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Three Tips for Buying Insurance

What you need to know before purchasing home or auto insurance

Buying insurance has never been easier. In fact, some of the most visible companies in the industry have based their entire business model on making the purchase process as quick as possible. This has propelled the industry forward as every company has had to do what they can to meet customers’ expectations for delivering the modern insurance policy. But just because the process has become easier doesn’t change the fact that you are still entering into a complex legal contract with insurers. What could go wrong with taking something complex and making it as simple as possible?

Insurance policies have become a commodity where the lowest price wins. While price is a large factor in the overall value of an insurance policy, it is not the only factor. What should you know when purchasing home or auto insurance or comparing a new quote against your current policy?

Here are some tips:

Watch out for undersold limits of coverage.

If you’ve ever done a quote for auto insurance online, you may have noticed that they will steer you towards a coverage level just below what you currently have. The quote will likely not have coverage for things like windshield glass, roadside assistance, or rental car coverage. Homeowners insurance also excludes many coverages that need to be purchased separately include sewer drain and sump pump coverage, service line coverage, or equipment breakdown. Not having, or not having enough of, these coverages can lead to large out of pocket expenses.

Be careful to understand your deductible.

While auto insurance deductibles can be pretty straightforward there are some significant differences in home insurance deductibles, most notably the Wind/Hail deductible. In many areas, the most frequent cause of a claims comes from wind or hail damage. Some insurance companies have started to require a higher deductible usually based on a percentage of the insured value of your home. You could have a $1,000 deductible on your home for fire, theft, or water damage, but if a hail storm damages your roof, you could be on the hook for a much higher out of pocket expense to replace your shingles.

Beware the fine print.

Do you have a pet? If your policy excludes or limits coverage for dog bites, you would be responsible for any medical expenses caused by your pet.

Do you own a trampoline or a swimming pool? Insurance companies have different requirements for safety features surrounding pools and trampolines that might exclude coverage if someone is hurt while using them.

How about a property that requires you to own large equipment to maintain the yard and driveway? Not all insurance policies allow tractors or ATVs to be added to the policy, especially if the unit is ever taken off the property.

Any of these things can create an exposure for you that insurance companies are all too familiar with and, in some cases, don’t want to insure. The value an independent insurance agent brings is the knowledge to help you navigate all of the options available and find the right option for your unique situation.

Products sold through First International Insurance are not a deposit, not insured by FDIC or any other government agency, not guaranteed by First International Bank & Trust, may lose value.