There are a lot of ways to spend money that you could probably use somewhere else. We are highlighting a few of those money wasters.
Part of our job is making sure your coverage is proper and not excessive. Take a look at the below:
1. Extended Warranties. In all likelihood, you don’t need it. Most electronics or appliances already have a warranty, and you will be throwing away hard earned money.
2. Collision Damage Wavers. Rental car insurance is a confusing matter. One optional add-on that's typically presented at the counter is almost never worth the extra money: the collision damage waiver (CDW), which covers the loss of, or damage to, the rental car. Most major credit cards provide this coverage for free as long as you pay for the rental with that card.
3. Excessive Liability Coverage. Liability insurance provides coverage when you're sued or other legal claims are brought against you. It can be important, and sometimes mandatory (e.g., auto insurance), to hold some amount of liability coverage. Higher limits come with higher rates, though, and there is a point at which the amount you pay for the amount of coverage is not statistically advantageous. With auto insurance, for example, you pay a hefty fee for a high liability limit when less than 5 percent of accidents result in claims that large.
4. Umbrella Coverage. Umbrella insurance protects you with extra liability coverage to supplement your current insurance policies. With some policies, this secondary insurance kicks in only if claims exceed the coverage from your primary insurance. Other umbrella coverage "drops down" to cover losses when the primary insurance doesn't pay in full or cover the contingency. Regardless, an umbrella policy is probably unnecessary unless you've already accumulated significant wealth that you want to protect from a lawsuit. It also may be less expensive to increase limits on individual policies (home, auto, etc.) than to buy an umbrella policy.
5. Unnecessary Riders. Basic policies may have exclusions or limitations that you can cover with a rider that gets you higher limits on jewelry, for example, or coverage for water damage in the basement (where you keep the big-screen TV). Riders are occasionally free but most often come with an added fee. Paying for a rider when you don't really want it is just throwing away money.
6. Competing Riders. Perhaps you want an income rider on your life insurance policy that provides a guaranteed income stream you can turn on later (e.g., at retirement). You may also want an accelerated benefit rider that lets you collect a lump sum if you're seriously injured or develop a serious medical condition. Heads up. Dr. Sterling Jack, president of Colwyn Investments in South Jordan, Utah, has seen cases where the accelerated benefit was voided when the insured person activated the income stream but continued paying for the competing rider. Steer clear of coverages that vie for supremacy.
7. Flight Insurance. Flight insurance provides death and dismemberment coverage while you're traveling by plane. If you already have a life insurance policy this type of coverage is likely redundant. Moreover, the chance of a mishap during a flight is extremely low. As the saying goes, you're more likely to die getting to the airport than flying in the plane -- 2,200 times more likely, in fact.
8. Pet Insurance. Pet insurance is health insurance for your pet. There are co-pays, deductibles, premiums, and provider networks. In the event your pet gets sick or injured, pet insurance will protect your savings. When the Better Business Bureau looked at the numbers, though, researchers concluded that unless the breed is predisposed to expensive ailments, you're probably better off stashing some money in an emergency pet fund.
This is part of the Park Family Insurance ongoing education series for Roseville Home Insurance and Rocklin Home Insurance, prevention is key!
Come talk to us if you have questions about any of these issues!