How to Understand Your Homeowners and Auto Insurance Coverage

How to Understand Your Homeowners and Auto Insurance Coverage

Learn the two basic elements of almost all insurance policies: liability coverage and property coverage. After that, understanding your financial situation is your best tool when determining coverage amounts for home and insurance. Finally, be willing to accept that adequate coverage far outweighs the cost of inadequate coverage.

1.Know your Coverage:

Insurance coverage are typically broken down into two categories wheather you are talking about home, auto or commercial policies: those are liability coverage and property coverage. Liability protects your assets (all that your own) in the event that you are responsible for damage to a person or that persons assets and you are sued. Property coverage protects the items that you own (home, auto, etc) in the event that they are damaged by what is called a "Covered Peril". Peril is an insurance word for "something that could cause damage" such as fire, wind, etc.

 

2. Do an assessment of your financial state: 

If you own a home and have a job, you have a lot to lose, and therefore, more to protect. A good rule of thumb is that your liability limits on both you home and your auto should never be lower than the total of your assets, plus several years of your current salary. If you were to have an auto accident, and not have enough liability to pay for a medical or property claim, in most states a judgement can be issued against your wages for several years. This is money that is taken out before you ever receive your payback.

3. Do your homework:

Most insurance companies are rated on their history and their history and their future.

You can find out how well a company ranks in terms of how well they pay their claims, how strong they are financially, and how proficiant their servicing staff perform.