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How Having Too Little (or Too Much) Insurance Hurts You

Auto Insurance
Choosing how much insurance to get for your automobile is covered by the laws in each state. Each state has a minimum amount of insurance coverage required. But, the minimum in most states is far too low. It’s important that you assess the truth of the situation in a worst case scenario to ensure that you get enough insurance to cover your needs.

Homeowner’s Insurance
Choosing how much homeowner’s insurance you need depends on the same factors as other insurance in terms of laws regarding minimum coverage. Then, you will go through with your insurance agent the potential factors that can come up, such as whether or not your policy covers floods or water damage.

Rental Insurance
Your rental agreement usually covers how much insurance you need to buy, but so does the cost of your items. Do not assume that you’re covered in an apartment fire when you’re in a rental unless you are paying for rental insurance. The owner’s insurance likely only covers the building and not your personal belongings. Get enough to pay off what you owe and replace items at an increased cost.

Having too much insurance can hurt you by requiring you to spend too much of today’s money that could be used for savings and other purposes. Having too little insurance can cause problems by not protecting you and your family enough, contributing to potential financial disasters over situations such as a car accident, a busted pipe, or other issues that insurance is designed to help protect against.