Insurance is a critical centerpiece of risk management for consumers, yet many tend to seek out the biggest bargain around. If this is the approach, individuals need to be clear on what they will sacrifice for those savings.
Simply put, if an insurer emphasizes savings over every other consideration, they are likely not providing coverage options or limits that many customers need to adequately insure their assets - and their very peace of mind.
Shopping based solely on price can lead to devastating consequences.
A few of the common areas that will be missed in cheap personal insurance packages include:
- Original equipment parts for your car: Do you want aftermarket body panels used as part of a covered claim repair to your newer car?
- Lower deductibles: Some carriers might default you to a deductible higher than you want or can afford in the event of a loss to your home or vehicle.
- Higher liability limits: Think about the total value of your assets and all you could lose if you're sued. Some carriers commonly offer low liability limits to keep prices down - which could leave you heavily exposed.
- Replacement cost for your home: Should a total loss happen to your home, it's typically covered for what it is estimated to cost to rebuild it. Are you covered if the actual construction cost to rebuild is greater than the coverage limit stated on your policy?
- Cash out option: If your home is totally destroyed, will your carrier give you a cash settlement if you decide not to rebuild it?
"Insurance is a central component of personal risk mitigation."
Considering the fact that insurance is meant to be a central piece of risk mitigation and continuity, leaning toward convenience and speed rather than comprehensive coverage and accuracy can be a dangerous game. The balance between the coverage you need and can afford is rarely struck with a cookie-cutter approach.
Instead, make sure you are working with an independent agent, as specialized support and expertise can help to ensure that all potential risks are covered and you are not one major event away from potential economic disaster. By putting the effort into the analysis of risks and carefully finding the most affordable coverage for your specific needs, you can cover your bases while still not necessarily breaking the bank.