Potholes. The nemesis of drivers everywhere. They appear when you least expect them and they can do some real damage to your tires, your wheels, and even the frame of your vehicle. Potholes need to be filled quickly, before they get larger and damage more vehicles.
Insurance potholes act in the same way. They pop up when you least expect them and certainly when you don’t need them. When they rear their ugly heads they can do some real damage to your assets – especially your cash assets. Insurance potholes need to be filled too. And just like potholes in the road, it’s easy to put off fixing them. But procrastination with insurance potholes is a REALLY bad idea.
One of the biggest insurance potholes is a “gap” in coverage.
What is a “gap” in coverage? Other than a time gap, where you allow a non-payment of insurance premiums to cause your policy to lapse or go dormant, a gap in coverage occurs when what you want to insure is valued at more than the insurance you’ve purchased.
State law minimum requirements for car insurance vary from state to state but usually they’re very, very low. Many states only require you to purchase as little as $10,000 in property damage coverage per accident. So, if you have a car accident and it is deemed to be your fault, make sure the other vehicle isn’t worth more than $10,000. That means don’t hit an car less than one or two years old, no upscale European or Japanese models, no Cadillacs, Lincolns, or Corvettes. Think you can pull that off? If you have any doubts, you have a gap in coverage.
Far too many people believe that the younger crowd doesn’t need any life insurance but I disagree. Even if you don’t have dependents, the chances are very good you’ll have some final expenses associated with your untimely death .. should it occur. Do you really want your mother or father or other family members to have to face telling the hospital or your creditors that there isn’t enough money to pay them off? Do you really want your parents or family to have to shoulder the entire bill associated with your funeral? I know I didn’t. That’s why I bought a minimal policy, even before I had children, just so my wife wouldn’t face that ordeal.
Wait a minute! Isn’t your home insured for it’s replacement value? Where could there be a gap in that insurance? My answer: how much is your jewelry insured for? How ‘bout your electronics? What about any antiques, guns, furs, or other of those items typically capped at a ridiculously low amount on homeowners insurance policies? If you have those items included in your homeowners insurance policy as an additional rider, you don’t have that gap in coverage.
Has your home increased in value since you bought your policy? If it has, you may be underinsured. If your home has actually decreased in value, you may be over insured and need to decrease it.
You rent your apartment or house? You need renter’s insurance. Without it, if anything happens to the dwelling and you lose your personal belongings, you’re out of luck. Renter’s insurance is cheap.
I know the Federal government is supposed to swoop down sometime in the near future and save us from the evil health care industry, but personally, I’m not holding my breath. Your gap in coverage with your health insurance may come in the form of a higher than standard deductible ($2,000 per person and up). If it is, a supplemental health insurance plan can close that gap and provide you with the necessary coverage so you’re not left holding a bill that’s much larger than you realized.
What do you do if you find a gap in coverage?
I’d recommend checking out InsureMe. When you fill out their simple form, you can get quotes from insurance agents without the hassle. InsureMe’s research shows that consumers save 20-40% by receiving multiple quotes and over 60% of consumers would recommend InsureMe to a friend!
Even if you don’t want to try InsureMe, give your regular insurance agent a call and schedule a time you can both examine your gaps in coverage and make sure they’re filled as soon as possible.
Photo by Heneghan