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Why shopping for insurance matters

Are your policies the right ones for your situation?
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Shopping for insurance can save you money and not knowing how you’re covered can cost you thousands. Do you have enough coverage for a major accident? Are you paying two insurers for the same policy?

A yearly review of your insurance policies ahead of renewals offer an excellent opportunity to analyze how much you’re spending and for what type of coverage. You may think you’re safe by having policies in place – but are they the right policies for your particular situation?

Here are four big reasons why it’s important to shop around for all your insurance needs.

 

1. Not enough coverage

There is basic minimum coverage requirement for car insurance across Canada, and although going cheap can save you money in the short term, it could end up costing you thousands in the long run. For instance, in most provinces, the minimum third-party liability (important for when someone decides to sue you) is $200,000. Is that enough? Let’s say you’re in a severe at-fault accident causing brain damage or paralysis. That person could sue you for lost wages and medical bills for life, which could be somewhere in the millions. We recommend shopping around for car insurance quotes to help you find the best deal for the right level of coverage.

Finding the right amount of coverage isn’t limited to just shopping for auto insurance. In home insurance, Hurricane Harvey hit Houston in August of 2017 and damaged over 200,000 homes with catastrophic flooding caused by one of the most substantial rainfalls in US history. Over 75% of those homes had no flood insurance because it was not required by their mortgage lender as they are not in the special flood hazard zone. This disastrous flooding in Houston further exemplifies the need to review your policies and understand your coverages. Are you protected for potential damages in your area? Natural disasters are unpredictable, but by purchasing a more comprehensive home insurance policy, you can arm yourself against the potential financial repercussion.

 

2. Paying too much

A car or home insurance policy typically lasts for one year because the provider is continually reviewing their risk. They want to be aware of any changes (both personal and public) and to charge appropriately. If your insurer is going to reassess your situation annually, shouldn’t you be doing the same? This is why you should be shopping and comparing every year to ensure you’re getting the best rates, and renewal time is a great opportunity to review, inquire about discounts and switch without penalty.

Does your home insurance provider know that you have an alarm system or motion sensor cameras installed? These are security enhancements that can reduce the cost of your home insurance. Even wearable technology has been shown to reduce life insurance rates if you can prove you’re living a healthier lifestyle. Quick tip – if you’re getting home insurance quotes, consider bundling with your auto insurance policy at the same time, it may lead to reduced premiums.

Did you know you could save money by agreeing to track your driving habits? It’s true – auto insurers are getting into technology with telematics devices. A telematics device monitors your driving behaviour like how many actual kilometres are driven, how hard you brake, and how you handle a turn. If you’re up for the challenge, you’ll get a unique rate rather than one based on generalized historical statistics.

 

3. Too much coverage

It’s possible to be over-insured, costing you more money for levels of coverage you don’t need. Roadside assistance from CAA, or other private companies, is a great idea to keep you safe in the event of a battery failure or tire puncture. But, did you know some car insurance companies include roadside services in their coverage? Are you paying two providers for the same service?

You may have the same issue with life insurance. A common rule of thumb is to insure yourself for ten times your annual salary. So, if you make, $70,000 per year, an insurance agent might sell you a policy for $700,000. But that ignores a lot of important variables. For example, you may have debts, you may have kids who require education funding, and you may have a spouse with a higher income or a lower income that would need to be supplemented if you were no longer there. When you first received your life insurance quotes, you may not have thought too much about the face amount of your policy, and that could mean that you are now over- or under-insured. It’s worth it to build a financial plan with a more precise analysis of your needs.

 

4. Keep your insurance provider up to date

Providing services like driving for Uber, or hosting for Airbnb, is an exciting way to make some extra cash, but if you haven’t told your insurer, you could be in for a surprise. Running a business with your insured assets changes the terms of your agreement, which puts your coverage at risk. An insurer could choose to reject potential claims or even void your policy altogether, which is why we recommend keeping your insurance providers in the loop.

Running a new business might be the sign of a career change, and you should keep your insurance provider informed. If you’re now an alumnus after graduation, a union member, or even belong to a large organization, you could benefit from reduced premiums. You should ask your insurance provider for a discount.

If all these changes inspired you to move residences, it’s time to update your home insurance policy. In the same way your car insurance premium would go down if you drive in a lower density area, your home insurance premium could also see a reduction. Both a home and a car are cheaper to insure in areas with lower rates of vandalism and theft because there is less risk of a claim.

Life changes and so should your insurance. Shopping around, comparing quotes, and speaking to your provider to ask for potential discounts is essential.  If you can pay higher deductibles for collision and comprehensive, or if you pay yearly instead of monthly premiums, it can save you money. It’s also great to know how you’re covered, and how you’re protected, in case you need it.

Safety and protection are vital for the right insurance and shopping around will make sure you get the best value. These tips should help make you a savvy buyer.

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