Here's Why I Pay More Than I Need to for Insurance

Buying insurance can be a big expense. But it's important. Getting the right coverage is so essential that I actually pay more than I need to. I overpay for the homeowners insurance I bought to protect my house. I overpay for my auto insurance policies as well.

Why would I pay more than the minimum? There are a few very simple reasons why.

1. I want comprehensive coverage

The biggest reason why I pay more for insurance than I have to is because I want my coverage to be comprehensive.

Every state sets minimum requirements for car insurance. Usually, you're only required to buy bodily injury and property damage liability coverage, although some locations impose additional requirements such as personal injury protection or uninsured motorist coverage. And the required policy limits are often pretty low -- sometimes, you're mandated to buy as little as $5,000 in property damage liability or $15,000 in injury liability.

I think these coverage limits are way too low, especially when even something as simple as a broken leg requiring surgery could come with medical bills of $15,000 to $40,000 or more. If the worst were to happen and I caused a crash and injured someone, I would want my insurance to pay all of their bills so I wouldn't risk being personally sued for the additional funds they need.

I also want more than the required coverage, as I want things like collision and comprehensive insurance to pay for my vehicle to be repaired or replaced if I get into a crash that's my fault or my car is stolen or damaged by vandals.

I even buy more than the amount of home insurance my mortgage lender requires, as mortgage lenders generally mandate only property damage coverage and I want protection for the contents of my home, as well as liability insurance.

Buying more than the minimum amount of protection that my lender or state requires means I pay higher premiums. But it also means that if someone is hurt or my property is damaged, there will be insurance coverage to pay for it. Anyone who cares about protecting themselves from financial catastrophe in case something goes wrong should also consider buying more than the minimum coverage their lender or the law requires.

Think about how much it would cost to replace every possession, or to pay for catastrophic injuries for an injured victim after a car accident or fall at home. Then, make sure you have sufficient insurance in place to pay for these expenses.

2. I want a trusted insurer

Another big reason I pay more for coverage is because I didn't use price as my deciding criteria when deciding who to buy insurance from.

Sure, I shopped around and got multiple insurance quotes before buying home and auto coverage. But I only considered insurers that had a solid reputation for customer service and claims handling. I won't settle for an insurer that gives its customers a hard time when things go wrong, even if their premium prices were rock bottom.

When a covered loss happens, it usually means something has gone pretty wrong, like a car accident or a house fire. No one wants to be fighting with an insurance company during this time, so it's always worth paying a little extra for quality coverage. Checking the National Association of Insurance Commissioners' complaints database and reviewing J.D. Power rankings can be helpful in finding quality insurance companies.

The reality is, most consumers should overpay for insurance because that's what it takes to get the right coverage from the right company. Anyone who is focused on price alone and who scales down their coverage or who goes with the cheapest company just to save a few bucks could end up really regretting it when a problem happens. That's a bad situation to be in, since it will be too late to fix things once the covered loss has already occurred.