As we discussed recently, likely the
largest financial investment you will make in your life is in the
property you reside in. Not surprisingly, then, many options have
evolved over time in terms of ways that you can protect this
investment. This is certainly true of the home insurance aspect of
protecting your property: there is a great deal of customization
available to you. This is to your advantage, not only because it
ensures that you are getting specifically what you need, but also
because it ensures that you are spending only exactly what you need
to in the areas that will best serve you. With that freedom comes the
responsibility of making sure that you are getting precisely what you
need. All too often, people treat insurance as something that has to
get done, thinking of it simply as something to do a quick and dirty
job of just to tick it off the list. If that's you, you may be losing
money on your insurance plan. Here are the most common ways this
happens:
Settling for the first option you
find. You are your primary advocate. This has to be the case
simply because nobody knows your circumstances and needs as
intimately as you do. The only way to ensure that you are meeting
those needs is to communicate them clearly to a potential provider,
and then to critically assess how well this provider is willing and
able to meet them. To maximize success in this endeavour, it is
necessary to: (A) ask plenty of questions, and (B) speak to plenty of
providers, choosing the one that best meets or (ideally) exceeds your
expectations.
Buying more coverage than
you need. We certainly don't advocate
skimping on the coverage you need. After all, nothing is more
wasteful than buying into an insurance plan that doesn't give you the
coverage you need in the end. That said, you can assess whether it is
unlikely for you to face a certain type of calamity, and if it is, to
opt out of that coverage. Do this with caution though: there are many
types of crises that simply cannot be anticipated (such as fires and
thefts). And if you do go this route, do so realizing that it may
cost you more if you do have to make a claim.
Purchasing separate plans.
Your home isn't the only item you are insuring; you have
at least one other item you are paying insurance for in your vehicle.
Are your home and your vehicle insured separately, perhaps by
different providers? If so, you are likely losing money here. In this
regard, insurance is a bit like phone/internet/cable plans: you get
better rates when you take a package. Note, however, that this
doesn't automatically mean that all insurance packages are
necessarily cheaper than patchwork plans. You still have to shop
around to ensure you're getting the best rates.
Trying to DIY. Certainly there is a higher upfront cost to seeking the advice of a professional. Many people seek to bypass that preliminary cost by doing the research themselves. If you are considering this route, be honest with yourself about your capabilities. Are you sure that they will match the expertise of a professional? Will you find yourself the best rates and know how to navigate the terminology and the insider's resources that a broker has access to? The last thing you want to do is work hard to find the cheapest rate possible, only to find—at the time of crisis—that your coverage is next to nil. Remember that the cost of a professional is a one time thing; the cost of a DIY mistake could be ongoing.
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