5 Insurance Mistakes to Avoid
1. Not Shopping Your Insurance to Cut Your Expenses.
With insurance rates going up people should be shopping their home insurance for better rates and coverage. Your home insurance is designed to protect one of your most valuable assets. You should make sure that you have enough coverage to completely rebuild your home and replace your personal property, no matter what the real estate market is doing in your area. Another good way to save money is to raise your deductibles. An increase from $500 to $1,000 on your vehicles could save you up to 25% on your premium payments.
2. Selecting an insurance company by price alone.
It is important to choose a company with competitive prices. However, make sure the carrier you choose is financially sound and provides excellent customer service especially when it comes to claims. Ask your friends and family members how their experiences have been with their current carrier. Select an insurance company that aligns with your needs and handles claims fairly, efficiently and in a timely manner.
3. Avoid State Minimums for Your Auto Insurance.
Many people want the cheapest price on their auto insurance. This may be fine for some, but the minimum is just that, it is the least amount you can get away with by law. So, when you buy only the minimum amount of coverage (in Colorado that is 25/50) it means you are likely to pay more out-of-pocket when you are in an at-fault accident. And if you are sued for an amount above your limits, you will be responsible for the difference. This will jeopardize your financial well-being for the future and may also result in bankruptcy affecting your life for the next 7-15 years.
A good way you can save: First, consider dropping collision and/or comprehensive coverage on older cars worth less than $3,000 or over 10 years of age. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident as a minimum. Going from the state minimums 25/50 to a level like 50/100 or 100/300 is a small cost increase for better coverage.
4. Neglecting to Protect Your Family with Life Insurance.
The state makes you get auto insurance for your auto. The mortgage companies require homeowner’s insurance when you obtain a loan for your home. However, for most people, “family” is the most important of the three. Unfortunately, the need for life insurance is often neglected or ignored. When an income-producer dies suddenly, their income stops as well. Who is going to provide funds for the mortgage, utilities, food, education and other bills for your family that was being supported by that income? Life Insurance leaves a legacy behind for those you love, so they don’t have to struggle financially after a loved one died.
Here is an example of how cost-effective life insurance can be. A 35-year-old male, non-smoker, can get a 20 Year, $250,000 term policy for only $13 a month. Keep in mind that money is tax-free.
5. Neglecting to buy Renters Insurance.
Renter’s insurance policies cover your possessions and additional living expenses if something happens to the apartment, house or condo that you are renting. If a disaster has happened (tornado, fire, flood, etc.), what are you going to do? Move in with family or friends until you find another place to live? Renters Insurance provides coverage for Loss of Use to accommodate your living situation if such an event occurs.
How are you going to replace all your personal property if it destroyed by a covered peril? Renters Insurance offers full replacement coverage on all of your personal possessions up to your policy limit.
Renter’s insurance provides liability protection in the event someone is injured in your rentals and decides to sue you. It is not expensive for the protection it provides.
Plus, by having a Renters policy it will give you a multi-policy discount saving you money on your Auto Insurance. It’s a Win-Win.