Purchasing insurance coverage can be confusing for consumers. The following tips provide some helpful background to consider before making your next insurance decision.


Automobile Insurance

Automobile insurance is the most commonly purchased type of insurance. Individual states require a certain amount of coverage, and the lienholder on your car can require additional coverage. It is recommended that buyers learn the basics before they shop and consider the following ideas:

Buyers should be aware of the different types of insurance discounts before purchasing a new policy. Automobile insurance discounts are given for good grades, multi-car policies, safe driving courses, anti-theft devices and good credit histories.

Remember “diminishing returns” when considering comprehensive and collision coverage on older vehicles or those that no longer hold a lien. Consider the amount of premiums to be paid compared to the amount of money that you may receive for a vehicle in the event of a loss. However, it’s also important for the buyer to consider whether they have the funds to repair or replace the car in case of a collision.

Driver exclusions or named driver policies are common components of insurance. The broader the coverage, the more drivers are covered in case of an accident. Once drivers are excluded either as a whole or by name, the scope of your policy becomes narrower and leads to uncovered claims, out-of-pocket expenses and possibly uncovered lawsuits.


Homeowner Insurance

Homeowner insurance is not just for those who own a home. Whether a buyer owns or rents a home, lives in an assisted living facility or has an “extended stay” with a relative, there are always belongings that need to be insured. Each situation varies and so does the insurance coverage.

Flood and windstorm coverage is not part of a standard homeowner’s policy. Buyers should remember to consider the risk and be appropriately insured. Flood insurance does not cover wind damage and windstorm insurance does not cover flooding or storm surge damage. If you live along the coast, you should have both windstorm and flood insurance.

Don’t turn a home into a “business” without first confirming that the insurance will provide adequate coverage. That includes weekend rentals, home offices and day care services. Even the occasional “work from home” day may require a slight adjustment to a policy in order to provide the broadest coverage.

Homes should not be left vacant or unoccupied for any length of time without consulting an insurance agent. Adjustments to a policy will be necessary to continue coverage.   

There are numerous websites available to assist with the selection of an insurance company or agent as well as to answer general insurance policy questions. Whatever choices buyers make, they should develop a trusting relationship with their insurance agent so they can have piece of mind when purchasing coverage.

Formed in 1974, the Independent Bankers Association of Texas (IBAT) represents Texas community banks. The Austin-based group is the largest state community banking organization in the nation, with membership comprised of more than 2,000 banks and branches in 700 Texas communities. Providing safe and responsible financial services to all Texans, IBAT member bank assets range in size from $10 million to $20 billion with combined assets statewide of nearly $165 billion. IBAT member banks are committed to supporting and investing in their local communities.