The Importance of Comparison Shopping for Insurance
Introduction
For most of us, our first experience with insurance is buying car insurance to meet state laws or a lender’s requirement. But building a comprehensive insurance plan is an absolute necessity to anyone who wants to be in great financial shape.
At Insurify, we recognize that insurance is a vital part of a sound financial plan— not just another item on a to do list. It’s our mission to help people find the best deal on home and auto insurance products.
To use Insurify, users fill out a short form to receive real quotes fast and confidentially. We use proprietary AI technology to get you accurate results without sharing your information. You’ll get access to the best and cheapest homeowners and auto insurance quotes available to you.
Why Getting the Right Insurance Coverage Is So Important
Insurance protects you from financial loss. Without insurance covering your home, you could lose one of your most valuable investments after a storm or small kitchen fire. If you’re found uninsured and at fault for a car accident, your life savings could be wiped out in a flash.
No one likes to think about risk, but life is full of them. Insurance is a way to keep you, your investments, and your loved ones protected.
Coverage Types: What Kind of Insurance Do You Really Need?
In short, you should insure your major assets— anything that would cause financial ruin or a major financial setback. Plus any personal liability associated with that asset. This means you should consider policies for:
Your car
Your home
Your personal belongings
Your income
Your medical bills
When you buy home insurance or car insurance, you’re also buying personal liability insurance. Your car insurance protects you in the event that you damage someone else’s body or property. Your home insurance protects you from certain lawsuits and when someone is hurt on your property.
Coverage Limits: How Much Insurance Do You Really Need?
Policy coverage limits are the maximum your insurance company pays in the event of a covered claim. If the claim costs more than the limit, you’re left paying the difference.
Unfortunately, there’s no one-size-fits-all when it comes to coverage limits. How much you need depends on:
The asset you’re insuring
The likelihood of suffering a loss
Your risk tolerance.
Let’s look at these more in depth.
The Asset You’re Insuring
How much coverage you need depends on the type of insurance you’re buying. Here’s a general overview of what you can expect to insure in different policy types and how to determine your coverage limits.
Car Insurance
You’re insuring your vehicle and your liability with car insurance. If your car is worth less than $5,000 you may not need collision and comprehensive coverage. But for most drivers increased liability coverage is the right move.
Consider the cost of medical bills and vehicles— it’s easy to see that $50k of medical coverage and $25k of property coverage can run out quickly. Setting higher liability limits usually costs a few dollars more than lower limits. That’s a very low cost for valuable coverage.
Home Insurance
What people often get wrong about home insurance is setting coverage limits based on the market value of the home instead of rebuilding costs. If your home is damaged, you pay to rebuild. Always use this cost to set your coverage limit.
When it comes to liability protection, always check to see what the cost is to raise your limits. Lawsuits and medical bills can easily get out of hand, and often higher personal liability is only a few dollars a month.
The Likelihood of Suffering a Loss
Understanding your exposure to risk is actually really hard. In fact, humans are terrible at it. But that doesn’t mean you can't make educated guesses (or speak with a professional).
You should protect yourself against perils that pose you reasonable danger. Things like:
Floods
Earthquakes
Tornados
Windstorms
Identity theft
Personal injury
Special Considerations
For some, standard policy types still leave vulnerable holes in their insurance plan. Cover your gaps with additional coverages such as umbrella policies or supplemental insurance.
Your Risk Tolerance
Finally, you should consider your tolerance for risk. This is not the same thing as not getting insurance when you clearly need it. It’s never a good idea to be uninsured or underinsured.
However, some people will someday choose between adding collision and comprehensive coverage to an aging car. For some, they see the added cost of coverage worth the protection. For others, keeping extra in the emergency fund to replace the car is a better option.
When it comes to decisions like these, the answer comes down to your tolerance for risk— plus how much you keep in your emergency fund.
How To Save on Insurance Coverage
There are many ways to save on insurance premiums, so many that we can’t cover them all in this short post. But here’s a general overview:
Use discount programs
Raise your deductible (within reason)
Lower your coverage limits (within reason)
Comparison shop for insurance regularly
Comparison shopping may not sound like fun, but don’t sleep on it. It’s the easiest way to save on insurance premiums.Using a tool like Insurify (and we do hope you’ll give ours a shot!) saves you time when you need to save money.
Fill out a brief form and switch when the price is right. Rest assured: you control your information. We never sell personal information. In fact, we only make money when our product delivers you with a better insurance deal— all the more incentive to do our job right!
We know that you, as a Financial Gym member, take your money seriously. We take it seriously, too. We just want you to be able to save for and spend on better things than overpriced insurance.