When budgets get tight, it’s natural for homeowners and drivers to look for ways to lower their monthly expenses. One of the first places people turn is their insurance policy, specifically by reducing their coverage to shrink the premium.

But while lowering coverage may save a few dollars today, it can create massive financial exposure at the exact moment you need insurance the most.

At Mt. Franklin Insurance, we regularly help clients understand the real risks behind “minimum limits” coverage and why it’s often the most expensive mistake a policyholder can make.

Why Minimum Auto Liability Coverage Isn’t Enough

Across Texas and neighboring states like New Mexico state-required auto liability limits are surprisingly low. On paper, they meet legal requirements but in reality, they may not even cover a minor fender-bender.

For example:

• Medical bills from even a low-speed accident can exceed minimum medical liability coverage.
• Modern vehicles are equipped with expensive sensors, cameras, and bumpers so repairs add up fast.
• If the claim costs more than your policy covers, you personally pay the difference.
• Higher personal financial risk and increased exposure to lawsuits

That means you could purchase a policy, pay every monthly premium, and still face thousands or tens of thousands of dollars in unpaid damages.

At Mt. Franklin Insurance, we don’t sell minimum-limit auto policies for this very reason. If a claim occurs, our priority is making sure you and your family are protected.

The Hidden Danger of Lowering Your Home Insurance Coverage

Homeowners face a similar temptation: lowering their home’s insured value to reduce the annual premium.

While it may look harmless on the surface, this move carries two serious risks:

1. You may not have enough coverage to rebuild your home.

If a fire, storm, or major loss occurs and your coverage is too low, the payout may not be enough to repair or rebuild the damaged structure.

2. Co-insurance penalties can reduce claim payouts even further.

Most home insurance policies include a co-insurance clause, which requires you to insure your home at a certain percentage of its true rebuild cost, often 80% to 100%.

If your insured value is reduced below that threshold:

• The insurance company has the right to reduce your claim payout.
• Even partial losses may not be covered in full.
• You could end up paying out of pocket for repairs you expected the policy to handle.
• Stress and uncertainty during what should be a straightforward process

This is why rebuild value, not market value, is the foundation of a properly structured home insurance policy.

Mt. Franklin Insurance: Expert advice for the right insurance policy.

Insurance exists to protect you, not to meet the bare minimum legal requirement. A policy that fails you during a claim isn’t a deal…it’s a liability.

Mt. Franklin Insurance has decades of experience reviewing liability limits, home values, and policy structures to make sure clients have the coverage they truly need.

We don’t believe in selling the cheapest policy.  We believe in selling the right policy, the one that keeps you, your family, and your assets protected when life happens.