It’s never too late to learn more about your insurance coverages! Now that it’s the start of a new year, commit to learning a few insurance basics that will help you for years to come.
Everyone Needs Insurance
Every person needs to be covered by insurance in some fashion, and every adult needs to purchase insurance coverage. It doesn’t matter what stage of life you’re in, you will help yourself in the long run with the right insurance coverage.
- College students living in their first apartment need renters insurance.
- Car owners need auto insurance — and more than the state required minimums.
- You still need homeowners insurance even if you’ve managed to pay off your mortgage.
- Everyone needs life insurance, including single people and stay-at-home parents.
It’s Important to Understand a Few Insurance Basics
Many of the mistakes people make with their insurance is due to the fact that they don’t understand the terms being used and how they apply to them. At the very least, make sure you have a clear understanding of these terms:
Premium: This is the amount you pay to have insurance coverage. Some premiums are paid annually, like homeowners insurance. Others are paid monthly, like health and life insurance. Auto insurance premiums can be paid monthly or every six months upon renewal.
Deductible: This is the amount of money you’ll have to pay before your insurance company will pay a claim. If your auto insurance deductible is $1,000, and your claim is $2,000, you’ll be responsible to pay the first $1,000, and your insurer will pay the rest.
Liability: Home, auto, and renters insurance all include liability coverage. This covers you when you’re at-fault for an accident or injury suffered by someone else such as a visitor to your home or the other driver in a car accident. Because bodily injury and property damage can be more expensive than anticipated, it’s important to have as much liability coverage as possible.
Choose Replacement Cost
For most of your insurance coverage, you want to choose “replacement cost” coverage instead of “actual value.” The only exception to this is when you insure something that gains value over time like antiques, jewelry, and collectibles. For your home and auto insurance, you want your policy to pay out at the replacement cost.
Why? Because then you’ll know that your claim will cover the cost to replace your home or vehicle after a major loss. A vehicle loses value the longer it’s driven. Home values fluctuate up and down — and the home value for insurance doesn’t account for the land it’s on. Replacement cost makes sure you can rebuild or replace what you lost without forcing you to pay thousands of dollars you don’t have.
Don’t Rely on Other Drivers’ Auto Insurance
Yes, all other drivers on the road should have auto insurance. Yes, that auto insurance should pay the claim in full if you’re in an accident and the other driver was at fault. But that’s not what always happens. Too many drivers either don’t have enough auto insurance coverage or they don’t have an active policy at all.
Make sure you have a robust auto insurance policy that includes uninsured/underinsured motorist coverage. This will protect you when the other driver doesn’t have enough coverage. Their insurer will only pay a claim up to their policy limit. The rest is either up to the other driver to pay (unlikely) or it’s up to you, which puts you in a financial bind. Protect yourself from that with good auto insurance.
Work With An Independent Insurance Agency
Too many people think that cutting their insurance coverage is a great way to save money and help their budget. Until they’re in an accident or their home is damaged. That’s when you can find yourself in a financial crisis because you’re left paying out-of-pocket for repairs.
When you work with an independent insurance agency like ours, you can rest assured that you’ll be getting great coverage at a great value.
Have questions about your insurance coverage? Need help shopping around for a new policy? Contact Charlotte Insurance today!