This is a quick post about 3 things any new parent should do with insurance that I forgot to do. I am no insurance expert. This is just what makes sense to me in my situation.
1. Change your health insurance to a plan with a lower deductible.
When you were in your roaring twenties without a care in the world, you didn’t use health insurance as much. The smart money was choosing a higher deductible and lower premium. With a child you will have more visits to the doctor and potentially have a reason to make a claim and use up that deductible. If your deductible is $1,000, you will need to pay up to that amount in cash. You should change your plan to the higher premium/lower deductible. In most cases, the monthly premium only slightly goes up while a $1,000 out of pocket is a harder hit financially. Your employer usually offers two plans. From here on out, bubs, you will be in the higher monthly bracket.
This is important because you can only make the change at two specific times: 1. once a year during enrollment, and 2. when a child is born.
2. Increase your auto insurance coverage.
I don’t know about you, but having children makes me want to be covered well. There is so much more to lose. In my life before the goal was to have the lowest monthly premium possible. To do this, companies lower your coverage amounts. A big place this happens in Auto is the bodily and property coverage. You should have at least $300,000 in bodily for each occurrence. Also, property should be at least $100,000. Crash into a BMW and $50,000 goes out the door pretty fast.
3. Increase your home insurance coverage.
With home or rental insurance the same rule applies: less coverage means lower monthly payment. (You do have rental insurance if you rent, right? Get this now if you don’t. It will cover you as a renter and also help your rates when you do buy that home.) The big place insurers will lower your monthly premium is in the replacement cost of your home. This is not a bad practice. It is simply how you can get your premium lower. But now you have more to cover, right?
Create your own estimate of the replacement cost! Do not rely on their estimate. You know your house and the cost of local services. Give them the replacement value you want. You can always compare rates based on a number of costs. Pick a high total cost and your lowest comfortable one and see what their rate calculation gives you.
In my case, they came up with a value for our home that I think is way low. I want $40,000 more than they quoted. That increase in value of the home rebuild increased my annual payment by ONLY $40. I believe that $40 is worth an extra $40,000 in case my house gets hit by a freak lightning storm and burns down while we are far, far away.
I could say more about these 3 important changes, but I was updating coverage this morning and wanted to share my tips with you all.