Insurance is one of those things that’s easy to postpone. Unless you’ve suffered a covered loss, it’s easy to take for granted how helpful insurance can be.
Coverage Priorities
There’s no one-size-fits-all approach to insurance. The best insurance coverage balances your budget, financial picture, responsibilities, assets and risk tolerance. Rather than focusing on getting the lowest-priced coverage or the policy with the most coverage options, find a balance of adequate coverage, quality protection and affordable premium costs.
Assets and Specialized Risks
Start with a list of assets that you would want to replace in case of loss or damage, such as:
- Your home or other property
- Your cars or other vehicles
- Contents or belongings inside your home or business
- Business property or equipment
- Financial assets and savings
- Future earnings
From there, make a list of insurance coverage options that you know you need. This might include auto liability insurance, coverage to rebuild a house and replacement coverage for belongings, as well as liability insurance (https://en.wikipedia.org/wiki/Liability_insurance) to pay medical bills if someone is injured at your home.
Think beyond the obvious to determine if you have more specialized insurance needs. Examples can include liability coverage for running a home-based business, jewelry or other coverage for high-value items, disability insurance or other income protection, and so forth.
Costs and Exclusions
Although insurance quotes may seem similar at a glance, read the fine print to make sure you understand what each policy includes, and what it doesn’t. A cheaper price tag may come with a higher deductible, limited coverage or other gaps in benefits that you didn’t anticipate.
Think carefully about the amount you can comfortably pay as a deductible. Yes, a higher deductible can help lower monthly premiums, but can you comfortably pay that higher amount out of pocket in case of an unexpected accident or other emergency?
Similarly, review policy limits. If repairs, replacement items or other covered costs are more than you expected, will you have enough to cover the difference?
Also, property insurance policies can offer full replacement costs for damaged items, or only partial reimbursement, based on depreciation.
Schedule a time each year to review insurance options. Americas Insurance is one place to start when exploring coverage options and comparing policies. Give yourself about a month before policy renewal, to have ample time to shop for insurance without feeling rushed.
Before you purchase a policy, read through its exclusions, which are a list of reasons, items or activities that won’t be covered. Common exclusions can include certain reasons for a claim, categories of items, business activities, intentional actions, lack of upkeep and normal wear and tear.
For instance, insurance companies (more info here) distinguish between items damaged in an unexpected accident or event, and those that have worn out over time or suffered damage because they were in disrepair to begin with. If you filed a claim to repair water damage, an assessor may want to know whether you delayed addressing a dripping roof and suffered more widespread damage, or whether you acted quickly to mitigate damage and discovered water seepage due to an unexpected, one-time event. Depending on the situation, an assessor may reduce or decline your claim.
When documenting your belongings, take photos or gather repair and inspection records as needed. This can show that your property has been well-maintained, and help establish the condition of items before a covered event occurs.
Liability and Comparison
Liability insurance can help protect your savings if someone sues you for causing injury, damaging property or other types of covered losses. These costs can include legal fees and representation, repairs and medical costs, lost wages and more.
Think beyond the basics to get a sense of your financial liability needs. Consider whether you:
- Have added new drivers to a car insurance policy
- Participate in expensive hobbies, own expensive recreational equipment or collect valuable items
- Hire help around the home
- Frequently host visitors
- Invest in home improvement projects
- Recently bought a new car or other expensive asset
- Run a home-based business
Review coverage options side by side to ensure that you understand each policy’s details. What kinds of accidents or events are included or excluded? How are claims calculated? What kind of documentation will you need to file a claim? What kinds of high-value items or specialized risks need additional coverage?
Be upfront and answer all application questions truthfully and completely, including when adding new drivers to an insurance policy, explaining home business usage, home improvement projects or other details. Insurance providers may cross-check information at claim time, and limit or decline claims if they discover that policyholders left out relevant information.
Keeping Coverage Current
Remember that your insurance needs evolve as your life changes. Reminders to update your coverage may include:
When it’s time to review coverage options, gather your insurance policy declarations page or other summary information, and jot down life changes since you last filed a policy claim or shopped around for coverage options.
