Five Insurance Mistakes That Can Cost You Thousands
A few small insurance mistakes might not seem like a big deal—until one of them leaves you paying thousands of dollars out of pocket.
Insurance is meant to protect you financially when the unexpected happens, but having a policy doesn’t automatically mean you’re fully protected. Choosing limits that are too low, skipping important coverage, or failing to review your policy can create expensive gaps you may not notice until it’s too late.
Here are 5 mistakes that can cost you thousands of dollars and then how to avoid them.
1. Not Updating Your Insurance After Major Life Changes
Your insurance should change as your life changes.
Buying a new vehicle, renovating your home, getting married, starting a business, adding a teenage driver, or purchasing expensive belongings can all affect your insurance needs.
One common example is home renovations. If you significantly upgrade your kitchen, finish your basement, or add onto your home but never tell your insurance agent, your current dwelling limit may no longer reflect what it would cost to rebuild your home.
The same goes for expensive jewelry, electronics, collectibles, or other valuables. Standard homeowners policies may have limitations for certain types of property, so additional coverage may be necessary.
Reviewing your policies after major changes can help make sure your coverage still matches your life.
2. Choosing Coverage That Is the Cheapest
Everyone wants to save money, but the cheapest insurance policy isn’t always the best deal.
A lower premium can sometimes mean lower liability limits, higher deductibles, or fewer coverage options. That may not seem like a big deal until you have a serious claim.
For example, imagine you cause an accident that results in $75,000 in injuries, but your auto policy only provides $25,000 in bodily injury liability coverage. Depending on the circumstances, you could potentially be responsible for the amount that exceeds your policy limits.
Instead of looking only at the monthly price, consider what you’re actually getting for your premium. Saving a few dollars each month may not be worth taking on thousands of dollars in additional risk.
3. Assuming Everything Is Automatically Covered
One of the biggest insurance mistakes is assuming your policy covers something without actually checking.
Insurance policies contain exclusions, limitations, deductibles, and specific coverage conditions. For example, a standard homeowners policy generally does not provide coverage for every type of water or flood damage. Certain valuables may also have coverage limits, and business equipment kept at home may not receive the same protection as personal belongings.
Auto policies can also vary when it comes to rental reimbursement, roadside assistance, custom equipment, or coverage for certain drivers.
Before something happens, ask your insurance agent questions like, “Would my policy cover this?” and “Are there any limits or exclusions I should know about?”
It’s much better to find out before a claim than afterward.
4. Never Reviewing Your Insurance Policy
One of the easiest insurance mistakes to make is assuming that once you have a policy, you never need to look at it again. But your life can change a lot from year to year, and your insurance should change with it.
Buying a new car, remodeling your home, getting married, adding a new driver, starting a business, or purchasing expensive belongings can all affect the amount and type of coverage you need. If your policy still reflects your situation from several years ago, you could have gaps in coverage without realizing it.
Rates and discounts can also change over time. You may qualify for savings you didn’t have before, or another insurance carrier may offer better coverage for a similar price.
Reviewing your insurance at least once a year gives you a chance to make sure your limits, deductibles, discounts, and coverage options still make sense. A short policy review now could help prevent a much more expensive surprise later.
5. Skipping Umbrella Insurance
Many people assume the liability coverage on their home and auto policies is enough, but a serious accident or lawsuit can quickly exceed those limits.
Umbrella insurance provides an extra layer of liability protection above the limits of certain underlying policies, such as auto or homeowners insurance. For example, if you’re responsible for a major car accident and the damages are higher than your auto liability limit, an umbrella policy may help cover the remaining eligible costs up to its own limit.
Without that additional protection, you could be responsible for paying the difference out of pocket. Depending on the situation, that could put your savings, income, and other assets at risk.
Umbrella insurance can be especially worth considering if you own a home, have significant savings or assets, have young drivers in your household, own rental property, or simply want additional protection against a large liability claim.
Skipping umbrella coverage might save you money on your premium today, but one major lawsuit could cost far more in the long run.
Conclusion
Insurance mistakes are often easy to overlook, but they can become very expensive when a claim happens. Taking the time to review your coverage, understand your limits, and make sure you have the protection you actually need can help prevent major financial surprises.
Your insurance should grow and change along with your life. If it’s been a while since you reviewed your policies, now may be a good time to speak with an independent insurance agent and make sure you’re properly protected.
You can experience being a part of and full-serviced independent Insurance Agency today! Simply contact Briggs Agency Inc, if you are interested in an insurance review at 219-769-4840 or visit our website at www.BriggsAgency.com. We look forward to hearing from you!
Blog Post Written by: Alex Condes
