Every person and family should have adequate insurance coverage, with these policies at a minimum:
- Life insurance
- Medical insurance
- Dental insurance
- Vehicle insurance
- Homeowner’s or Renter’s insurance
Business owners and people with large estates or other unique circumstances will often require additional insurance coverages.
Insurance is a vital part of a financial plan, even if some view it as a necessary evil. The truth is that insurance, when needed, can often save someone from financial ruin. That is why it is critical to put time, thought, and even legal advice into your overall insurance plan. Not only do you need the right types of coverage, but you need the right amount of coverage, too.
Following are 10 pitfalls to avoid when planning for insurance coverage.
- Not getting life insurance. Many people think life insurance is too expensive or they do not need it. Some are covered under an employer’s group life plan, which, unfortunately, do not pay out much.
It is an excellent idea to analyze how much your family would need should you die. While you most likely cannot replace a lifetime of earnings, life insurance can help your children, spouse, and close relatives get back on their feet should you die. It can give them breathing room and a sense of comfort as they mourn their loss. Life insurance can also help cover funeral and burial expenses.
- Relying too much on employer coverage. Many employers offer their employees life, medical, dental, and short-term disability coverage. Always analyze the coverages and costs as they may not be enough for your situation. Consider adding insurance where needed to ensure adequate protection for you and your family. For example, long-term care coverage is something many employers do not offer, but that can be vastly important.
- Not shopping around for the best rates and coverages. Employers who provide employees insurance generally offer various plans with different premiums, benefits, co-pays, and deductibles. Employees should carefully review the offerings and choose the plan that best suits their needs. If a spouse’s employer also offers coverage, compare both offerings and select the best one.
Some smaller employers may only offer one type of medical or life coverage, for example. You are not obligated to take it. Make sure it will fit your needs and budget.
People whose employers do not offer coverage or self-employed people also need to do their due diligence. They can buy insurance on the open market or under the Affordable Care Act, but they need to compare benefits and costs to ensure adequate coverage.
- Buying too little coverage. Many people will often go with the bare minimum coverage on insurance to keep their costs down. Or, with health insurance, they will go with a plan that has extremely high deductibles and out-of-pocket expenses but lower costs. Think about this carefully: will the least amount of benefits or the highest amount of costs really help you should you need coverage? In most cases, it will not.
- Not checking the insurance agent’s work. Insurance agents are required to spell out what is covered and what is not when working with a client. They need to review coverages and costs carefully. But mistakes can happen. Errors and omissions on the part of an insurance agent do occur.
Maybe the agent did not explain in depth what your homeowner insurance covered. Perhaps you thought your deductible was lower than what was quoted. Hundreds of similar scenarios play out each day because we are all humans. The best thing to do is to review your coverages and policies – including the fine print – several times before signing anything. Ask your lawyer to review as well.
Unfortunately, as in any profession, there can be shady insurance agents. They might sell you a policy that includes items you did not ask for or sell you a comprehensive policy that has coverage gaps unbeknownst to you. This is another reason to carefully check what the agent is selling versus what you want to buy. You may be able to sue an agent for negligence when there are unexpected policy exclusions or other issues.
- Buying the highest coverage possible. Like purchasing the minimum coverage, buying the maximum coverage may not be a good financial decision, either. You may end up paying for coverage that you simply do not need or will use. Take the time to figure out what you and your family need – buying too little or too much will not help you either way.
- Not getting add-ons. Some people feel one policy is enough and do not consider getting additional coverages. Flood and earthquake insurance, for example, can be a lifesaver if these events happen. Insuring electronics and valuable items such as jewelry is also smart. And, why not add conveniences like towing and rental cars to an auto policy? These relatively small costs can add up to significant savings.
- Getting the wrong coverage. You may think that buying collision-only coverage on your car will save you money, but that is rarely the case. Constantly review and ask questions when deciding how much and what type of coverage will fully protect you and your family.
- Not getting renter’s insurance. If you lease your living space, it is always good to get renter’s insurance. Some leasing agents require proof of renter’s insurance upon move in, but even if your apartment does not require it, it is wise to get it. Renter’s insurance will cover personal items such as furniture, electronics, clothing, jewelry, and other things that are damaged, lost, or stolen. D
- Not updating insurance policies. A marriage, new home, new car, and new baby are all good reasons to update your insurance. As you change jobs and income levels, you will also want to review your insurance coverages. Keeping up to date on all your policies is a smart financial move that can keep surprises to a minimum.
Contact a Warren Insurance Lawyer at Herold Law for Insurance Review
A Warren insurance lawyer at Herold Law can advise you on getting the full value and coverage from your insurance plans, and help you recover your losses when you don’t. Call us today for an initial consultation at 908-647-1022 or contact us online. Our office in Warren, New Jersey, serves individuals and families throughout Warren, Plainfield, and Summit.