Navigating insurance can be a headache, but every responsible adult understands that it’s both essential and, at times, legally required. In this article, we’ll discuss 17 common mistakes people often make—or might make down the road—when purchasing insurance.
Disregarding the Insurer’s Reputation
The reputation of an insurer is critical, especially when you need them the most. Look at how satisfied other customers are and read their complaints. The Insurance Information Institute recommends looking at these five factors when choosing an insurer; licensing, price, financial solidity, comfort, and service.
Not Checking for Policy Renewal Changes
Always check for any changes at renewal to avoid unexpected costs or gaps in coverage. When setting up your insurance, make sure to check how often and how much your provider can change your policy during its term. If possible, find a policy that is static and doesn’t change for at least a couple of years.
Ignoring the Importance of Shopping Around
Shopping around is crucial to ensuring you’re getting the best coverage for your money, says MarketWatch. It’s very unwise to go with the first insurance deal you get, as you can probably find a cheaper one somewhere else. Even if you want to stick with that provider, you can always leverage the other offer to get them to give you a discount.
Overlooking the Fine Print
Many people skip reading the fine print, which can lead to unpleasant surprises during a claim. Companies know that most people aren’t going to read this and are able to sneak in a few technicalities that they can use to lowball you when giving you a payout. This fine print will also give you details on how you can make a claim successfully.
Choosing the Wrong Coverage Amount
Selecting the appropriate coverage amount is vital for adequate protection without overpaying. Make sure that the coverage amount that you’ll receive in case of an unfortunate incident covers the cost of replacing the item. Take into account future needs and lifestyle changes, as this amount might be enough for now but not in the future.
Ignoring Discounts and Deals
You might be missing out on potential savings by not asking about available discounts. In almost all cases, there is a discount or deal that the insurance company will give you to get you to stick with them. You can also inquire about bundling options, loyalty discounts, or profession-based discounts.
Neglecting to Update Insurance Regularly
Regular updates ensure that your insurance keeps pace with your life’s changes. Regularly talk to your insurance agent and ask them if there’s a way to improve your policy. This might include increasing the coverage amount, reducing your premium, or changing a plan completely.
Being Misled by Low Premiums
Low premiums can be tempting, but they may not always offer the best value. Like with many things, if it’s cheaper, it’s likely worse than the alternative. Prudential says, “A low premium means a higher deductible and vice versa. Both the insured individual and the policy provider must take on some level of risk.”
Not Understanding Policy Limits and Deductibles
Deductibles and limits play a crucial role in how your insurance operates in times of need. You must fully understand the policy’s limits and maximum payouts before signing on to the deal. Take into consideration how these factors affect your premium and whether it’s worth it.
Opting for Insurance Without Professional Advice
Professional guidance can help tailor a policy to your specific requirements and risk profile. When you get insurance, it’s smart to talk to an insurance agent or broker. They can help you choose a policy that fits your needs. They offer advice that’s specific to you, which is much better than the general tips you find online.
Failing to Consider Total Insurance Costs
It’s important to think about all the costs of insurance, not just the monthly payment. You should know about the extra fees and the cost of adding more coverage. When you add up all these costs, it can really affect your budget. Knowing the total cost from the start helps you make better financial choices.
Not Clarifying Agent or Broker Fees
Transparency about fees ensures there are no hidden costs that can affect your financial decisions. When you work with an insurance agent or broker, make sure you understand their fees. Some might have hidden costs. Knowing how they get paid helps you see if they have your best interests in mind.
Underestimating the Need for Personal Liability Coverage
Liability coverage is often overlooked, but it can save you from financial ruin in the event of a lawsuit. You should consider how risky your daily activities are and think about getting extra protection with an umbrella policy. You can never know when things will go wrong and your finances will be negatively affected.
Overlooking the Impact of Credit Scores on Premiums
Your credit score can really affect how much you pay for insurance. Insurance companies look at your credit score to decide your rates. If you have a good score, you might pay less. To get a better rating, try to improve your credit score by fixing any mistakes on your credit reports.
Failing to Properly Document Property and Valuables
Make a current list of all your stuff and keep photos or videos as proof of what you own. Store these records in a safe place where you can easily get to them if you need to. If you ever need to make an insurance claim, having detailed and up-to-date documentation can make the whole process go smoother.
Skipping Over Special Coverage for High-Value Items
Special items often require additional coverage to be adequately protected under your policy. It might even be best to get special insurance, as regular insurance may not properly cover your valuables. For example, Fortune Recommends says you can find specialty watch insurance that will adequately protect your watches.