7 things to consider before buying insurance

3 minute read

Buying insurance is a significant investment. As with any long-term investment, you want to make sure you’re getting your money’s worth.

Below are some tips to consider and some questions you’ll want to ask before you purchase insurance coverage.

  1. Shop around. There are multiple insurance companies offering a variety of coverages. Ask yourself: Who can best fulfil my needs? You may also want to see if you want to buy insurance through an agent (who sells insurance for just one company) or through a broker (who represents multiple insurance companies) or buy online directly.
  2. Only buy insurance to maintain your existing standard of living. You don’t need insurance for events that won’t severely strain your finances. Start with your basic needs (home, auto, business), then work your way to include other needs (cyber, liability). You can always obtain coverage later for something if you change your mind. You can minimize your risk and maximize your savings by buying insurance that won’t cause you to break the bank.
  3. Ask your insurance provider what the policy doesn’t cover. Every insurance policy has perils that are not covered by your policy. These perils are referred to as “exclusions”, and every policy has them. Ask your insurance provider to explain the exclusions in your policy to avoid discovering what they are once you incur damages or a loss.
  4. Consider bundling several policies with one insurance carrier. There may be value in bundling several policies with one insurance carrier. If you’re looking to insure multiple vehicles or obtain multiple types of business coverage (e.g., liability, property, cyber), then you may want to consider obtaining coverages under one insurance provider who carries multiple products, and who may be able to offer you multi-policy discounts or loyalty programs.
  5. Review your insurance needs on a yearly basis. As your needs evolve, so will your insurance policy. Maybe you’ve acquired a new vehicle since obtaining auto insurance for your primary vehicle, or started operating your business out of your home, or experienced a cyber-attack during the year… Whatever the change(s), you’ll want to make sure you’re covered for any new risk exposures. Talk to your insurance provider to stay on top of your insurance needs.
  6. Don’t defer payments. Default of payment is considered a “bad risk”, which leads to being charged a higher rate. If you decide you don’t want to renew your policy, immediately notify the insurer in writing. Note that switching your insurance provider before your policy is up for renewal may result in a penalty fee for premature cancellation.
  7. Take measures to minimize risk and prevent losses from occurring. Risk management can go a long way in helping you stay protected. If you own a home, consider performing seasonal maintenance checks. If you have a home-based business, consider purchasing anti-malware for your computers to minimize your risk of becoming a victim to cybercrime. Risk management and planning, in addition to getting the right insurance, can help you be prepared and stay ahead.

Buying insurance doesn’t have to be a daunting task. With research and communication, you can make a smart investment today that’ll secure your peace of mind tomorrow.

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