It’s satisfying to save money. And looking for insurance coverage while shopping about is a fantastic way to accomplish it.
However, just decreasing or eliminating critical coverages is akin to going on a diet without exercising—all it’s about the numbers, not the results.
Don’t put yourself in danger of being underinsured and being responsible for substantially larger payments in the event of a calamity.
The five most common car, house, flood, and renters insurance blunders, as well as advice for avoiding them while still saving money (we call them “better ways to save”), are listed below:
1. Insuring a home for its real estate value rather than for the cost of rebuilding.
When real estate prices fall, some homeowners may believe they may lower their home insurance premiums. However, insurance is designed to cover the expense of rebuilding a home, not the purchase price.
Whatever the situation of the real estate market, you should make sure you have adequate coverage to totally rebuild your home and replace your things.
Raising your deductible is a smarter way to save. A $500 increase to $1,000 might save you up to 25% on your premium payments.
See also: Most Large Auto Insurers Charge 40 and 60-Year-Old Women Higher Rates Than Men
2. Selecting an insurance company by price alone.
It is critical to select a provider that offers competitive pricing. However, make certain that the insurer you choose is financially stable and has excellent customer service.
A better method to save money is to: Check a company’s financial stability with independent rating organizations (some well-known ones: A.M. Best, Moody’s), and inquire about the experiences of friends and family members with insurers. Choose an insurance company that will respond to your demands and process claims in a fair and timely manner.
3. Dropping flood insurance.
Flood damage is not covered by most homeowner’s and renter’s insurance plans. The National Flood Insurance Program (NFIP) as well as certain commercial insurance companies offer coverage.
You may not realize you’re at risk for flooding, but keep in mind that low-risk locations account for 25% of all flood losses. Flooding can also be caused by yearly weather patterns, such as spring runoff from melting winter snows.
A better approach to save: Before buying a house, check with the National Flood Insurance Program to see if it’s in a flood zone; if it is, you might want to consider moving to a less risky region.
If you already live in a flood zone, look into flood mitigation measures that might help minimize your risk of flooding and consider buying flood insurance. www.FloodSmart.gov provides additional flood insurance information.
4. Only purchasing the legally required amount of liability for your car.
The bare minimum is exactly that—the bare minimum that you can get away with under the law. As a result, obtaining the bare minimum of liability insurance means you’ll end up paying more out of cash later. And if you’re sued, such costs can put your finances in jeopardy.
Consider removing collision and/or comprehensive coverage on older automobiles worth less than $1,000 as a better way to economize. A minimum of $100,000 in bodily injury protection per person and $300,000 per accident is recommended by the insurance industry and consumer groups.
5. Neglecting to buy renters insurance.
If you have to move out due to an insured event, such as a fire or hurricane, renters insurance will cover your belongings and additional living expenses. It also protects you from responsibility in the event that someone gets wounded in your house and decides to sue you.
Look into multi-policy discounts for a great way to save. Purchasing multiple policies with the same insurer, such as renters, auto, and life, will save you money.