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With nearly one in 10 Americans jobless, foreclosed homes reaching record heights, and others forced to make ends meet with less money, many people are looking for ways to cut costs on their insurance premiums. There are smart ways to save on home and auto insurance; however, there also mistakes that can result in being dangerously underinsured.

The following examples are five of the biggest mistakes consumers make on their insurance:

  1. Insuring a home for its real estate value rather than for the cost of rebuilding.  When real estate prices go down, some homeowners believe they can reduce the amount of insurance of the dwelling on their homeowner’s policy. Beware! Insurance is meant to cover the amount if will cost to REBUILD your home, not the current market value of your home. In some areas of the country the market value can be less than the amount to rebuild. Always be sure you have enough coverage to rebuild your home in a total loss.  A better way to save: Raise your deductible. Increasing your deductible to $1,000 or $2,500 can save you $100’s off your annual premium.
  2. Selecting an insurance company on price alone.  While it is important to choose a company that offers competitive prices, always be sure the company is also financially sound with great customer service.  A better way to save: Ask your neighbors if their insurance is priced well, and if they are satisfied with their customer service and claims handling.
  3. Dropping earthquake insurance.  Damage due to earthquakes is never covered on a standard homeowner’s or renter’s policy. While the savings may seem enticing, it is never worth it if you live in an earthquake-prone area.  A better way to save: Before purchasing a home, be sure it is earthquake retrofitted. This will significantly reduce your insurance cost.
  4. Only purchasing the legally required amount of liability for your car.  In today’s bad economy, people are more willing to sue over car accidents than ever before. California’s state minimum liability limits of $15,000 per person, and $30,000 per accident are simply not enough. In the event you are liable for an accident in excess of those limits, you are required to pay out-of-pocket. Especially for people who own homes, limits of $100,000 per person and $300,000 are highly recommended. A better way to save: Consider dropping comprehensive and collision coverage on your vehicle worth less than $3,000. Your premium will decrease significantly.
  5. Neglecting to buy renters insurance.  A renters policy covers your possessions and additional living expenses if you have to relocate due to a disaster. Equally important, it provides liability protection in the event you are sued. A better way to save: Look into multi-policy discounts. Most companies will offer discounts on your auto policy of up to 20%. It some cases, the savings can even pay for your renters insurance!

Want to be sure are getting the maximum discounts allowed? Contact our agency for a free insurance review!

www.genemorganinsurance.com