Five Common Mistakes Made When Buying Insurance
#1 Insuring your Home for Market Value Only
After home values crashed in recent years, many people have gotten the idea that they can insure their home to market value or for the purchase price. The market value may be more/less than you paid for your home, however, the replacement cost will likely be substantially more than the Market Value and/or the purchase price. This is due to the ever increasing cost of building materials. With your home insured to replacement cost the insurance company will pay to replace your home even if the cost is more than the market value of your home.
#2 Choosing an Insurance Company or Policy based on Price Alone
No one wants to overpay for insurance but it is important to understand that some insurers will sell you a policy with less coverage in order to give you a lower price, leaving you at risk of huge financial hardship should you be held liable in an accident or experience a loss. It is extremely important that you identify your NEEDS before purchasing an Insurance Policy.
#3 Overlooking Flood Insurance
Standard home policies do not provide coverage in the event of a flood. If you live in a flood zone you will likely be required to purchase a flood insurance policy. Statistics show, however, that 20% of flood claims occur in low to moderate risk areas where coverage is not required. Understand your risk when considering a flood policy.
#4 Carrying Auto Liability Insurance at the State Minimum
In the state of Wisconsin Drivers are required to carry Auto Liability Insurance. Your policy must provide at least the following minimum liability coverage:
• $25,000 for injury or death of one person;
• $50,000 for injury or death of two or more people; and
• $10,000 for property damage.
The law also requires uninsured motorist coverage of at least $25,000/$50,000 each for bodily injury only. These are EXTREMELY LOW LIMITS! We do not advise carrying such low limits. If you are liable for an accident where multiple people are severly injured this coverage will be horribly inadequate and could leave you financially responsible for the remaining damages and medical expenses of those you injured. It is well worth the extra premium to protect yourself and others.
#5 Opting to go without Renter's Insurance
Often times people believe that their Landlords Insurance Policy will protect them and their personal property in the event of a loss. THIS IS NOT TRUE! Your Personal Property IS NOT covered by your Landlords Insurance! If you cannot afford to rebuy everything you own in the event of a loss then you should carry Renter's Insurance . 60-65% of renters skip getting Renter's Insurance. This is alarming considering the average monthly cost is $15-$35/Month which is relatively inexpensive. It will also provide you with personal liability coverage to protect anyone who may become injured in your home.