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Insurance. At times, it can be daunting and confusing. And sometimes, you just can’t help but wonder if you’re about to make a mistake that could end up costing you a lot.
Here are 5 common insurance blunders you’re sure to encounter when talking insurance – and how to avoid them.
1. Going the bare minimum with auto insurance
Just having liability insurance or the minimums required by law could end up biting you in the future. While going with the minimum may save you some money on premiums up front, if you’re involved in a serious accident, you may be paying tons out of pocket.
Take a look at your coverage, and though you might not need a full comprehensive policy, adding collision to help pay for damaged vehicles could give you a cushion when it comes to protecting your assets.
2. Under-insuring in order to get a lower monthly premium
What’s your home really worth? Just because home prices are going down doesn’t mean you should lower your home’s worth to save a few dollars on monthly premiums.
The Insurance Information Institute says a common insurance mistake is insuring a home for its real estate value and not the cost of actually rebuilding it. It’s just like insuring anything else – you wouldn’t want your insurance to only cover what it cost you years ago to buy a TV, you want it to cover the cost of buying a new one today. Be vigilant in making sure you insure your home on what it would cost to repair items, regardless of what’s happening in the housing market.
3. Going with a company simply because of the dollar signs
If you’re struggling to decide on an insurance company, don’t make the mistake of judging solely based on cost. Shop around for insurance companies and consider factors like reputation and customer support. Short of getting firsthand recommendations, you can also check out independent ratings systems like Standard & Poor’s or Moody’s.
4. Not getting a move on with things like life insurance
Procrastination isn’t an ideal strategy for any type of insurance, but it’s especially a problem when it comes to life insurance. According to NerdWallet, a 2015 Insurance Barometer Study found that 43 percent of Americans say they would feel a financial hit within six months if their family’s primary wage-earner died, yet 54 percent of Americans hadn’t planned on buying life insurance in the next 12 months. Life insurance might sound like a downer subject, but it’s one of those things that are better to confront sooner rather than later.
5. Neglecting to think about flood or earthquake coverage
Many basic insurance policies will cover catastrophic events like fires, but what about earthquakes or floods? Failing to understand the circumstances excluded from your policy is one of the top mistakes people make when it comes to purchasing home insurance, according to Nasdaq. Coverage from floods and earthquakes are typically not included in a standard policy, but if you’re in an area prone to either, be sure to take a close look at the fine print and add coverage if needed.
To make sure you’re thinking big picture, choosing the insurance that’s right for you and avoiding costly mistakes, contact State Farm Insurance. See how your insurance policies stack with Francisco Aguilar, your go-to State Farm agent in Corpus Christi. Contact him about all your insurance needs – home, auto, life, health and more – at FranksMyAgent.com or 361-991-8242.
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