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12 Horrible Pieces Of Insurance Advice

If someone is injured while visiting you and sues you, your landlord's insurance won't cover that either.

4. Get the best rate even if you have to lie a little.

It might be tempting to fudge the truth on a life insurance application, especially if you have a serious health condition. "Don't do it," advises Steven Modell, president of Modell Brokerage Group in Wayne, Pa. "Not only is it insurance fraud and a felony in most states, but it could prevent your beneficiaries from receiving the death benefit."

5. Base your home insurance policy on the real estate value of your home.

Experts recommend setting the structural limit of a home insurance policy on what it would cost to rebuild the home if it were destroyed, not the real estate value. Trouble is, the rebuilding cost is a subjective number.

"Many agents use online tools to estimate the rebuild value, but those tools can be misleading," says Moraga. "It's more important to talk to a contractor and find out what the local costs are for your home's particular type of construction, whether it's in a tract home or custom construction."

6. Set your dwelling limit low.

Some insurance agents try to give customers the lowest premium possible in order to close the sale.

"One of the ways they're doing it is by underestimating the value of the dwelling and slapping a 100 percent extended coverage endorsement on the policy," explains Bach. "Most policies have four separate categories of coverage: 1) Dwelling. 2) Contents. 3) Other structures. 4) Additional living expenses. Three of the four pay a percentage of the dwelling, so if you lowball the dwelling value because you have 100 percent extended coverage endorsement, you'll be underinsured for your contents, other structures and additional living expenses."

7. Purchase the state minimum coverage for auto insurance.

Many drivers buy the minimum coverage their state law requires for auto insurance.

"In California that minimum was set in 1967," says Moraga. "A lot has changed since then. So when you look at your auto policy, understand that if you're only getting what's mandated by law, you may be woefully unable to pay any kind of a claim."

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