It’s that time of year when advisors are suggesting you take a fresh look at the important aspects of your life, especially when it comes to financial planning. As you go through that review, we suggest you include your personal insurance in your considerations. Not only does personal insurance help protect your balance sheet, but it can have a big impact on your cash flow as well.
Skeptical that homeowners and auto policies can affect your bottom line? Here are a few things to think about as you enter the New Year.
Are you wasting premium dollars?
You are if you have low deductibles.
It costs you extra premium dollars you probably shouldn’t be spending. The average person has an auto insurance claim once every five years and a home insurance claim once every five to ten years. Bet on yourself by increasing your deductibles and work to minimize your risk rather than see the cash go out the door to the insurance company.
Are you abusing your insurance coverage?
You are if you are submitting small claims.
Sure, you might think you’ve got it coming because you’ve been paying premiums for years. That line of thinking can get dangerous. The insurance companies will catch up and take your loss record into account for years to come – in some cases as long as five years. Insurance premiums are now determined by complex pricing algorithms, and claims history is a big part of that. Protect your record by avoiding small claims; keep the premium in your pocket by choosing higher deductibles and, when you do have a loss, make sure it’s really worth it to submit it to your carrier!
Are you raising your premium by not minding your credit score?
You are if your score is too low.
We’ve all heard the impact that you’re credit score has on your ability to secure a mortgage or get a preferred credit card, but it also has an increasing impact on your insurance premium. The pricing algorithms of most insurance companies factor your credit score heavily into your premium calculation.
Here are two things you can do: First, actively manage your credit score to keep it as high as possible. Second, make sure when you apply for insurance as a married couple, you apply in the name of the spouse with the better credit score. That can have a significant impact on your insurance premium.
Are you underestimating the impact an uninsured or underinsured motorist could have on your financial well-being?
You are if you think this is no big deal.
At least 15% of the drivers on the road have no insurance or very low limits. Look around next time you are driving – can you see six cars? Yup, one of those is likely a major threat to your family’s balance sheet! We’ll call them “Irresponsible Drivers.” Neither your basic liability insurance nor your umbrella policy will protect you.
Consider this scenario: Your family is on a trip and hit by an Irresponsible Driver who carries no insurance. Someone in your household has a very serious injury requiring hospital stays, rehabilitation, and loss of income. If the Irresponsible Driver carried proper insurance, that would pay for the costs. But since they don’t, those costs will be paid from one of two places – your bank account or the uninsured/underinsured motorists limit on your auto policy. Which would you choose?
Here’s another way to think about it? When you buy auto liability insurance and a traditional personal excess (or umbrella) policy, you are buying insurance limits that protect other people against accidents you cause. When you buy uninsured/underinsured liability protection, you are buying protection from the actions of others. You need both. It’s that simple.
Is the task of deciphering insurance daunting?
It doesn’t have to be.
There are plenty of reasons to talk to a professional insurance agent; these are just a few. Proper insurance doesn’t have to be overwhelming. Let the team at New Agency Partners help you understand the impact insurance has on your balance sheet and cash flow before it’s too late. Take that fifteen minutes, but make sure you invest in the right team!