Unsure of where to begin with insurance? Get the facts here.
We all know accidents can happen, and when they do, it's crucial to have some protection in place. Insurance can help safeguard you, your loved ones, and your valuable assets. But with so many insurance options available, it can be tricky to know which type and coverage are right for you. While some insurance is mandatory, others are for your peace of mind. In this article, we'll take a look at some important factors to consider when shopping for insurance and how you can snag the best deals.
Coverage and Types of Insurance
With so many insurance options out there, it's easy to get bogged down and feel like you're in over your head. Let's break it down one step at a time.
Before making a purchase, it is crucial to shop around and conduct a comparison of insurance products by exploring different options.
First off, let's talk about coverage. In essence, coverage is a pledge from the insurance company that they'll pay out when a particular loss or accident occurs. Your insurance policy lists the coverage you have, and it serves as a legal agreement between you and the insurer.
Keep in mind, various policies will provide coverage for different types of losses.
Every state has a "financial responsibility" law in place. That basically means that if you or someone driving your car causes an accident, you need to have a way to pay for it. Most folks opt to purchase car insurance to meet this requirement.
Car insurance policies come with various types of coverage to choose from, including:
Liability coverage: This one protects you in case you're at fault in a collision and pays for damage to the other vehicle or bodily injury if someone gets hurt.
Uninsured motorist coverage: If an uninsured or underinsured driver hits your vehicle, this coverage will pay for the damages.
Collision coverage: This one will pay for the repair of damages to your car if you're at fault. Lenders or auto dealers usually require collision coverage for new or leased vehicles.
Comprehensive coverage: If your car gets stolen or damaged due to fire, falling objects like rocks or trees, or other non-collision-related incidents, comprehensive coverage will cover the costs.
Homeowners or Renters Insurance
So, what all can you expect to be covered under your policy? Let's break it down:
- First and foremost, any damage to your home, garage, furniture, or personal belongings due to a covered incident or theft will be covered.
- In case your home or rental housing needs repairs and you require temporary accommodation, your policy will cover your living expenses during that time.
- If you accidentally cause bodily injury or property damage, your policy has got your back.
- Accidents that occur in and around your home or apartment will also be covered.
- And lastly, although it's limited, you'll have some coverage for valuable items like jewelry.
Natural Disaster Insurance
Standard homeowner policies often cover a lot of natural disasters. However, you should know that floods, earthquakes, and infestations usually don't make the cut. That being said, it's crucial to pick a policy that caters to your specific coverage requirements.
In the event of death, the benefits from your policy could be used to cover a range of expenses, such as:
- Funeral costs
- Income replacement to cover the salary you would have earned over the years
- Paying off your home mortgage
- Clearing off any other debts you may have had
- College tuition expenses for your children
Premiums and Deductibles
Understanding the costs of insurance and the difference between premiums and deductibles is key. Here are the basics:
- The premium is the amount you pay for your insurance policy, which is usually paid every month, six months, or year.
- The deductible is the amount you'll have to pay out of your own pocket before your insurance company kicks in and pays for the rest of the claim.
Generally, choosing a higher deductible will mean you pay a lower premium. Deductibles can vary depending on the type of insurance, like for homeowners' insurance it's usually between $500 to $2,000. For auto insurance, you can go from $0 to $2,000, where you don't have to pay anything upfront for a covered claim.
It's important to keep in mind that the deductible applies every time you make a claim, be it for your home or auto policy. So, let's say you have a $500 deductible for your car insurance and get into an accident that causes $2,500 worth of damage. You'd pay the first $500, and your insurer would cover the remaining $2,000.
Questions to Ask Before Buying Insurance
When you have an idea of the coverage you need and the budget you have, you can either speak to an agent or go online to shop around. It's important to ask specific questions about cost, coverage, and other specifics to make the right choice. Here are some general questions to consider, but you can also come up with your own, tailored to your needs.
- How much will my premium cost and how often do I need to pay it?
- Will there be any additional fees charged?
- Are there any discounts available?
- Can I spread out my payments?
- What happens if I miss a payment?
- What factors might increase my payments?
- Does this policy cover flood damage?
- What's covered in a hit-and-run accident?
- Will this policy apply to a new baby?
- How long will this coverage last?
- When does my coverage start?
- How long should I keep this insurance policy?
- What information do I need to file a claim?
- Can I file a claim online?
- Can someone file a claim on my behalf if I'm unable to do so?
How to Spot and Avoid Unfavorable Deals
When you're shopping for insurance, it's crucial to take your time and compare products from different companies. Unfortunately, some companies might try to pull a fast one on you by charging too much or trying to sell you coverage that you don't really need. Here are some tips to help you navigate the insurance market:
- Do your homework online and make sure the company you're considering is licensed in your state. Don't forget to read customer reviews, too.
- Avoid companies that only communicate through automated systems and never let you talk to a real person.
- Stay away from pushy insurance agents, especially the ones who try to scare or bully you into buying a policy. Trustworthy agents will give you the time and space you need to make a decision.
- Be cautious of quotes that are way lower than the others (like 15% to 20% lower) for essentially the same coverage. It could be a sign of shady business practices.
- Shop around and get quotes from several companies that offer policies that suit your needs.
Shopping for insurance can get pretty complicated, but if you put in the effort to do your research and compare companies and quotes, you can easily find the perfect policy that fits all your needs.
Save a Bundle
When you're checking out insurance options, don't forget to ask about bundling! Quite a few insurance companies offer discounts if you purchase multiple policies at once, like car, home, and life insurance. It could be a great way to save some extra cash!