Insurance buying mistakes will not save money in the following situations.
Saving you money on your insurance is top-of-mind for us. And, so it should be for any good local agent or broker. However, sometimes consumers think they can find a cheaper option, or they seek lower rates without thinking it through. But, looking for cheap isn’t always the best route. It is one of five common mistakes that people make when buying protection for their home, their car, or their lives. Trying to save money can leave you dangerously under-insured. Here, according to the Insurance Information Institute (III), are the top five mistakes some buyers make:
The consumer insures their home for its market value rather than the cost of rebuilding it. When values fall, some homeowners think their insurance premium should also go down. But the cost of rebuilding your home after a disaster is unlikely to have fallen. Rebuilding is what you should be insuring. If you really need to cut your premium, consider opting for a higher deductible – the amount you pay before your policy kicks in.
The insured goes for the lowest price option, as we mentioned earlier. There are subtle differences between policy coverages from one firm and another. There may also be big differences between the financial strength of companies. It’s no use having a cut-price policy if your insurer goes bust! A good broker/agent can steer you clear of this risk.
Insurance buying mistakes can cost you more in the long run.
They drop or avoid flood insurance (if it’s available) because they don’t live in a high flood-risk zone. The fact is that around one-quarter of all damaging floods actually occur outside those high-risk areas.
Buying the minimum amount of auto liability insurance that the law requires. In most cases, the legal minimum coverage is way below the actual cost of making good. Especially if people are injured and you are held to blame. In fact, as more and more people opt to take out lawsuits against at-fault drivers, the gap between legal minimums and actual costs is widening. If you don’t have sufficient coverage, the balance of any costs comes out of your own pocket.
They rent their homes so they don’t think they need home insurance. If you rent your house, apartment, or condo, the owner should have insurance coverage for the cost of damage to the structure of the building. But, not for what’s inside it or for your liability if someone is injured in your home. Renters insurance provides this protection – plus meeting the cost of additional living expenses if you have to move out while the building is fixed. Read our article about Renter’s Insurance here.
No one wants to make insurance buying mistakes.
The absolute best way of avoiding mistakes like these is to work with a reputable agent or broker. Contact us if we can help.