Common misconceptions about insurance coverage

There is a lot of misinformation floating around about insurance. Sometimes the information is outdated, while in other cases, it was never true to begin with. To help you make the best decisions regarding your coverage, we will address some of the most common misconceptions.

Health insurance and car insurance rates drop dramatically after age 25

First, health insurance does not get cheaper with age but gets pricier. If you are holding out hope that you will be paying less in health insurance once you reach age 25, think again. As for car insurance, there is some truth to this. 25 is the age at which most insurance companies consider a driver to no longer be a “youthful operator.” Rates may drop, but not substantially.

You need to insure your home for the amount paid at purchase

The idea behind your homeowner’s insurance policy is that you should have enough coverage to replace your home should it be lost to something, such as a fire. Replacement cost of a home is almost always lower than market value, which includes things like land value and neighborhood. If you insure for the cost of replacement rather than the cost of purchase, you are likely to save money over the years in premiums.

Full coverage means everything is covered

When we hear the term “full coverage,” we expect that to mean that everything is covered. However, that does not apply to car insurance. In this case, full coverage just means the policy covers damage to the vehicle you own. Liability and collision coverage are not included; for that, you need comprehensive coverage.

All insurance companies offer the same policies

If all insurance companies are the same, why would there be a need for such a variety of providers? The answer is there wouldn’t be — and that is because all insurance companies do not offer the same policies. For example, one company might use clear and concrete language in their contracts, making it easy for the insured to understand their coverage; another might use evasive language meant to cast doubt and make it easier to deny claims. Always research your options.

If you are interested in comparing potential providers, speak with your independent insurance broker.