Insurance plays a crucial role in protecting your financial future, yet too few people know what coverage they currently have or really understand how it works. When it comes to your home and auto policies, if you find it impossible to remember what your insurance coverage is, let’s narrow it down to three very important coverages.
The homeowner policy protects you from financial loss if your home is damaged. Make sure you’ve got replacement cost coverage with a limit high enough to rebuild your home with today’s construction prices. And if you have a sump pump or drain in your basement, you’ll need Sewer/Drain Backup coverage which typically needs to be added by request. In claim situations, I’ve never heard anyone lament over having purchased too much of these coverages!
On the auto policy, the two important coverages are Personal Injury Protection (PIP) and Liability Coverage. PIP is what pays for the auto accident medical costs incurred by you and your resident relatives if they’re in an auto accident in your vehicle or someone else’s. Hopefully you’ve got Unlimited PIP because that’s the best protection you can buy and no other state in our country has PIP this good! Unlimited PIP pays out as long as you’re incurring medical costs from your auto accident, even for the rest of your life. Liability coverage is what protects you from lawsuits if you’re in an accident. We’re at an all-time high for people “lawyering up” when they’re in an accident and awarded damages are also at an all-time high. I’d personally consider a $500,000 limit to be the absolute lowest to purchase. Dollar for dollar, liability coverage is the least expensive coverage you can buy and skimping on it has never been riskier. After a lawsuit, nobody complains about having had too much liability coverage!
Contact your insurance agent for a good conversation about how your insurance protects your financial future from the costs of rebuilding your home, auto accident medical costs, and lawsuits. Ask for detailed explanations and a story about how the coverage works in real life. Once you get a handle on these three coverages, the other coverages get easier to understand and remember.
