Courtesy of iii.org
Avoid these pitfalls when buying car, home, flood and rental insurance.
Saving money feels good. Shopping around when you are looking for insurance coverage is a great way to do that. Simply reducing your coverage or losing important coverage altogether is like diet without exercise – focused only on numbers, not on results. Do not risk ending up dangerously underinsured and on the hook for much larger bills in the event of a disaster.
The following are the five most common car, home, flood, and rent that people make along with suggestions to ward off pitfalls while still saving money (we call them, "better ways to save"):
When property prices fall, some homeowners may think they can reduce the amount of insurance in their home. But insurance is designed to cover the cost of remodeling not the selling price of the home. You should make sure you have enough coverage to completely rebuild your home and replace your belongings – no matter what the real estate market does.
A better way to save : Increase your deductible. An increase from $ 500 to $ 1,000 can save up to 25 percent on your premium payments.
2. Choosing an insurance company by price alone.
It is important to choose a company with competitive prices. But make sure that the insurer you choose is financially sound and provides good customer service.
A better way to save : Check the financial health of a company with independent credit rating agencies (some well known: AM Best, Moody & # 39; s) and ask friends and family members about their experiences with insurance companies. Choose an insurance company that meets your needs and handles claims fairly and efficiently.
3. Losing flood insurance.
Damage from floods is not covered by under standard insurance for homeowners and tenants. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. You may not be aware that you are at risk of flooding, but remember that 25 percent of all flood losses occur in low-risk areas. In addition, annual weather patterns – such as spring runoff from melting winter snow – can cause flooding.
A better way to save : Before buying a house, contact NFIP to determine if a property is located in a flood zone; If so, you may want to consider a less risky area. If you already live in a particular flood zone, look for measures to mitigate the risk of flood damage and consider buying flood insurance. For more information on flood insurance, visit www.FloodSmart.gov.
4. Only buy the statutory liability amount for your car.
The minimum is just that – the least you can get away with by law. So just buying the slightest liability means you will probably pay more in your pocket later. And if you sue, these costs can jeopardize your financial well-being.
A better way to save : Consider losing a collision and / or extensive coverage on older cars worth less than $ 1,000. The insurance industry and consumer groups generally recommend at least $ 100,000 in personal injury protection and $ 300,000 per accident.
5. To neglect to buy tenant insurance.
A tenant's insurance policy covers your belongings and additional living expenses if you have to relocate due to an insured disaster, such as a fire or hurricane. Equally important, it provides liability protection in the event that someone is injured in your home and decides to sue.
A better way to save : Look at multi-political rebates. Buying multiple insurance policies with the same insurer, such as tenants, car and life, will generally provide savings.