Financial planning for the future? This mistake could set you back years

Financial planning for the future? This mistake could set you back years

By Christian Underwood, Account Manager

As consumers, we’re constantly bombarded by commercials for discount, one-size-fits-all insurance policies. Because of this, even successful individuals are sacrificing professional advice from an insurance broker just to save some pennies on a premium. The unfortunate reality here is that this often leads to massive gaps in coverage. 

Due to the potential financial impact you could face as a result of inadequate coverage, it’s important that you and your wealth manager take a closer look at your personal insurance policies and limits before it’s too late. 

Investing in your retirement through sufficient insurance coverage

Whether you’re a financial planner or a client working with one you truly trust, there are some policies you need to review to ensure that one unforeseen incident doesn’t have the ability to dramatically delay your much-anticipated retirement or other future goals like college funds

Below are five items under your personal insurance policies that I highly recommend you review right away.

#1 Underinsured motorist limits under your automobile policy. 

Most successful families have high enough liability limits, but I often find that they have inadequate uninsured motorist limits. Honestly, it’s probably one of the greatest areas of too little insurance. That’s why I recommend financial advisors and their clients take a look at their underinsured/uninsured motorist limit.

With more and more uninsured motorists on the road, you could be at a significant financial loss if you were to be in an accident with an uninsured motorist. If this were the case, you could be facing high deductibles or copays with your health insurance, unpaid time off work or worse, the incident could leave you unable to work at all. Without adequate limits, all of these could be out-of-pocket expenses.

#2 Parts coverage under your automobile policy.

As far as claim settlements go, if you’re driving a high-end or luxury vehicle, I highly suggest you look to partner with an insurance carrier or broker who pays for original manufacturer (OEM) parts instead of aftermarket parts.

Aftermarket parts don’t always properly fit the vehicle and may not even be safely installed. Most people don’t realize that many of the common carriers that you see online and in commercials don’t actually offer the OEM parts in their auto policies.

#3 The dwelling limit on your homeowner’s policy.

This is the limit to completely rebuild your house back to the way it was before the loss including debris removal, and you should try to find a company that will pay a guaranteed replacement cost.

In my experience, most total losses on homes go above and beyond the coverage limit on the policy so if you don’t have guaranteed replacement cost coverage, you could be at a significant out-of-pocket expense to finish repairs.

Additionally, many carriers may only cover their clients’ homes at market value rather than completing an appraisal to see how much it would cost to rebuild. This is why it’s important for a financial advisor and a client to partner with an insurance company or broker who will send an appraiser out to review the property and calculate the proper replacement cost protection. You do not want to be left with only 2/3 of a house after a total loss!

#4 Water damage coverage on your homeowner’s policy.

You want to find a carrier that properly covers water damage to the full limit. With water losses being the most common type of loss on a home, it’s very important to have the proper coverage in place. At the very least, look at your policy and verify the sub-limit isn’t too low for water claims.

For example, pipes bursting or backing up in a home on a higher story can lead to multiple rooms that need to be completely gutted, heating and cooling equipment repairs and even living expenses if you are unable to live in the home for several months. This type of water damage can easily cost you tens of thousands of dollars to repair.

#5 Umbrella Coverage.

What is an umbrella policy? Umbrella coverage is excess liability that goes above and beyond what’s on your automobile and homeowners policies. This type of policy is extremely affordable, often a one million dollar umbrella is only $150 a year, and it will cover you above and beyond for any automobile accident or personal lawsuit. These policies are extremely affordable, but can also be often overlooked!

The importance of your financial advisor partnering with a trusted broker

Working with a financial advisor who will review your personal insurance policies for gaps in coverage or partnering with the right insurance broker is priceless, and financial advisors should understand that this service has become invaluable to clients. 

According to Chub Financial Advisors, 77% of successful families want support and guidance when it comes to their personal insurance policies from their financial advisors, but only 28% of financial advisors actually offer this service. Their survey also showed that 49% of clients would consider switching to a new financial advisor if they could get personal insurance service through that financial advisor.

Trust Byars|Wright to help protect your future

Here at Byars|Wright, relationships matter and we want to help protect the relationship between you, your family, and your financial advisor by helping to review your personal insurance.

Ultimately, by partnering and receiving expert advice from a property and casualty insurance broker like Byars|Wright, your financial advisor could further protect your portfolio, ensuring you’ll never have to use up your savings and retirement investments to pay for a loss that wasn’t properly covered.

 

Learn more about protecting your future through personal insurance from Byars|Wright in Birmingham, AL 

Byars|Wright, Inc.. is a locally owned and operated independent insurance agency with four offices in the greater Birmingham area that has developed into a major provider of commercial and personal insurance. Since 1946, the agency has made acquisitions to expand its scope of business and delivers a wide range of insurance products with quality coverage at competitive prices. Byars|Wright has been designated a Best Practices Agency by the Independent Insurance Agents and Brokers of America and was also named “Best Companies to Work For in Alabama” by Business Alabama in 2016, 2017, and 2018. Byars|Wright, Where Relationships Matter. www.byarswright.com.