When it comes to protecting what matters most — your home, car, family, and livelihood — insurance is both a shield and a mystery. Policies can be dense, deductibles confusing, and fine print intimidating. In a recent episode of Insurance Hour, host and insurance expert Karl Susman unpacked some of the most common and costly mistakes people make when it comes to insurance. From misunderstanding earthquake coverage to neglecting proper liability protection, Susman's message is clear: being informed is the best insurance of all.
Living in California means accepting one fact — the ground will shake again. Yet, many homeowners mistakenly assume that their standard homeowners policy automatically includes earthquake protection. It doesn't.
As Susman explains, earthquake insurance is a separate policy entirely, and one that's worth serious consideration. Deductibles typically range from 2.5% to 25% of your insured value, not the total damage or market value of your home. For instance, if your home is insured for $500,000 and you have a 10% deductible, you'd be responsible for the first $50,000 in earthquake repairs.
While that may sound steep, the alternative — being left with nothing after a major quake — can be financially devastating. Companies like GeoVera, a California-based earthquake insurer, now offer customizable plans that make coverage more accessible and affordable.
The takeaway? Check your policy. If earthquake coverage isn't listed, you don't have it. And when the next big one hits, that oversight could be catastrophic.
Umbrella insurance sounds fancy — and it is, in the best way possible. This type of policy provides extra liability coverage beyond your auto, home, or renter's insurance.
Many people think umbrella insurance is only for the wealthy, but that's a dangerous misconception. As Susman notes, "Anyone who drives a car, owns a pet, or entertains guests has liability exposure."
Here's the key distinction: umbrella policies don't protect your things — they protect you and your assets if you're sued for bodily injury or property damage. For example, if your auto policy covers up to $300,000 in liability and you're sued for $1 million, an umbrella policy could cover the remaining $700,000.
Umbrella coverage also extends to legal defense costs, which can quickly deplete your limits. Be sure to check whether your policy includes defense costs outside the liability limit — otherwise, your million-dollar policy might shrink to half that once attorney fees are deducted.
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