5 Insurance Buying Mistakes to Avoid

Buying insurance can be confusing, but when the unexpected happens – a house fire, a fender bender or a broken bone – it's a relief to know that some of those financial losses will be covered. But how do you know how much coverage you need? And what questions should you ask before buying a policy?

Many consumers aren't sure. Insurance coverage is far from one size fits all, so here's a look at mistakes some consumers make when buying insurance.

  1. Assuming insurance is out of reach.

A large percentage of the population has no health or life insurance. Often that’s because people feel they can’t afford it. But it is far from the truth.

The average consumer thinks life insurance is three times more expensive than it actually is. And often they do not research the actual costs.

When buying insurance, ask about potential discounts. These may be offered if you place all your insurance with one company.

  1. Relying on assumptions or outdated figures.

Your home could be underinsured if you've renovated or if the cost to rebuild has increased due to higher material costs or other factors. That's why experts recommend reviewing insurance coverage once a year to make sure it still fits your needs.

  1. Shopping on price alone.

Comparing insurance policies can be confusing, but resist the urge to simply choose the policy with the lowest premium. Consider the company's reputation and the coverage you'd get for that premium.

  1. Glossing over the details.

Make sure you understand what your insurance policy covers. Read your insurance policy and contact me if anything is unclear. Unfortunately, a lot of people don't find out what coverage they should have had until they make a claim. For example, if you live in a flood-prone area, your insurance might not cover damage from flooding.

  1. Setting your excess too low.

Setting a low excess typically means higher premiums. Insurance is designed to protect against losses you could not cover yourself, so if you can afford to pay the first $500 or $1,000 yourself, you may not need a lower excess. Consider your own financial situation. How much of the risk are you willing to assume yourself?

Because insurance can be so complicated, we recommend an annual review of all your policies to ensure you are adequately covered. Now would be a good time to call and book a time for a review so you don’t find yourself out of pocket should disaster strike.

 

Source: http://money.usnews.com/money/personal-finance/articles/2014/01/27/5-insurance-buying-mistakes-to-avoid

© KEPA 2015

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