by R. Cleve Folger, CPCU, CIC, Partner
1. Choose a professional agent. Insurance policies are complicated. Not understanding coverage or the nuances between policies can be dangerous. Ask the people in Louisiana and Mississippi why they had problems after Katrina and most will tell you they did not have the proper coverage.
2. Home Insurance—Make sure you insure your home to its full replacement value. Too often, people buy insurance that equals their mortgage and after a few years it becomes woefully inadequate.
3. Home Insurance—If you have jewelry, make sure it is separately insured on a floater policy. The homeowners policy does not insure against losing or breaking jewelry.
4. Homeowners Insurance—Minimize your premium cost by increasing deductibles. Start with minimum deductibles of $500 or $1,000.
5. Auto Insurance—Make sure you look at your liability limits. A $10,000 loss five years ago could cost upward to $20,000 today. If you haven’t checked your limits lately, chances are you need to reanalyze. In addition to the claim being more costly, most people have an increase in net worth over time which becomes subject to claims settlement in the event limits are too low.
6. Auto Insurance—Reduce premiums by increasing deductibles on physical damage coverage. Also consider purchasing your auto insurance from the same insurance company that insures your home. Most companies give discounts for insuring both.
7. Make sure you purchase an umbrella policy. This provides an extra layer of liability coverage over your home and car. Remember, as discussed above, you need more coverage today than you did yesterday.
8. Life Insurance—Term insurance is far cheaper than permanent insurance. However, term insurance has an expiration date. So, consider a mix of term and permanent insurance to accomplish your retirement and estate plans.
9. Health Insurance—Make sure that coverage is adequate for the catastrophic event. There is probably no more important insurance than the insurance that maintains your health.
10. Long Term Care Insurance—Make sure you consider the burden you would place on others if you need care over a long period of time. Long Term Care insurance provides a method to preserve net worth and take care of the financial obligations if and when one needs medical care at home or a convalescent center.