Four Costly Insurance Mistakes

Gain Knowledge on InsuranceHome and car insurance are necessary investments that protect you from a total loss in the event of accident, natural disaster, or theft. Researching and buying insurance, however, requires the purchaser to pay close attention to several facts in order to avoid making some costly insurance mistakes. Here are some of the most common of these errors and their consequences:

  1. Buying Inadequate Insurance — Premium costs decrease in proportion to a decrease in the amount of coverage that you actually buy. Yet while you might save on premium costs, not having enough insurance means that you will not have enough in a payout to cover replacement and repair costs should a claim be necessary. Unless your annual premium costs are more than what the total payout would be for a car insurance claim, for example, you should carry more than basic coverage.
  2. Considering Premium Costs Alone — In comparing two policies, you will often find that the premium costs for one company’s policy are much less than for another company’s policy that offers the same coverage. If the cheaper company, however, does not have a good reputation, you may never see a payout if you make a claim. So be sure to consider the insurance company’s reputation in addition to the cost for the coverage.
  3. Choosing Low Deductibles — The lowest deductibles for home and automobile coverage may seem attractive, but premium costs increase as your deductible goes down. You can save a lot of money every year by choosing high deductibles for your policy, but just make sure that you have enough money to cover these deductibles in the event of a loss.
  4. Filling Out Insurance Applications Incompletely — If you have many add-ons that make your home or car a lower risk to the insurance company for coverage, then make sure to include them on your application. Air bags, car alarms, home alarms, fire extinguishers, and so forth result in lower premiums.