When it comes to purchasing insurance, fear is an important motivator. We are justified in our worries about protecting assets such as homes and automobiles, and we buy insurance to protect our financial integrity. Despite our best efforts, sometimes our insurance does not offer full financial protection. This is not necessarily because there is a problem with the insurance policy; it can be a result of human failure. When purchasing an insurance policy, many people fail to look at the true level of coverage that is necessary to restore assets to their pre-disaster conditions.
Below are five common insurance mistakes to avoid at all costs:
*Trying to do it all on your own – Shopping for insurance is complicated, and it is best to seek professional advice. While it is fine to use the Internet to educate yourself, you should ultimately work with an independent agent who can offer multiple options for your consideration. An agent will help you untangle the complex issues involved in purchasing the proper amount of coverage to meet your needs.
*Buying into the hype – If it sounds too good to be true, it probably is. Where insurance is concerned, you often get what you pay for. A company that promises large discounts is most likely offering less coverage.
*Slicing it too thin– In a difficult economy, many people try to cut their living expenses to the bone. While it may be prudent to cut out some of the “extras” we enjoy such as eating out and going to the movies, reducing an insurance policy is risky. If and when disaster strikes, you’ll be glad you didn’t cut back on insurance premiums, which can result in thousands of dollars of uncovered damages.
*Neglecting regular protection reviews – Consider how much your life can change in a short amount of time. For instance, has the value of your home gone up or down in the last few years? Has a new car been purchased or has a teenager just gotten their driver’s license? Has an adult child finished their higher education? These are just a few of the changes that can cause either an overlap or gap in your insurance protection.
*Restricting your options – There are quite a few insurance companies that advertise a “one size fits all” approach to insurance. In some cases, these companies do not have your best interests at heart. It is best to consider multiple options, rather than limiting yourself to one choice.