I’m an Insurance Expert: 4 Ways To Assess Your Insurance Needs And Coverage
Written by
Laura Bogart
Edited by
Zuri Anderson
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Insurance is a crucial component of financial planning. Finding the right insurance plans for health care coverage, auto coverage and even renting or property coverage can help you save a lot of money in the long-term. However, insurance plans don’t exactly come as a one-size-fits-all package. Your needs are unique and highly personal. Your coverage should be, too.
But how do you even begin to assess what your actual needs are, in terms of the coverage you should look for? It’s a hard question. Fortunately, GOBankingRates talked to some experts who can help you find answers.
Look at What Your Usage May Be
Determining the kinds of coverage you’ll need starts with an honest assessment of where you’re starting from and where you think you’ll be in the future.
Janet Ruiz, director of strategic communications at Insurance Information Institute, recommended that when you’re looking into car or property insurance, you ask yourself important questions about the condition of those items, as well as how you intend to use them.
For instance, if you’re purchasing auto insurance, consider what kind of car you intend to buy — or already have. Are you a real road warrior or more likely to only take the car to the grocery store on weekends? Knowing what kind of car you want to insure and taking an honest inventory of your own driving habits can steer you toward coverage that truly reflects your needs.
She said you should take the same open-eyed approach to assessing your home insurance plans. Ask yourself if your home is in good condition or if you’re in an area that is vulnerable to damage.
These are questions that you’ll want to not only ask yourself but ask your insurance provider. You should invite the agent to tour your premises and discuss how you are currently managing risks. They will be able to evaluate your actions and offer suggestions, she added.
Build a Relationship With Your Insurance Provider
It may be tempting to think of your insurance company as yet another place your money goes every month. However, your insurance provider can actually be an ally in helping you find the most cost-effective plans that best suit your needs.
Ruiz shared that maintaining an open dialogue with your insurance provider can actually help you learn more about how to find the right plans, as well as protect yourself and your property.
“Just know that as risks and costs grow, the industry is already intensifying its focus on predicting and preventing future damage and losses,” she added.
Part of building that relationship means finding the right provider, which means doing some shopping around initially. Ruiz said that asking friends and family for recommendations is a good place to start. She also encouraged you not to be afraid to do some comparison shopping and ask hard questions. While price should be an important consideration, she reminded consumers that there are additional factors that make a quality insurance company and insurance package.
“Remember, you’ll be dealing with this company in the event of an accident or other emergency. When you need to file a claim, you’ll want an insurer that provides good customer service, so test that while you’re shopping, and choose a company whose representatives take the time to address your questions and concerns,” she said.
Spend Time To Run the Numbers
According to Brian Dow, president of FlexBenefits, you can help yourself determine the kind of coverage you’ll need by looking at the value of what you need to insure, even at a granular level. For instance, when you’re insuring physical assets, you’ll need to determine the cost to repair or replace that asset.
Dow suggested that property owners will also need to factor in the liability they may have in case someone is injured on or around their property.
“You might choose to tie your liability insurance to your net worth. Umbrella liability policies are a cost effective way to cover this risk,” he said.
Evaluating your own health and life insurance needs may feel more fraught, but it’s necessary to figure out the right plan.
“Life insurance goals are often targeted to income replacement, paying off home loans, covering the cost of childcare expenses and/or education,” he added.
Dow explained that when purchasing health insurance, you should consider any maximum coverage, network limitations and cost sharing.
“To lower health insurance premiums, most people have a form of a high deductible plan. If you don’t have cash on hand to cover your full deductible and other out-of-pocket costs, consider supplemental insurance. Consider your lifestyle, family history and age when looking at supplemental coverage. There are lots of options available for accident, disability, life and critical illness and long-term care, and one size doesn’t fit all,” he said.
Update Your Plans as Needed
You may not realize it, but your insurance needs can evolve over time. Anything from an addition to the family to a significant raise or promotion at work can compel you to reassess your coverage.
“Don’t set it and forget it. Remember to revisit your insurance needs regularly, especially during major life events, including new family members, changes of income and large purchases,” said Dow.
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