Five Insurance Mistakes to Avoid and Still Save Money

Here are 5 great points to start the year off right provided by Adrianne Peixotte of ProInsurance.

1.  Insuring a Home for its Real Estate 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.  But 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.  Raise your deductible.  An increase from $1000 to $2500 could save up to 25% on your premium payments.
2.  Selecting an Insurance Company by Price Alone.
It's important to choose an insurer with competitive prices, but also one that is financially sound and provides good service.  Check the financial health of insurance companies with independant rating agencies and ask friends and family for recommendations.  Select an insurance company that will respond to your needs and handle claims fairly and efficiently.
3.  Only Purchasing the Legally Required Amount of Liability for Your Car.
In today's litigious society, buying only the minimum amount of liability means you are likely to pay more out-of-pocket if you are sued--and those costs may be steep.  Consider dropping collision and/or comprehensive coverage on older cars worth less than $1000.  Insurance industry groups generally recommend a minimum of $250K of bodily injury protection per person and $500K per accident.
4.  Dropping Flood Insurance.
Damage from flooding is not covered under standard homeowners and renters insurance policies.  Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies.  Many homeowners are unaware they are at risk for flooding, but in fact 25% of all flood losses occur in low risk areas.  Furthermore with significant snow fall this winter, spring related flooding may be particularly severe, thus increasing the importance of purchasing flood insurance.  Before purchasing a home, check with the NFIP to determine whether the property is situated in a flood zone; if so, consider a less risky area.  If you are already living in a designated flood zone, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance.  Information on flood insurance can be found at www.FloodSmart.gov.
5.  Neglecting to Buy Renters Insurance.
A renters insurance policy covers your possessions and additional living expenses if you have to move out due to an insured disaster, such as a fire or hurricane.  Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.  Look into multi-policy discounts.  Buying several policies with the same insurer, such as renters, auto and life will generally provide savings.