The Holes in Your Insurance Coverage

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The Holes in Your Insurance Coverage

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When is the Right Time to Upsize?

January 24, 2020

So, you have health insurance.  You probably have car and home insurance as well.  Great, all is good in the world and you can sleep easy at night.  But what if you had a major car accident that was your fault or a tree from your property falls on your neighbor’s house? Now the stress begins.

Scenarios like that are when an “umbrella” insurance policy would come into play.  Something that most people don’t both to purchase.  Umbrella policies pick up the slack above whatever your car of home limits is.  If your car insurance coverage is for $100,000, then you can buy the umbrella policy to cover everything above that amount, in amounts upwards of $5 million.  These policies often come into play if the person that was damaged sues you.  The good news is these type of insurance policies are easy to buy through your existing car or home agent and are very affordable.  Someone with good credit and a clean driving record, might find coverage for as little as $200 per year per million of coverage.

But that is not the only hole in your insurance.  If you just bought that new car, you might have taken out a loan.  We know that as soon as you drive off the lot, the depreciation of the value of the car is going to make you upside down on that loan.  If you total the car the next day, the insurance company is not going to give you what you owe, but rather what it is worth.  In that scenario, you would need Gap insurance.  This is the insurance that covers the difference between the actual value and what you owe.  Just make sure you do not buy that from the car dealer.  It will be more expensive than if you buy it from the agent that you got your car insurance from.

By cutting out a few Starbucks trips, or not buying that insurance policy that Best Buy tries to sell you when you buy a new refrigerator or TV, will probably be enough to pay for these other real holes in your insurance coverage.  And then you really can sleep easy at night.

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About the author

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Van Pappas

Vice President, Private CFO®

Van Pappas, CFP® - Van is a native of Atlanta. He holds his undergraduate degree in Finance with an emphasis in Real Estate. As a planner for 15 years, he earned his CFP designation from Kaplan University. He is currently the Chairman and founder of the Chamblee Chamber of Commerce and sits on the Downtown Development Authority for the City of Chamblee. In 2012, he noticed the value of helping the X-Y Generations and decided to merge his practice with oXYGen Financial.

Background and qualification information is available at FINRA's BrokerCheck website.

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