Avoid Mistakes When it Comes to Your Insurance Needs

With consumers looking to save money these days wherever they can, avoiding mistakes on their insurance needs becomes more important than ever.

Given that there are close to one in 10 Americans unemployed, and others having to make ends meet with less money, many individuals are seeking ways to trim costs.

As the Insurance Information Institute (I.I.I.) points out, there are smart means by which to save on auto and home insurance, and there are also mistakes that can lead to being dangerously underinsured.

According to a spokesperson for I.I.I., when cash flow is tight, it is critical to be financially protected against a catastrophe with the correct amount and type of insurance. In simply taking a few easy steps, consumers can cut costs and remain protected in the event of a disaster.

Here are five of the greatest insurance mistakes that consumers need to be on the lookout for:

First, do not insure a residence for its real estate value as opposed to the cost of rebuilding.

When real estate prices fall, some homeowners may be inclined to try decreasing the amount of insurance on their home. Keep in mind that insurance is designed to cover the expense of rebuilding, not the sales price of the residence. Make sure you have enough coverage to entirely rebuild the home and replace the possessions.

Secondly, choosing an insurer by price alone is another no-no.

It is important to select a company with competitive prices, but also one that proves financially sound and offers good customer service.

Third, be sure not to drop flood insurance.

Damage from flooding is not a coverage option under standard homeowners’ and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), along with some private insurers. Many homeowners are unaware they are at risk for flooding, but in fact one-fourth of all flood losses take place in low risk areas.

Prior to acquiring a home, consumers should check with the NFIP to find out whether it is in a flood zone. If it is, look for a less risky area. For those already residing in a flood zone area, look at mitigation efforts that can decrease your risk of flood damage and think about acquiring flood insurance.

Another mistake is only acquiring the legally required amount of liability for your vehicle.

In today’s litigious society, purchasing only the minimum amount of liability means one is likely to pay more out-of-pocket – and those expenses can be steep.

Consumers should look at dropping collision and/or comprehensive coverage on older vehicles worth less than $1,000. It is typically recommended that consumers obtain a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

Finally, not acquiring renters insurance can come back to haunt consumers.

A renters’ policy covers your possessions and added living costs if you have to relocate due to a disaster. It is also important to note that it provides liability protection in the event an individual is injured in your residence and chooses to sue.

Consumers should research multi-policy discounts, as purchasing several policies with the same insurer, like renters’, auto and life typically provide savings.