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Everything You Need to Know About Shopping for Insurance
It’s important to shop around and compare insurance products before you buy.
Everything You Need to Know About Shopping for Insurance
Need insurance but don’t know where to start? Get the facts here.
Accidents happen, and when they do, you want to be protected. Insurance can offer protection for you, your loved ones, and your assets, but what type of insurance and what kind of coverage do you need? Some insurance is required, and some is for your own peace of mind. In this article, we’ll look at what you should consider when shopping for insurance and how to get the best deals.
Coverage and Types of Insurance
Because there are so many different types of insurance, determining what you need can feel overwhelming. Let’s take it one step at a time.
First, let’s discuss coverage. Essentially, coverage is a promise that the insurance company will pay you when a certain accident or loss happens. Coverage is listed on your insurance policy, which is the contract between you and the insurance company.
Different types of policies will cover different kinds of losses.
Every state has some type of “financial responsibility” law, which means that you must have a way to pay if you or someone driving your car causes an accident. Most people purchase car insurance to meet this requirement.
Car insurance policies offer several types of coverage:
- Liability coverage protects you if you are at fault for a collision and pays for damage to the other vehicle or for bodily injury if someone gets hurt.
- Uninsured motorist coverage pays for damages if an uninsured (or underinsured) driver hits your vehicle.
- Collision coverage pays to repair damage to your vehicle if you are at fault. Collison is generally required by lenders or auto dealers for new vehicles and leased vehicles.
- Comprehensive coverage covers damage to your car due to theft, fire, or falling objects (such as rocks or trees).
Homeowners or Renters Insurance
Coverage may include:
- Damage to your home, garage, furniture, and other personal property due to a covered incident or theft
- Living expenses for temporary housing while your home or rental housing is being repaired
- Bodily injury or property damage that is your fault
- Accidents that happen in and around your home or apartment
- Limited coverage for valuables, such as jewelry
Natural Disaster Insurance
Standard homeowner policies may cover a wide range of natural disasters, but disasters such as floods, earthquakes, and infestations are generally not covered. It’s important to find a policy that provides the coverage that you need.
In the event of death, benefits could be used to cover the following:
- Funeral costs
- Income replacement for years of lost salary
- Paying off your home mortgage
- Paying off other debts
- College tuition for children
Premiums and Deductibles
It’s important to understand the costs associated with insurance and the difference between deductibles and premiums.
- Premium is the amount you pay for an insurance policy, which is generally paid monthly, every six months, or annually.
- Deductible is the amount you must pay before your insurance company will pay when you file a claim.
Generally, a higher deductible means you’ll pay a lower premium. Deductibles vary depending on the type of insurance. Deductibles for homeowners insurance typically run between $500 and $2,000. For auto insurance, you can choose deductible amounts from $0 (where you don’t have to pay any amount up front toward a covered claim) up to $2,000. The deductible on a homeowners or auto policy applies each time you file a claim.
How does a deducible work? Let’s say the collision coverage on your car insurance policy has a $500 deductible. You damage your vehicle in a covered accident, and it costs $2,500 to fix. You would pay $500 toward repairs, and your insurer would cover the remaining $2,000.
Questions to Ask Before Buying Insurance
Once you have an idea of the coverage you need and your budget, you can speak to an agent or shop online. You’ll want to ask about cost, coverage, and other specifics. Here are some examples of general questions, but you can come up with your own that are specific to your needs.
- How much will my premium cost and how often will I pay it?
- Will I be charged any extra fees?
- Are discounts offered?
- Can I spread my payments out?
- What happens if I skip a payment?
- What factors will increase my payments?
- Does this policy cover flood damage?
- What would be covered in a hit-and-run accident?
- Does this policy apply to a new baby?
- What is the term of coverage?
- When does my coverage begin?
- How long should I maintain this insurance?
- What information is necessary for filing a claim?
- Is filing online possible?
- Can someone file a claim on my behalf if I cannot?
How to Avoid Bad Deals
It’s important to shop around and compare insurance products before you buy. Watch out for companies that might try to overcharge you or sell you insurance you don’t need.
- Research the company online and make sure it’s licensed in your state. It’s also a good idea to check out customer reviews.
- Avoid companies that don’t let you talk to a live person.
- Steer clear of aggressive insurance agents, especially if they try to pressure you to make decisions. Some shady agents will try to use fear or intimidation to sell you insurance.
- When comparing quotes, be skeptical of companies that offer significantly lower premium costs (more than 15% to 20% lower) for nearly identical coverage.
- Check out multiple companies and compare a variety of quotes that suit your needs.
Arm Yourself With Info
While shopping for insurance can be complicated, if you do your research and compare companies and quotes, you should be able to find the best policy for your needs. If you need assistance, reach out to your financial institution.
Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.
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