Property and casualty insurance can be complicated. This probably helps explain why some misconceptions about insurance persist, even among people who’ve been buying insurance for years. Here are some mistaken beliefs that are surprisingly common.
All policies are pretty much the same
Actually, there’s no such thing as a “standard” property or vehicle policy. Every homeowner, every commercial building owner, and every driver has different insurance needs. Many properties and vehicles are unique.
For many reasons, different insurers may charge widely varying amounts for similar coverage. It pays to work with a broker who’s affiliated with multiple companies, to help tailor the coverage to your unique situation.
You can fudge things a little on your application
In insurance, there’s no such thing as “a little white lie.” It’s important that you answer questions honestly and disclose all the information that the insurance provider requests when applying for a policy. Fudging the facts or “forgetting” to disclose information can result in coverage being reduced or denied, or even make you liable for fraud.
Lapsed coverage doesn’t matter
Letting a policy lapse before purchasing a new one seems harmless. Unless something happens while you’re uninsured, what difference does it make?
It can make a significant difference. Letting policies lapse or creating insurance gaps is risky behavior in the eyes of insurers. If they see a pattern of letting policies lapse, insurers may increase your rates or decline to offer coverage.
Your coverage limit should equal the market value
Your homeowner’s or commercial property policy should offer enough coverage to make you whole in the event of a fire, theft or disaster. If your building burns to the ground, for example, your insurance should cover the value of the contents and the cost to rebuild. If you own commercial property, your policy should also cover the loss of income due to business interruption.
That amount of coverage won’t match the amount you paid for the property or its current market value, and it shouldn’t.
Comprehensive means everything
Most vehicle policies offer two broad areas of insurance, collision and comprehensive. While comprehensive sounds as if it should cover everything, it doesn’t.
In simple terms, vehicle insurance falls into two parts: protection for property you damage and people you hurt in an accident, and coverage for you and your own vehicle.
Make sure you understand what liabilities your policy covers, and that your coverage matches your situation.
A covered home is … covered
Homeowner’s and commercial property policies don’t necessarily cover every natural disaster. Areas that are prone to floods and earthquakes, for example, may call for additional insurance.
High-value contents—such as jewelry, artwork, guns or collectibles—may also be excluded unless you’ve added additional insurance or a rider to your policy.
Particularly with art, collectibles or rarities, make sure you give your insurer a full list of covered items, documented with photos, receipts or appraisals. If in doubt, ask your agent or broker what you need to protect your valuable items.
If you don’t fully understand what is and isn’t covered in your insurance policies, get a full explanation from your agent or broker. Don’t assume that something is covered and then find out the hard way that it isn’t.
If you have any questions about your insurance coverage or would like a complimentary review of your existing policies, please call us at 877-576-5200.