Comprehensive financial planning includes making sure you’re protected from risk of many kinds. It may not be as exciting as strategies to reduce taxes or increase investment returns, but it’s your safety net when the unexpected strikes. Better yet, there are ways you can boost the effectiveness of your auto, home, and umbrella protection. How? We collaborated with Christopher Togawa, owner of Christopher Togawa Insurance Agency, to bring you these 7 tips.
- Raise your deductibles, raise your limits. You’ll get the most out of your insurance dollar by raising deductibles and coverage limits rather than keeping deductibles and limits low. Think of insurance as a way to transfer risk of major loss rather than prepaying expenses like a chipped windshield or minor scuff from a wayward shopping cart.
- Consider separating risk by putting driving age kids on their own policy once they leave the home. This doesn’t mean leaving your kids on their own. You can still help with premium payments and guide them on the “why” of safe driving. But moving kids to their own policies once they move out separates risks that may be outside your control.
- Add umbrella coverage on top of your home and auto limits. Your auto and home policies likely have $500,000 coverage maximums. If you’re in an accident with $1 million in damages, you’re on the hook for the $500,000 above your policy limit, putting your personal assets or future earnings at risk. Damages, pain and suffering, and medical costs can easily add up to $1 million or more. Umbrella coverage, also called excess liability, coverage can add up to $5-10 million in additional protection.
- Combine auto, home, and umbrella coverage. Many carriers offer discounts for bundling coverage together. Rather than spreading out across multiple companies, look at consolidating with a single company, ideally with the help of an insurance agent that can help you compare rates across multiple companies and streamline this aspect of your life.
- Ask if you’re eligible for discounts. Are you a safe driver? Driving fewer miles annually? Achieve good grades in school? Did you add a home security system? You might qualify for a number of rate reductions that put more money in your pocket.
- Change your home? Change your home policy. Did you remodel your home? Are you renting a room as an AirBnB? Are you conducting business from your home now? Don’t forget to discuss these changes with your insurance agent so they can keep your coverage consistent with your changing needs.
- Using a personal car for business? Do you use your personal car for business purposes? Your car may be considered in business use and require a business rider or separate policy to cover it. Talk with your insurance agent to find out if this applies to you.
Why focus on this topic? Building a successful investment plan without adequate protection is like locking your front door while leaving the back door wide open. You can safely and confidently spend more growing your assets when liability risks are covered. Your financial advising team should collaborate with your auto, home, and liability insurance agent to ensure your plan and protection are properly coordinated.
The “Alterra” name was coined by joining the Latin roots “alter”, the origin of the word “altruism” with “terra” meaning earth or land. This name reflects the company philosophy of “clients before profits” and providing firmly grounded advice.