Five Biggest Insurance Mistakes
Avoid these five biggest insurance mistakes the next time you're shopping for insurance. One of the biggest insurance mistakes we all make is choosing a provider based on price rather than coverage. Low prices are great, but it’s very important to pick a company that is financially sound and provides good customer service. Keep reading to learn more.
Free Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
UPDATED: Jan 21, 2021
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
The Insurance Information Institute recently highlighted the five biggest insurance mistakes to avoid.
Insuring a Home For Its Real Estate Value
Topping the list was insuring a home for its real estate value instead of its replacement costs (Replacement Cost vs Actual Cash Value).
“When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home,” the III said in a press release. “But insurance is designed to cover the cost of rebuilding, not the sales price of the home.”
They recommend that you obtain a homeowners insurance policy that provides enough coverage to completely rebuild your home and replace any belongings.
Selecting an Insurance Company by Price
The second biggest insurance mistake is picking an insurance company by price alone.
Sure low prices are great, but it’s also very important to pick a company that is financially sound (insurance company ratings) and provides good customer service (top auto insurers by customer satisfaction).
Dropping Flood Insurance
Remember, flood damage is not covered under a standard homeowners or renters insurance policy, so be sure you have flood insurance in place if you live in a flood risk area.
Note that roughly 25% of all flood losses occur in low risk areas.
Purchasing Bare Bones Car Insurance
Though minimum auto insurance can save you a lot of money on your premium, it can also put you at great risk of paying high out-of-pocket expenses for non-covered events.
The insurance industry generally recommends a minimum of $100,000 for bodily injury protection per person and $300,000 per accident, so don’t skimp.
Not Purchasing Renters Insurance
Rounding out the list is failure to purchase renters insurance. Just because you don’t own a home doesn’t mean you shouldn’t protect your belongings.
Renters insurance also provides liability protection if someone is injured in the home you rent and decides to sue.