The following blog post was written by our interns, Mauria Ferrell and Brady Gray.
Do you have enough insurance to cover your home or car if something unexpected were to happen tomorrow? Today we are going to look at the homeowners and auto coverage and help you determine if you would be covered.
When starting to talk about insurance, there are some basic concepts you should understand. Your policy has a regular premium to keep your insurance in effect and your deductible is the out-of-pocket expense that you will have to pay in the event of a claim. Generally, having a higher deductible would mean having to pay more out of pocket before the insurance kicks in. The advantage to that is it would result in lower monthly premium payments while lower deductibles would make your monthly premium payments larger.
Have you reviewed your homeowner’s policy lately? If not, it may be crucial that you update it. Make sure you are insured for at least 80% of whatever it would cost to replace your home so your insurer will pay out appropriately. If your home is not insured for correct amount, it may cost you more out of pocket if an unforeseen event occurred.
A straightforward way to estimate your home’s value would be to take the market average per square foot and multiply that by your home’s square footage. For example, if your home is 2,500 sq. ft. and the market average per square foot is $150, then your home would be worth about $375,000. Therefore, your homeowner’s policy should cover at least $300,000. It is also important to note that external structures, such as sheds or fencing, may not be covered within most policies.
Next, we’re going to look at auto insurance. Do you know your states requirements for auto insurance? In the event of an accident in Mississippi, your limits for bodily injury are $25,000 per person, with a maximum of $50,000 for bodily injury per incident. It also covers up to $25,000 if you damage another person’s property. It may show up on your auto policy as $25,000/$50,000/$25,000. One important thing to remember is that you should not have auto coverage that exceeds your car’s value. Some car insurance companies offer tracking devices that monitor your driving, giving you a discount based on how safely you drive. Knowing you are fully covered should an accident happen, can ease your peace of mind.
It is a good idea to consider purchasing liability coverage with higher limits. Remember, if you are at fault in an accident, liability coverage will only pay up to your limits of insurance. You will be responsible for any damages over that amount. Most insurers will offer an umbrella policy that can give you much higher liability coverage that can cover your home and your automobile on top of your existing coverage.
We’ve all heard the commercials about bundling your home and auto insurance to help save money. According to a study from InsuranceQuotes.com, combining home and auto insurance saves the average consumer 16.1% on their premiums. Combining your insurance has many advantages. With just one insurer for multiple policies, it will be easier to keep track of your accounts. If there is an incident that damages both your home and vehicle, some insurers will only make you meet one deductible before it pays out. If your insurance wasn’t bundled, you'd need to pay two deductibles to two different companies.
The best way to know if you’re fully covered is to hire help from an independent licensed insurance agent. Shop around for different offers and be sure to consult a financial advisor.