Insurance is different from many other types of purchases, and it is essential to understand and respect those differences. Unlike so many other investments, the need for insurance coverage changes over time. If you fail to adapt to these changing needs, you could find yourself underinsured just when you need the protection the most.
It is a good idea to review all of your insurance coverage – from homeowners or renters’ insurance to health to auto insurance – at least once a year. Tax time is a great time to go over your current coverage and make necessary adjustments. When tax season rolls around, you need to gather all of your financial paperwork, from your W2 form and investment documents to your receipts and business forms. These financial documents can be quite valuable at determining how much insurance coverage you need, making tax season the perfect time for your annual insurance review.
You can start by reviewing your current automobile insurance. You should look at the current value of the car you drive and deciding whether or not collision and comprehensive coverage still make sense. This coverage pays to replace or repair your vehicle in the event of an accident, but it can significantly increase the cost of your premiums. “If your car is worth less than $2,000 to $3,000, it might no longer make sense to retain this type of coverage,” suggests Georgia insurance professional Aneetra Alford.
You can continue by looking at the amount of liability insurance you carry on your car insurance policy and making sure it covers the number of assets you have to protect. If your household assets have grown over the past year, it might be time to increase your coverage limits as well.
Increasing the coverage limits on your homeowner’s insurance is a smart move. As the value of your assets grows and change, it makes sense to review and update your homeowner’s insurance as well.
“This kind of annual review is the best way to provide the protection you need for yourself and your family. Your need for insurance changes a great deal over time,” says insurance professional Aneetra Alford, from Georgia. That means you need to review your coverage often and make sure you are keeping up with those changing insurance needs.