Whatever we do, it can be a wonderful thing to save as much money as possible. Not only you feel good but also you can allot more funds to things that are more important such as your financial security. When you are buying insurance, while you should definitely focus on getting the right coverage, you should also shop around to get the best rates so that you don’t end up wasting your hard-earned money.
However, it is vital that you do not let your passion for money-saving overtake prudence and result in your being underinsured. Some common insurance mistakes that you should take care to avoid:
Insuring the Land Not the Home
A common mistake that people taking out home insurance make is to insure the land and not the home. When the value of the real estate goes down, they are tempted to reduce the insurance cover to avail of a lower premium amount. The point to understand and remember that the land on which the house is built is almost never at risk, and it is only the home that is built on the land that may suffer damage. Consequently, when you are considering insuring your home, you can safely deduct the cost of the land and insure only the home to an extent that you are covered against the cost of even completely rebuilding it if your home is destroyed due to a fire, hurricane or some other disaster. Make sure that the homeowner’s policy includes the insurance cover for personal belongings as a total loss of your home could leave you just standing in the clothes you are in. If you are seriously worried about the cost of the premium, you can raise your deductible, and save handsomely.
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Buying Minimum Auto Insurance
You can stay within the law by buying only the minimum car insurance cover that is prescribed by your state but this can leave you seriously underinsured. If you do meet with an accident, then you could find yourself paying out really large sums from your pocket, which could leave you financially depleted or even crippled, if you are aggressively sued. You can save money instead by not taking collision insurance or comprehensive insurance if your car has a relatively low market value. However, be sure to take out at least $100,000 cover for bodily injury per person and a minimum of $300,000 insurance per accident
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Not Including Flood Insurance
Because flood insurance is not included in a standard home insurance policy, most customers do not take out a separate policy for flood damage. You need to investigate whether your home is situated in an area that is flood-prone or will experience flooding from the runoffs of melting snows, as this can significantly expose you to the risk of damage. You can check with the NFIP to ascertain if your home is in a flood-prone zone and decide on another area that is less risky. If your home has already been purchased, make flood insurance your top priority.
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Going By the Price Alone
When choosing an insurance company, it is wise to ensure that you do not end up with an unnecessarily large premium amount, but you should take care that you do not let your opinion be clouded only by the price. You need to be certain that the insurance company that you choose will provide good customer service; be honest about admitting its liabilities when they have to pay up, and most importantly be physically in existence at the time of the claim. Hence, you should take care to choose an insurance company more on what it is going to deliver rather than on the price alone. Before finalizing, check the rating of the insurance company and see what sort of feedback they have been receiving on the Internet. Ask your friends and relatives if they have dealt with the company and what their experience has been. In a time of crisis, your insurance company must be able to assist you responsibly and efficiently.
By Thomas Sujain