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How to avoid home and auto insurance gaps

October 24, 2014

There's a difference between obtaining insurance and getting comprehensive coverage. While any insurance is better than none at all, the last thing you want is to obtain home and auto insurance yet still not have the financial protection you require should the need arise.

Fortunately, there are simple ways to avoid these gaps in coverage.

A little commonsense can help you avoid insurance gaps.

Home

First and foremost, find out exactly what is covered under your homeowners insurance policy. You may think that you're fully protected should a disaster occur, but many policies contain a cap on replacement costs. If this cap is reached, you could find yourself paying exorbitant amounts out of pocket.

Also, find out what exclusions exist in your policy. Even if your insurance states that it covers all peril to your property, you may find that things like floods and earthquakes will only be covered if you add a special addendum.

Next, make sure your home is correctly valued. You may have obtained a homeowners insurance policy when you first moved in, but your property may have risen in value since that time, especially if you made renovations. Reviewing your policy on a routine basis will help you ensure you have enough homeowners insurance to cover your home's true worth.

Auto

Just like with homeowners insurance, not all auto coverage is created equal. Because all U.S. states require drivers to obtain auto insurance, you may think that everyone receives the same protection, but this simply isn't the case. Carefully go over your policy to understand exactly what is covered.

Also, keep in mind that only certain people may be covered when they get behind the wheel of your vehicle. You may assume that all your family members who live with you are covered, but this may not be true. Insurers should be made aware of any and all changes in marital status and living arrangements, as this could affect who is covered under your policy.

Switching insurers

If you decide to switch to a new insurance carrier, it's vital to plan ahead so you don't find yourself without coverage. If your new home or auto policy isn't activated before your old one ends, you could find yourself completely vulnerable to costly disasters and accidents. Even worse, if you're caught driving without insurance, you could face steep penalties and legal action.

With this in mind, make sure you have your new policy ready to go before ending your old one.