Agents from across the U.S. clear up a few of the most common insurance misconceptions.
Insurance can be complicated and not everyone has the time or desire for to go through all of their policies. A little knowledge can make a big difference. An insurance agent can help you to understand the basics and dispel any misunderstandings.
The insurance doesn’t cover all.
Andrew McGill, agent with The Insurance Shoppe, Collierville, and Nashville, Tennessee, says that most people don’t know the details of insurance. They don’t know that homeowners policies do not cover earthquake or flood damage. You will need separate coverage if your home is susceptible to these natural disasters.
Most auto policies only cover personal use of the car. If you have a side job delivering food or groceries during the pandemic, then you will need additional coverage. Keya Pratt is agent and CEO at Pratt Insurance LLC, Richmond, Virginia. You may not be covered for accidents that occur on the job.
All insurance policies generally cover wear and tear. Katherine Navarro Wong is a State Farm agent in Santa Rosa. Many policyholders call her asking whether their insurance covers broken dishwashers and aging gutters.
No. Insurance is meant to cover accidental, sudden damage and not for regular maintenance. Wong states that insurance is not designed to replace an old pipe. However, if the pipe burst into the wall or flooring and causes damage, it would be covered.
An insufficient coverage can lead to costly consequences
You could let your car insurance policy lapse for many reasons, including if you are having difficulty paying your bills or if you don’t own a vehicle. Pratt warns that this could lead to a significant financial loss. People tend to shop for insurance after cancelling their insurance. Unfortunately, this can lead to a significant negative in the calculation of your price.
Insurers view customers as more risky after a gap in coverage and charge higher rates.
You can avoid this by shopping for quotes before your policy expires, buying non-owner car insurance if you’re between vehicles and asking your carrier for leniency if you’re struggling to make payments.
It’s impossible to get coverage for an event that has already occurred
You might need a rental car if your car is damaged or in an accident. Wong states that it is too late to add this coverage. Your auto policy would pay for this only if you had rental car coverage in place when the accident happened — not if you added it the day after.
This is true for all insurance. For example, say a storm leaves an inch of water in your basement, but you haven’t purchased flood insurance. While you can still purchase coverage for future catastrophes, it will not cover damage to your home that has already occurred.
Liability insurance is essential.
While many people are focused on getting enough coverage for their possessions, the liability insurance that you have on your policy might be more important. It covers injuries and property damage you are responsible for.
Wong states that a lawsuit is “more devastating than losing your computer [or] ring,” The cost of a lawsuit, including legal fees, can reach hundreds of thousands of dollar, especially if the victim is seriously hurt.
To protect yourself financially, buy enough liability insurance on your auto and home insurance policies to cover your net worth.
Your agent is available to assist
Are you confused by the fine print of your policy? Jana Schellin Foster is an agent at Nevada Insurance Agency Co., Reno, Nevada. “We are here to help you and guide you through this process.
Foster recommends that you interview agents to ensure you can trust them and get the services you need.
Wong suggests contacting Wong once a year, or whenever you experience changes in your life. These could include getting married, purchasing a new vehicle, or renovating your house. All of these changes can trigger insurance updates.
Foster believes trust is the most important thing you can have in an agent. Foster says that you are too busy with your children, your job, and other things. You shouldn’t need to worry about what your insurance should do for you.
