This is a guest post by Gordon Insurance Agency, a Renaissance Alliance member agency. It is a post that was previously featured on the Agency’s Personal Insurance Blog.
Insurance can be puzzling- the more you know, the better. As surprising as this may sound, insurance is not entirely about the price. Thus, we’ve created a list of things-to-know about insurance for your convenience.
1. Amount of coverage
What do you want to protect? That’s the overall question for deciding the amount of coverage you need. The best advice we can offer you is for you to think about all the things that could potentially happen. Or consult a professional agent who will ask lots of questions to uncover areas you need to pay special attention. Although you might want to push these thoughts to the side (i.e. “that could never happen to me!”), someone has to think of these situations. Nobody plans for a car accident or a guest being injured at his/her house, yet these sorts of things happen all the time. A good way to cover a lot of these is by running down a prepared list such as this checklist for your homeowners insurance.
2. Risk level
The amount of risk you take sometimes depends on one aspect of your life: money. If you have available money, then choosing a policy with high deductibles is probably the best option for you. Remember, “Insure only what you can’t afford to lose.”
Obviously, this part of our list is also going to discuss risk. Some policies cover more than other policies do, so be informed on what risks you can afford to take, as well as what is the cost of transferring that risk (via insurance)? An example of this is would be a dog with a biting history. The only company that will offer coverage after a dog has bitten someone (resulting in an insurance claim) is the Massachusetts Fair Plan (MPIUA). But they might do so with a $25,000 limit of liability for dog bites. So you have to ask, is the dog worth that much to me that if he/she bites someone and it results in a $100,000 claim (we’ve had one here that exceeded that, and not even from a dog ‘on the list’), are you prepared to pony up the next $75,000? Make sure you know what is covered on your policy, and be careful with what chances you take where insurance doesn’t go.
3. Insurance company
People often assume that the insurance company will be able to handle anything and everything- you should never assume. If the company goes under, or even if the company stays around but has poor finances, then you won’t get what you need. The best way to make sure that your company will be able to provide for you is to check a credit rating agency. We recommend A.M. Best Company for this. Other credit rating agencies include Fitch Ratings and Standard & Poor’s.
Everybody loves saving money; discounts can be available all around you, and you might not even know it! For a list of most prevalent (MA) auto insurance discounts, click our video and list. For homeowners discounts, visit our short video on homeowners discounts here. Account discounts, where you have two lines or more (such as home and auto), are often the most compelling.
Always ask your agent questions, he/she is there is serve YOU.
5. When do I need to look at new insurance?
Certain life changes will cause you to look at new insurance. These changes include:
- Starting a new business
- Buying an additional home
- Adding a driver to the auto policy
- Changing jobs (especially if you leave a rich benefits plan for a bare bones benefits employer)
- Volunteer work (such as serving on the board of a non-profit organization)
This list just helps prove a very important point: insurance is not only about the price. For a few extra dollars, you can have all sorts of things protected. Think back to the dog example- imagine how expensive it would be to defend a bad dog bite without insurance! When it comes to insurance, price is important, but it’s not the only thing that matters.