As the owner of a home, a working adult with a family, or anyone with liabilities, you need to be sure you are amply covered against all risks, and there’s no better way to get peace of mind than with insurance. Despite the knowledge that not having insurance is a huge risk, especially in an uncertain economic climate, too many Americans are caught off guard each year. Inadequate coverage can be just as bad as not being covered at all. Here’s how to ensure you do not run the risk of being underinsured.
Don’t be tempted to ‘save money’ by under insuring
If you hope to save a few hundred by opting for lower insurance, think again. While it might seem tough to rake up the extra dough now, it will be well worth it if you do end up needing that coverage tomorrow. You may actually end up taking on huge expensive debt or swiping your credit cards, where a little extra on the insurance cover could have seen you through. And you will be left with the burden of debt and interest, even though you have already spent a fair bit to get that basic coverage. Stretch yourself, but get proper insurance coverage.
Insure for what you will need, not what you are insuring is worth currently
With any kind of insurance, you need to consider what you are protecting. If that asset were to be destroyed, how much would it cost you to get a new one or have it restored? For instance, you should know that your home insurance isn’t determined by the market value of your home. Sometimes, a homeowner can end up with inadequate coverage because they are going by the market value of their house. What you need to instead be considering, is how much you will need to meet expenses to restore your home or rebuild if it is destroyed.
Don’t be motivated by pricing alone
Insurance companies offer great deals and lower rates to get your business. Always compare your insurance quotes. Know what you are getting. Is the coverage leaving out some features you may need? Would you be better off taking the marginally higher premium so you get an additional benefit that you will find useful? Will the lower priced deal leave you under insured? What is the track record on clearing claims? Check out features along with pricing to ensure you are adequately insured. For homeowners, flood insurance may be an add-on extra that many find worth paying for. If you opt to skip it, especially if you live in a region prone to heavy rain or flash floods – you are woefully under insured.
Make your own choices, don’t just meet legal requirements
While the law might stipulate a certain minimum insurance coverage, keep in mind that’s usually just to cover the bare minimum. It may not be optimal or ideal for your situation. A car owner may do well to get slightly more than the bare bones car insurance coverage to protect against huge expenses in case of litigation. Assess what you need and even if it is well above the minimum legal requirement, go ahead. For instance, if you do not actually own a home and live in a rented apartment, there may be no ‘need’ for you to have insurance. But renter’s insurance will offer you valuable protection in case your possessions are damaged in an accident or natural calamity that affects your home.
