Avoid these Common Insurance Mistakes

Vincenza Vicari-Bentley, AFC, Empowering Financial Wellness Program Coordinator

 Basic insurance is crucial to protecting what you have. I know that reading about insurance is not exciting or fun, but a mistake with insurance could be financially devastating. What we need to remember is that insurance is not an investment, it’s something we pay for to protect ourselves and our assets. Here are some common mistakes you can avoid by being informed.

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1. Choosing not to have insurance so you can save money. Start with making sure you have the basics. Car insurance, renter’s or home insurance, health insurance, disability insurance and even life insurance. You’d be surprised at how inexpensive some of these types of insurance can be, especially if you can get them at discounted rates through your employer or by bundling policies.
2. Having the wrong type of insurance policies for your situation. Make sure you understand any insurance policy you buy. What are you getting for the money you are paying? Is it enough? Is it too much? The type of insurance you need depends on your personal situation. Think about if you would be able to cover the loss if you didn’t have the insurance? Think emergency savings-could that cover it?
3. Underinsuring yourself. Car insurance is the most common way people are inadequately covered.  You should consider the maximum amount your insurance will pay for each accident and see if that’s enough for you. Remember, you’re responsible for any expenses that insurance does NOT cover. Sometimes maxing out the policy coverage doesn’t mean you’ll pay that much more for insurance. Shop around and see what the difference is between basic coverage and the max you could be covered for. 
   
4. Over insuring yourself. Believe it or not, it’s possible to have too much coverage! Talk to an independent insurance agent to see what is appropriate for your situation. For example, when you’re younger, you don’t need as much liability insurance, since you don’t usually have a lot of assets you’re needing to protect. 
   
5. Not shopping around to get the best price. Ideally, it’s a good idea to shop around every few years, or when there is a change in your family dynamic. It doesn't take a lot of time and can really help keep your costs low for some types of basic insurance. 

While the reality is that some ​​people may struggle to pay for insurance it’s important to at least have basic coverage.  Going without may lead to bankruptcy even if you have one catastrophic event. Protect yourself and do some research to find what works best for you and your budget. www.policygenius.com is a great place to start researching. Like Benjamin Franklin said “An ounce of prevention is worth a pound of cure”!