We all enjoy a good scare this time of year, but it shouldn’t be because you made a mistake with your insurance policy. Here are some of the ghastliest gaffes when it comes to your insurance coverage and how to avoid them.
1. Being Underinsured on Your Home
It’s a tough time for many Americans, and while we should always look for ways to trim the fat, cutting insurance coverage to the point where you have inadequate coverage is definitely not the best option. In the event of a disaster, being underinsured could mean losing tens of thousands of dollars or more if you have to repair or replace your home. One way to objectively determine if you have enough coverage is to use a web tool like AccuCoverage to account for custom features of your home and the cost of construction in your area. Review your current policy against the report to determine if you may need to change your coverage. One important detail in a homeowner’s policy that could cost you a bundle is whether your personal belongings are covered for their current (depreciated) value or at replacement cost.
2. Dropping Needed Coverage to Save
Some insurance companies make it easy — perhaps too easy — to opt-in and out of coverage through their websites. It may seem quick and painless to do, but if you don’t 100% understand the policy language, you could drop necessary coverage. Always check with your We Insure agent to ensure your cost-saving measures don’t accidentally remove coverage you need. For instance, if you live in a hurricane-prone state, you may need hurricane coverage, but windstorm damages caused by the winds created by a hurricane storm are not generally included. Hurricanes and windstorms go hand in hand, so excluding windstorm coverage could become a very costly mistake!
3. Shopping Solely Based on Price
If you’re shopping policies on price alone, you’re leaving key decision factors on the table: appropriate coverage, customer service and the reputation of the insurance company. A low price can mean many things, including limited coverage or a high premium. Determine what types of coverage you need first, and then have a We Insure agent shop carriers to give you an apples-to-apples comparison. Be sure to ask if any discounts are available. Auto insurers may offer a break for good driving behavior, and home insurers often give discounts for upgrades like a new roof or monitored alarm system. From there, you can make a final determination by reviewing the service quality and other reputation factors of the company.
4. Not Having Flood Insurance When You’re at Risk
Even if you don’t live in a high-risk area, most property owners should consider flood insurance. According to FEMA, during a 30-year mortgage, there’s a 25 percent chance you could experience flood conditions if your home is in a 100-year floodplain. Just one inch of flooding in your home can cost $20,000 or more in repairs! Flood zones change over time, so even if you weren’t in a flood zone when you first purchased your home, your risk may have since changed. An example of floods occurring in non-flood zone areas include the 50+-inches of rain from Hurricane Harvey in 2017, resulting in catastrophic property flooding in Texas and Louisiana.
5. Buying Bare-Bones Auto Coverage
The adage “you get what you pay for” can especially be true when it comes to cheap auto insurance. You’d be spooked if you knew the frightening risk you’re taking if you hurt someone in an accident and face a lawsuit without adequate coverage. Even minor accidents can lead to very costly damages. And inadequate coverage may put your home and personal savings at risk. Think about that threat before picking a plan with only the state-minimum mandated coverage.
6. Forgetting to Pay Your Premium
Whoopsies. We’ve all forgotten to pay a bill from time to time, but this is one mistake that’s completely avoidable. Set up automatic bill payment online or through your agent to take care of your insurance premium, or at least set up a recurring reminder in your calendar. Late payments can affect your credit report, and those who consistently pay late can end up paying higher insurance premiums and late fees as a result.
The Takeaway: Don’t cut and slash your insurance policies for short-term savings, especially during challenging economic times. It’s important to protect yourself from the types of disasters and worst-case scenarios that can wipe out a lifetime of savings. Take calculated but informed steps and work with a We Insure agent to guide you along the way — and save the scares for the Halloween horror movies.