Insurance policies can be complicated. So much so, in fact, that it’s easy to ignore your coverage until you have an incident and file a claim. But ignoring your insurance policy or insurance agent can leave you short when you need help. Review these tips before purchasing a new policy or when it’s time to pay your premium.
Start with What Has Changed
Has something changed in your life that warrants a closer look at your insurance? Some examples include:
- Bought a new vehicle, paid off or refinanced an old one, or now use your vehicle for a new purpose (i.e., deliveries, business, rideshare)? Your auto insurance may need an update.
- Bought or sold a home? Your homeowner’s insurance or renters’ insurance needs to reflect your new living situation.
- Added a new driver to the family (teen drivers, a new spouse/partner, or other)?
- Started a business? You may need additional business insurance or update your current homeowners, renters, or auto insurance policies to accommodate a home-based or freelance business.
- Got married or divorced, or welcomed a new baby into the family?
Any changes in your life may warrant new insurance policies, added coverage, or removed coverage.
Look Beyond the Monthly Premium
Your policy’s monthly (or annual) premium is likely the first cost you consider. But, if a low premium is your sole consideration, you can end up underinsured. Check these costs too:
- Deductible: The deductible is what you agree to pay in the event of a covered loss. The higher the deductible, typically the lower the premium will be. Make sure you could pay a high deductible if you had an unexpected accident, theft, or loss.
- Coverage limits: Check each part of your insurance policy to understand the limits of your coverage. Coverage limits are the most your insurance company will pay if you file a covered claim. Anything in excess will be your financial burden. In homeowners’ insurance, for example, you should ensure your dwelling coverage limit would adequately rebuild your home. In auto insurance, bodily injury liability coverage pays for others injured in an at-fault accident you may be involved in.
- Exclusions: Each section of your policy should also outline what your policy does not cover. Read over your insurance policy to understand what types of losses, items, and situations your insurance will not cover. If you’re still unsure of whether an item or situation is covered, call your agent.
Replacement Cost Changes the Math
Replacement cost coverage pays to rebuild or replace damaged or stolen items without taking depreciation into consideration. Actual cash value policies factor depreciation (ordinary wear and tear) into the loss payout. Replacement cost coverage can cost more, but paying for replacement cost coverage on certain items in your homeowners, renters, auto, or life insurance policy may be worthwhile.
When Extra Coverage Is Worth It
- How much of a risk am I taking without this coverage?
- What does my policy already cover? For example, jewelry, collectibles, expensive tools or electronics, and business equipment may not be adequately covered under a homeowners or renters insurance policy. You may need added coverage to insure these expensive items.
- Could I recover financially if I had to replace damaged or stolen items? Would you need to go into savings or take out a loan to replace damaged, stolen, or lost property? If so, added coverage may be worthwhile. Americas Insurance can help you explore your insurance coverage options.
Do Not Overlook Liability Protection
Liability coverage can help pay if you’re found responsible for injuring someone else or damaging their property. Liability coverage varies from person to person, but reducing coverage should only be an option if you have little to no income, few assets to protect, and a minimal risk of liability claims. Check the limits on each of your insurance policies to make sure you have adequate liability insurance, which covers at en.wikipedia.org/wiki/Liability_insurance, in the event of an accident.
Before Your Next Renewal
Your insurance agent should contact you when it’s time to pay your premium, but don’t wait for a reminder to review your coverage. Skim your policy declaration pages. Think through the questions above, and jot down questions for your insurance agent. Make sure they fully understand your needs, and ask for clarification on any confusing insurance policy terms.
Insurance companies expect their policyholders to notify them right away in the event of theft, damage, or loss. Depending on the policy, failure to promptly report damage, theft, or other loss can complicate or void a claim. Insurers may also expect policyholders to keep damaged items until they can investigate losses. For instance, getting rid of soaked carpet and drywall before the insurer assesses damage can complicate a homeowners insurance claim. Some policies also expect policyholders to obtain permission, estimates, and inspections before beginning repairs on water-damaged homes or accident-damaged vehicles.
If you know what to do when filing a claim, you’ll save time and stress when disaster strikes. Write down the basics, your policy number, agent or company information, and a place to leave a voicemail in an easy-to-find location. Add any information specific to your insurance policies, and keep receipts, pictures, and a rough idea of what your things are worth.
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