Insurance is a tricky business. What kind do you need? What about coverage? What if you aren’t covered? When buying home and auto insurance, consider these common mistakes that could be costly in the long run.

Underinsuring your home: It’s not always enough just to have sufficient coverage to pay off your mortgage. You should think about all of the costs incurred in the event of a total loss. This can include the costs of grading on your property to get ready for a rebuild, or labor and material costs that are added on to the price of a total rebuild. Also, be sure your coverage is acceptable for your personal property inside the home.

Not adding umbrella insurance: This is one of the costliest mistakes you can make. Umbrella insurance is added as extra liability coverage on top of the liability coverage you already have. It’s important for many reasons, but ultimately can protect your family from financial ruin if you are at fault for any event that occurs inside your home or from an accident. This includes pet injuries, like a dog bite, or medical payments from a car accident where the policy holder is at fault. The cost to add is relatively low for the extra pay off, if needed.  

Thinking you have a flat deductible: Not every deductible is created equal. Auto insurance carriers can list separate deductibles for glass-only claims (cracking your windshield) than they would for an accident. For home, many carriers will list separate deductibles for wind and hail damage.   

Having a deductible that is too low: Having a lower deductible is better in a time of loss, but will cost you more money throughout the years in your premium. Get two quotes: one with a higher deductible and one with a lower deductible. Compare the amount you would pay out of pocket in the event of a loss with the amount you are paying in premiums every year. If you can afford a larger deductible, it would be a smarter money move to pay less in premiums over the years. 

Remember to shop your insurance coverage every year right before your renewals to find the best rates and make sure your coverage levels are sufficient to cover you in a total loss.

Allison Baines, Wealth plan design specialist at oXYGen Financial. Co-host of “They Don’t Teach You This” podcast. Connect with her at

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