A Personal Insurance Update

Every homeowner in needs competitively priced personal insurance. Personal insurance can be tricky especially if you take your advice from certain entertaining television advertisements.  Many of these ads make insurance buying sound as simple as getting a cup of coffee.  The problem with this kind of thinking is that if you do not know what kind of personal insurance you need, how can you know what kind of insurance to buy?

The good news is we are here to help you find the right combination of coverage, price, and service.  We can help you identify what kind of insurance you need, then get you the best coverage at an affordable price.  The last thing you want is to find out after you have a claim that you have no coverage for that claim.

We put together a short list of mistakes many people make when buying insurance.  We hope you will call our office to get a no-obligation personal insurance review.

Common Insurance Mistakes

1.    Not knowing the replacement value of your home. Many people don’t understand the difference between “market value” and “replacement value.” Market value refers to the value of your home for resale purposes.  Replacement value refers to the cost to rebuild your home from the foundation up.  Ask your agent to help you define what it might cost to rebuild your home using current new construction costs.

2.    Assuming you have flood and earthquake insurance.  All personal insurance policies exclude flood damage and earthquake damage to your home and personal property.  We can provide you with a competitively priced option for both kinds of coverage based on your individual needs.  There is a 30 to 45 day waiting period before any flood insurance can go into effect.

3.    Assuming that sewage backup is automatically covered under your homeowner’s insurance policy.  Sewer backup coverage can be added at a very low cost and is recommended.  Sewer backup usually is defined as being caused by issues with the sewer line outside of the home.

4.    Setting your deductible too low.  Many people set their auto insurance or home insurance deductibles too low.  Often a small increase in deductibles can offer significant savings from year to year.  If you have a good claim or loss history, it will pay you to increase your personal insurance deductibles.

5.    Failing to use an independent agent.  Independent agents, like our firm, can shop your insurance to dozens of insurers and work with you to find the best possible combination of coverage, price, and service.  We are also there to help you manage and process all your personal insurance claims. We work for you—not for the insurance company.

6.    Paying premiums in monthly installments. If you are able to pay your insurance in full, it can save you as much as 5% off your premium, depending on the coverage and insurance company.  There are also billing fees that are added to monthly premium installments.

7.    Buying insurance based on price alone. Low priced insurance is good, but it may mean that in order to get a low price, the company is offering limited coverage. Low priced insurance is good at first, but if you have a claim and have to pay a large amount out of your pocket, it really is not low-cost insurance.  We also recommend looking to A.M. Best, J.D. Power and the Better Business Bureau for ratings on an insurance company’s financial strength, handling of claims, and customer service/business practices, respectively. We can also help you better understand which company may be better for your individual needs.

8.    Only purchasing the legally required amount of auto liability coverage. The minimum amount of insurance is just that—the minimum.  If you have a claim over the policy limit, you will be required to come up with the money to settle all claims against you, including attorney’s fees.   If you own property or have any investments like a 401K, we recommend buying auto liability limits above the minimum requirement.  If you want to save money, consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000.

9.    Not bundling your home and auto insurance. One very good way to reduce your personal insurance premiums is to bundle your insurance policies with one insurer. You also might consider combining your boat, RV or motorcycle with one insurer as well. Bundling can save you a lot of time when it comes to making claims. If a fire in your garage damages your car and motorcycle, one phone call can start both the homeowners and auto insurance claims.

10. Thinking stay at home parents don’t need life insurance. Life insurance can be just as important for the stay at home parent as it is for the breadwinner. Think of the cost of all the activities a stay at home parent undertakes, and put a dollar amount to these.