5 Common Insurance Mistakes to Avoid
Insurance is essential protection, but many people make costly errors when purchasing and maintaining their policies. Here are the top mistakes to watch out for:
1. Underinsuring to Save Money
Choosing lower coverage limits to reduce premiums can leave you dangerously exposed.
Consequence: You might face substantial out-of-pocket costs when filing a claim.
Solution: Balance affordability with adequate protection. Consider higher deductibles instead of lower coverage limits.
2. Not Updating Policies
Keeping the same policy year after year without reviewing changes in your life situation.
Consequence: You might be overpaying or have gaps in coverage.
Solution: Review all policies annually and after major life events (marriage, new home, job change).
3. Overlooking Deductibles
Not understanding how your deductible affects both premiums and claim payments.
Consequence: Unexpected high out-of-pocket costs when you need to file a claim.
Solution: Choose deductibles based on what you can comfortably pay in an emergency.
4. Ignoring Policy Exclusions
Not reading the fine print about what’s not covered.
Consequence> Surprise denials when you need coverage most.
Solution: Always review exclusions and ask about adding riders for special needs.
5. Automatic Renewal Without Shopping Around
Letting your policy renew without comparing other options.
Consequence: Missing out on better coverage or lower rates.
Solution: Get quotes from 2-3 insurers before each renewal period.