How to Get the Right Insurance Coverage at the Right Price
This is a question as old as time. Back in the Roman Empire, folks would sit around the table and have this very conversation. “Petronius, what do you pay for your auto insurance? What coverage do you have?”
To which the reply would be along the lines of, “I don’t know, but my rates just went to 10 denarii! I hate those insurance companies!”
Knowing if you have the right coverage and for the right price is a story told over and over again. Let’s try to unpack some of it and help you put your head on your pillow at night and feel at least a little bit more confident with your insurance choices.
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This article is written by Karl Susman, an insurance agency owner and expert witness in state, federal and criminal courts. Karl has been helping consumers understand the complex world of insurance for more than 30 years.
First things first, understand that what is appropriate insurance coverage for you is not the same as what it may be for your friend, or neighbor, or family member. There isn’t any such thing as “the right coverage,” although certainly there can be the wrong coverage.
Figure out what you want or need
Insurance is not a commodity — one size is not the same as another, and what one person’s needs may be entirely different from another’s. The most important first step is to figure out what it is that you want, or need. I suggest starting with an insurance professional to assist with this step.
With a licensed insurance professional, you should be talking about things like:
- What is it you are looking to insure? Your house? Your car? Your jewelry?
- What do you want it insured against? Damage by fire? Theft? Vandalism?
- How do you want to be compensated if there is a loss? Fix it? Replace it? Pay you cash?
- How much can you shoulder on your own before you want the insurance company to start compensating you?
These are some fundamental questions that need answers. Although you may think some are obvious, they aren’t. Although you may feel you don’t have a choice, you do. You have more choices than you can imagine.
You need to ask the questions to get the answers, and you need the answers to those questions in order to properly ascertain the insurance coverage you are looking for.
Finding the right person to help
You may find that you need more or less coverage than you already have. You may find that one insurance company offers something another excludes.
To make things more unique, one insurer may offer precisely what you want but only if you ask for it specifically — a policy addendum, if you will, that we refer to as an endorsement. All of these things are out there; you just need to ask.
But, you may be asking yourself, how do you know what you don’t know? How can you ask questions on a topic you’re not familiar with?
This is where it is crucial that you spend the time to find a person who will take the necessary time to educate you on insurance coverage, not a person who will simply sell you a policy.
Knowing what coverage you have is crucial for you to have your expectations fulfilled during claim time. If there is a disconnect between what you think you are covered for and what you are actually covered for when a claim arises, the buck stops with us as consumers.
As good as some insurance agents and brokers are, mind-reading tends not to be part of their repertoire.
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Be sure you do your due diligence before a claim — spend the time to ask questions, get answers and make informed decisions — rather than being upset and frustrated after a claim. The only thing worse than having a claim is not having the insurance in place you thought you had.
If you are more of the self-educating type, there are many resources online that you can use to get some basic 411 on insurance.
The source matters, so stay away from the self-appointed experts on YouTube and instead look for non-profits that help consumers and insurance company FAQs.
These are places that will be full of information, and their only goal is to educate others on insurance.
Revisit your policies regularly
Finally, the only thing that we know for sure is that nothing stays the same. That means the insurance coverage you may feel comfortable with today will not be the coverage you likely want at some point in the future.
For this reason, it is important to revisit your insurance policies frequently. Look them over to make sure they still cover the things you want them to.
You may have made some purchases and forgotten to add them to your policy.
Just as likely, you may have gotten rid of something and still are paying a premium to protect it.
Taking the time to review what you have and what you are paying an insurance premium for is always a good use of your time.
Want to learn more about insurance? Visit KarlSusman.com.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
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