5 Insurance Mistakes Consumers Make
NEW YORK – Jan. 5, 2012 – Many people make a New Year’s resolution to cut back on expenses, but according to the Insurance Information Institute (I.I.I.), there are smart ways to reduce insurance costs and some not-so-smart ways.
I.I.I issued the a list of top consumer mistakes followed by practical ways to trim costs:
1. Insuring a home for its real estate value instead of for the cost of rebuilding. With the real estate market in a slump and home prices down in parts of the country, some homeowners think they can reduce the amount of insurance on their home too, the I.I.I. says. But insurance is designed to cover the cost of rebuilding, not the sales price of a home. Make sure you have enough coverage to completely rebuild your home and replace all your belongings in the event of a disaster.
A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your annual premium.
2. Selecting an insurance company by price alone. It’s a good idea to also make sure the company is financially sound and provides good customer service.
A better way to save: Check the financial health of a company through independent rating agencies, and ask friends and family for recommendations. You should select an insurance company that has a reputation for excellent customer service and will respond to your needs and handle claims fairly and efficiently.
3. Dropping flood insurance. Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP) as well as from some private insurance companies. Many homeowners are unaware they are at risk for flooding, but in fact 25 percent of all flood losses occur in low risk areas.
A better way to save: Before purchasing a home check with the National Flood Insurance Program (NFIP) to see whether it’s located in a flood zone. (Some mortgage lenders require coverage, if so.) If you already own a home in a flood zone area, look at home mitigation efforts that can reduce the risk of flood damage and consider purchasing flood insurance.
4. Purchasing only the legally required amount of liability for your vehicle. In today’s litigious society, buying only the minimum amount of liability means you’re likely to pay more out-of-pocket if you are sued – and those costs may be steep. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.
A better way to save: Consider dropping collision and/or comprehensive coverage on older vehicles worth less than $1,000.
5. Not buying buy renters insurance. A renters insurance policy covers your possessions and additional living expenses if you have to move out of your home due to a disaster. Equally important: It provides liability protection in the event someone is injured in your home and decides to sue.
A better way to save: Look into multi-policy discounts. Buying several policies with the same insurer, such as renters, auto and life, generally provides savings.
© 2012 Florida Realtors®
This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.
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