5 Misconceptions About the Insurance Industry

Insurance is complicated – but it’s also a necessity. It helps to protect us from the uncertainty we all face in our day-to-day lives. But with endless information available online, it can be tough for people to distinguish between what’s true and what’s false. While there are many misconceptions floating around about insurance, here are five of the most common fallacies we run into:

  1. I don’t need renters insurance.

According to the Insurance Information Institute, only 37 percent of renters have renters insurance. It’s a common misconception that if something were to happen to a rental unit, the landlord’s insurance policy would reimburse them for any item that was damaged. However, a landlord’s insurance does not cover your personal belongings. That’s why renters insurance is so important. It also covers liability expenses should someone gets hurt in your rental property and may possibly cover increased living expenses when a covered loss makes your rental unlivable.

  1. My homeowners insurance policy covers valuable items.

While most homeowners insurance policies do cover jewelry and other precious items, it’s usually only up to a certain (rather low) value. To properly insure your jewelry, art, antiques and other expensive belongings, you should consider purchasing an additional floater or endorsement to cover your individual valuables.

  1. My homeowners insurance covers flood and earthquake damage.

Your homeowners insurance policy offers financial protection against damage caused by wind, hail, fire, theft and vandalism. However, it does not protect your home in the event of flood or earthquake damage. To ensure you’re covered in these scenarios, you need to purchase separate flood and earthquake policies that are outside of your normal homeowners policy. In some states, it may even be possible to purchase earthquake coverage as an endorsement to your main homeowners policy.

  1. If a friend gets into an accident with my vehicle, their insurance covers it.

This is a very common misconception among drivers. But automotive insurance follows the vehicle itself, not the driver. No matter who is driving your car at the time of an accident, if the driver of your vehicle is at fault, your auto insurer bears the primary responsibility for any damage caused to your vehicle or someone else’s. The only time your friend’s policy would kick in would be as a secondary form of coverage, should the damage exceed your own policy limits.

  1. All insurance companies offer the same policies, at the same rates.

Many individuals continue to believe that all insurance companies offer the same policies, at the same rates, across the board. However, this is not the case. In actuality, the quality of the coverage you receive can vary greatly company by company. And while the insurance coverage offered may have the same name, the customer experience can be very different across companies. In addition, rates can vary company to company and are unfortunately, non-negotiable, even by insurance agents. It’s important to remember that the insurance carrier sets their rates based on many factors, not insurance agents themselves. Your insurance agent can work with you to find the best coverage for your lifestyle, budget and unique needs. But since every person is different, even two people with the same coverage will not pay be paying the insurance rates.

As with all insurance questions, it’s best talk with your insurance agent before making any assumptions about your coverage. Doing so can save you a lot of time, frustration and money.

Have questions about your personal or commercial insurance? Contact us to speak with a licensed insurance professional.

Disclaimer: All data, information, and opinions provided on this article, newsletter, or blog is for informational and educational purposes only. While every caution has been taken to provide readers with the most accurate information and honest analysis, please use individual discretion before making any decisions based on the information in this article, newsletter, or blog. Georgetown Insurance Service, Inc. is not responsible if its readers happen to experience loss, injury, or damage resulting from its display or use. All information is provided on an as-is basis. This article, newsletter, or blog does not represent the thoughts, intentions, plans, or strategies of any specific Insurance Carrier, Georgetown Insurance Service, Inc. partner or affiliate.
Have questions? Contact Us to speak with a licensed insurance professional.

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