If you are like many Americans, you probably have multiple policies for home, auto, medical and life insurance. And if you are lucky and working for a good employer, you might also have additional life insurance as well as disability insurance. But did you know that no matter how well covered you think you are, there are some gaps in coverage that can unexpectedly wreak havoc on your savings should the unthinkable strike? Here are the common gaps many Americans have in their insurance coverage.
Auto Insurance Coverage Gaps
All states require car owners to have mandatory auto insurance that can cover liability and personal injury protection. Depending upon the state you live, there are also some additional requirements. According to III (Insurance Information Institute), collision coverage and comprehensive coverage are optional coverages. So if you are in an accident, the damages to your person and property may not be covered if you do not have collision coverage. Similarly, if your car gets damaged by fire, falling objects, vandalism or storms, you may not be covered if you do not have comprehensive coverage. Do not assume that you might have them. Check your policy and talk to an agent to find out for sure if you have coverage for this category. Avoiding this gap might save you money if the worst-case scenario strikes.
Flood Insurance Coverage Gap
According to the Federal Emergency Management Agency, all states in the country have witnessed floods. But according to a poll conducted by the Insurance Information Institute, only 12% of homeowners carry flood insurance. It is important to note that homeowners insurance does not cover flooding. You need a separate policy. You can obtain a reasonably priced flood coverage through the National Flood Insurance Program. If this does not meet your requirement, you can always check with your insurance company; they can help you start a policy through the federal program or get help to find a private company that offers flood insurance. It is important to remember that there is a 30-day waiting period before coverage kicks in. Getting a policy right before an approaching storm might not cover your property so it is better to get it before the season begins.
Homeowner Coverage Gaps
Where-you-reside Gap: If you own a home, you probably have homeowner’s insurance that will cover if a fire strikes or a tornado hits your home. But did you know that if you move out while you still own the home, your coverage ends? Yes, most consumers are not aware that if they move to a nursing home or get relocated for their job, their homeowners coverage stops with regard to the coverage on the dwelling itself. So as soon as you plan to move out of your home, you must switch to a policy that is appropriate for your situation and make sure the home is covered in your absence, whether it is short or long term.
Home Undervaluation: If you make improvements or updates to your home, your home value improves significantly. According to HGTV, you can expect to recoup 60% – 120% of your investment on a kitchen remodel; 80% – 130% of adding an extra bathroom, and 60% – 90% of adding energy efficient-windows. When your home improvement projects increase the value of your home, your initial coverage may not be sufficient and you may be left with a gap. So when these big changes are made to your home, you should check with your insurance agent to see if your policy needs to be updated.
Life Insurance Coverage Gap
Employee offered life insurance plans restrict your coverage to small amounts, typically up to 2-3 times your salary. But when the unthinkable happens, do you think that would be sufficient enough to cover your spouse or dependents? Probably not. According to the American Council of Life Insurers, life insurance coverage should be at seven to 10 times a person’s annual salary. Employee offered life insurance plans also stand the risk of being non-transferrable when you change jobs and sometimes your employer may suddenly discontinue them, leaving you with gaps in coverage. It is advisable to buy alternative options in addition to the standard policies. Personal Life Insurance plans can be purchased directly from an insurance provide and they do not carry the same restrictions as the employer provided plans. They also supplement and fill gaps in your coverage by providing you with consistent coverage. You can also save money in the long term by locking in the rates and you can expand limits on your coverage options.
Disability Income Coverage Gap
According to the Bureau of Labor Statistics, only 38% of workers have access to short-term disability insurance through their employers. If you have short-term disability insurance coverage through your employer, your plans will pay up to 60% of your income up to $10,000 per month for a few months and up to a year. But many households will not be able to get by with just 60% of the income. Social Security Disability is available only to people with long-term disabilities lasting at least a year. There is a common waiting period of 90 days before the benefits are paid, and these benefits also end when the disability ends. To avoid these gaps, you can purchase individual disability insurance from several private insurers. These policies ensure you will not fall short of replacing your current income during periods of disability.
Help is at hand with Insurtech
Simply put, Insurtech is a term that includes all things that technology can modernize about insurance. Innovation in technology brings efficiency which leads to better management of insurances. There are some apps in the market that can help you track your policies. But an innovative app like InsuredMine will not only help you manage your policies, but will also provide you data-driven analytics that can help you recognize your coverage requirements based on your personalized needs and make suggestions. What’s more? Late fees will be a thing of the past by setting reminders for approaching due dates. Gaps in coverage can be addressed based on the personalized intuitive insights you receive in your inboxes. You can proactively reach out to your insurance company to discuss the gaps and ways you can cover them. You can compare your coverage with peers of similar portfolios and see if you are overpaying. Based on this understanding, you can renegotiate terms with your insurance carrier for a better deal. In addition to all these benefits, you also have the convenience of accessing your policy details securely anywhere. With all the benefits that Insurtech can offer to make your insurance management more efficient, it’s anybody’s guess as to why there is increased interest and use for these products and tools.