Understanding Your Insurance Policies Can Help You Avoid Bankruptcy

April 24, 2012 by  Filed under: Bankruptcy 

Though there are many reasons a person may end up filing for bankruptcy, there are certain things that can be done ahead of time to minimize the likelihood that you will need to declare bankruptcy. One key way to protect yourself against a potential financial disaster is to fully understand each insurance policy you have. The most important policies to understand are the rules of your medical, car, and home insurance.

Medical insurance can be exceedingly complex to decode, but it is imperative that you ask questions of your provider to ensure you know how you will be covered in the event of a serious illness or injury. Some medical insurance can look appealing because of low monthly payments, but the tradeoff may be very little to no coverage when you need it most. These insurance details are “hidden” within the pages of your policy details.

All too often, people do not take the time to completely understand what their medical coverage will be until an emergency occurs and it is too late. Unforeseen medical expenses do not have to result in staggering costs and bankruptcy. Make sure you know how you and your family will be cared for under your current policy; if you find this coverage insufficient in the event of a serious illness, be proactive and change to a better policy.

Sometimes people may choose to purchase the minimum car insurance required by law. For example, someone may purchase car insurance with $10,000 of coverage. Most times, this minimum coverage policy is not a wise one to choose because a serious accident will likely not be completely covered under the policy. If an accident occurs and damages total $25,000, you will be forced to cover the $15,000 difference out of your own pocket.

Scenarios such as this often result in the person being left with no choice other than declaring bankruptcy. Any money “saved” on the lower monthly payments is nothing compared to the thousands of dollars of payout required to settle an insurance claim. A thorough understanding the benefits and drawbacks of individual car insurance policies can save you the immense heartache of “finding out too late” your policy has inadequate coverage.

Home insurance does not cover damage for certain natural disasters. For example, if you live in an earthquake-prone area, it is prudent to purchase earthquake insurance to cover yourself in the event of an earthquake. Without this specialized insurance, an earthquake may cause you to lose your home and even struggle to provide the basic necessities for life.

Flooding is also typically not covered under home insurance. Even though a flood may not seem likely in your area, the unpredictability of weather and its devastating effects can be seen in news stories almost every week. It is always sensible to be safe rather than sorry when considering insurance that covers your home and ensures the well-being of your family.

Even with the best of intentions and most careful planning, unexpected financial hardship can still occur. If you or someone you know is facing overwhelming medical bills or another kind of debt, bankruptcy may be an option to help get you back on your feet. It is important to consult with an experienced bankruptcy lawyer who can carefully assess your situation and guide you through the best recovery process for your unique case.

With offices in Corpus Christi, McAllen, Brownsville, Harlingen, Houston, San Antonio, Dallas, and Fort Worth, the experienced team at Malaise Law Firm has the legal know-how to help with all your bankruptcy concerns and needs. They have over sixty lawyers and staff members, including seven bankruptcy attorneys who focus specifically on the bankruptcy law practice area. You can have confidence that their firm will do everything they can to get you on the path to financial peace of mind. Contact a South Texas bankruptcy lawyer from the firm for a free initial consultation.

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