Frequently Asked Questions

What is the difference between an insurance broker and an insurance agent?

Insurance brokers are independent. They work for their clients, the insured, as opposed to insurance companies that employ agents to represent them.


Does Independent Insurance Agents of California provide free policy evaluations?



When you review an insurance policy, what are the primary things you are evaluating?

The primary items are: (1) Does the policy provide comprehensive coverage? (2) Is the amount of coverage reasonably adequate? (3). Are unnecessary coverages included? (4) The reputation of the insurance company for paying claims, and (5) The cost of the policy.


What happens if after you evaluate a policy, you find that all is in good order?

We will advise you of that fact and suggest another evaluation in the future since circumstances, including prices for insurance, is constantly changing.


I am a newly retired business executive looking for a second career. Does becoming an independent insurance broker make sense and is it practical?

Absolutely. We can refer you to a company that will assist you in getting licensed. From there, we can help you with our in-house training program. Experience as a retired business executive will help you immensely.


Why do I pay a brokerage fee?

In the insurance industry, a brokerage fee or broker fee is what insurance brokers charge clients in exchange for finding an insurance policy at the best price with the greatest benefits.


What is the significance of the Agent of Record?

The agent of record is the person or company that has the legal authority to represent the insured in maintaining, serving, and/or purchasing an insurance policy.


Does my homeowner insurance policy cover me for the risk of flooding?

Almost never. Flood insurance policies-are stand alone insurance policies that provide comprehensive coverage for losses caused by flooding including runoff of surface water from rain, broken irrigation lines, and other sources. According to the Federal Emergency Management Agency (FEMA), flooding is the nation's number one natural disaster. It accounts for 25% of all flood claims in low-risk areas. In high-risk areas, the probability is 25 % that a home will experience flooding during a 30-year period. Even one inch of water can cost a homeowner thousands of dollars.


Why did the cost of insurance on homes increase so dramatically after 2020?

The cost of insurance on homes is tied to the rate of inflation. As the price of lumber and other building supplies increase in price, the cost of home insurance follows. Inflation increased dramatically starting in January of 2020 and has continued to be very high due to high federal spending.


What is Forced-Placed Insurance?

Forced-Placed Insurance, also known as lender-placed insurance and creditor-placed insurance is an insurance policy placed by a lender in the event that a property owner's insurance has been cancelled or has lapsed. The purpose of the insurance is to protect the interest of the lender should their collateral be damaged or destroyed. The cost of forced-placed insurance is always passed on to the property owner.


How are insurance companies rated for safety?

Insurance companies are rated by several rating companies. Factors they consider include: (1) The amount of cash reserves, (2) The diversity of their income, (3) Their debt ratio, and (4) The types of risks assumed. See: Insurance Company Ratings.


What is subrogation and how does it work?

Subrogation is the right to sue a third party to recover money paid by an insurance company on a claim. The right may be exercised when an insurance company pays a claim and then sues the person that caused the loss. The process is usually reserved for significant dollar claims.


What is a claims-made policy?

A claims-made policy is an insurance policy that provides coverage when a claim is made against it regardless of when the claim event took place. However, the policy covers claims made only while the policy is in force or active. Another type of policy is an occurrence insurance policy.


What is an occurrence insurance policy?

An occurrence insurance policy is a policy that covers claims made for injuries or damages sustained during the life of the insurance policy. Under an occurrence insurance policy, the insured can make a claim for damages that occurred during the time the policy was in force, even if time has elapsed and the policy is no longer in force. Liability policies generally are either occurrence policies or claims made policies.


What is strict liability?

Strict liability is a legal standard that places absolute liability on a party for damages, regardless of fault. For example, in California, if an owner's dog attacks someone, the owner is strictly liable even if they were not negligent.


What is a consequential loss?

In the insurance industry, a consequential loss is an indirect or secondary loss caused by damage to or the destruction of business owned property. Typically, a consequential loss will be lost business income. A consequential loss insurance policy or clause can compensate the owner of the damaged or destroyed property for lost income. This type of policy is called a business interruption policy or business income policy. Consequential losses are not the same as consequential damages as defined in the legal profession.


What is the significance of the term: Coordination of Benefits?

Coordination of benefits refers to the policy provisions that determine the primary insurer and the secondary insurer when an insured has two more policies covering the same risks. It prevents insurance companies from overpaying on claims. Coordination of benefits is commonly used when there is water damage in a condominium unit.


What is an assumed liability?

An assumed liability is contractual liability. It exists when one party to a contract accepts a liability as part of an agreement. Insurance policies are available to protect against most assumed or contractual liabilities.


What is an Insurance Endorsement-Rider?

An insurance endorsement is a change in a policy that adds to or deletes a provision in the policy. Endorsements change the amount of the premium. The provision added is called a rider. The endorsement is attached to the original insurance policy.