Insurance is among the most important financial investments any adult can make. From covering your assets such as cars and homes to protecting you and your health, insurance is truly invaluable in those times when you need financial support the most. However, choosing suitable coverage at an affordable price can also be quite complicated, which is why mistakes are a common part of this process. To help you streamline this procedure and choose the right coverage for you, here are some common insurance mistakes you should avoid in 2023:
Not getting insured
It can often seem like not getting any insurance at all is the easiest way to save money, but that couldn’t be further from the truth. You should at leasthave basic health insurance, homeowner’s or renter’s insurance that covers fire and theft, as well as car insurance that provides coverage for thefts and accidents. These policies will help to protect you in case of unexpected circumstances, giving you some peace of mind knowing you will be covered if any emergencies occur. Not having this protection, however, can turn out to be an extremely costly and potentially financially debilitating mistake.
Under-insuring yourself
According to the Financial Services Regulatory Authority, third-party liability (TPL) and accident benefits (AB) account for over half of all car insurance claims costs. Unfortunately, many insurance companies will only give you basic and standard coverage by default, which can be quite disappointing when you need coverage the most. Similar situations can happen with health insurance. While a million dollars seems sufficient, it may not be enough in case of serious illnesses. That is why you should carefully consider the scope of coverage, as well as the maximum amount your policy will pay for each incident. Make sure not to under-insure yourself, or the expenses could end up being too high to cover.
Over-insuring yourself
On the other hand, over-insuring yourself is another costly mistake you can make. However, determining the type and scope of coverage you truly need can often be a difficult task, especially once you consider aspects such as liability insurance. It might be best to consult a reputable independent insurance agent regarding your assets and the best methods of adequately protecting them. A third party will be able to provide unbiased advice based on extensive knowledge and experience. You should also keep in mind that you might not need quite as much insurance when you are younger, as you’re often not seen as a liability and you likely don’t have as many assets.
Paying for junk insurance
Australia’s Financial Services Royal Commission has recently revealed that the country’s largest four banks have been deceiving consumers by unethically selling worthless insurance products along with credit cards and loans. These products are called junk insurance and include consumer credit insurance (CCI), guaranteed asset protection (GAP), extended warranty (EW), and more. This insurance is often completely useless to consumers, but can quickly add up to high costs. For that reason, it’s absolutely vital to read each policy very carefully before signing any documents. If you’ve already paid for similar products unknowingly, you can decide to refund junk insurance as well. Just make sure to contact experienced claims experts for help.
Not getting any add-ons
While junk insurance might be redundant, other add-ons could be quite beneficial in case of an emergency. Even if you don’t live in a high-risk area, consider options that might not be covered by a standard insurance policy, such as earthquake and flood coverage for your home. These natural disasters can be detrimental, causing tens of thousands of dollars in damages. The same can be true for auto insurance. While a comprehensive policy may not be necessary for you, even a smaller add-on such as towing coverage could save you in unfavorable situations. Review all offered add-ons carefully to see what your policy is missing.
Setting a high deductible
When purchasing insurance, you will also be able to choose how high your deductible will be. This represents the amount you have to pay yourself before insurance can cover the losses. If you have a $1,000 deductible on your home insurance and a fire occurs, for instance, you will need to pay $1,000 and your insurer will only cover the damages surpassing that amount. Policies with larger deductibles tend to be more affordable, but you should never set your own deductibles so high that you may not be able to pay for them. Otherwise, you can find yourself in financial trouble if you don’t manage to cover your losses in the future.
Not shopping around
Prices of insurance policies can vary drastically from one provider to another, even for the same coverage. If you don’t shop around for your insurance, you can end up paying significantly more than you have to for adequate protection. Aim to get several quotes from different insurance providers and compare their policies and prices before making the final decision. You can also look at providers that offer discounts based on your alma mater or current place of employment. Then, repeat this process of shopping around each year to ensure your policies are the best and more affordable options.
Not reviewing coverage
After choosing the right solutions and purchasing insurance, it’s also vital to review your coverage regularly. It’s recommended to do this at least once per year, or when a major life change occurs. By doing this, you can ensure that you still have suitable coverage for your needs, and that your policies are as affordable as possible. If you notice that you’re paying too much for insurance, or that your policies don’t offer the coverage you require as circumstances change, it might be time to contact your insurance provider and ask for adjustments, or even find new policies that are better for your current situation.
Choosing insurance can be a complex and challenging task. Avoid the common mistakes mentioned above to get the protection you need and deserve in 2023, without having to break the bank. How to Buy a House After Bankruptcy