After receiving my April newsletter and attempting to follow
my advice of maintaining an umbrella insurance policy, one of my readers
contacted his insurer to add coverage. This reader was shocked when his insurer
informed him that he didn’t qualify for an umbrella policy because he didn’t carry
sufficient liability insurance on his auto policy. (Minimum auto liability
insurance – frequently $500,000 – is required in order to purchase umbrella
coverage.) Although this individual had owned his policy for eight years, he
was unaware that the policy only provided $50,000 of liability coverage. This
amount was clearly insufficient for an individual approaching and preparing for
retirement.
In addition to realizing that he was severely underinsured,
this individual discovered he was also paying excessive premiums. For only
$50,000 of auto liability coverage, this person was paying $914 per year.
Moreover, the individual realized he was paying $351 per year for the $350,000
of liability coverage the individual had on his condo. Consequently, in total,
this person was paying $1,265 per year for $50,000 of auto liability and
$350,000 of home liability coverage.
This individual then spoke with an independent insurance
agent to increase auto liability coverage to an amount that enabled him to
obtain an umbrella policy. This was critical, as it dramatically decreased the individual’s
liability exposure, a risk an individual with accumulated assets clearly
shouldn’t have. Even better, the individual was able to obtain dramatically
improved rates on his policies. For a total of $1,207 (less than he was
previously paying!), the individual was able to secure $1,000,000 of auto
liability coverage, $350,000 of home liability, and an additional $1,000,000
umbrella policy.
Clearly, it can be beneficial to occasionally review and
compare rates on your insurance policies. People tend to believe that policies
that have been owned for extended periods of time are efficiently priced, but
it may be the opposite. If you haven’t verified that you are adequately insured
and conducted a cost comparison recently, speak to an independent insurance
agent and minimize your exposure with cost-effective policies.
1 comment:
Nice post!!!Always try to remember your last insurance coverage.Thank you
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