Can You Ever Have Too Much Insurance?

 

If you've ever caught yourself thinking "I'm insurance poor," it's likely because you've been adding up all those policies you've managed to collect and all those premiums you continue to pay.  If you're like most people, you have life insurance, car insurance, health insurance, homeowners or renters insurance and maybe more.  The question is, can you ever have too much insurance?

Vehicle Insurance

In the state of North Carolina, anyone driving a vehicle on public roads is required by law to have at least a minimum amount of liability insurance.  This is third-party liability coverage to help pay for financial losses suffered by others in an accident you cause.  Losses may be the result of property damage, bodily injury or death.  In NC, the minimum liability coverage required is:

• $30,000 per person per accident bodily injury
• $60,000 per accident bodily injury coverage for all persons
• $25,000 per accident property damage

How Much is Enough

Many experts recommend you increase your liability limits three to five times the minimums (or more).  The amount you carry should depend upon the number of assets you stand to lose if sued for liability.  Even more protection is available through the purchase of a high-value umbrella policy.  This is a relatively inexpensive way to significantly increase your asset protection.

Other car insurance options should depend on the value/condition of the insured vehicle.  If you're driving an older, beater car that you could easily replace, carrying collision and comprehensive coverage on it probably doesn't make sense.  The money you're spending on these coverages might be better applied to medical payments or uninsured driver's coverage.

Life Insurance

You buy life insurance to keep your dependents financially secure in case you die unexpectedly.  The death benefit should cover: 

• Your income
• Major debts
• Funeral expenses
• Future obligations such as your children's education

As you age, however, you likely don't need the coverage you once needed.  Your home mortgage may be paid off, the kids are grown and off on their own and your debts are what they once were.  In this case, you can lower your coverage to a more appropriate amount. 

Homeowners Insurance 

Your homeowners coverage should be enough to rebuild your home and replace your property should the home be totally destroyed.  This doesn't mean covering the market value of the home or the value of the land.  Umbrella coverage can extend your homeowners liability limit.