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Buying Insurance Can Be Confusing

| February 23, 2020

Buying insurance can be confusing, but when the unexpected happens – a house fire, a fender bender or a broken bone – it's a relief to know that some of those financial losses will be covered. But how do you know how much coverage you need? Here are 5 myths about insurance.

1. Assuming insurance is out of reach. Approximately 48 million Americans have no health insurance. And about 30 percent of U.S. households do not have life insurance. In some cases, consumers skip insurance because they think it's out of their budget. Often, that's not the case.
When buying health insurance or property and casualty insurance, ask about potential discounts. Many consumers don't realize they can get financial help if they buy their health insurance through the health insurance marketplaces. While health insurance discounts are often income-based, homeowners and auto insurers offer discounts for everything from being a good student or a good driver, to having a home security system.

2. Relying on assumptions or outdated figures. Changing economic conditions mean you might need more insurance coverage than you had in the past. Consumers might have based their life insurance coverage on their current income, but if something happens and you're no longer around, you need more capital at work to provide the same income. Disability and long-term care insurance are even more complicated than traditional life insurance. For disability, do you want coverage that lasts forever? Are there health issues in your family?
For homeowners insurance, your home could be underinsured if you've renovated or if the cost to build a home has increased due to higher material costs or other factors. That's why you should review your insurance coverage once a year to make sure it fits your current needs.

3. Shopping on price alone. Comparing insurance policies can be confusing, but resist the urge to simply choose the policy with the lowest premium. Consider the company's reputation and the coverage you'd get for that premium. Many times there are coverages that are not obvious. The “low rate” insurance flyers you receive could simply be less coverage, which is why they are cheaper.
Make sure you're shopping apples to apples and getting quotes based on the same coverage that you have. Your property and casualty insurance may not cover things like food spoilage in the event of a power outage or stolen electronics so you may want to purchase extra endorsements to cover these losses.

4. Glossing over the details. Make sure you understand what your insurance policy covers. For health insurance, it's cheaper to see doctors who are in-network and buy prescription drugs covered by the formulary. Otherwise, you could get an expensive surprise.
Unfortunately, a lot of people don't find out what coverage they should have had until they have a loss.

5. Setting your deductible too low. Setting a low deductible typically means higher premiums, and in the case of property and casualty insurance, a greater likelihood of small claims that could ultimately raise your premiums. Insurance is designed to protect against losses you could not cover yourself. Consider your own financial situation and how much of the risk are you willing to assume?

Call HSBR Insurance for guidance for all your insurance needs.