1. Letting teens drive too soon
It’s no secret that children develop at different rates as they grow up. This is also true for driving. Some kids will be ready to drive earlier than others. I was 14 when my first car ride to school. However, it is something parents need to discuss with their children. Some people should not drive yet because they don’t feel ready. Driving is a dangerous job that requires you to control a large, fast-moving object. This can lead to serious injury or even death.
2. Two different agents can insure your vehicle and home
In 99 percent of cases, it is better to keep everything with the same company when you shop for insurance. You are likely to get a lower rate if you have multiple providers. Nearly every company offers discounts when you bundle everything together, with the most popular being auto and house. Companies are offering discounts to customers who have policies that go beyond auto and home. Numerous providers offer substantial discounts when you have multiple policies such as life, umbrella, offroad, marine, and rental properties.
Apart from the price, one agent will make your life easier. You won’t have to deal with two people who will often give you two answers. There are many agents out there, and not all agents are the same. It is important to find someone trustworthy who can help you with your questions as well as recommend what is best for yourself.
3. Low liability coverage
Low liability limits are one of the most costly mistakes in insurance. Low liability limits are a big problem in today’s world. The payouts are increasing as well as the likelihood of lawsuits. Even though medical costs have increased 25 percent over the last five years, your liability limits remain the same, it is now 25% more likely that you will be subject to a claim exceeding your liability limit.
Insurance is complicated. One of the most common assumptions is that high liability limits will make insurance expensive. This is far from reality. You can often double or triple your liability by going out for dinner every month. Does that dinner really provide enough coverage to cover hundreds of thousands of liability claims? I don’t believe so.
What liability limits should you set? It will vary from one state to the next, but I recommend at least $500,000 in your auto policy and a $1,000,000 umbrella insurance. You’re probably wondering why I would need $1.5million worth of coverage.
First, depending on where you live, bankruptcy may not be possible due to liability claims. This is what it means. If you have $25,000 in liability on your car and you were to seriously hurt someone, causing $300,000. worth of damage, then you’d be responsible for $275,000. They have the right to take your car and check it, as well as garnish wages, until you get paid. It is important to consider not only what you may lose, but also the future earnings that could be lost.
The second reason is that death claims are more common than $750,000. This means that even if your auto policy covers $500,000, you could still be responsible for up to a quarter million dollars.
Insurance requires you to think about the worst-case scenario. That is why insurance exists. You are doing yourself a disservice by purchasing low limits and not considering the worst case scenario.
4. You should not inform your insurance company that you have a new teen driver
It could lead to a denial of a claim if you are withholding drivers. Although you may be paying insurance, if you fail to disclose a driver in order not to pay an additional premium, you could end up being responsible for the entire claim. It can be difficult to swallow the extra $100 per month for a new driver. However, I can assure you that it will be more difficult to stomach the repossession if your child is involved in a serious accident.
