Buying insurance can be intimidating. Just going through the process you may find yourself inundated with a wide range of unfamiliar words and phrases such as “indemnification” or “coinsurance” making everything seem a little more difficult to understand.
Yet in today's world it’s expected you take the responsibility to purchase insurance. In an effort to help a first-time buyer simplify the process, I thought I would sit down and ask for guidance from an industry veteran, a Personal Lines Insurance Consultant from R&R Insurance, Don Charpentier.
With the help of Don, I put together a solid Top 10 Tips for New Insurance Buyers. Whether you are looking for home, auto, renters, or any other kind of insurance, here are the top ten things that will help you through the purchasing process.
- Look for a Stable Agency
Don has been at several agencies in his career. In his experience, there is much more to an insurance company than its prices – you want to make sure to do your research surrounding its reputation too. There are many aspects that can be easily looked over such as the financial stability of the company. Take the time to look into their long-term track record, number of carriers, and customer ratings. If you take these steps to find a stable and reliable agency, your buying experience will be significantly less stressful.
- Find an Agent that You Trust
When investing in something as important as insurance, it is vital to make sure the people guiding you through the decision-making process are trustworthy. For instance, Don advises that you find an agent who is not selling insurance based off which company will pay them the most. They should rather be looking out for you, matching you with the best insurance for whatever you need coverage on.
- Assess Your Needs
Do not buy insurance solely based on what you see others buying. First, understand your specific needs. Go over your lifestyle, assets, and potential risks. Make sure to evaluate your spending abilities too, do you have enough to afford adequate coverage? As Don says, “If you don’t have enough coverage, what’s the point?” If you are in the financial position to do so, ensure that you have plenty of coverage. If you do not have enough coverage, you could end up responsible for paying out of pocket.
- Stay Honest
When communicating with your insurer, provide accurate information. Be truthful about your health, driving history, and any other relevant information, your insurers need to be prepared too! Even though it can seem embarrassing at times, providing accurate information could prevent claims being denied or your policy being canceled.
- Evaluate Your Deductible
Your deductible is the amount you pay out-of-pocket before your insurance kicks in. Generally, the higher your deductible, the lower your premium (monthly or annual payment). You will want to make sure that you can comfortably afford the deductible if you need to file a claim. Finding the right balance between premium and deductible is key to ensuring you do not face financial strain if an emergency occurs.
- Check for Exemptions
Unfortunately, sometimes insurance does not cover every situation that you would expect. It is vital to thoroughly understand what your insurance does and does not cover. Make sure to assess and understand these gaps so that you are not unprepared if a situation arises.
- Ask About Bundles
Many insurance companies offer discounts if you buy more than one type of insurance from them (such as bundling home and auto insurance). If you need multiple policies, bundling could save you some money while giving you coverage on what you need. Make sure to compare the prices of bundles and individual policies as well.
- Review Your Policy
Don believes it to be most beneficial that you review your policy whenever you go through any significant financial changes such as home renovations, new drivers, or health issues. By reviewing your policies, you can make sure that your coverage is still effective and sufficient for your lifestyle. Additionally, reviewing your policy periodically ensures that you are paying the best possible price.
- Do Not File Too Many Claims
If you are looking to file a claim, make sure to consult your agent first. Do not file a claim every time something happens, rather, only file claims for major expenses. Too many claims can lead to being uninsurable or significantly raising your rates. Depending on your financial stability, Don suggests that it may be more beneficial to pay for smaller expenses out of pocket to avoid raising rates or filing too many claims.
- Stay Loyal
Surprisingly, staying loyal to an insurance company could actually save you money in the long run. When you find a trustworthy agency to work with, stay loyal to them if possible. Remember – this is a partnership that requires mutual trust. It is not just a transactional relationship, but an advisory one too. If you become a loyal or long-time customer, you can consider asking about longevity discounts. Longevity discounts may result in better and more stable rates in response to your loyalty.
Closing Thoughts
As a first-time insurance buyer, it is easy to feel confused or intimidated by the process. However, by considering these ten pieces of advice, you can make informed decisions that will protect you and your loved ones for years to come. If you follow these tips, buying insurance may not seem so scary after all.
Have questions about your first policy? Contact an R&R Insurance personal lines agent, like Don Charpentier, today!
