With nearly one in 10 Americans out of work, and others
forced to make ends meet with less money, many people are looking for ways to
cut costs.
There are many ways to save on home and auto insurance. Be
careful, though, not to make mistakes that could result in your being
dangerously underinsured.
“When money is tight, it’s extremely important to be
financially protected against a catastrophe with the right amount and type of
insurance,” said Jeanne M. Salvatore, senior vice president and consumer
spokesperson for the Insurance Information
Institute (I.I.I.). “By taking a few simple steps, it is possible to cut
costs and still be protected should disaster strike.”
According to the I.I.I., these are the five biggest
insurance mistakes that people often make:
1. Insuring a home
for its market value rather than for the cost of rebuilding. When real
estate prices go down, some homeowners may think they can reduce the amount of
insurance on their home. Insurance is designed to cover the cost of rebuilding,
not the sales price of the home. You should make sure that you have enough
coverage to completely rebuild your home and replace your belongings.
A better way to save:
Raise your deductible. An increase from $500 to $1,000 could save you up to 25
percent on your premium payments.
2. Selecting an
insurance company by price alone. It is important to choose a company with
competitive prices, but also one that is financially sound and provides good
customer service.
A better way to save:
Check the financial health of a company with independent rating agencies. You
should select an insurance company that will respond to your needs and handle
claims fairly and efficiently.
Financially strong insurers like Erie Insurance have the
financial wherewithal to ensure that payment is made when it’s due. ERIE ERIE ERIE
3. Dropping flood
insurance. Damage from flooding is not covered under standard homeowners
and renters insurance policies. Many homeowners are unaware they are at risk
for flooding. Coverage is available from the National Flood Insurance Program (NFIP),
as well as from some private insurance companies. Erie Insurance offers coverage through
American Bankers.
A better way to save: All types of
homes, including condominiums, are eligible for flood insurance. You can even purchase
flood insurance to protect your contents if you rent your home. It’s a good
idea to start the process as soon as you can because most flood insurance
policies have at least a 30-day waiting period before they take effect. If you’re
already living in a flood zone area, look
at mitigation efforts that can reduce your risk of flood damage. Before
purchasing a home, check with the NFIP to determine if it’s in a flood zone; if
so, consider a less risky area.
4. Only purchasing
the legally required amount of liability coverage for your car. In today’s
litigious society, buying only the minimum amount of liability coverage means
you are more likely to have to make out-of-pocket payments — and those costs
may be steep.
A better way to save:
The insurance industry and consumer groups generally recommend a minimum of
$100,000 of bodily injury liability protection per person and $300,000 per
accident. Also, consider dropping collision and/or comprehensive coverage
on older cars worth less than $1,000.
5. Neglecting to buy
renters insurance. A renters policy covers your possessions and additional
living expenses if you have to move out due to a disaster. Equally important,
it provides liability protection in the event someone is injured in your home
and decides to sue.
A better way to save:
Look into multi-policy discounts. Buying several policies with the same
insurer, such as renters, auto and life will generally provide savings.
Not all companies are licensed or
operate in all states. Not all products are offered
in all states. Go to erieinsurance.com
for company licensure and territory
information.
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