Getting the right insurance policy should protect your finances, not jeopardize them. But if you’re like most people, you might not even realize you’re making avoidable insurance policy mistakes.
From not reviewing your policy to choosing coverage based solely on cost, many oversights can cost you time, money, and peace of mind. In this guide, we’ll break down the top insurance policy mistakes and show you how to avoid them.
1. Shopping for Insurance Without an Expert
It’s tempting to go it alone. Online quotes are fast and easy. But without an independent agent, you could miss out on better coverage at a lower rate.
- You might not compare enough companies.
- You may misunderstand complex coverage options.
- You’re likely to miss out on custom discounts.
Fix it: Work with a licensed independent agent who can shop multiple carriers for the best fit, not just the cheapest price.
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2. Not Asking for Available Discounts
Many insurers offer discounts you won’t know about unless you ask. Up to 84% of homeowners miss out on available insurance discounts.
3. Blind Loyalty to Your Current Provider
Loyalty can come at a price. Many insurers offer better deals to new customers than to existing ones. Shop your policy every couple of years.
4. Focusing Only on Cost
Nearly 40% of Americans choose insurance based solely on price (J.D. Power 2023). But cheap premiums can mean poor coverage when you need it most.
5. Choosing Minimum Required Coverage
Massachusetts may require minimum coverage, but that doesn’t mean it’s enough. Talk with your agent to determine what truly protects you.
6. Relying on Group Insurance Alone
Only 45% of employer-provided life insurance policies offer sufficient coverage for dependents (LIMRA). Supplement with personal policies.
7. Providing Inaccurate Info on Your Application
1 in 10 insurance claims are denied due to errors or missing info on the application (NAIC). Always double-check details and update them as needed.
8. Not Updating Your Policy Regularly
Your insurance needs change. Set reminders to review policies yearly or after major life events like marriage, home purchases, or new jobs.
9. Skipping Beneficiary Updates
Make sure your beneficiary is up-to-date to prevent delays or misdirected payouts.
10. Ignoring the Fine Print
The exclusions and conditions in your policy are just as important as the coverage amounts. Read everything—or have your agent explain it.
Common Insurance Mistakes: At-a-Glance
| Mistake | Impact | How to Avoid |
|---|---|---|
| Only considering price | Insufficient coverage or high deductibles | Balance cost with benefits and policy terms |
| Not updating the policy | Coverage gaps during life changes | Review policy annually or after major events |
| Relying on group insurance only | Limited and non-portable coverage | Supplement with personal policies |
| Not reading exclusions | Denied claims for uncovered scenarios | Read the fine print or review with an agent |
| Skipping beneficiary updates | Delayed or misdirected payouts | Regularly update and document changes |
Need Help Fixing Insurance Mistakes?
Whether you’re unsure about your current coverage or shopping for a better deal, the LoPriore Insurance team is here to help.
FAQs About Insurance Policy Mistakes
What’s the biggest mistake people make with insurance?
They may not understand what their policy does and doesn’t cover, which can lead to costly surprises during a claim.
How often should I review my insurance policy?
Annually, or any time your life circumstances change.
Is it bad to switch insurance companies?
Not at all. In fact, shopping around could get you better rates or coverage.
How do I know if I have enough coverage?
Speak with a licensed insurance agent to review your needs.
Can an agent really save me money?
Yes! Independent agents compare multiple carriers and find discounts you might not discover on your own.
Conclusion
Avoiding insurance policy mistakes isn’t complicated—it just takes a little awareness and the right help. By reviewing your coverage regularly and working with an experienced insurance team, you’ll protect what matters most.
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