When it comes to buying insurance, what you don’t know can hurt you…and your family…for years to come. Learn how to identify the top ten insurance blunders and what to do to avoid them with these tips.
1. Buying insurance on price alone.
Although the price is a major consideration, it’s even more important to have a reliable company and agent available should a claim arise. Take time to investigate the reputation and rating of the insurance company by visiting a third-party insurance rating company like A.M. Best, Fitch Ratings, Weiss or Standard & Poor’s. Make sure the company will be there when you need them, especially before buying long-term insurance policies like life insurance.
2. Failure to fully understand your policy.
Take time to evaluate your coverage and make sure you fully understand what is included in the policy. Exclusions, addendums, limitations, restrictions and other “fine print” can make a big difference in price and coverage. Don’t be afraid to ask questions…it’s a normal part of doing business.
3. Forgetting to update policies or make changes when needed.
Life events require major updates to your insurance coverage; everything from marriage to taking an extended vacation may have insurance implications. Take time to plan in advance and notify your agent of any life-changing events (marriage, retirement, leaving for college, new job etc…)
4. Making assumptions about your coverage.
Many people “think” they have coverage when they don’t. Common situations include taking a rental car out of the nation (car insurance limits), traveling out of the country (may not have life insurance), relocating (homeowners coverage may not cover belongings in transit) or other common exclusions.
5. Paying late and missing deadlines.
If you are like most people then you might have a tendency to ignore all those reminders and updates sent from the insurance company; after all, they begin to look the same after a while. Big mistake! Take the time to open, review and act upon them. One of the most commonly encountered blunders is also the easiest to prevent – late payments! Don’t allow your auto, homeowners or life insurance policy to be canceled simply because you forgot the payment. Not only will it leave you vulnerable to potential claims but it can increase your premiums.
6. Skipping important insurance products.
Most people focus on those types of insurance required by law or a mortgage company: auto insurance, homeowners insurance and perhaps employment provided health insurance. Unfortunately, that often leaves you vulnerable to some of the most frequently encountered problems including liability claims, disability and of course…loss of income.
- Disability insurance
- Life insurance
- Long-term care insurance
- Personal liability insurance
- Supplemental health and drug coverage
7. Failure to insure valuables separately.
Most homeowner policies have limits on jewelry, computers, electronic equipment and other valuables including business or hobby related items. Adding additional coverage for valuables is easy and inexpensive – just ask your agent about a rider to the existing policy.
8. Duplicating insurance.
It’s particularly easy to duplicate coverage especially if you tend to use different providers for auto, home, life, health, and other coverage. One of the benefits of working with one agent is the ability to coordinate coverage, have one primary point of contact for all your insurance needs and eliminate duplicate coverage (which also will save money!).
9. Buying before obtaining quotes.
Most people buy a home, car, boat or other major purchase and then shop for insurance…big mistake! Avoid unpleasant surprises and costly premiums by obtaining insurance quotes prior to making a major purchase. Not only will you have a better idea of how to budget for the new purchase but it often makes you aware of prior damages or other issues that can be hard to spot. For example, major water-related claims on a home or extensive body work on a car could be a primary reason to negotiate a lower price.
10. Naming, title, and other troubles.
What’s in a name? A Lot! Another commonly encountered and easily overlooked insurance blunder is how a policy, beneficiary or title is recorded. Names matter especially when it comes to legal transactions. Areas most prone to problems include beneficiaries, ownership of real estate, cars, automobiles or other major investments as well as health or personal care coverage.