When it comes to insurance, what you don’t know can hurt you. Even conscientious consumers who think they’ve covered their bases can find out, at the exact wrong time, that their coverage is insufficient.
Here are some common myths, nightmare scenarios that they could lead to, and how to avoid them.
Myth #1: I met with my broker a while ago and we picked the perfect coverage for my needs.
If at some time in the past, you sat down with your broker and purchased the coverage you needed, kudos to you. But when was that? Has anything changed in your life since then?
Changes to your family or business should trigger an insurance re-evaluation. Anything from a new baby or home renovation, to purchasing new equipment for your business or moving your business location, can affect your insurance needs. It’s worth checking in with your agent on a regular basis to see if your current plan provides enough protection.
Myth #2: Market value coverage is the same as replacement cost coverage.
These two terms describe vastly different things. It helps to think about both in terms of property insurance on your home. The market value of your home is what it is worth if someone wanted to buy it. The replacement cost is the amount it would take to rebuild your home on the same spot, to the same specifications and quality, if it were destroyed. The market value of your home can be completely different than the replacement cost, and fluctuations in market value often have nothing to do with what construction costs.
To ensure that you have the proper coverage for your home or other property, you would not only want to opt for replacement cost coverage, you should regularly review your policy to make sure your coverage limits keep pace with what replacements would cost.
Myth #3: Multiple individual policies are just as good as an insurance package.
You may currently have an array of different insurance policies, each one geared toward a specific need. It’s easy to feel like you are covered no matter what happens, right? However, almost every type of insurance has exclusions that you might not be aware of—for example, regular homeowner’s insurance won’t cover you in the event of a flood or an earthquake.
A well-crafted insurance package, whether for personal or commercial needs, is built to make sure you’re as covered as you can be, with no surprises and with no exclusions that you are unaware of. By combining the different types of policies, you need into one comprehensive package, you’ll get more peace of mind knowing that you’re fully covered with the convenience of one bill.
The experts at Stearns and Co. can help ensure you don’t fall prey to insurance myths that can leave you stranded when something goes wrong. Contact us today for a consultation.