Insurance can be a tricky purchase. Your lien-holders and mortgage lender may be satisfied, but this simply isn’t enough! The average household in Michigan pays close to $3400 per year on their home and auto coverage. That combined with health and life insurance, with the amount you spend, shouldn’t it cover your family the way you intend it to? Below are 4 mistakes that our agency sees on a daily basis. Hopefully going over a few of these will help make the whole process that much easier for you.
Mistake #1: Having Only the Required State Minimum Liability Insurance In Michigan, the minimum coverage of 20/40/10 is required in order to drive. In almost all cases, this is nowhere near enough coverage! Choosing only the minimum liability insurance could leave you open to a lawsuit, garnished wages, or potentially losing an asset, like your home. Discuss different liability amounts with your agent to see what is necessary based on your income, net worth, and liabilities. (Another bonus? It won’t be near as much as you might think!) You can email or contact us with a copy of your policy for a free review now.
Mistake #2: Insuring Your Home for Actual Cash Value (ACV) Many people think they only need enough coverage to insure their home for the amount they paid for it. Not true! Generally, you need to be insured for the amount of money it would cost to replace your home. If a fire or tornado destroyed the house, you would need insurance to replace it. The total cost could be tens of thousands more than the house would have sold for on the market. If you’re currently only insured for the cash value of your home, you could be at risk! Make sure your agent runs a report called a “Replacement Cost Estimator”. This is only as accurate as the information you provide, so it pays to spend a few minutes with your agent adding in as many details about the interior and exterior of your home as possible.
Mistake #3: Buying Life Insurance Only through Work Most people tell me that they have life insurance through work and aren’t interested in purchasing their own coverage. This is also a mistake. The problem? Most policies provided by your employer you can’t take with you if you left your job. So unless you are staying in your job for the next 30 years, it pays to look into something on your own in addition to what work provides for you. Think about it, if you develop health issues and leave your current employer….you might not be able to get coverage again! When you purchase your own life insurance (which can be very affordable), you are covered no matter where you work or what health problems you might develop in the future. It’s the smarter choice! And with this it’s not a one or the other type of scenario. You can have both if that makes sense for you.
Mistake #4: Purchasing the Cheapest Policy It’s tempting to shop for insurance and just pick whatever is the cheapest, but it’s usually not the best idea. Would you hire a tile guy to install your roof just because he was the cheapest? Probably not. First, make sure that you’re buying from a trusted company. You want a solid carrier that you can trust to pay claims. And you want to make sure you’re comparing comparable coverage. Does the cheaper policy only insure your home for cash value instead of replacement cost (like mistake #2)? Does one company exclude water leaks but another cover them? Is your deductible higher on one verses the other? Big details can be hidden in the small print!
Best way to avoid ALL of these mistakes? Work with an independent insurance agent! We know all about insurance and can find the right coverage for your specific situation. We’ll make sure your liability limits are high enough, that your home will be replaced after a loss, that you won’t lose your life insurance when you change jobs, and that you aren’t buying an inadequate policy that doesn’t protect you.
Contact us today for second look on your policy.