An insurance policy is all about protecting your assets. There are some basic types of insurance that you should have, including life insurance, homeowners/renters insurance, auto insurance, and health insurance. You might also need other types of insurance, depending on your individual situation and needs. Business insurance, disability, and umbrella are all examples of other types of insurance to consider.
Even if you think that you are set with insurance, though, it's important to be aware of possible mistakes you might be making. Look over your insurance coverage, and see if you are making these 3 common insurance mistakes:
1. Minimal Car Insurance Coverage
When you purchase auto insurance, you have to get the minimum coverage required by your state for liability. Additionally, in some states you need minimal coverage for other medical coverage or personal injury. This minimum amount is often rather small — in some states it's not even enough to cover the average cost of property damage from an accident.
Instead of just getting the minimum, consider upping the coverage a little bit. You might have to pay a higher premium, but you will be better covered in the event of an accident. Check out auto insurance rates here.
2. Ignore Home Business Coverage
One of the biggest misconceptions about homeowners insurance is that your home business is covered. This is not always the case. While some equipment and liability might be covered under your regular homeowners or renters policy, you might actually need a separate endorsement on your policy in order to receive proper coverage.
Realize, though, that your extra home business insurance coverage under your homeowners policy probably isn't going to cover liability. Depending on your business, you might need errors and omissions, malpractice, personal liability, and other types of coverage.
Double-check to see what you need to do to make sure that your home business is adequately covered — even if it is just a side hustle.
3. Same Homeowners Coverage You Had Years Ago
If you have been in your home for a long time, it might be worth more now than when you bought it (even after the crash of a few years ago). Unfortunately, many consumers take a buy it and forget it approach to homeowners insurance. Over time, though, if you have made improvements and if the market has improved, your home might not be adequately covered. If you bought $150,000 worth of coverage 20 years ago, and now your home is worth $275,000, you are missing out on a large chunk of coverage.
Another consideration is whether or not you have bought valuable items since. If the contents of your home have increased in value, along with the actual value of the home, the coverage that was adequate 10 or 15 years ago may not be adequate today. You might also be lacking coverage for flooding and other natural disasters.
Read through your policy, and determine whether or not you need to buy more coverage for your home. You don't want to find out, when your home is seriously damaged, that you don't have enough coverage to replace your home and its contents.
Check out homeowners insurance rates here.
What are some other common insurance mistakes?