5 common misconceptions about insurance.
In this article, we will discuss 5 common misconceptions about insurance. Understanding your insurance policy, coverage and rates can be daunting, but making sure you have the right insurance when you need it most is extremely important. Every day, our insurance advisors talk to customers and help them understand the ins and outs of home and auto insurance. Today we will cover some of the most common myths, misconceptions, and assumptions we hear from our customers to help you make informed insurance decisions in the future.
Table of Contents:
- MYTH: Your insurance policy is guaranteed to cover everything:
- MYTH: Filing a claim is always the answer
- MYTH: Mortgage companies will cancel your old insurance policy when you move
- MYTH: Staying with one carrier for many years will get you the best rate
- MYTH: You’ll save money by purchasing your state’s minimum coverage for auto insurance
1- Your insurance policy is guaranteed to cover everything:
The biggest and most important thing I’ve heard is a lack of understanding of what the term “replacement cost” truly implies. The vast majority think that their insurance contract will fully cover the cost of remaking their home, should it be necessary.
In reality, they are underinsured. Their current insurance coverage is often insufficient, and in case of harm, they will have to pay most of the expenses or even demolish their home. For example, a customer may not have sufficient coverage to replace their hardwood flooring and be forced to switch to laminate flooring.
Actually, insurance is something we all wish we never had to use, but having the right insurance policy is necessary to be able to restore your home and protect you from the unexpected. At styleveer We have a detailed process in place to ensure our customers are properly covered by their home insurance policy should they ever need to remodel.
2- Filing a claim is always the answer:
Many people feel that when damage occurs to their home or vehicle, they should always file a claim just to find out if the damage is covered. In reality, you don’t always have to make claims. Even a $0 payment can have a negative impact on your sum insured. This is important because your Insurance Score is based on your creditworthiness and claims history, and is used by insurance companies to determine your risk level.
If your insurance score goes down, you’re more likely to pay more premiums in the future. My advice is to check your insurance policy before filing a claim to determine if the cause of the damage is covered. Otherwise, you may not file a claim.
Even if the cause of the damage is covered, you should get an estimate for the repair and compare it to your deductible to ensure that the damage claim is worth making rather than paying out of pocket.
3- Mortgage companies will cancel your old insurance policy when you move:
A common misconception I hear is that your mortgage company will void your home insurance if you sell your home. The truth is that in all cases, whether you sell your home or simply switch to a new provider, the homeowner is responsible for canceling their policy.
If you choose to switch, the insurer can’t cancel the policy without your consent—either verbal consent or your signature on a special form. Make sure to contact your wireless service provider to cancel your policy.
4- Staying with one carrier for many years will get you the best rate:
I often hear the notion that being loyal to an insurance company always helps get the best rates. The truth is staying with an insurance company doesn’t guarantee you’ll get the best rates. In fact, the best way to get good insurance is to check yours about 30 days before your current policy renews each year (so you have plenty of time to look around and get a new policy).
There are many reputable insurance companies – some you may not know about at first – that offer competitive rates and may be good for you. This is especially true if you combine your home and auto insurance.
5- You’ll save money by purchasing your state’s minimum coverage for auto insurance:
Many people believe that the best way to save money on auto insurance is to get as little coverage as possible (your state’s minimum coverage).
The truth is that a higher liability limit will have a positive effect on your future insurance rates, saving you money in the long run. While you may be paying a slightly higher rate now, greater liability coverage in the event of an accident is far more important than a small fee increase.