Car and Home Insurance

Do not skimp on your insurance. This is not a way to save money. Keep in mind that insurance is intended to transfer financial risk to insurance companies. You are effectively self-insuring without formal insurance. This means that you will pay out of your pocket in the event you suffer a financial catastrophe such as a loss of home or serious illness.

Renters, for example, don’t have renter’s coverage that covers personal property loss (the landlord’s policy doesn’t). Renter’s insurance can be very affordable. Yet, how often do you hear about tenants who have lost everything due to an apartment fire?

Get the insurance that you need. Discuss your insurance requirements with your financial advisor. You probably already know that you need home, car and medical insurance. Do you have disability insurance to cover the possibility of losing your income because of an injury or illness? Financial planners often recommend that clients purchase long-term insurance as soon as they are in their 50s or 60s. This will cover the high costs of long-term care. Are you covered for liability if you are sued beyond your standard auto or home insurance?

Be aware of gaps. For example, people who have multiple properties in different states may use multiple agents to obtain their property and casualty insurance. This can lead to expensive duplicated coverage or worse, no coverage at any property due to an expired policy or neglect. To provide additional coverage for jewelry and antiques with limited value under a standard policy, you may need “floaters” or “riders”.

Don’t spend money on things you don’t use. Although you will probably need life insurance, it is not a necessity. Life insurance is generally for those whose death has a major financial impact on others, such as a spouse, children, dependent parents or heirs, who may face a large estate tax bill. If you’re young and single, you may not be eligible for it. As you get older, your coverage may be less important or you might only need it for a short time.

Also, you don’t likely need to spend a lot on insurance for pets, certain diseases, loans, and cars. Make sure you have the right amount. Although people may buy too much insurance, they are often underinsured.

Life insurance is a good example of this. Many people base their decisions on the premium cost, rather than what death benefits they require. It is better to calculate how much money you’ll need to replace lost income for your dependents. Next, consider your insurance options. A whole life policy with an investment component may be affordable for some people. Many others, however, would rather spend their few insurance dollars on term life. This policy does not have an investment component and allows you to purchase more death benefit coverage per pound.

Compare all options. There are many carriers that charge different prices so make sure to compare the features and coverage. Don’t just focus on the price. A carrier should be financially sound to ensure that you have the option of obtaining benefits if needed.

Multiple policies can be purchased through one carrier. Multiple policies can often be purchased through one carrier to get better deals, such as home, car and liability. Not all carriers are the same in all areas. These carriers may be beneficial for property and casualty, but they are not good for life or health. So make sure you’re getting the most out of your savings.

Take care of yourself. Keep your premiums down by installing smoke alarms and security cameras in your home. A clean driving record is also a great way to stay healthy.

Avoid small claims by increasing your deductibles. Higher deductibles will lower your premium costs. You can also self-insure the amount through an emergency fund. Small claims are also reduced, which is a problem in insurance due to increased premiums and even the possibility of losing customers with multiple small (and larger) claims.