The New Year is often a time to clear out the clutter, set intentions, and get things in order. Yet, one thing many people forget to review during this fresh start is their insurance coverage.Homeowners insurance and auto insurance are meant to safeguard what matters most – your home, your car, and your peace of mind. But mistakes in managing these policies can leave you vulnerable when you need protection the most.
Here are five common insurance missteps you'll want to avoid this year, along with actionable tips to ensure you're adequately covered.
MISTAKE #1: UNDERESTIMATING HOMEOWNERS INSURANCE COVERAGE
When was the last time you reviewed your homeowners insurance policy? Many people make the mistake of setting and forgetting their coverage, assuming it will cover everything that might happen. However, your coverage might not reflect your current needs or the cost of rebuilding your home.
For example, if you've renovated your kitchen or added a home office, your current policy might not take these upgrades into account. Worse yet, some homeowners only insure their property up to its market value – not the replacement cost, which can leave them underinsured in a disaster like a fire or hurricane.
What to do instead:
- Schedule a policy review every year (the New Year is a perfect time!).
- Talk with your insurance provider to ensure your policy reflects the replacement cost of your home, not just market value.
- If you've made upgrades to your home, provide your insurer with those details – those changes could raise the value of your property, and you'll want your policy to reflect that.
MISTAKE #2: SKIPPING COMPREHENSIVE AUTO INSURANCE
Many people assume that basic liability insurance is enough, especially if they have an older car. While it's true that liability insurance is the minimum required by law, it won't cover things like theft, a hailstorm, or hitting a deer on your early-morning commute. Skipping comprehensive or collision coverage to save a couple of bucks could cost you thousands in the event of an accident.
Imagine driving home in icy conditions and sliding into a guardrail. Without collision coverage, you're on the hook for the repair costs, no matter how slick the road is. Now, add inflation and rising repair costs, and the gamble of going minimal could hit your wallet harder than you'd like.
What to do instead:
- Consider your car's age, condition, and value to determine whether comprehensive and collision coverage makes sense for you.
- Ask your insurer about bundling options to save money without sacrificing coverage.
- Remember that risks like theft, natural disasters, or road accidents don't take a backseat, no matter how old your car is or how careful you are as a driver.
MISTAKE #3: NOT UPDATING YOUR POLICIES AFTER LIFE CHANGES
Life doesn't stand still, and your insurance needs shouldn't either. But people often forget to update their homeowners and auto insurance policies after big changes, leaving gaps in their coverage.
For example, if you've recently gotten married, moved to a new city, or added a new driver (like a teenager) to the family, your insurance policies should reflect those changes. Similarly, if you've acquired valuable items, like new jewelry, artwork, or expensive electronics, you'll want to make sure those are covered.
What to do instead:
- Notify your insurance agent about any major life events, such as a marriage, a move, or a new driver in the household.
- Conduct a yearly inventory of your belongings to ensure your personal property coverage is current.
- Consider adding a rider or endorsement for high-value items, as your standard homeowners insurance might limit covering things like jewelry.
MISTAKE #4: CHOOSING PRICE OVER PROTECTION
Saving money is great, but choosing the cheapest insurance policy can often backfire. Low premiums typically come with stripped-down coverage, higher deductibles, or exclusions that could leave you uncovered when disaster strikes. While it's tempting to focus solely on cost, it's far more important to evaluate what you're actually getting for your money.
Take homeowners insurance, for example. A bare-bones policy might not include coverage for water damage, earthquakes, or even certain weather event, depending on where you live. Similarly, opting for the cheapest auto insurance could mean footing the bill for costly repairs after an accident.
What to do instead:
- Compare policies based on the coverage offered, not just the price tag.
- Make sure to understand what's included – and excluded – before signing a policy.
- Keep in mind that spending a little more upfront for better coverage can save you thousands in the long run.
MISTAKE #5: OVERLOOKING DISCOUNTS AND BUNDLING OPPORTUNITIES
Surprising as it sounds, many people leave money on the table by not taking advantage of discounts or bundling options. You might already be eligible for savings based on your home security features, driving habits, or even your occupation.
Similarly, bundling your homeowners insurance with your auto insurance is one of the simplest ways to cut costs. Still, this is where working with a knowledgeable insurance professional can make all the difference – they'll know what discounts are available and help you find the best deal.
What to do instead:
- Ask your insurer about discounts for things like installing a security system, having a history of safe driving, or maintaining good credit.
- Explore bundling your policies; many insurers offer significant savings for multi-policy holders.
- Work with an expert who can help you uncover hidden opportunities for savings.
The New Year is an ideal time to reflect, regroup, and prioritize your financial well-being. By avoiding these common insurance mistakes, you'll protect your home and car and ensure peace of mind for whatever comes your way.
Take the time to review your policies, make updates as needed, and work with trusted experts who put your needs first. Don't wait until it's too late—reach out to SimplyIOA today to start the year off right with the proper protection for you and your family. Start by speaking to a SimplyIOA agent at 833.872.4467 or getting a quote online now.
