Questions and Answers:

This service is to answer general questions about insurance for people in Colorado. Unless I can read your policy I can't tell you anything about it. Specific questions should be referred to your own insurance agent. E-mail your question and I will answer personally. I will post FAQ's here.

AUTO:

When does it make sense to drop collision coverage on an older car? This is a frequent question which we see especially when there are teenage drivers in the family. Since the insurance company is not going to pay much more than the street value of the car, it makes sense to figure out when the premiums paid to the insurer begin to equal the street value.

The average policy pays a collision loss about 1 time in 7 years. Take the collision part of the auto insurance premium, multiply that by 7, add the deductible and you have your approximate investment in collision coverage between the present and when you might expect to have a claim. When this amount gets close to the value of the car...drop the coverage.

What does "total loss" mean from an insurance standpoint? The term means that the cost of repairs is more than the replacement value of the car. Frequently an older car that you love is damaged and the total for repairs is higher than the "street value." Frequently you can let the insurance company pay you for the street value of the car, and then purchase the car back from the insurance company as salvage and have the repairs done at your own expense.

HOME:

What does 2% wind and hail deductible mean? Several companies, State Farm and Allstate being the leaders have changed deductible amount from $250 or $500 to an amount equal to 2% of the value of your home. A $175,000 home then has a $3,500 deductible for wind and hail. We represent several companies that do not use this kind of deductible.

I have replacement cost coverage but the company didn't pay that much. The terms of replacement cost coverage are that after you have replaced what was damaged, the company will pay the replacement cost. Often, as a way to keep claim payments down, the insurance company will pay you for the actual cash value before you make the actual replacement. (I suspect some people don't make the replacement or forget to supply the replacement cost bill, saving the insurance company some money.) Actual Cash Value is the depreciated value.

AIRCRAFT:

My airplane was heavily damaged by hail. How will the claim be settled? The insurance company is bound by the policy limit for a total loss. They may offer you a check for the amount insured, or less if current conditions indicate you could buy a similar plane for less money. (Fat chance!) Hail claims are tough ones though because even though the airplane is heavily damaged (based on price) it still flies fine.

In this case, because the plane is basically sound and the damage is cosmetic, you might want to buy the salvage from the insurance company and defer repairs. Should you do that, don't waste your money on hull insurance because unless it is repaired by the next claim...it is still a total loss and you probably won't get paid for a hull claim!