Tips For Getting The Best Insurance Coverage

In this article, we look at some tips on how you can ensure that you have complete insurance coverage so that all areas of your life are covered and financial risk is minimized.

Not having adequate insurance coverage is actually quite common, and many people, especially those with multiple policies, have coverage gaps which leave them exposed to unnecessary risk.

If you currently have an insurance policy, or are looking to insure yourself against a specific risk, keep the following tips in mind so that you can have the best policy that meets your unique needs and requirements.

1) Your Insurance Agent

Perhaps the most important part of taking out any insurance plan is the insurance agent that you go to.

A good agent should listen to what sort of coverage you would like, give you advice on any additional coverage you may have overlooked and then help find you a policy that meets your needs and does so at the lowest price possible.

Ideally, you should find an insurance agent that is an expert in all areas of personal insurance, as they will be able to provide you with the best advice if you are looking for multiple policies that encompass different areas.

A good agent is also likely to represent a good insurance company, one that has established itself as a trustworthy insurer and is respected within the financial community. This is important because you obviously want the company who you take out your policy agreement with to still be around throughout the duration of your policy.

Finally, you are likely to get the best and most unbiased advice from an independent agent or a broker.

2) Insuring Yourself Against Natural Disasters

Natural disasters can pose an extremely serious risk to your financial security. If your home is destroyed by an earthquake for example, and you are not insured against such a loss, then you will have to pay to rebuild your home which most people cannot afford to do without getting themselves into serious debt.

The same applies to the destruction or damage of homes by flooding. As flood insurance is not provided as standard under a regular homeowners policy, you are strongly advised to insure yourself against this risk if it is a risk that you face in your area.

It is therefore vitally important that you check what natural disaster risks there are in the area in which you live, and then make sure that you take out the correct insurance coverage to protect yourself in the event that you suffer a total loss.

The victims of Hurricane Katrina provide a vivid example of just how destructive natural disasters can be, and also, what can happen if you are not adequately insured against such a loss. Don’t let the same happen to you!

3) Home Replacement Guarantee

One of the biggest losses that can occur to you is the destruction of your home, which is why it makes a lot of sense to have an adequate level of homeowners insurance coverage.

Generally, people who do not have adequate homeowners insurance coverage do not have enough structural coverage. This type of coverage is designed to cover the costs that you incur as a result of rebuilding your home after it has been destroyed.

The primary reason for a lack of such coverage is not fully determining the true value of a home at the time the policy agreement was signed. However, finding out the true value of a home can sometimes be difficult to do, especially if you have an old house.

There is always the danger therefore that you could underestimate the value of your home and so don’t receive enough coverage, or overestimate the value of your home and end up paying more for your home insurance than you should.

In both situations you end up losing money. If you are underinsured, then you could one day suffer a large financial loss that you will have to pay for by yourself. If you overinsure, then you will end up wasting money by paying extra throughout the life of your policy for no additional benefit. So being insured for the right amount is clearly something that you should aim to do.

Fortunately, there is a way to safeguard yourself against suffering underinsured losses if you have difficulty valuing your house.

Extended replacement cost guarantee is an additional type of coverage that you can take out which guarantees that your insurance company will pay the entire cost of rebuilding your home, even if that cost is greater than the amount you originally insured your home for.

Considering this additional coverage only costs on average an extra $10-$50 a year, it is something that you are strongly advised to purchase as it could save you from suffering a big financial loss if your home is ever destroyed.

4) Liability Limits

Most people have several different insurance policies, each with different liability limits. From an insurance perspective, this is not necessarily the best strategy to use as it leaves you with less coverage for certain risks.

Since you cannot predict what losses you will suffer in the future, it is a far better strategy to have equal liability limits on each of your policies to provide you with complete protection against the risks that you have insured yourself against.

All too often people have large limits on certain policies and lower limits on others, but when they suffer a loss that was covered by a low limit, they sometimes find that their coverage limit is not enough to cover their claim and so they end up having to pay for the rest of the loss out of their own pocket.

Most of the differences in coverage limits occur as a result of taking out different policies with different insurance agents. You can therefore greatly reduce the risk of this happening to you by taking out as much of your liability insurance as you can with one agent.

Ideally, you should aim to be more or less equally insured in all the major areas of your life such as your health, your automobile, your car and your income.

5) Liability Gaps

A liability gap occurs when you are not covered by your insurance policies against certain risks. This tends to occur with individuals who have taken out multiple policies with different insurance agents from different companies.

One of the advantages of having a good insurance agent is that they will be able to spot such liability gaps, and then advise you on how to close them.

So if you do have multiple policies, then it is a good idea to speak with an insurance agent and get them to review what sort of coverage you have and determine if there any risks that you are currently exposed to.

You may just find that you aren’t covered against something which you thought you were covered for. In such a case, it is better to find out now rather than at claim time.

One way to close such coverage gaps is with gap insurance.

Reviewing your policies is also a good way to remove coverages from your insurance policies that you no longer need.

This is likely to happen to you throughout your lifetime, so it is recommended to review your policies every 5-10 years, or whenever a major life event occurs such as having a child, moving home, increases in your income or retirement.

Removing unnecessary coverage options will save you money, so this is something that is in your best interest to do. Do not make the mistake however, of removing coverages that you still need just to save money.

Doing so will only expose you to greater uninsured financial risk, and could end up costing you more money later on if you ever need to make a claim on that policy.

6) Life Insurance Coverage

When it comes to life insurance, most insurance agents will give you two pieces of advice. The first is to buy life insurance if you have dependents, and the second is to buy more life insurance coverage than you think you need.

If you have a family you would like your life insurance policy to benefit for example, you should take out between 25%-50% more coverage than you originally planned. This should give your family plenty of money after your death, and not put them under financial strain after you are gone.

It is important to remember that there are two main types of policies that you can take out. The cheaper option is term life insurance, but this will only pay out to your dependents if you die during a certain period of time.

This can be useful to cover major expenses such as a mortgage, but since you can’t predict when you are going to die, having this type of policy could result in your dependents not receiving any money at all if you die outside the term that you were insured for.

To protect against this uncertainty, consider taking out a permanent life insurance policy instead as that will pay out regardless of when you die.

7) Long Term Disability/Unemployment

Disability insurance is perhaps the most overlooked form of insurance out of all the different types of policies that you can buy. Its purpose is to cover you in the event that you are unable to work, or during the period while you are looking for work.

If you are the sole income earner of your household, then this is a policy that you should seriously consider as not protecting your income would expose your family, and their current lifestyle, to a great amount of risk.

Considering that jobs are a lot less stable than they once were, disability insurance is becoming an increasing important form of insurance, and fortunately, people are slowing starting to realize this.

It should be noted however, that if you have sufficient funds saved up then you probably don’t require disability insurance, as you can afford to support yourself financially in the event that you lose your job or become unable to work.