When was the last time you checked your insurance coverage?

When was the last time you compared the rates of your home and car insurance policies? Unfortunately, long-term policies and an excellent safety record don’t always translate into lower insurance rates. Even if you think you’ve got a good price, looking around every now and then is smart.

After receiving my April newsletter and attempting to follow my advice to keep an umbrella insurance policy, one of my readers contacted their insurer to add coverage. This reader was shocked when his insurer informed him that he was not eligible for an umbrella policy because he did not have sufficient liability insurance on his car policy. (A minimum auto liability insurance policy — often $500,000 — is required to purchase umbrella coverage.) Although this person had owned his policy for eight years, he was unaware that the policy only offered $50,000 in liability coverage. This amount was clearly insufficient for an individual approaching and preparing for retirement.

In addition to realizing that he was severely underinsured, this person discovered that he was also paying excessive premiums. For just $50,000 in auto liability coverage, this person paid $914 a year. In addition, the person realized that he was paying $351 a year for the $350,000 in liability coverage the person had on his apartment.

Consequently, this person paid a total of $1,265 per year for $50,000 in auto liability and $350,000 in home liability coverage.

This person then spoke to an independent insurance agent to raise the auto liability coverage to an amount that would allow him to obtain an umbrella policy. This was critical, as it dramatically reduced the individual’s liability exposure, a risk that an individual with accumulated assets clearly shouldn’t have. Even better, the individual was able to get drastically improved rates on his policy. For a total of $1,207 (less than he previously paid!), the individual was able to secure $1,000,000 in auto liability coverage, $350,000 in home liability, and an additional $1,000,000 umbrella policy.

Obviously, it can be useful to review and compare the rates of your insurance policies from time to time. People tend to believe that policies that have been held for a long time are priced efficiently, but it could be the opposite. If you have not checked that you are adequately insured and have not done a cost comparison recently, contact an independent insurance agent and minimize your exposure with cost-effective policies.