As a personal injury lawyer, there are always several insurance hacks that I constantly find myself talking about with current and former clients when it comes to insurance. Unfortunately, these conversations occasionally come up in the context of explaining why your current insurance is not good enough.
Your insurance agent should discuss many of these things with you when you purchase your personal insurance policies. I dislike being the bearer of bad news, so here is a proactive list of insurance hacks you should know and have in your insurance arsenal before you find yourself needing more but lacking it.
6 Insurance Hacks
Overall, you should have, at minimum, six different policies: Health, Personal Auto, Homeowners/Renters, Personal Umbrella, Long Term Disability, and Life. If you are in your 50s, you should have long-term care insurance. If you are in your 60s, it might be too late
1. Increase your personal auto to $500,000 in coverage.
What most people don’t realize is that when you have $500,000 in coverage, you are protected not only from a lawsuit against you but also if you are injured by an uninsured or underinsured driver.
What happens if you are injured by such a person? That person has a policy limit of $25,000 or, even worse, no insurance at all. He has no assets to speak of and lives paycheck to paycheck like 78{48c504d5a5f0724c566492c27f2412e3d97a5dbd1d2791ef7ccf262d1d58a622} of Americans. Who is going to pay for your medical expenses and who is going to compensate you for your pain and suffering?
The answer is your own car insurance policy.You may think that your policy limits are to protect you if you are sued. That is true, but the same limits help you if you are injured. Increase your limits to $500,000. It really doesn’t cost that much more each month to increase from $100,000 to $500,000. When you don’t have enough insurance of your own, you may end up settling for less than your case is worth.
If you never use it, that is ok. But if you ever need it, you will thank me later.
There may be scenarios where $500,000 is not enough. You should talk with an attorney about your individual financial situation to decide how much insurance you should have.
2. Increase your medical expense payments to $20,000
When you recover from someone’s personal auto insurance or from your underinsured or uninsured motorist coverage described in 1, you have to wait to recover until you are finished treating and your case is ripe for resolution. Leading up to that point you have to cover all of the out-of-pocket medical expenses.
Your car insurance policy should have medical expense payments included. Most will be about $2,000 unless you specifically increase it. I recommend you increase it to $20,000. It really isn’t that difficult to get to $20,000 in medical expenses and your med pay coverage will reimburse you for it as you go. This is a must have.
3. Buy a $1,000,000 umbrella policy
If you have $250,000 or $500,000 in personal auto insurance, then you may qualify for an additional $1,000,000 in liability coverage. If you injure someone else, then you will be covered for an additional $750,000 or $500,000. All for just a couple hundred dollars a year. This is the cheapest insurance out there and it is a must have.
4. Don’t waste money on short term disability insurance
A lot of people talk about their disability insurance like Aflac being their disability insurance. This is usually short-term insurance and, in my opinion, it is a waste of money. For the amount you spend, you should work hard to eliminate debt and save up a 3-6 month emergency fund. Then, your long-term disability insurance will take care of you.
5. Purchase long term disability insurance to cover any significant injury
Everyone should have long-term disability insurance. You can survive being out of work for 3-6 months. But what if you are out of work for 5 years or for the rest of your life. Long-term disability insurance will cover your monthly expenses if and only if you have the appropriate policy.
6. Life insurance is a must at 10-12 times your annual income
Everyone needs life insurance and not just through your job. If you ever leave or lose your job but you acquire some condition that renders you uninsurable during your employment, you will never be able to get adequate insurance on the private market after that job. Life insurance is intended to be an income replacement so you should have 10-12 times your annual income. This is a Dave Ramsey recommendation that I 100{48c504d5a5f0724c566492c27f2412e3d97a5dbd1d2791ef7ccf262d1d58a622} agree with.
These are just insurance hacks that will put you in a position to succeed in life. Don’t forget that this isn’t about other people. It is about you and your family. Take the time to protect your family now so you don’t put yourself, and your family, in a predicament later.
