Avoid Cutting Yourself Short with Insurance

Tough economic times mean hard decisions for many Americans when it comes to where to prioritize their spending habits.

With approximately one in 10 Americans out of work, and others having to make ends meet with less money, many consumers are in search of means to cut costs.

As Insurance Information Institute (I.I.I.) points out, there are smart methods to go about saving on home and auto insurance, yet there are also mistakes that can lead to being dangerously underinsured.

First, insuring a home for its real estate value rather than for the cost of rebuilding is a mistake to look out for.

When real estate prices drop, some homeowners might feel like reducing the amount of insurance on their residence. Keep in mind that insurance is there to cover the expense of rebuilding, not the sales price of the home.

Individuals should be sure to have enough coverage to entirely rebuild their home and replace their possessions.

Secondly, do not choose an insurer by price alone.

Consumers should select an insurance company with prices, but also one that is financially stable and gives you good customer service. The financial well-being of an insurer can be checked through independent rating agencies, along with asking family and friends for their thoughts and recommendations.

Consumers also need to avoid dropping flood insurance.

Damage from flooding is not covered through standard homeowners’ and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), along with some private insurers. Not surprisingly, many homeowners are not aware they are at risk for flooding, however one-fourth of all flood losses take place in low risk areas.

Still yet another mistake is only acquiring the legally required amount of liability for your vehicle.

With lawsuits prevalent in this day and age, acquiring only the minimum amount of liability translates to paying more out-of-pocket; those costs can be quite expensive.

Finally, do not neglect buying renters insurance.

A renter’s policy protects your possessions and added living costs should you have to move out as a result of a disaster. Just as importantly, it provides liability protection in the event someone suffers an injury in your home and wants to sue.

While there are many things you can cut out in your life to save money, make insurance is not at the top of the list.