Last Updated: March 27, 2009

According to FPA member, Steven J. Stanganelli, CRPC®, CFP® of Focus Capital Wealth Management, Inc. it's important that you don't scrimp or skip needed coverage on your auto, home, income or life insurance. It's also important that you review, at least once per year, these types of policies to make sure that adequate coverage is in place. You may also want to consider also reviewing your policies when there is a life-changing event such as a birth or death. However, do skip the extended warranty coverage offered on small-ticket items. "For instance, a cordless phone that costs $20 at an electronics store may offer a two-year extended warranty for replacement at $5 but that's just increased your cost now by 25 percent" he said. "And it is more than likely that if and when the phone gets fried, you'll be able to simply replace it at the same current cost with even more fancy features."

When purchasing property and casualty insurance, Stanganelli recommends dealing with a reputable property and casualty insurance agent who has access to many carriers. "Be sure to call and review your coverage," he said. "Going for the lowest premium is not a way to save money." For example, he said owning a home with a replacement cost of $400,000 and having outdated coverage up to only $300,000 exposes you to all sorts of risks and out-of-pocket costs if there is a damage claim since you'll only get a proportion of the loss covered by the insurance. Why? Because you did not have full replacement cost
coverage.