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1. My spouse wants a life
insurance policy, but I don’t
think it’s necessary.

While life insurance covers the life of the policyholder, it is the
policyholder’s family who benefits from the coverage. If a
family’s primary breadwinner passes away, how will that
person’s income be replaced? Also consider potential losses
incurred by the passing of a stay-at-home parent who cleans,
takes care of kids and a home. It could cost a lot of money to
replace these services. Understanding your family’s needs will
help determine whether a life insurance policy makes sense.

2. I only need collision and
liability coverage for my
vehicle.

Liability coverage protects you and your family if you’re at
fault during an accident and will cover damages to property,
vehicles or people up to your policy limits. Collision coverage
will cover costs to repair your vehicle (minus the deductible)
in a collision such as hitting a pole, vehicle or other object.
However, if your vehicle is stolen or flooded or if you hit a
deer, you’ll need comprehensive coverage to recoup your
loss. Think about all your risks and the potential costs of
replacing a vehicle when deciding on coverage.

3. If I lend my car to a friend
and they crash, their
insurance will cover it.

It may seem only fair that a friend’s insurer would cover the
accident, but auto insurance follows the vehicle, not the
driver. So your insurer would bear the primary responsibility
for any damage a friend causes while borrowing your vehicle.
If the damage exceeds your policy limits, then your friend’s
policy would kick in as secondary.

4. I don’t need any additional
rental car insurance
because my credit card will
cover me.

Many credit cards will only cover collision insurance, not
liability which means you’ll be on the hook for the other
driver’s damages if you’re at fault. Also, depending on where
you travel, your credit card company may restrict coverage.
However, your own auto insurance policy might cover a rental
car, so be sure to call them as well. Don’t make assumptions;
take time to find out what’s covered.

5. Health insurance is
available for purchase
whenever I need it,
no matter what.

Not true. To purchase coverage in the individual market and
off the Exchange, you must either purchase during open
enrollment or experience a qualifying life event. Additionally, if
you get a new job that offers health insurance, you may have
to wait 30-60 days before your coverage takes effect.

6. Health insurance will pay
the same, no matter where I
receive care.

Insurers negotiate payment rates with networks of providers.
If you use a provider outside your insurer’s network, your
insurer may not cover the entire bill and you may be required
to pay more out-of-pocket. Check to see if your provider is in
your insurer’s network to avoid a surprise bill.

7. My state’s minimum auto
liability coverage is
sufficient.

If you’re at fault for an accident where you damage an
expensive vehicle or more than one vehicle, your minimum
property damage limits might not cover the full costs of the
damage. Have you checked what your liability limit is for
bodily injuries? Serious injuries or even death can translate
into millions of dollars in settlement fees. In this case, you’re
personally responsible for the costs not covered by your auto
insurance policy.

8. A tree in my backyard fell
and hit my home; therefore,
the removal and damages
are covered.

If the tree was damaged by water or wind, you may not be able
to get it replaced depending on the language of your policy.  If
not, you’re covered for damages to your home and any of your
belongings that were also damaged. You will have to pay your
deductible, but your homeowners insurance typically will also
cover the cost of removing the tree and even replacing it.

9. Homeowners insurance
means I’m covered for
flooding losses.

Think again. Flood insurance is not covered as part of
standard homeowners and renters insurance policies. If you
want to be covered for flood damage, you’ll have to purchase
coverage specific to flooding. If you live in a flood zone or if
your home could be flooded by an overflowing creek or pond
or even water running down a hill, look into buying flood
insurance. And buy it before you need it as there is a 30-day
waiting period after purchase before the coverage takes
effect.