What do you really need to know about insurance coverage?

Farmers Insurance is currently running an ad campaign that focuses on getting to know your coverage. The commercials focus on understanding whether you have enough or too much coverage for the property that you own. It isn’t a bad basis for an ad campaign. Why? Insurance mistakes can cost thousands of dollars. 

What are some of the biggest misconceptions about insurance? The investment group The Motley Fool recently published the results of a 2,000-response survey targeted at exposing insurance myths. The biggest insurance myth that people buy into turned out to be purchasing coverage based on the market value of a home.

The survey found that 52 percent of respondents thought you should purchase coverage based on the market value of your home when what you need is the cost of reconstruction. If a storm, hurricane, fire or other disaster damages or levels your Florida home, you still have the property but not the structure.

The other top five included:

  • 42 percent believed red cars cost more to insure because police target them
  • 44 percent believed an insurance company can cancel based on one at-fault crash
  • 40 percent believed that smaller cars are cheaper to insure
  • 36 percent believe the Affordable Care Act allows health insurers to base rates on pre-existing conditions

While not asked and answered by the survey, there is one other insurance myth that consumers need to know about. It is a big one based on another ad campaign alleging that an insurance company is your friend. No insurance company is your friend. The best interests that an insurance company is looking out for are its own. 

Even when you purchase the right insurance coverage for the assets that you own, an insurance company will attempt to deny or underpay a claim. At our law firm, we help individuals enforce the terms of their policy. We simply expect that insurance companies live up to the promises that they make.