Got insurance questions? Agents have heard and can answer them all

Emmet Pierce

When it comes to insurance policy questions, it's hard to stump an experienced agent. They've pretty much heard it all.

Over time, agents and brokers become experts on auto, health, home and life mishaps, and how to protect their clients, says Mark Carrasquillo, an insurance broker at E.G. Bowman Co. in New York.

"You hear all types of scenarios," he says. "You have to try to educate the client."

Consumers often contact agents for guidance because they have trouble understanding their policies, says Alan Levenson, a broker at Technology Insurance Associates in New Jersey. "You have to depend on a competent insurance agent that you can trust," he says.

Here are answers to five questions that insurance agents frequently hear and answer.

1. Do I have to list all drivers in my household?

Carrasquillo says many consumers try to get lower auto insurance rates by omitting licensed drivers in their households from insurance applications. Insurers ask for this information because it helps them gauge the risk of a policyholder filing a claim.

The more people who have access to your car, the more likely it is that a mishap will occur, Carrasquillo says. "It does affect the premium," he adds.

Many people fudge their answers, but savvy agents may do Internet searches to learn more about applicants, Carrasquillo says. If they determine that more than one person of driving age live in a home, they may challenge an application that lists just one driver.

If an unnamed driver in your household has an accident with your car, your insurer could contest the claim or pay it and then cancel your policy, Carrasquillo says.

2. Do I really have to fix it myself?

Derek Ross, an insurance broker in Tarzana, Calif., often is asked whether homeowner's insurance will cover routine maintenance issues, such as leaky plumbing, cracked windows and damaged roofs. The answer is "no." In fact, your insurer may reject a homeowner's claim if it arises from failure to maintain your home. For example, if you fail to repair your roof and your home floods during a storm, your insurer may decline coverage.

If you want someone else to do your maintenance, Ross suggests that you buy a homeowner's warranty agreement. For a monthly fee, warranty companies will send crews to your home to make repairs that are covered under the contract.

3. How do I reduce my insurance costs?

Since the recession hit, consumers have been hunting for ways to save money on insurance. The best way to lower your costs is to shop for bargains, says Dennis Hilton, an independent agent in Maine.

However, some cheap policies aren't truly bargains. In addition to making price comparisons, you should consider what you're getting for your money, Hilton says. If you save money by reducing your coverage, you could end up spending more out of pocket when you file a claim.

To get the best value, look for extra services that insurers offer to attract new customers, Hilton says. For example, some car insurance companies provide roadside assistance. Others will waive your deductible if you need to replace a broken windshield.

Insurance agent Jack Hungelmann, author of "Insurance for Dummies," advises clients with employer-provided group health insurance to compare their costs with those offered by individual policies. If consumers are very healthy, individual policies sometimes can give them lower rates, he says.

4. What if my insurance company goes bust?

Jack Lenenberg, a Georgia-based agent who specializes in long-term care insurance, says he often is asked what will happen if an insurance company goes belly-up. "People are cautious today," he says.

State insurance guaranty funds have been set up to protect consumers when health, life and property-casualty insurance companies fail, he says. Most funds were created in the 1960s, and there have been about 550 insolvencies, according to the National Conference of Insurance Guaranty Funds. The amounts that are guaranteed vary by state.

The best thing to do is make sure your company is solvent before you buy a policy. You can do this is through online financial rating services like A.M. Best, Moody's and Standard & Poor's.

5. Do I really need renter's insurance?

Sometimes agents have to tell clients things they don't want to hear. Renters often dismiss the need for property and liability insurance, since they assume they're covered by the landlord's policy. They aren't, Hungelmann says.

Renters may not own their homes, but they often have expensive possessions that could be lost in a burglary or fire. A renter's policy also will provide coverage to protect you if a guest is injured and files a lawsuit against you.

"If you have a party at your place and someone gets hurt, you'll need liability coverage," Hungelmann says.