Overinsured? You're Wasting Cash

Insurance is something everyone needs, but there is such a thing as too much of a good thing. A lot has been said about purchasing too little insurance, but overdoing it can place you in unnecessary financial strain and may make it harder for you to keep up with premium payments. Remember these suggestions to keep from paying too much and being overinsured.

How many times have you wondered about whether or not to buy that extra coverage on your rental car? Well if you have comprehensive and collision coverage, it should cover you while driving the rental car. However, for some people having comprehensive and collision auto insurance is not practical if their car is worth very little. If the car is totaled, your insurance company will only provide you with the cash value of the vehicle. If it is worth very little, it may not make much sense to purchase this type of auto insurance.

During real estate booms it could be costly to insure your home at market value. Instead, your home insurance policy should cover the cost of what it would cost to rebuild your home. The market value of a home includes not just the house but the value of the land it is on. You could be paying much more than you need to on your home insurance. Also, it pays to review your policy regularly. If you carry riders for special possessions such as expensive computer equipment, jewelry or antiques, be sure to adjust or remove the coverage if you no longer posses the property.

With life insurance the policy should reflect your intentions for the money. If the policy is for supporting a spouse and children, or paying off a mortgage, the amount of coverage should be considerable. Some individuals only need a life insurance policy to cover funeral costs. If this is the case, a very small policy is all that is needed, Know what your intentions are for your death benefit to avoid overpaying for coverage you don't need. Incidentally, mortgage insurance may not be needed if you have a sizable life insurance policy that can pay off the mortgage in the event of your death.