7 Biggest Insurance Mistakes People Make

Being in the business for over 30 years, you learn the do’s and don’ts of insurance.  Here are some of the biggest insurance mistakes people make. 

1. Selecting your policy based price – How do you select a lawyer, accountant, doctor, or a contractor?  Insurance is a very complicated industry and “Shopping and Hopping” for the lowest rate is one the worse things you can do.  When you cut your rates, you run the risk of cutting your coverages and service level. Ask yourself – What’s the financial health of the company? Do you know how good the policy is? How is their claims service? Who will be servicing your account? Will you have a personal agent to talk to?  Look for Value, not price. 
2. Not having enough liability coverage – Medical expenses have gone up drastically in the past 20 years, yet many Americans are still carrying the same bodily injury liability limits – $100,000 per person/$300,000 per accident.  If these limits were the standard 20 years ago, how can they be adequate now?    And you don’t want to find out what would happen if you didn’t have enough coverage.  Did you know that spending pennies a day more on your auto insurance can get you about double the coverage. And opting for a higher collision deductible can offset the cost.  
3. Having the “it can never happen to me” mentality –  Sure, its human nature to think nothing will happen to you, but there’s a strong chance something will happen in your lifetime, and it may be catastrophic. 
        a) Having a Personal Umbrella Policy (extra liability coverage) gives you that extra peace of mind and may cost as little as $200 per year for an extra $1 million coverage.
        b) Opt for a Comprehensive “Open Peril” homeowner’s policy for Dwelling and Personal Property.
        c) Consider adding Flood and/or Sewer Back up coverage.
        d) Consider adding extra Ordinance or Law Coverage  Many homeowner’s policies will provide 10% of your dwelling coverage to pay for increased construction costs due to building code upgrades.  Think how many codes have been changed since your home was built. 10% coverage may not be enough.
4. Underinsuring your property – Many people estimate their home’s value based on Market value.  However for insurance purposes, it’s Replacement Value that’s used.  Replacement value is the cost to rebuild your home with “like kind and quality” material. If you have a condo, you pick your limits so, make sure you have enough Dwelling coverage for your unit’s walls, flooring, cabinets and fixtures, along with enough personal property coverage.  Items add up quickly so be liberal with your estimates.  
5.  Not buying a life insurance policy because you have coverage with your employer. Even though your employer may have a top-notch life insurance program, it’s worth asking yourself the following questions:
       a) How long do you have to pay for the life insurance policy?
       b) If you retire or lose your job due to a layoff, what happens to your protection?
       c) Do the costs go up?
       d) If you leave the company, does the life insurance coverage go with you?
       e) Do you have enough coverage?
   Talk with your insurance agent about buying a separate life insurance policy. It’s often a more effective way to cover costs and protect loved ones left behind. 
6. Reporting small claims will hurt your record more than you think.  The way insurance companies think – a claim is a claim, regardless of the amount paid.  Call your agent before reporting the claim to your insurance company.  Your agent will help you determine whether or not you should report it.
7. Not communicating with your agent about life events that will impact your coverage such as running a business out of your home, having employees work in your home – even a caregiver, getting a divorce, or moving out of your home and leaving it vacant or renting it out. There can be exclusions or coverage limitations within the policy that may be applicable.  Or you may need a different type of policy to give you the proper protection.

To offset the cost of increasing your coverages, we recommend increasing your deductible.  Absorbing $1,000 is easier to handle than $10,000 or even $100,000.

Talking to your agent is one of the best thing you can do to make sure you understand your coverages. Your agent is there to help you get the protection you want and need.