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Tips for Home Insurance Shoppers: An Interview with Allen Gayle of Downing & Gayle Insurance

By Allen Gayle

Tell us a little bit about your company and its foundation.

Downing & Gayle Insurance was founded in 1988 with a firm promise and commitment to outstanding customer service. We believe that purchasing insurance can be made simple for the customer by taking the time to explain coverage and options. As an independent insurance agency, we encourage you to work with us to put together an insurance package that covers your relevant needs and assures you that if a catastrophe occurs we will put you back in the same position you were in before the event. We represent "A" rated companies with proven track records and excellent claims service. Our agency is family owned and operated and we consider our insureds to be a part of our extended family. So whether you are relocating to the Raleigh area or a lifetime resident, remember, we've been making "No Apologies for Old-fashioned Service" for over 25 years.

What are some of the services your company provides?

We are an independent insurance agency which means that we represent more than one insurance company. This allows us do the shopping for you while customizing an insurance plan to a specific need and budget. We offer Personal Insurance which covers, Auto, Home, Renters, Jewelry, Collectibles, Umbrella policies and more. We offer Business Insurance such as General Liability, Property & Equipment, Umbrellas, Workers Compensations, etc with special products designed to fit special industry needs. We sell Life Insurance to protect your mortgage, funeral expenses, family needs as well as Business Life Insurance designed to keep the business running smoothly even after the loss of a key employee or even an owner! As business owner's ourselves, we know just how important it is to weigh insurance options vs risk and design a program that fits the need of the individual client.

Please briefly explain the idea of home insurance to our readers, what it is, why it was created, etc.

Everyone needs to understand that "insurance" is about "risk". You either retain it (the risk) or you pass the risk on to someone else (the insurance company) at a price. Homeowners insurance started as a Fire Insurance policy. Since buying a home is such a major expense for all Americans, it quickly became something to be insured. Many years later, the idea of combining protection for property and liability in the same policy, was born.

Because one event can cause more than one claim, it is important for the homeowner to understand what they are buying or, just as important, not buying. Most people ask only the most obvious questions, like, how much will I get if my house burns to the ground and what happens if someone is injured on my property. It's very difficult to narrow the description and importance of homeowners insurance to just a few paragraphs, but we will try.

When you buy a home, the bank or mortgage lender will require that you acquire a hazard insurance policy to cover the property for which you have secured a loan. The insured value of the home is predominately controlled by the reconstruction costs of the structure itself. The homeowner is given options of deductibles, the LOWER the deductible (the amount you pay out of pocket) the higher the premium and vice versa. The result being that the property owner who is willing to pay more out of their own pocket before the insurance company pays will typically have a lower premium.

The typical NC homeowners policy consists of six basic coverages:
1) Coverage A covers the Dwelling;
2) Coverage B - Other Structures;
3) Coverage C - Personal Property;
4) Coverage D - Loss of Use;
5) Coverage E - Liability and
6) Coverage F - Medical Payments. There is more than one type of Homeowners policy that can be written. The policies written most in our agency are HO-3 and HE-7+21. A comparison of coverages and rates for each can be obtained from us by requesting a free quote by phone or email.

What facts should I gather about my new house before I start shopping? (ie. age of electrical, energy efficient additions, etc)

Here are some facts you should have available when you go to get a quote for a house:
Year of Construction and Address
When were the following items updated or replaced: Roof, Electrical, HVAC and Plumbing.
Square footage, Number of Bedrooms & Baths
Is it a single family unit, town home or condo? One or two story?
Ownership?
Pets? If so, what type & breed?

How can the location of my home affect my insurance costs?

This is probably one question homeowners never consider when purchasing a home. It doesn't need to be a controlling factor, however the location can and will have an impact on the cost of your insurance. Remember, as I stated earlier, insurance is about risk. How much risk are you willing to retain?

Insurance companies use Fire District Codes as a determining factor for homeowner insurance rates. The ISO (Insurance Service Organization) rates all fire departments using many factors and gives a rating based on a scale of 1-10 with 1 being the very best and 10 being the least. For example; Raleigh is a 3 while, Apex is a 5. Insurance companies use these numbers to determine rates in a given area. Basically, the closer you are to a fire hydrant and fire department the better your rates. So when you are looking for that new home, consider the fire department distance and rating.

How do I make sure I am not underinsured? What does it mean to insure my home to "replacement value"?

First, be sure you adequately describe your house to your agent so he/she can determine the replacement cost as it is today. Agents have at their disposal software programs that can determine reconstruction costs based on zip codes. Also, all insurance companies I'm aware of have an inflation factor built into their policies which increase or decrease replacement costs as building costs fluctuate from year to year. Remember, what you pay for your house (Market or Appraised value) is and will be different from what it may cost to replace it (Cost to Rebuild). Over the past few years, houses have been purchased for much less than what it will cost to rebuild them in the event of a total loss.

Secondly, if you want full replacement cost for your house it is important to insure it for replacement value. This is done by purchasing a policy which has provisions in it to cover not only the amount of Coverage A Dwelling, but an additional amount usually based on a percentage of the current dwelling amount. Over the years construction costs have risen and fallen in varying degrees. It is important to periodically request a new replacement cost estimator from your insurance agent. It has happened that the cost to rebuild a house has far exceeded the amount on the policy, so don't try to understate the value just to save a few bucks.

In your personal opinion, is it worth it to get additional coverage for some of the valuable items in my home?

Yes, by all means! Your Homeowners policy gives limited coverage to valuables such as jewelry, antiques, collectibles, coins, etc. It also gives limited situations in which your valuables would be covered. For instance, you go to the beach and a stone falls out of your diamond ring! Because your ring was not stolen, destroyed in a fire, etc, there is no coverage. OR, if you have a house fire and all of your valuables are destroyed, you would only receive the limited amount listed in your policy for all of your items combined. If, however, you had a separate policy listing each piece and showing the appraised value or receipt value, you would have coverage regardless of the mishap. Inland Marine type polices are extremely reasonable in cost and offer deductibles as low as zero! If you have a claim on your Inland Marine policy, it does not affect your homeowner policy rates or claims status. Still another advantage? An Inland Marine policy covers your valuables for ANY and ALL risks!

Can I save money on my monthly premium if I add certain safety features to my home?

Yes. Smoke Detectors, CO2 Detectors and Monitored Fire and Burglar alarm systems for the entire house are the most common. Some other features, which are usually only found in much higher end homes, are sprinklers and fire rated sheet rock.

How can I ensure that I am working with a home insurance provider that I trust?

Choosing an Insurance Agent is extremely important. Many people forget that this is the person that will be handling situations for them during some of the most trying times of their life. You want to get a good rate with a good insurance carrier, but more importantly, you want to know that they are going to be there when you need them. Check out the agent's website including their mission statement. Look for credentials that show that the agent is serious about being the best in their field. Check out the rating on the companies they represent, especially the claims approval rating. Find out how long they have been in the industry, how long their staff has remained in the agency and ask your neighbors and friends who they recommend. Our motto since 1988 has been that we "make no apologies for Old Fashioned Service!". We feel that if you never have a claim, then service is ALL that you have gotten in return for your money. We would love to earn your business.

What's the best way for people to get in contact with you and your company?

At Downing & Gayle Insurance, we want you to feel free to reach us anytime, including after hours. Whether you want a quote from Erie Insurance, Progressive, Builders Mutual or one of our other valued insurance providers, feel free to call and speak to me or with one of our professional licensed agents at 919-841-1099, Email me at Allen@DowningGayle.com, Fax me at 919-848-7977 or feel free to reach us on our website at www.DowningGayle.com.

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