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Three Insurance Coverage Gaps You Shouldn’t Ignore

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You thought you covered the essentials: your home, your car, and your health are all insured. What else could you need? Unfortunately, many Americans who insure their basic needs have gaps in coverage that can unexpectedly drain their savings if disaster strikes.

In this podcast episode, we team up with Gary Pozsik of Health, Wealth, and Happiness to discuss three common insurance problems you may not be prepared for and how you can fill the coverage gaps.

Episode Highlights

1. No flood insurance leads to costly problems.

Flooding has occurred in every state over the last several years, and just one inch of water can cause $25,000 of damage to one’s home.

However, the Insurance Information Institute estimates that just 15 percent of homeowners across America carry flood insurance.

Many Americans skip flood insurance because they assume their standard homeowners or renters insurance policy will cover flood damage. However, this is incorrect.

Flood damage is excluded under standard homeowners and renters insurance policies. However, it is available as a separate policy from the National Flood Insurance Program (NFIP), administered by FEMA, and from some private insurers.

As of September 2019, 59 insurance companies participated in the Write Your Own program, in which insurers issue policies and adjust flood claims on behalf of the federal government under their own names. Learn more about common flood insurance myths and what a typical policy will cover.

2. Americans should not forgo disability insurance.

It is often reported that one in three women and one in four men will have a disability that keeps them out of work for 90+ days during their working lifetime. In addition, half of working Americans would face financial difficulties if they were out of work for just 30 days.

This is a problem that could be remedied with long-term disability insurance, yet it’s estimated that only 40 percent of working Americans have a long-term disability policy.

Unfortunately, many do not think disability insurance is necessary because they assume Social Security Disability Insurance will cover them if they become disabled. However, SSDI has extremely strict criteria, making it difficult to collect benefits. SSDI benefits are much less than many expect – more than three-quarters of disabled workers receive monthly SSDI benefits of less than $1,500.

Long-term disability insurance usually pays between 40 to 60 percent of your pre-disability gross salary and can be purchased privately or through your employer. Learn more about questions to ask before you purchase a disability insurance policy.

3. Guaranteed auto protection is a must.

It is unfortunate, but true: when you drive your new car off the dealership lot, its value depreciates instantly. If your car is totaled or stolen soon after purchase, your insurance company will not reimburse you for the amount you owe on the car, but for its actual (and instantly depreciated) cash value.

Fortunately, guaranteed auto protection, or gap insurance, can help you avoid owing money on your new car or lease if it is wrecked or stolen. This insurance coverage makes up the difference between what your car is worth and how much you owe on your loan or lease.

You can buy gap insurance from your dealership or lender, but it is often cheaper to purchase through your auto insurance company if you several years of coverage. Talk to your trusted insurance agent about how much coverage is best for you.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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