Are There Gaps in Your Insurance Coverage?

You're probably not as well insured as you think you are. Read on to find the gaps in your insurance coverage, and get tips on how to close them.

Homeowner's/Renter's/Condo Insurance

Mind the Gap
Mind the Gap. Photo © Flickr user
  • If you've made improvements to your home since you last updated your policy, you may not have enough insurance to cover the cost of rebuilding your home, should a disaster strike. Sit down with your insurance agent, and make sure he has the latest information about your home, so it's adequately insured. Do this any time you make improvements. You may spend a few more bucks on your premiums, but it'll save you thousands, if you ever need to file a major claim.
  • Should someone get hurt on your property, your insurance will pick up the tab for any medical expenses and damages, but only up to a point. Anything that exceeds the limits of your policy becomes your responsibility. Just imagine what would happen to your finances, if someone were to sue you for millions and win? Protect yourself by purchasing an umbrella policy. It'll give you extra liability coverage that picks up where your homeowner's/renters/condo insurance leaves off. And bonus: a single umbrella insurance policy will cover both your home and your vehicles.

Why Everyone Needs Umbrella Insurance

  • Have valuable artwork, jewelry, electronics, collectibles or antiques? If so, you may need to add a rider (aka endorsement) to your policy to increase your coverage on these items. You don't want to have your $5,000 engagement ring stolen only to find that it's covered for $1,000.

Do You Need a Rider?

  • Lots of things can cause damage to your home, and not all of them are covered under a standard policy. To get flood, mudslide or earthquake coverage, you'll need to pay extra to tack it on to your policy. It's definitely worth the expense, if you live in an area that's prone to any of these problems.

Auto Insurance

  •  Full coverage insurance isn't really full coverage. Should you be found at fault for an accident (and sued for damages), that $100,000-$300,000 of coverage won't take you very far, and you'll be on the hook for the rest. Protect yourself by purchasing umbrella insurance to increase your liability coverage to one million dollars or as much as five.

Understanding Full Coverage Auto Insurance

  • Do you carpool to work or have other people's kids in your car on a regular basis? If so, that's yet another reason to purchase an umbrella policy.

What You Need to Know When You Buy Umbrella Insurance

  • Leasing a vehicle? Then, you need gap insurance. It's designed to make up the difference between what a car is worth and what you still owe on it. Why is that important? Because if your vehicle gets wrecked or stolen, you'll still be responsible for paying off your lease. And since cars depreciate quickly, you probably owe quite a bit more than your auto insurance company is going to decide your car is worth (and ultimately pay out). Without gap insurance, you'll have to make up the difference. With gap insurance, someone else will.

Learn More About Gap Insurance

  • If an uninsured or underinsured driver causes an accident, you may have trouble getting them to take financial responsibility for your injuries and damages. Review your policy to see if you have uninsured and underinsured motorist coverage, and if you don't, get it.

Learn More About Uninsured Motorists Coverage 

  • Ditching comprehensive and collision coverage may seem like a good way to save on your auto insurance, but if your car gets damaged in an accident that you caused, or something happens to your car (a tree falls on it; it's stolen; it suffers hail damage, etc.), you'll have to pay the repair or replacement costs. Make sure you can afford to cover the cost, before you decide to self-insure.
  • Have you done something to trick out your car since the last time your reviewed your policy? If so, you need to let your insurance agent know, so he can tweak your policy accordingly. Things to mention: body modifications, mechanical upgrades, wheel upgrades, a new stereo system, etc. And if you added an alarm system, be sure to mention that, too. It could earn you a discount.

Life Insurance

  • If life insurance is part of your benefits package at work, and you don't have any additional policies in place, you may not have enough insurance to provide for your family's needs (those work policies tend to be kind of meager). Spend some time thinking about how much money it would take to keep your family afloat. Then, bump up your coverage accordingly.

How Much Life Insurance Do I Need?

  • Another reason to buy your own life insurance: You may not be able to transfer your group life insurance policy, if you ever leave the company. And since life insurance premiums are set based on your age when you purchase the policy, the "wait and see" game could end up costing you a lot of money down the road.