Frequently Asked Questions
Below are some of our frequently asked questions. If you have any other questions or concerns, please feel free to contact us.
- Why do Insurers Need So Much Information From Me When Applying For a New Policy?
- What are the advantages to using an agent to purchase insurance?
- I have an older car whose current market value is very low – do I really need to purchase car insurance?
- What is the difference between collision physical damage coverage and comprehensive physical damage coverage?
- What factors can affect the cost of my car insurance in Colorado?
- What are some practical things I can do to lower the cost of my home insurance?
- What does homeowners insurance cover in Colorado?
- What is the difference between “actual cash value” and “replacement cost”?
- What factors should I consider when purchasing homeowners insurance?
Why do Insurers Need So Much Information From Me When Applying For a New Policy?
When you apply for an insurance policy at Denver West Insurance Brokers you will be asked a number of questions. We take the time (up front) to make sure the premium we quote is the final price you pay.
Computers Quickly Digest Rating Factors
The information that an insurance carriers uses to determine the cost of an insurance policy are called ‘rating factors.’ The invention of computers, and it’s ability to quickly compute many factors (in milliseconds) has helped the insurance industry ‘fine tune’ it’s pricing ability of an insurance policy. In the 1950’s they had to ‘manually’ compute a price so they only used a few rating factors and asked just a few questions of the insured. The agent may have only asked the drivers age, vehicle type and miles driven per year. Today, with the help of computers, the carrier can use a hundred factors in computing policy cost. This in turn has increased the number of questions the agent needs to ask when quoting a new insurance policy.
History is a Good Predictor of Future Insurance Losses
Insurance carriers have found ‘history’ to be a good predictor of the future. The computer systems can pull several reports about the drivers driving history and the cars accident history by using the drivers, name, address, date of birth, social security number, drivers license number and vehicle’s VIN number. Adults with good driving records and good credit will generally pay less for car insurance, than young drivers with traffic tickets.
Driver and Car Characteristics are a Predictor of Future Insurance Losses
In addition to your age, gender and driving experience, information about the car you drive and use of the car is also needed to determine policy cost. For example, a large luxury car costs more to repair or replace than a compact car. A larger vehicle can also cause more property damage and more severe injuries to other drivers. Someone in Denver or Golden Colorado 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.
A Homes Age and Construction Features Will Determine Policy Cost
Along with the homeowners credit score and prior loss history, the age of the home and it’s construction features are used to determine policy cost. Expect to be asked home features such as year built, frame type, roof type, square feet, how many bathrooms, type of flooring etc. The cost to repair or rebuild a home according to the reconstruction features is a major component of the policy cost.
Insurers Use this Information to Price a Policy
Insurance carriers need to collect enough premium to pay for losses, admininstrative expenses and make a reasonable profit. Making sure they collect enough premium (policy cost to the insured) in order to meet their obligations to their policy holders is vital to their business operations. The questions asked by the agent might seem like many, but they are all used in the policy rating process.
What are the advantages to using an agent to purchase insurance?
By using an independent agent such as Denver West Insurance Brokers, the policyholder receives more personalized service. Having direct contact with Denver West Insurance Brokers can be very important when purchasing insurance, and absolutely necessary when filing a claim. Denver West Insurance Brokers is able to deliver quality insurance in Denver, Golden, Arvada or anywhere else in Colorado, with competitive pricing and local, customized service.
I have an older car whose current market value is very low – do I really need to purchase car insurance?
Colorado has laws that require drivers to have at least $25,000/$50,000 vehicle 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 than the deductible. Many people with older cars decide not to purchase any physical damage coverage.
What is the difference between collision physical damage coverage and comprehensive physical damage coverage?
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.
What factors can affect the cost of my car insurance in Colorado?
A number of factors can affect the cost of your car insurance in Colorado — 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 Golden, Denver or anywhere else in the state of Colorado.
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.
What are some practical things I can do to lower the cost of my home insurance?
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 Denver West Insurance Brokers.
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 Denver West Brokers 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.
What does homeowners insurance cover in Colorado?
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.
What is the difference between “actual cash value” and “replacement cost”?
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.
What factors should I consider when purchasing homeowners insurance?
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 Denver West Insurance Brokers 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 your needs.
- 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. Denver West Insurance Brokers 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.