The Burden of Unnecessary Insurance

Of course you want to have enough insurance to protect your family and your investments. But what about having too much insurance? Over-insuring your home or car can cause a financial burden and undue stress in an already tight budget. Why would you have full coverage insurance on a car that will not last another six months if you could accomplish the same protection with the state minimum ? Cadillac policies for a less than Cadillac car is not a smart financial decision.

What about overextending your health care coverage?

Although it sounds hard to believe, especially in light of the number of men, women and children who have little or no insurance at all, there are some instances where overpaying for health insurance is not only a major burden, it is also largely unnecessary. If you never take prescription meds, or the ones that you do take are commonly available through your local pharmacies $4 plan, then paying the additional premium for medications is not needed. You can save that money toward something more important. Know what you need, and only pay for the coverage and services that you will be most likely to use.

When you purchase or renew your homeowners insurance policy, have an appraisal done to be sure that you are covering the full value of both the home and the items that are held within it.

Conversely, do not over cover items that will have zero or low replacement value. If you have priceless antiques, cover them separately, with appraisals and pictures to back your claim if a loss occurs. Do not overstate your belongings and hope that the adjuster just assumes the listing to be accurate and truthful. The likelihood is that there will be many items that are either disallowed, or paid at a reduced value than what you originally claimed it at, meaning that you have paid an increased premium for absolutely nothing at all.

Carefully review your policies before each renewal period for any changes that may have occurred, especially if you multiple policies. Did one of your children “age out” of your policy? Or hopefully move out and get their own insurance? Have you sold the boat, the second car or the motorcycle? Make sure that each policy is for items that you actually still own and use before paying for your renewal.

For instance, my second car, an older Ford, only has fire and theft insurance on it right now since it is sitting immobile in my driveway. The savings from changing from a liability to the lesser comprehensive policy was substantial for me.

Yes, you have to carry liability insurance , but unless you have a newer or financed car, then you do not have to go to full coverage. Yes, there are some additional perks with the higher policy, but do they outweigh the additional cost involved?

If you are worried about the cost of a tow bill during a break down or accident for instance, investigate the cost of an auto club membership. If you can still save money by having the auto club cover mishaps on the road and keep the liability insurance, then why not? If the cost of the auto club exceeds the full coverage policy amount and you have valid reasons to worry about being stranded on the road, then it might be worth the additional cost for your own sense of security.

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