If you’re new to the world of insurance, then you may find the entire process a little overwhelming. There are so many different types of policies and coverage options available, that it can be difficult to know exactly where to start. However, while it may seem like an intimidating field, getting the right type of insurance is quite simple if you have a solid understanding of your own individual needs and risk factors. To get you started on the right foot, we’ve listed some common insurance mistakes to avoid when purchasing a policy.
Don’t Assume You Have Enough Insurance
Some common insurance mistakes that many people make is assuming that their existing coverage is enough. For example, if you have a home insurance policy, it may cover your belongings inside the home. However, this type of policy usually doesn’t cover your belongings if they are outside the home or in a car. Similarly, renters insurance won’t typically cover items that are inside your house (if something breaks while you’re out) or liability if someone gets hurt on your property. As you can see, it’s important to do the research and find out what type of coverage you need so that no aspect of your life goes unprotected.
Don’t Forget About Long-term care insurance
One of the most common insurance mistakes that people make is forgetting about long-term care insurance. Long-term care insurance covers all of the expenses related to extended medical assistance for an individual who can no longer live independently due to injury or illness. The most common age for these individuals is between 60 and 64 years old.
While it may not seem like a big deal when you are in your 20s, this type of coverage becomes more important as you get older. If you have children, then you will also want to protect them from the financial consequences of taking care of your needs while they are trying to raise a family and build their careers.
Disproportionate Amount of Money on Collision and Comprehensive Insurance
Another common insurance mistakes people make is having too much of their money allocated to collision and comprehensive insurance. No matter how good a driver you are, there will always be the possibility that you’ll be in an accident. Collision and comprehensive insurance, which pays for damages to your car if it’s damaged in a crash or becomes stolen, can be quite expensive depending on the type of car you own. While it’s important to have this coverage, some people allocate as much as 50 percent of their coverage just on collision and comprehensive insurance.
The thing to keep in mind is that you may not need as much collision and comprehensive insurance. If you live in an urban area with good public transportation options, then your car may never leave the driveway. And even if you do drive, maybe you only use your car for errands or commuting locally – meaning that it won’t be exposed to the same types of risks that someone who drives across state lines would be. If this is true for you, then it might make sense to allocate less than 20 percent of your coverage to these types of insurance. In reality, allocating 5-10% should cover most people’s needs when it comes to collision and comprehensive coverage.
Don’t Neglect Your Credit Score
Many people overlook their credit history when securing insurance. It can be tempting to think that because your credit history is doing just fine, you don’t need to worry about it. But in reality, a poor credit rating could mean that you are not eligible for certain types of coverage or the premiums you’d have to pay would be significantly higher.
Don’t Buy Excess Coverage For Protection Against Rare Events
A common error made when purchasing insurance is buying excess coverage for protection against rare events. For example, many people purchase extended warranties for their electronics in case anything happens to them after the manufacturer’s warranty ends. But you have to consider whether or not it’s worth it. You may be paying hundreds of dollars a year just in case your device breaks and you need a repair. Is that necessary?
Instead, take some time to evaluate your risk factors. If you have an expensive device, then extended warranties might make sense for you. Otherwise, they probably won’t be worth the extra money. This is because there are so few instances where these types of warranties justify their cost. And if you don’t have a large enough risk factor, then think twice before purchasing additional coverage for protection against rare events!
Whether you are buying life insurance, disability insurance, homeowners insurance, auto insurance, or any other type of coverage, it is crucial to make sure you have enough coverage. The insurance mistakes highlighted in this article can be avoided with the help of a qualified agent.