With increasing job instability and the value of paychecks and investments going down, you may be tempted to cut corners on your insurance. While there are many smart ways to save money on insurance, there are also mistakes that could result in being dangerously underinsured. The following are two insurance mistakes you should avoid.

Insuring a Home for its Real Estate Value Rather than the Cost of Rebuilding

With the value of real estate going down, some home buyers may think that they can reduce the amount of insurance on their home. Insurance,  however, is designed to cover the cost of rebuilding a home. It is not linked to the sale price of the home. Homeowners should be careful to purchase enough insurance coverage to completely rebuild their home and replace their belongings.

• A better Way To Save MoneyConsider higher deductibles. If you were to raise a $500 deductible to as much as $1,000, you may save up to 25 percent on many home insurance policies. The average person only files a claim every eight to 10 years, so most homeowners will save money over time.

Only Purchasing the Legally Required Amount of Liability Protection for a Car

Every state has financial responsibility laws for drivers requiring you to buy a minimum amount of liability coverage. However, if you buy only the minimum coverage, you may end up paying significantly more out-of-pocket in the long run.

• A better Way To Save MoneyBefore you buy a new or used car, check into insurance costs. Your premium is based in part on the car’s sticker price, the cost to repair it, its overall safety record and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft like air bags, anti-lock brakes, daytime running lights and anti-theft devices.

- Bryce Arnett