Insurance FAQs provided by Scalzo, Zogby & Wittig, Inc.
- General Insurance Questions
- Car Insurance Questions
- Homeowners Insurance Questions
- Life Insurance Questions
- Renters Insurance Questions
- Umbrella Insurance Questions
Q: What kinds of questions should I be expected to answer when I’m applying for an insurance policy in NY? Why do insurers need so much information?
A: When you apply for an insurance policy at Scalzo, Zogby & Wittig, Inc., you will be asked a number of questions. For example, we might ask your name, age, gender, address, etc. You will also be asked a series of other questions which will be used to determine how likely you are to make a claim.
When we decide whether or not to offer car insurance to a potential customer, we want to know about your previous driving record, whether you have any recent accidents or tickets, and what type of car will need to be insured.
We offer a variety of programs for different customers. Adults with good driving records will generally pay less for car insurance than young drivers with traffic tickets. In order to determine which program you qualify for, Scalzo, Zogby & Wittig, Inc. will need basic information about you.
In addition to your age, gender and driving experience, information about the car you drive, and your driving record, is also needed to determine a fair price. For example, a large luxury car costs more to repair or replace than a compact car. Also, someone in New Hartford who commutes 30 miles each way is more likely to be in an accident than someone who commutes via bus and only drives on weekends.
Q: What are the advantages to using an agent to purchase insurance?
A: By using an independent agent such as Scalzo, Zogby & Wittig, Inc., the policyholder receives more personalized service. Having direct contact with us can be very important when purchasing insurance, and absolutely necessary when filing a claim. We are able to deliver quality insurance in New Hartford and Central NY with competitive pricing and local, customized service.
Car Insurance FAQs in New York
Q: I have an older car whose current market value is very low – do I really need to purchase car insurance?
A: Most states, including New York, have insurance laws that require drivers to have at least some car liability insurance. These laws were enacted to ensure that victims of car accidents receive compensation, when their losses are caused by the actions of a negligent individual.
Often times the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just “total” the car and give you a check for the car’s market value less the deductible. Many people with older cars decide not to purchase any physical damage coverage.
Q: What is the difference between collision physical damage coverage and comprehensive physical damage coverage?
A: Collision is defined as losses you incur when your car collides into another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.
Comprehensive provides coverage for mostly other direct physical damage losses you could incur, including theft. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.
Q: What factors can affect the cost of my car insurance in New York State?
A: A number of factors can affect the cost of your car insurance in New York – some of which you can control and some that are beyond your control.
The type of car you drive, the purpose the car serves, your driving record, and where the car is garaged can all affect how much your car insurance will cost you in Central NY.
Even your marital status can affect your cost of insurance. Statistics show that married couples tend to have fewer and less costly accidents than those who are single.
Homeowners Insurance FAQs in New York State
Q: What are some practical things I can do to lower the cost of my home insurance?
A: There are a number of things you can do to lower the cost of your homeowners insurance. The easiest thing to do is request a comprehensive review of your policy and your needs from us at Scalzo, Zogby & Wittig, Inc.
It’s not surprising to find quotes on homeowners insurance that vary by hundreds of dollars for the same coverage on the same home. When you shop, be careful to make sure each insurer is offering the same coverage.
Another way to lower the cost of your home insurance is to look for any discounts that you may qualify for. For example, many insurers will offer a discount when you place both your car and homeowners insurance with them. Other times, insurers offer discounts if there are deadbolt exterior locks on all your doors, or if your home has a security system. Be sure to ask us about any discounts that you may qualify for.
Another easy way to lower the cost of your homeowners insurance is to raise your deductible. Increasing your deductible from $250 to $500 will lower your premium, sometimes by as much as five or ten percent.
Q: What does homeowners insurance cover in New York State?
A: The typical homeowners policy has two main sections: Section I covers the property of the insured and Section II provides personal liability coverage for the insured. Almost anyone who owns or leases property has a need for this type of insurance. Usually, homeowners insurance is required by the lender to obtain a mortgage.
Q: What is the difference between “actual cash value” and “replacement cost”?
A: Covered losses under a homeowners policy can be paid on either an actual cash value basis or on a replacement cost basis. When “actual cash value” is used, the policy owner is entitled to the depreciated value of the damaged property. Under the “replacement cost” coverage, the policy owner is reimbursed on an amount necessary to replace the article with one of similar type and quality at current prices.
Q: What factors should I consider when purchasing homeowners insurance?
A: There are a number of factors you should consider when purchasing any product or service, and insurance is no different.
Below is a checklist of things you should consider when you purchase homeowners insurance:
- Determine the amount and type of insurance you will need. The coverage limit of your house should equal 100% of its replacement cost. If your policy limit is less than 80% of the replacement cost of your home, any payment from your insurance company will be less than the full cost to replace your home – you’ll have to pay the rest out of your own pocket. Also, decide if the personal property and personal liability limits are adequate for you.
- Decide which, if any, additional endorsements you want to add to your policy. For example, do you want the personal property replacement cost endorsement, an earthquake endorsement, or a jewelry endorsement?
- Once you have decided on the coverage you want in your homeowners insurance policy, please consult us and we will be able to help you determine if there are any gaps in coverage that you might not have been aware of, explain the details of the policy’s exclusions and limitations, as well as recommend an insurance company that will live up to your expectations.
Q: What are the policy limits (i.e., coverage limits) in the standard homeowners policy?
A: Note: this answer is based on the Insurance Services Office’s HO-3 policy.
The home and other structures on the premises are protected on an “all risks” basis up to the policy limits. “All risks” means that unless the policy specifically excludes the manner in which your home is damaged or destroyed, there is coverage. The policy limit for the home is set by the policy owner at the time the insurance is purchased. The policy limit for the other structure is usually equal to 10% of the policy limit for the home.
Losses to your personal property are covered on a “named perils” basis. “Named perils” means that you have coverage only when your property is damaged or destroyed in the manner specifically described in the policy. The policy limit on the coverage is equal to 50% of the policy limit on the home. Limits for the coverage of additional expenses that the policy owner may incur when the residence cannot be used because of an insured loss is equal to 20% of the policy limit on the home.
The coverage limit on personal liability is determined by the policy owner at the time the policy is issued. The coverage limit on medical payments to others is usually set at $1000 per injured person.
Q: Where and when is my personal property covered?
A: Personal property (except property that is specifically excluded) is covered anywhere in the world. For example, suppose that while traveling, you purchase a dresser and you want to ship it home. Your homeowners policy would provide coverage for the “named perils” while the dresser is in transit – even though the dresser has never been in your home before.
Q: Do I need earthquake coverage in New York State? How can I get it?
A: The standard insurance policy does not pay for direct damages caused by “earth movement.” “Earth movement” is a much broader term than earthquake. It includes earthquake, volcanic activity and other earth movement. This coverage may be available by endorsement for an additional charge. If you live in an area that is susceptible to earthquakes, you’ll pay more on earthquake coverage than if you live somewhere unlikely to have an earthquake. Before you decide to buy earthquake coverage, Scalzo, Zogby & Wittig, Inc. can help you weigh the costs and benefits based on living in New York.
Life Insurance FAQs in New York State
Q: How much life insurance should an individual own?
A: “Rule of thumb” suggests an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account when determining the right amount of life insurance for you and your family.
Important factors include:
- Income sources and amounts other than salary earnings
- Whether or not you are married and, if so, what is your spouse’s earning capacity
- The number of individuals who are financially dependent upon you
- The amount of death benefits payable from social security and an employer-sponsored life insurance plan
- Whether any special life insurance needs exist – (mortgage repayment, education fund, estate planning need, etc.)
Calculating the correct amount of life insurance to buy is not as simple as it appears. We recommend contacting us at: 315-792-0000 to help determine the right amount of coverage you need. As an independent agent, Scalzo, Zogby & Wittig, Inc. has unbiased advisors that will help you avoid buying too much, show you appropriate and optional coverages, and recommend a company that will best serve your interests.
Q: What about purchasing life insurance for a spouse or children?
A: In certain circumstances, it is advisable to purchase life insurance for children. However, generally such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s).
It is of utmost importance that the income-earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance. This should be done before purchasing life insurance for children or on a non-wage-earning spouse. Life insurance on a non-wage-earning spouse is often recommended for the purpose of paying for household services lost due to this individual’s death. In a dual-earning household, it is important to protect the income earning capacity of both spouses.
Q: Should term insurance or cash value life insurance be purchased?
A: This depends on your personal circumstances.
First, recognize that in any life insurance purchasing decision, two questions must be answered:
- “How much life insurance should I buy?”
- “What type of life insurance policy should I buy?”
The first question should always be initially resolved. For example, the amount of life insurance that you need may be so large that you can only afford it through the purchase of term insurance, since term insurance has a lower premium.
If your ability to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, then it is appropriate to consider the second question – what type of policy to buy. Important factors affecting this decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.
Q: How does mortgage protection term insurance differ from other types of term life insurance?
A: The face amount under mortgage protection term insurance decreases over time, consistent with the projected annual decreases in the outstanding balance of a mortgage loan. Mortgage protection policies are generally available to cover a range of mortgage repayment periods – (e.g., 15, 20, 25 or 30 years.) Although the face amount decreases over time, the premium usually remains the same. Further, the premium payment period is often shorter than the maximum period of insurance coverage – for example: a 20-year mortgage protection policy might require level premiums be paid over the first 17 years.
Q: Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage loan?
A: Yes. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured’s death. Although a lender may offer a mortgage protection term policy to you, the lender rarely requires it.
Credit life insurance is frequently recommended in conjunction with taking out an installment loan when purchasing expensive appliances, a new car, or for debt consolidation.
Q: Is credit life insurance a good buy?
A: Credit life insurance is frequently more expensive than traditional term life insurance. If you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.
Renters Insurance FAQs in New York State
Q: Why would I want to buy renters insurance?
A: If you live in an apartment or a rented house, renters insurance provides important coverage for you and your possessions in Central NY. A standard renters insurance policy protects your personal property in many cases of theft or damage, and may pay for temporary living expenses if your rental is damaged. It can also shield you from personal liability. Anyone who leases a house or apartment should consider this type of coverage.
Q: How does a renters insurance policy protect my personal property?
A: A renters insurance policy provides named perils coverage. This means that the policy only pays when your property is damaged or destroyed by any of the ways specifically described in the policy. These usually include:
- Fire or lightning
- Windstorm or hail
- Vandalism or malicious mischief
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water or steam
- Sudden and accidental damage from artificially generated electrical current
- Volcanic eruptions (but this doesn’t include earthquake or tremors)
Renters insurance coverage applies to your personal property no matter where you are in the world. This means you’re covered when you are on vacation as well as at home.
Q: Why do some apartment complexes require tenants to have renters insurance?
A: Owners of apartment complexes buy insurance policies for their liability in order to cover their buildings and personal property. However, these policies do not cover any of the tenant’s property or liability. By requiring their tenants to have renters insurance, the apartment owner is assured that the tenants will not mistakenly believe the apartment complex owner’s policy will provide coverage for a tenant’s property or personal liability. Although this type of requirement benefits the apartment complex owner, there are benefits for the renter as well. At Scalzo, Zogby & Wittig, Inc. we recommend you purchase renters insurance regardless of what your landlord requires.
Q: What if I share my apartment with a roommate? Do we both need to have renters insurance?
A: Standard renter’s policies cover only you and relatives that live with you. If your roommate is not a relative, each of you will need your own renter’s insurance policy to cover your own property and to provide you liability coverage for your own actions.
Umbrella Insurance FAQs in New York State
Q: What is a personal umbrella liability policy?
A: The personal umbrella liability policy is designed to increase your liability protection. This single policy acts as an “umbrella” over all of your other personal liability policies – home, car, boat, RV, etc., so you have a higher personal liability limit than what would otherwise be available. In certain circumstances, an umbrella insurance policy may provide personal liability coverage that is otherwise excluded from your other policies. For example, an umbrella insurance policy provides coverage anywhere in the world, whereas your car insurance policy usually provides coverage in only the US and Canada.
Q: How do I know if I need a personal umbrella liability policy?
A: It used to be that the only people who needed personal umbrella liability policies were wealthy individuals, who had sizable amounts of personal assets that would be at risk in a lawsuit.
However, in our very litigious society, even individuals with modest incomes and assets are often subjects of large lawsuits. Since those with modest incomes are even less able to pay damages than a wealthy individual, we recognize the need to provide coverage limits greater than what can be obtained from their homeowner insurance or car insurance policies.