Common Insurance Mistakes People Make

Money is too tight and time is too precious to waste either. Avoid these common insurance mistakes people make when buying insurance.

1. Never ever lie on an application.

Lying includes failing to disclose requested information and omitting information, as well as telling big fat whoppers. No matter how tempted you are it’s a mistake that will come back to bite you or your beneficiaries. Any lie or omission can justify cancelation of your policy, nullification of benefits and it can even prevent you from buying coverage in the future. Tell the truth, the whole truth and nothing but the truth. If there’s something on the application you don’t understand, don’t guess at an answer. Call your agent or the company’s 800 number and get an answer before you sign on the dotted line.

2. Review your policies annually.

Changes in your situation can affect your insurance policies. Getting married or divorced, having a baby, opening a home business, a death in the family, a change of address, a child moving out the home, a home remodel or major purchase  – all those events and many others could have an impact on your car insurance, life insurance, homeowners’ insurance and health insurance policies. Review all of your insurance policies at least once every year, or whenever a life-changing event happens and keep your information up to date.

3. Don’t let coverage lapse.

This is really easy to do if you use electronic fund transfers and change banks; or if you do automatic payments using a debit or credit card and cancel a lost or stolen card. Paperless billing is really convenient (and great for the environment), but a bill once a month in the mail, even if you make automatic payments, is a great reminder. Even more so if you pay quarterly or annually. While most insurers have a grace period, why risk it? Use a paper or electronic calendar to remind you when payments are due.

4. Pay on time.

Missing payments repeatedly will get you a bad credit rating that can have a negative impact on your premiums come policy renewal time. Put yourself on an auto pay program. Save on stamps and you might even save a little on premiums.

5. Don’t cancel your policy before the new one is in effect.

Spend a few minutes to coordinate this or you may find yourself needlessly exposed to risk. After all, accidents happen when we least expect them (which is why they’re called accidents).

6. Carrying too much or too little coverage.

Both can be major mistakes. Too much coverage (like comprehensive auto cover on a 15-year-old junker or life insurance if you don’t have beneficiaries) is a waste of money. Don’t buy what you don’t need. Too little coverage (say on your life insurance or personal liability policies) can leave you or your survivors exposed to risk. Assess your personal situation and get it just right.

When shopping for online insurance quotes, remember to keep these common mistakes in mind.