Forward Bank

When it comes to buying insurance, what you don't know can hurt you. Learn how to identify the top 10 blunders and what to do to avoid them with these tips.

1. Buying insurance on price alone.

Although price is a key determinant on what insurance to buy its even more important to have a reliable company and agent available if a claim arises.

Take time to look into the reputation and the rating of the insurance company by looking at third-party insurance rating companies like A.M. Best, Fitch Ratings, Weiss, or Standard & Poor's. Make sure that the company will be there when you need them to be.

(Tip: Investigate an insurance company's complaint ratio by visiting the National Association of Insurance Commissioners website.)

2. Failure to fully understand your policy.

Take time in evaluating your coverage and make sure you fully understand what is included in the policy. Exclusions, addendums, limitations, restrictions, and other "fine print" can make a big difference in price and coverage. Don't be afraid to ask questions! It's a part of business.

(Tip: Actually read the policy and don't make assumptions.)

3. Forgetting to update policies or make changes when needed.

Life events require major updates to your insurance coverage; everything from marriage to taking an extended vacation may have insurance implications. Take time to plan in advance and notify your agent of any life changing events.

(Tip: Don't forget to update your name, address, and phone number if you have relocated, change of marital status, employment, or other significant life event.)

4. Making assumptions about your coverage.

Many people "think" they have coverage when they don't. Common situations include taking a rental car out of the nation (car insurance limits), traveling out of the country (may not have life insurance), relocating (homeowners coverage may not cover belongings in transit) or other common exclusions.

(Tip: Ask your agent! IF you have never taken the time to sit with your agent and talk about your insurance needs, assets and desired levels of protection make it a priority to do so.)

5. Paying late and missing deadlines.

If you are like most people then you might have a tendency to ignore all those reminders and updates sent from the insurance company; after all, they begin to look the same after a while. Big mistake! Take the time to open, review and act upon them. One of the most commonly encountered blunders is also the easiest to prevent – late payments! Don't allow your auto, homeowners or life insurance policy to be cancelled simply because you forgot the payment.

(Tip: Sign up for automatic payment of your insurance policies to make sure they are always paid on time.)

6. Skipping the important insurance products.

Most people focus on those types of insurance required by law or a mortgage company: auto insurance, homeowners insurance and perhaps employment provided health insurance. Unfortunately, that often leaves you vulnerable to some of the most frequently encountered problems including liability claims, disability and of course... loss of income.

(Tip: talk to your agent about affordable rates for frequent used insurances such as disability, life, long-term care, personal liability, and supplemental health and drug coverage.)

7. Failure to insure valuables separately.

Most homeowner policies have limits on jewelry, computers, electronic equipment and other valuables including business or hobby related items. Adding additional coverage for valuables is easy and inexpensive – just ask your agent about a rider to the existing policy.

(Tip: Take inventory of your belongings.)

8. Duplicating insurance.

It's particularly easy to duplicate coverage especially if you tend to use different providers for auto, home, life, health and other coverage. One of the benefits of working with one agent is the ability to coordinate coverage, have one primary point of contact for all your insurance needs and eliminate duplicate coverage (which also will save money!).

(Tip: When looking to buy insurance, ask your agent for multiple policy discounts if you switch all your policies to one provider.)

9. Buying before obtaining quotes.

Avoid unpleasant surprises and costly premiums by obtaining insurance quotes prior to making a major purchase. Not only will you have a better idea of how to budget for the new purchase but it often makes you aware of prior damages or other issues that can be hard to spot.

(Tip: Always obtain an insurance quote on the exact home, car, boat, or other major item before making the purchase.)

10. Naming title and other troubles.

What's in a name? A Lot! Another commonly encountered and easily overlooked insurance blunder is how a policy, beneficiary or title is recorded. Names matter especially when it comes to legal transactions. Areas most prone to problems include beneficiaries, ownership of real estate, cars, automobiles or other major investments as well as health or personal care coverage.

(Tip: Always use legal names and verify that each policy includes the item and owner(s) or beneficiary including social security number or other proper identification.)