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SMALL BUSINESS
Seven Common Insurance
Mistakes to Avoid
Previous-
Dave Martin, AP
Insurance is the product you buy in case the unthinkable happens. Unfortunately, by the time you need it, it's too late to make sure you have the right type and amount of insurance coverage. Make sure you don't make the following mistakes while buying financial protection against disaster.
Next: Not Shopping AroundMore from Bankrate:
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No. 1: Not Shopping Around
The most common mistake is that people don't shop around for insurance, says J. Robert Hunter, director of insurance at the Consumer Federation of America.
Hunter says if they would just read the insurance buyers guides offered by their state insurance departments and then call around to a few different companies, it could make a huge difference in the price they pay for insurance.
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Next: Only Comparing RatesMore from Bankrate:
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No. 2: Only Comparing Rates
You can check out insurance companies by looking at how they rank with third-party insurance rating companies, such as A.M. Best, Fitch Ratings, and Standard & Poor's.
Also examine a company's complaint ratio. State insurance departments sometime publish this information and the Web site of the National Association of Insurance Commissioners publishes these numbers.
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Next: Not Comparing AgentsMore from Bankrate:
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No. 3: Not Comparing Agents
Not all agents are created equal. First, make sure an agent is properly licensed, says Kansas Insurance Commissioner Sandy Praeger. Check with your state department of insurance.
Then make sure to get referrals and ask each agent some questions. "Ask them to explain the policy," Okumura says. "Ask what value they're going to bring to the table. How will they help you?"
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Next: Not Knowing Your PolicyMore from Bankrate:
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No. 4: Not Knowing Your Insurance Policy
Consumers' biggest mistake is not knowing what's in the fine print of their policies, says Etti Baranoff, associate professor of insurance and finance at Virginia Commonwealth University. They don't know what their deductibles are and don't realize what's not covered until disaster strikes.
She says consumers need to talk to their agents to find out what's not covered and do an evaluation each year.
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Next: Not Buying Certain TypesMore from Bankrate:
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No. 5: Not Buying Certain Types of Insurance
Don't skimp on health insurance no matter how robust you feel today. Also consider getting life insurance if you have dependents. Unless you have major assets to tap, think about getting long-term disability insurance.
Maintain an emergency fund of three to six months' worth of living expenses to take care of short-term disabilities, and get long-term care insurance as soon as it becomes feasible to do so.
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Next: Buying Unnecessary PoliciesMore from Bankrate:
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No. 6: Buying Unnecessary Policies
· Buying unnecessary life insurance coverage. Most people don't need life insurance on their kids, says Hunter. While the death of a child is tragic, financially it's not as detrimental as a breadwinner passing away.
· Buying specialized insurance. Be wary of purchasing too-specific variants of broader types of insurance. You may need life insurance, but you shouldn't buy it at the car dealership.
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Next: Not Updating Your CoverageMore from Bankrate:
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No. 7: Not Updating Your Coverage
Evaluate your coverage whenever you go through a life change, such as childbirth or marriage, but at least once annually. If the kids have left home, you can get more affordable auto insurance coverage. If you move from a house to an apartment, consider getting renters insurance to protect your belongings against fire or theft. For an annual review, do it 30 to 60 days in advance of renewal time, study it, and then look over your policies.
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