Insurance Health Checkup

Why review insurance?

Insurance coverage may not be the first thing you think of when assessing your overall financial health, but it is a crucial part of protecting the things that will make you wealthy. When was the last time you reviewed your homeowner’s or auto insurance coverage? If the answer is a year or more, it’s time to schedule your annual insurance review. 

What is the purpose of insurance?

The purpose of insurance is simply to transfer risk that we cannot handle ourselves. It is part of a defensive game plan. Without insurance, you could be one car accident, illness or emergency away from a financial catastrophe. 

We believe there are eight types of insurance you need:

  • Term Life Insurance

  • Auto Insurance

  • Homeowners/Renters Insurance

  • Health Insurance

  • Long-Term Disability Insurance

  • Long-Term Care Insurance

  • Identity Theft Protection

  • Umbrella Policy

In this article, we will cover how to do an annual check-up of your auto insurance, homeowners/renters insurance, and umbrella policies.

Do I have the right insurance coverage?

There are a lot of important things in your life that you want to protect: your family, your savings, your income, and your identity. Do you have the right coverage based on your individual needs?

Visit the Coverage Checkup Tool to learn what coverage you need or don’t need, which questions to ask, and where to go to get the best coverage. The process takes just 5 minutes!

How to Review Your Auto Insurance Coverage

Reviewing your auto insurance coverage can save you money. You can start by reviewing your policy’s declaration page, which is typically the first page of your policy. Here you can find your effective and renewal dates of coverage, kinds of coverage and their limits, deductibles, and premiums for each coverage type. For full coverage on your auto insurance, you want three things: collision, comprehensive, and liability

Liability Coverage will pay the property damage or medical expenses of the driver and their passengers if you are found at fault in an accident. If the cost of an accident exceeds your policy limits, you are liable for the remaining expenses. If your policy provides only minimum liability limits, you may want to consider increasing your coverage to between $100,000 and $300,000.

Collision and Comprehensive Coverage are types of coverage that protect your vehicle. Collision coverage  pays to repair or replace your vehicle in the event of an accident. Comprehensive coverage pays for stolen vehicles and damage from falling objects, floods, and storms. If you live in Hoboken or Jersey City, this may be important coverage to have. After Hurricane Ida, nearly 100 cars were damaged by flood waters on Jersey City roads. 

After you pay off your vehicle, you may be able to drop these coverages. But before you do so, you should have a fully funded emergency fund that could cover the cost of replacing your car if it were stolen or totaled.

**Personal injury protection (PIP) **helps pay the medical expenses of you and your passengers following a covered accident, including insurance co-payments and deductibles, ambulance service, hospitalization, and surgery. It can also include extra things like reimbursement for lost wages and childcare expenses. 

States with no-fault insurance laws (like New Jersey) require that you purchase a certain amount of PIP coverage. However, you can designate your health coverage provider as your primary source of medical care should you be injured in an accident. If an accident occurred, your health insurer would pay first, and your auto insurer would provide secondary coverage through Personal Injury Protection.

Deductibles apply to collision and comprehensive coverage. The deductible is the amount you must pay following a covered loss. Increasing your deductible will lower your insurance policy’s premium. If you have a fully funded emergency fund, you may consider electing higher deductibles.  

Riders are optional add-ons to your standard coverage. They can include rental car reimbursement, roadside assistance, and coverage for uninsured drivers.

Ways to Save on Auto Insurance

Insurers offer many auto insurance discounts and usually allow you to stack multiple discounts if you qualify. The most common discounts include:

  • Multi-policy “bundling” (typically, auto and home/renter’s)

  • Multi-vehicle

  • Safe driver

  • Good student

  • Defensive driver training course: This can save you money and is often discounted.

  • Adjusting mileage rates: Make sure your average annual mileage is accurate.

  • Employer Discounts: Many employers offer insurance discounts

How to Review Your Homeowners or Renters Insurance Coverage

Whether you own your home or are renting, it’s wise to have homeowners or renters insurance to cover you. It’s always a good idea to check with your insurance provider to know what your policy covers and what it doesn’t. 

If you are a homeowner, make sure your homeowners policy includes extended dwelling coverage. This coverage adds an extra layer of protection above your policy limits. With extended dwelling coverage, the insurance company will replace or rebuild your property even if the cost goes over your policy’s coverage, typically up to 20-25% above the amount you’re insured. 

An important thing for homeowners to remember is to raise their homeowner’s insurance as their home appreciates. The higher your home’s value, the higher the need for extended dwelling coverage.

Other coverages you may want to add include** flood insurance**, hurricane insurance, and earthquake coverage. These coverages often do not come with regular homeowners policies.

If you are a part of a condo, make sure your HOA has the right building coverage. It can take time for the HOA to do the research, but it’s worth the peace of mind so make sure you ask the question. In some cases, HOA may change insurance policies that lead to changes in the coverage - make sure you keep on top of those in case you need to adjust your insurance accordingly.

If you are renting,* always* get renter’s insurance. It's important to understand that while your landlord is required to carry insurance, that insurance does not extend to your personal belongings. Without renters insurance, you would be on the hook to replace your belongings if they’re lost in a fire, flood, burglary, or another disaster. Many landlords and apartment buildings will require that you have rentals insurance too.

Ways to Save on Homeowners and Renters Insurance

  • Multi-policy “bundling” 

  • Employer Discounts: Many employers offer insurance discounts

  • If you have a full emergency fund in place, you can take a higher deductible and lower the premium on your policy to help you save money.

What is Umbrella Insurance and Do I Need It?

An umbrella policy adds an extra layer of protection for you and your assets when you need coverage that goes above and beyond your homeowners or auto insurance. Let’s say you end up at fault for a multiple-vehicle accident. Your medical bills and property damages could quickly add up to more than your auto insurance will even cover. And if you’re sued for the difference, your savings, your home and even your future wages could be on the chopping block.

Protect yourself from a situation like that with a personal liability umbrella policy. **When you have a net worth of $500,000 or more, get an umbrella liability policy. **For a few hundred dollars a year, an umbrella policy can increase your liability coverage from the standard $500,000 to $1.5 million.

Plan Ahead and Set An Annual Calendar Reminder

An annual insurance review is part of your overall financial wellness game plan. Set a recurring event in your calendar to review your policies and compare the latest price quotes. This doesn’t have to take a lot of time. You can leverage online insurance tools like The Zebra {hyperlink:} and Policygenius ( that help you instantly compare insurance quotes from a variety of providers.** **

Many insurance providers incentivize policyholders who can pay the full premium once or twice a year. If you’re currently paying monthly, you’re likely being charged an additional service fee. Instead, set up a sinking fund to pay these annual fees. Start by totaling up how much you owe on your insurance premiums annually and divide that by the number of pay periods. Set up automatic transfers to a separate savings account after each paycheck is deposited. Then come policy renewal time, you will have the full balance set aside. By planning ahead, you can save money on your annual premiums.