Top 7 Misconceptions You Have About Insurance
Marco Briceno, MBA, CPRIA, CIC
Senior Territory Manager at Safeco Insurance
You probably use insurance as your “plan B” so that, no matter what happens, your family is safe and financially secure. But insurance is complicated. You might try to figure it out for yourself online, but a lot of information online, if it is accurate, just adds to the confusion. How do you separate the fact from the fiction? Here are the top seven misconceptions about insurance, and how to make sure that you are adequately covered.
#1. “Insurance Is Insurance,” All Policies Are the Same
Many insurance companies would love for you to believe this is true because they want to sell you on their policies with as little explanation as possible. However, spending more dollars on advertising does not provide you with better coverage. It is important to understand the “four corners” of the contract or policy that you have. Some companies provide better coverage options in order to provide better claims experience for their clients, most of the coverage comes by having a customized policy specific to you. Make sure you are work with a reputable agent who stays on top of industry trends and changes to legislation.
#2. The Market Value of Your Home Is Plenty of Coverage
How much is your home worth? You’re probably thinking of the amount that you could sell your house for today, when it’s standing. That’s the Market Value, and it is really more of a “Plan A” amount; it barely scratches the surface for why people actually buy insurance.
If your house were flooded or half-burnt to the ground, you would need to consider the Replacement Cost. That is, the cost to tear down the remains, clear the debris, and hire architects, engineers, and contractors, pull city permits, and purchase materials to rebuild your house.
#3. I Don’t Need Renter’s Insurance
Many tenants think they are covered under their landlord’s policy in case of fire or other disaster. It is true that the Landlord’s policy covers the building they own, that policy does not cover any of the tenant’s belongings or other interests. A wise tenant needs to have a Renter’s insurance policy to protect them, their belongings, and liability in case they cause property damage or personal injury.
#4. My Homeowner’s Policy Covers Everything
It’s true that your Homeowner’s policy covers your personal belongings, from your socks and ties to your appliances and furniture. However, there is very limited coverage for your valuable items. Items such as art, jewelry, and other expensive belongings don’t have the coverage you think they do. You have to make sure your policy is designed specifically to cover these items for either Replacement or Agreed value.
#5. If You Don’t Have Insurance, It’s Not That Bad
Did you know that lapsing your Auto insurance is against the law in Wisconsin? It sure is. Wisconsin requires you to carry at least $25,000/ $50,000/ $10,000 in liability coverage if you own a vehicle. Further, many insurance companies will not bother to sell you a policy if you are uninsured. This limits your options for coverage, and your premiums will certainly be higher, because the remaining companies will charge you more for having that gap in coverage.
#6. “Full means full,” Full Coverage Means Everything Is Covered
The term “full coverage” on your auto insurance policy means different things to different people. Most of the time, people refer to this as having liability plus comprehensive and collision coverage. But that does not mean that everything you want is covered. This common meaning does not include:
- Roadside Assistance - This will provide coverage should you need towing, tire repair, fuel delivery, battery jump starts, lock outs, and minor repairs when your car is disabled.
- Car rental - This will allow you to get a loaner vehicle should yours be involved in a claim.
- Full Glass - You do not have to pay the comprehensive deductible should you need to replace any windows. As cars get smarter and have more sensors, this is a good coverage to add as it covers the glass and any sensor recalibration.
- Replacement Value - Should your car get totaled, you could get the newest year, make and model of your car.
- Loan/ Lease Gap - This provides coverage for the difference between what you still owe on a Loan/ Lease of a vehicle and the value of your car after depreciation.
- Original Manufactured Parts - The standard policy will fix your car using aftermarket parts and work with any auto shop. While most auto shops are generalists, having this coverage will allow your car to be looked at and worked on by specialist to make sure it is same look, feel, and safety standards while using parts from the manufacturer.
#7. You Can Negotiate Your Insurance Rates
Many people think the premium you pay is set by your agent and that’s why people with the same coverage living right next to each other will have different rates. But when it comes to insurance, every person and every situation is different. Every company calculates your rates by considering your insurance score (similar to credit score), claims history, driving record, location, and other factors to determine the risk they’ll take by insuring you. The rates are then sent to the state’s Insurance Commissioner for approval before the agent gets access to them. The rates are determined by many factors—several of which are firmly within your control—and are non-negotiable. The best ways to lower your premiums are to pay your bills on-time, drive safely, and make choices and purchases that improve the safety of your home and car.
At The Starr Group, we are a full-service risk mitigation agency that strives to educate you about coverage needs at each stage and situation in your life. This is why we want to make sure you have a smooth claims process at the time of a loss. Please feel free to give me a call at (414) 761-4824 or email me mbriceno@starrgroup.com to build a strategy and make sure you and your family are protected.
CEO / INTEGRITY LIFE INSURANCE GROUP : NPN: 4269864 *** Protecting your families with Integrity: Insurance broker and licensed mortgage broker : NMLS 1030495
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