Buying insurance is a critical financial decision, but many people make costly mistakes due to lack of knowledge or rushed choices. Here are the most common insurance-buying mistakes and how to avoid them:
1. Not Shopping Around
Mistake: Accepting the first quote or sticking with your current insurer without comparing.
Fix: Get quotes from at least 3-5 insurers (use comparison sites like Policygenius or The Zebra).
2. Underinsuring to Save Money
Mistake: Choosing the cheapest plan with inadequate coverage (e.g., low liability limits on auto insurance).
Fix: Ensure coverage matches your actual risks (e.g., home replacement cost, medical needs).
3. Overlooking Deductibles
Mistake: Opting for a low deductible without realizing it raises premiums.
Fix: Choose the highest deductible you can afford to lower long-term costs.
4. Ignoring Exclusions
Mistake: Assuming “full coverage” means everything is included (e.g., floods in homeowners’ policies).
Fix: Read the fine print and ask about exclusions (e.g., “acts of God,” pre-existing conditions).
5. Not Updating Policies
Mistake: Keeping the same policy for years without reviewing life changes (marriage, new home, etc.).
Fix: Re-evaluate coverage annually or after major life events.