Insurance, though a significant part of our modern civilization can be quite confusing to an average person. Unless one works in the insurance industry, most people end up having some kind of insurance policy without necessarily fully understanding how it works. In this article, we will address some of the common misconceptions people have when it comes to insurance.
Personal lines insurance Vs. Commercial lines insurance
Most insurance packages fall along either personal lines or commercial lines protection with each taking about 50% of the market share. Personal lines insurance covers potential losses of things people own but can’t afford to pay for them in case of a tragedy such as a house or a car. On the other hand, commercial line insurance covers business or companies from any losses that could potentially lead to financial ruin such as accidents, lawsuits, etc.
Below are eight most common misconceptions about insurance,
COLLISION AND LIABILITY IS THE ONLY COVERAGE I NEED FOR MY VEHICLE.
Most collision and liability insurance policies will cover damages incurred to property, people, and other vehicles up to the limits of your plan. However in case your car is flooded or stolen, only comprehensive insurance policy will cover such a loss. When deciding on the type of vehicle insurance policy you need for your vehicle; It is important to consider getting a comprehensive insurance.
IF A FRIEND CRASHES MY CAR, THEIR INSURANCE POLICY WILL COVER IT.
This is another common misconception when it comes to vehicle insurance. If you happen to lend your car to a friend and he/she crashes it, your insurer will still carry the primary responsibility for repairing the vehicle. In case the damage incurred on the vehicle exceeds your policy limits, then your friend’s insurer will step in and help.
COMPARED TO LARGER MODELS, SMALL CARS ARE CHEAPER TO ENSURE.
On the contrary, most insurance companies set higher insurance rates for small cars compared to minivans and mid-sized vehicles. This is mainly because a more significant percentage of small cars are driven by young and incompetent drivers which increases risk.
THERE’S NO NEED FOR GETTING AN ADDITIONAL RENTAL CAR INSURANCE. MY CREDIT CARD WILL COVER IT.
If you are at fault in a collision, you may find yourself on the hook and have to cover damages incurred on the other vehicle. This is because most credit card companies cover collisions alone and not liability. It is also a good idea to check with your auto insurance company on whether or not they cover a rental car.
MY HOMEOWNER’S INSURANCE SHOULD BE DETERMINED BY THE REAL ESTATE VALUE OF THE HOUSE.
You should be careful when deciding how much insurance you want to pay for your home. In most states, the cost of rebuilding your house may vary significantly from what you can sell it for. Especially if you live in an area with a weak housing market, you should always base your homeowner’s insurance on how much it will cost you to rebuild your house.
HOMEOWNER’S INSURANCE COVERS FLOOD LOSSES
Homeowner’s insurance doesn’t cover or include damages caused due to floods. In case you want to be covered in case of flooding, you should purchase insurance coverage specific to flooding. It is essential to do this if your home is located in an area with a risk of flooding to avoid suffering great loss or even having to start over. You should also note that most insurance companies have a 30-day waiting period before the coverage starts.
MY INSURANCE POLICY CAN BE CANCELLED, IF OR WHEN I AM INVOLVED IN AN ACCIDENT.
Generally, insurance companies should send you a notice of non-renewal before canceling your insurance plan /policy. Most states have laws the governing cancellation process.
I DON’T THINK LIFE INSURANCE IS NECESSARY EVEN THOUGH MY SPOUSE HAS ONE.
It can be easy to take for granted all the thing that you do for your family when everything’s going fine. Whether you are a stay-at-home parent or the breadwinner, take a moment to imagine just how much financial burden your family would have if you weren’t around to support them. Even though life insurance covers the policyholder, it’s actually his/her family that benefit the most from it.
Located at 241 Washington Street Brookline, MA 02445, Kunevich & Lau insurance offers the best insurance services for both individuals and businesses in Massachusetts and surrounding regions. To learn more about how you can choose the right insurance policy, visit our offices or call us via (617) 731-1015 today!