Tips on Buying Insurance | Sears Real Estate Blog

Buying insurance can be tricky and how to know what to buy and how much downright confusing.?Bloomberg.com consulted consumer advocates, academics, financial advisers, insurance agents, and adjusters for advice on how to avoid overpaying, underinsuring, or missing out on claims you deserve to have paid.

Here are tips and tricks of the trade.

Use Buying Guides

Agents are paid by insurers to sell their products and often sell only certain companies? policies. Some insurers offering lower prices, such as Geico and USAA, sell directly to the public. Before meeting an agent, read buying guides on state insurance regulators? websites, such as Calfornia?s Insurance Dept. site?to learn what insurance should cost and cover. Ask agents what they make on a sale, says Karrol Kitt, a professor at the University of Texas at Austin, and drill down on what policies cover. Ask them to verify answers with written proof. ?Sometimes agents aren?t as knowledgeable as they should be,? Kitt says.

Be Wary of Cheap Policies

Insurance isn?t a ?commodity like salt or sugar,? says Bill Wilson of the Independent Insurance Agents & Brokers of America. ?There can be a dramatic difference in coverage from one policy to another.? One homeowners policy might cover all water damage, for example, while another might pay only if you notice it right away, excluding the effects of a pipe that has caused mold growth over a long stretch. In health care, coverage and price differences can be especially dramatic. ?The cheapest is rarely the best,? Ditr? says.

Raise Your Deductable

?Raising your deductible is the best way to keep your premiums down,? says Amy Bach, executive director of United Policyholders, a policyholder advocacy group. Even if you can afford the expensive premiums of a low-deductible policy, it should ultimately cost less to choose a high-deductible policy and create a bank account to insure your own small losses. Insurance should be for ?catastrophic losses,? says Rutgers University law professor Jay Feinman. For anything less, ?it often makes sense to absorb those yourself.?

Get Disaster Coverage

With disasters in the news, the importance of insuring a home against Mother Nature?s bag of tricks is all too clear. Fire insurance won?t necessarily pay out if the fire was caused by an earthquake?unless you have earthquake insurance. And coverage for hurricane wind damage might not protect you from the flood caused by the hurricane. (In Louisiana, only 29 percent of households are covered for floods, according to its insurance commissioner.) Flood insurance is available through the federal National Flood Insurance Program for an average of about $600 per year. On coastal areas and beachfront, coverage can be far more costly.

Don?t Underinsure

A dangerous way to lower premiums is to get too little coverage. Homeowners who can afford it would be smart to insure enough to cover the contents of a house?including artwork or other expensive items?and the full cost to rebuild a home on the site. This construction can be much more than the market value of a house, says public insurance adjuster Jack Kunz, president of Alex N. Sill. Also, many young families fail to get enough life insurance, says financial adviser Brenda Knox. Insurance agents sometimes won?t present a policy with full coverage for fear that the high premiums will scare off customers.

For more tips read the article from Bloomberg.com.

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