Speeding tickets. Cashing in your life insurance. The myth about renter’s insurance. Experts spill the secrets you always wanted to know.
By Felicia D. Pinkney
Sometimes it’s the flooded bathroom, which leads to two inches of water in the kitchen and dining room. (You vow to pause the DVR next time to turn off the bath water.)
Maybe it’s your teenage driver, who brings home a speeding ticket or two.
Or perhaps it’s your sweet little dog, who wouldn’t normally hurt a flea, but ends up biting the neighbor’s kid, sending the child to the doctor’s office with a really big boo-boo and not-so-happy parents.
Stuff happens. Occasionally it’s our fault and hard to admit, especially if insurance is involved. Seriously, who wants to fess up to causing a five-car pileup on Interstate 35?
But don’t assume the worst. Your Texas Farm Bureau Insurance agent can handle off-the-wall issues and tough questions, even the ones we’re too embarrassed to ask. Here, we round up 10 things that you’ve always wanted to ask about insurance … but didn’t.
1 Can you explain this insurance stuff so it’s easy for me to understand?
Insurance can be complicated if you’re trying to figure it out on your own. If you get that deer-in-headlights look when you hear terms such as “guaranteed renewable” and “viatical settlement,” you’re not alone. That’s why the best place to start is with your agent. He or she can give you a quick breakdown about insurance and make it less intimidating.
Lockhart residents Juandavid and Nora Castillo have had the same Texas Farm Bureau Insurance Agent, Mike Tate, for 16 years. Tate has offices in Lockhart and Gonzales.
“Mike is very thorough,” Nora Castillo says. “Throughout the years, he has helped us with all of our insurance needs, teaching us the importance of life insurance, liability insurance — because we own some rental properties with my mother — and disability insurance.”
Check in with your agent periodically for a refresher course if needed, or to alert him or her of changes.
“[Mike] meets with us once a year just to see how things are going, to see what may have changed in our lives, and if there are any changes that he would recommend,” Castillo says.
2 I got a DUI a few months ago. How long before I’m eligible for lower rates on car insurance?
It typically takes three years before the DUI can be removed, says Ray Harper, a Texas Farm Bureau Insurance agent based in Austin. If you received an SR-22, the rates will not decrease until you are removed from the SR-22, Harper says.
SR-22 is proof that you carry a special type of liability insurance required by the Texas Department of Public Safety (DPS). If it is cancelled, terminated or lapses, DPS must be notified. SR-22 is required for two years from the date of conviction, according to the DPS.
3 I was a smoker before I bought my life insurance policy. Now that I’ve quit, do I qualify for a lower rate?
Ask your agent, but you may have to wait at least a year to qualify for the non-tobacco rate, Harper says.
4 Will my bad credit affect my premiums?
Low credit scores affect your auto insurance rates, Tate says. The rate is determined by the degree of your financial stability. But it doesn’t have to be that way forever.
A client who improves his or her credit rating can eventually get a lower premium and a nice discount, Tate says. Also, if bad credit is the result of high medical bills, your agent may be able to work with the underwriters to lower your premium.
5 Is the person who rear-ends someone always at fault? What if they were rear-ended and caused a chain reaction?
The person who is rear-ended is rarely at fault, Tate says, unless it was the result of an improper or illegal action. (Example: an unsafe lane change that puts someone in front of another driver who has the right of way.)
It’s up to the claims adjuster to determine who’s liable. If there’s a chain reaction and one vehicle is pushed into another, the fault usually lies with the person who causes the initial impact, Tate says.
6 I don’t have anything valuable in my apartment. Do I really need renter’s insurance?
Even if you own just a few things, renter’s insurance replaces your personal property if it is damaged or stolen from your apartment. But did you know it also offers protection from liability lawsuits?
Just like homeowners policies, extended coverage can really benefit you in many ways. You’re covered if someone is hurt in your residence or if you accidentally injure someone else, Tate says. One example is if you hit them or their vehicle with a stray golf shot.
Or, if your pet bites someone, the medical payments portion of the coverage can pay up to $5,000 for injury caused to a nonresident of the property — regardless of fault.
7 I was denied life insurance once. Will my new agent find out? Can I still get a policy?
If a person has been declined for life insurance, that information is available to other insurance companies through the Medical Insurance Bureau (MIB), Tate says.
The MIB provides insurance companies with relevant health information, similar to what credit bureaus provide financial institutions.
And it’s not always easy to obtain coverage if you’ve been declined, Tate says. Most times, our health condition does not improve as we age. But work closely with your agent. He or she can often go the extra mile to paint a clear picture for the underwriters, which can make a big difference and help secure coverage, if possible.
8 I’ve heard people talking about the CLUE report. What is it? Should I be concerned?
Many insurance companies subscribe to CLUE, which stands for Comprehensive Loss Underwriting Exchange. It allows a company to look at your claims history, which is kept in the database for seven years.
The report is used primarily to underwrite and rate new policies. It can include a history of your driving violations and claims on your home, regardless of ownership.
You have the right to dispute errors on the CLUE report. According to the Texas Department of Insurance, you can get a free copy of the report if an insurance company based part of its decision to deny you coverage on a CLUE report. Call LexisNexis Personal Reports at 866-527-2600 or visit https://personalreports.lexisnexis.com/index.jsp
9 I got a speeding ticket. Again. Now what?
One speeding ticket won’t typically affect your premium, Harper says, as long as you remain with your current company.
However, if you keep racking up speeding tickets, renewal could be a problem when your policy expires.
If you decide to switch to another insurer, they will run another CLUE report and it could increase your premium. You may be able to remove a ticket from your record and reduce the fine if you take a certified defensive driving course. You’re only allowed one defensive course per year to remove one ticket, says the Texas Department of Insurance.
Take note: Defensive driving is not allowed to remove tickets for DUI, DWI, or for speeding more than 25 miles per hour over the posted limit.
10 Can I use my life insurance policy to pay off bills?
The main purpose of life insurance is the tax-free death benefit that goes to your beneficiary. There are various types of policies and a whole-life policy is one that builds cash value.
If outstanding bills include high-interest credit card balances, using the equity on your policy may be a wise way to eliminate those debts. However, make it your goal to return the equity to the policy as soon as possible. Your agent can help you develop a plan to pay it back.
Felicia Pinkney is a Prosper-based freelance writer who quizzes her insurance agent with questions on a regular basis.
Copyright 2011, Texas Heritage for Living®