Fear the Unknown!
6 Scary Insurance Misconceptions
There are lots of spooky things about Halloween such as ghosts, goblins and the unfathomable: running out of Halloween candy! Not many people add insurance to this list, despite the fact that a coverage gap could leave you and your family in serious financial trouble. Read on to learn about six of the scariest insurance misconceptions and how you can protect yourself.
1. “Full Coverage” Means Everything is Covered
When people talk about “full coverage” auto insurance, they often think it means their policy covers every possible scenario. But full coverage typically refers to a combination of liability, collision, and comprehensive coverage—it doesn’t include every type of potential loss. For example, you might not be covered for flood damage or other natural disasters unless you have a specific policy for it.
2. I Don’t Need Property Insurance If I Rent
Many renters mistakenly believe that their landlord’s insurance will cover their personal belongings in case of a fire, theft, or other damages. In reality, a landlord’s insurance only covers the physical structure of the building, not the personal items inside. Renters insurance is affordable and essential for protecting your belongings, and it often includes liability coverage in case someone is injured while visiting your rental.
3. My Home Insurance Covers Floods
One of the most common misconceptions about homeowners insurance is that it covers flood damage. In fact, most standard home insurance policies do not include flood protection. If you live in an area prone to flooding, you will need to purchase a separate flood insurance policy through the National Flood Insurance Program (NFIP) or a private insurer to be fully protected.
4. Minimum Auto Liability Coverage is Enough
While carrying the state-required minimum liability coverage for auto insurance may meet legal requirements, it often falls short of fully protecting you. If you’re at fault in an accident, minimum coverage may not be enough to cover medical bills, property damage, or legal fees, leaving you responsible for the remaining costs. It’s wise to consider higher limits or additional coverage, such as collision and comprehensive, to safeguard yourself against significant financial losses.
5. Life Insurance is Only for Breadwinners
While it’s important for the primary income earner to have life insurance, stay-at-home parents or others who contribute in non-financial ways should also consider coverage. Their work, whether it’s caregiving or managing a household, has a significant economic value. Without them, you’d likely face higher costs for childcare, household management, and other services.
6. Filing a claim is always the answer
A lot of people think that when they have damage to their home or vehicle, they should always file a claim, just to see if the damage is covered. In reality, you shouldn’t always file a claim. Even a $0 payout can negatively affect your insurance score. This is important because your insurance score is based on your credit rating and claims history, and is used by insurance carriers to determine your level of risk. If your insurance score goes down, you’re likely to pay more in premiums in the future. Talk to your agent and review your insurance policy before you submit a claim to determine if the cause of damage is covered. If it’s not, you shouldn’t file a claim. Even if the cause of damage is covered, you should get an estimate of the cost of repairs and compare it to your deductible to ensure the claim is worth filing, rather than paying out of pocket.
Understanding your insurance policy and what it does (and doesn’t) cover is essential to ensure you have adequate protection. Don’t fall for common misconceptions—always review your policy details with your agent and ask questions. That’s what we are here for!
Have questions about your coverage? Reach out to us today to make sure you’re properly protected.
