Basic insurance mistakes you should avoid

Just as it is essential for you to have basic insurance coverage, it is also important you identify and minimise some common financial mistakes that people make.

 You should make sure that you have adequate coverage for your needs. It is also important to realise that basic insurance will protect your assets and finances from an accident or another damaging situation, says Miriam Caldwell, personal finance specialists.

 However it is common to make mistakes when it comes to insurance. Here she stated five most common basic insurance mistakes.

 One of the basic insurance mistakes is choosing not to have basic insurance. Deciding to save money by not having insurance is a costly mistake that you would not want to make. You should have car insurance that covers accidents and thefts. You should have renter’s or home owner’s insurance to cover thefts and fire.

Additionally, you absolutely need basic health insurance. Medical bills can add up quickly and if you do not have it you can be crippled financially. If you cannot afford a comprehensive health insurance policy, you should at least get a high deductible or catastrophic health insurance plan. Many people struggle to afford health care even with health insurance, and going without may lead to bankruptcy if you have one catastrophic health event.

 Another common mistake that will cost you is to over-insure yourself. It can be difficult to determine how much basic insurance you really need. This is especially true when you consider the liability insurance. She said you should talk to an insurance agent (usually an independent one is best) about your assets and how best to protect them. When you are younger, you will not need as much insurance, since you do not have as many assets.

 Caldwell said another common mistake is to under-insure yourself. This can be quite costly, when you realise that your basic insurance will not cover needed expenses.

You should consider the maximum amount your insurance will pay on each accident. If you have health insurance you should consider the maximum amount your policy will pay. A million dollars may seem sufficient, but if you were to have cancer or another major illness the costs of care may exceed that amount.

 According to her, you may have the wrong types of basic insurance or too many policies. You can waste your money buying policies that you are not likely to use. If you are young you do not need to get every type of insurance available. You should make sure you understand the policies that you are getting as well. If you understand what you signed up for you will not be surprised when it comes time to file a claim.

HOPE MOSES-ASHIKE