3 Things You Need to Know About Insurance
Chances are that if you’re an adult, you know about insurance. At least, you understand that you need to get it.
Here are three things you need to know about insurance to make better decisions:
Insurance can protect your assets
You’re probably used to the fact that you have to pay for insurance. However, many of us don’t stop to consider that insurance is designed to protect your assets.
When you pay your monthly insurance premium, you are paying a small amount for the guarantee that you can be protected against loss. If you were in a car accident and totalled your car, it probably wouldn’t be easy to just buy a new car. You might not have enough capital sitting around to pay for a new vehicle. However, if you have auto insurance coverage, the insurer pays your claim, providing you with enough money for a different car – or at least a down payment.
Other types of insurance also protect you. Your homeowners insurance can help you avoid financial catastrophe if something happens to your home. Check your insurance coverage regularly to ensure that it still meets your needs. Get quotes regularly to ensure that you are getting the best coverage for your dollar.
Insurance premiums are based on your risk profile
The rates that you pay for insurance are based on your risk profile. Insurers have complicated formulas designed to determine the risk you present. If you are more likely to result in a payout from the company, you will be charged a higher insurance premium to make up for it.
This is also why your premiums might go up when you have a claim, or if you engage in risky behaviors, like traffic violations. If you want to maintain lower insurance premiums, you need to behave responsibly, and do what you can to take care of your things. On top of that, in some cases practicing good credit habits can also make you look more attractive, so it makes sense to engage in responsible financial behaviors.
Your insurance needs can change
Finally, one of the most important things you need to know about insurance is that your needs can change. That means that you need to adjust your insurance coverage accordingly. If your home goes up in value, you need to make sure that your replacement insurance will cover it. If you have upgraded your vehicle, you might need to make changes to your coverage. It’s important to recognize that your insurance needs can change, and that it’s ok to shop around for new insurance as needed, or talk to your insurer about making changes to your coverage.
Remember that you get insurance to protect your assets, and protect your financial situation. If you aren’t sure about something, ask questions, and make sure you know about insurance and how it’s used so that you can make the right decisions for you.
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