fund, estate planning, etc.

Figuring the correct life insurance needs isn't as simple as it seems. An agent who will work for you directly can help you avoid buying inappropriate coverage, either too much or not enough, and show you optional coverage vehicles that may more economically achieve your objectives.

What about purchasing life insurance on a spouse or children?
In most cases, it's advisable to purchase life insurance on children, but such purchases should not be made in lieu of purchasing life insurance on the family breadwinner(s).

There are 3 main reasons to purchase life insurance for your spouse and children, 1) GUARANTEED insurability...once the policy is written and you stay up to date with payment, this coverage can not be terminated, 2) Compared with most life insurance policies, there is a low lifetime premium and 3) Cash values can accumulate with compounding interest.

Protecting the family support of the primary wage earner is of utmost importance. This should be done before contemplating life insurance coverage for other family members. Life insurance on the non-wage earning spouse is frequently recommended to pay for household services lost following the death of that spouse. In a dual wage earning household, it is very important to protect the earning capacity of both spouses.

Should term insurance, or permanent (whole) life insurance be purchased?
The answer to this question will vary depending on your personal circumstances.

You must answer two questions to facilitate the decision of which type is best for your situation.

• How much life insurance should I buy?
• What type of policy will best fit my needs?

Most people need to carry "high" life insurance coverage amounts during the "family" years when, in most cases, you're carrying a mortgage, car payments and have kids. As a result, the amount of life insurance you need may be large enough that the only affordable means is through the purchase of term insurance, since term insurance has a lower premium.

If your ability to pay for sufficient life insurance is such that you can afford either type of policy then other factors should be considered. These factors include, your income bracket, whether your insurance needs are short or long term (20 years or more), and the rate of return you expect from alternative investments possessing similar risk.

How does mortgage protection term insurance differ from other forms of term insurance?
The face value of mortgage protection term insurance decreases over time, paralleling the decrease in the outstanding balance of the mortgage loan. These policies mirror the range of typical mortgage terms, 15, 20, 30 years. While the face amount decreases, the premiums will remain the same for the life of the policy.

Note: It is our opinion that this coverage is too limiting for most families, contact our office to discuss the reasons in greater detail.

Can an existing life insurance policy be used for repayment of a mortgage loan?
Any existing life insurance policy can be used for multiple purposes whether it is a term or cash value policy. If you choose to use it for payment of an outstanding mortgage that's your choice.

In a related area we are often asked if credit life insurance policies are a good buy. These policies are frequently offered when high value installment loans are made. Credit life insurance policies are usually very expensive for the amounts of coverage offered. If you already have sufficient life insurance to cover these sorts of obligations, then their high cost is unjustified.

Business Insurance

Small businesses need insurance too. Call me to find out more.

Liability Insurance

What is a personal umbrella liability policy?
A personal umbrella liability policy is used to increase your total liability protection. This separate policy acts as an umbrella over all of your other personal liability policies, home auto, boat, RV, etc. As a result, you have higher liability limits than would normally be available. In some cases the umbrella policy will afford liability coverage that is excluded from some of the other named policies. As an example, your umbrella policy will cover you for liability anywhere in the world, while your automobile policy will be restricted to the USA and Canada only.

How do I know if I need a personal umbrella liability policy?
It used to be believed that only "rich people" needed the extended protection of a personal umbrella liability policy because of sizable amounts of personal assets needing protection from lawsuits.

However, the tendency of our society to sue has increase significantly in recent years. Even individual with modest incomes and assets are too often subjects of large lawsuits. Since many realize they are less financially able to withstand the financial burden of an unfavorable lawsuit, they are more aware of the need to have insurance protection in the event of such an outcome. We happily do evaluations of your total liability coverage to help you determine if you need the additional liability protection of an umbrella policy.



State Street Insurance

Scott Richardson, LUTCF
1901 North State Street
Bellingham, WA 98225

(360) 714-8790

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