Insurance is something that everyone needs, but never wants to use. Whether it is home or auto insurance, life or business coverage, small mistakes could lead to significant consequences. So how do you know that you are making the right choices to protect your assets and future income? Continue reading to learn some of the most common insurance mistakes and how you can avoid them.
Not Getting Back-Up Insurance as Your Net Worth Increases
What do you have that is at-risk? Whether you are a successful entrepreneur, you received a large inheritance, or you have saved diligently over the course of many years, one of the biggest mistakes you could make is not knowing how much you stand to lose in a lawsuit.
Working with an agent that asks the right questions and helps you determine your needs is a critical first step to a comprehensive insurance program. Once determined, a relatively low-cost umbrella insurance policy can supplement your overall coverage once the limits on other primary policies have been exhausted.
Not Choosing the Right Car Insurance for Teens
As a parent, you can be held directly responsible for your teen driver’s actions, when behind the wheel of a vehicle. And unfortunately, the odds of your teen causing an accident in his or her first two years of driving are disproportionately high compared to older, more experienced drivers. That is why having the right car insurance for your teen is so essential. It protects your current and future net worth against lawsuits stemming from liability damages.
Not Understanding the Limits within Your Homeowners Policy
Your home is special to you and your family; it’s where you live, eat, and spend time with the ones you love. Homeowners insurance helps protect your house and everything in it, but some things may be excluded from coverage.
For example, many homeowners wrongly assume they will be covered for flood damage if they fall victim to rising waters. The truth is flood insurance is separate coverage that is not included in a typical homeowners policy. Just two inches of flood water could cause $40,000 in damage to the average 2,000-square foot home. If you have a much larger home or high-value possessions that are damaged as well, the losses could rise quickly.
Relying on Group Life Insurance
If you work for an employer, one of the perks of your job might be group life insurance. While an asset, group life insurance is typically tied to your employment. That means that you could lose your benefits if you decide to move jobs or were to get fired. For young and healthy workers, this might not seem like a problem. However, life insurance becomes increasingly difficult to acquire with age and as health deteriorates.
Losing a group life policy could mean going without insurance altogether if you are later denied coverage in the private market. The key to providing your family with financial security is purchasing a private life insurance policy while you are young and healthy. Private policies are not tied to employment. Not to mention, private coverage typically offers death benefits far and beyond those available through an employer’s coverage.