Insure For The Catastrophe
Many times I hear my clients and prospects utter the time worn cliche, “I’m insurance poor”.
I’m not sure EXACTLY what that means, but I have a hunch… I think what they are really saying is this-
“I don’t particularly like insurance, I pay too much for it, and I’d rather spend my money on other things.” Guess what? My sentiments exactly!
But what I do find with many individuals upon further investigation is this– There seems to be a preoccupation with wanting LOW deductibles, and having everything covered to the fullest extent possible. This approach to insuring indeed can lead to the “insurance poor” syndrome, through unnecessarily high premiums.
Say to yourself, “How much can I afford to lose and not be financially devastated to the point where I could not recover, or recover in a reasonably short time frame?”. With this in mind, your thinking will change.
You might say, “That $1500 or $2500 deductible per occurrence might not sound so bad. That shed out back that I’m spending $40 a year to insure, REALLY doesn’t NEED to be insured, and it wouldn’t affect me at all if I lost it…”
Helpful Hints To Avoid Feeling “Insurance Poor”:
Don’t insure things you don’t need, or can afford to lose.
Don’t insure buildings and structures that do not have a crucial usage.
Do use higher deductible levels where it make sense and premium savings are worthwhile. Key areas where higher deductibles can be a big money saver are: Dwellings, Farm Buildings, Machinery Equipment, Comprehensive and Collision on cars and trucks, Health Insurance
Eliminate Comprehensive and Collision on your vehicles when you feel you can absorb a total loss. If the unit is worth less than 10 times the purchase prices it’s time to consider deleting physical damage coverage. Another rule of thumb: Delete collision at 7 years and collision at 10 years.
Surprisingly all too often when reviewing insurance programs, I encounter low deductibles, coverage on things that really don’t NEED to be covered, AND LOW insurance amounts. This is a BAD combination!
Follow the suggestions above, and INSURE TO VALUE (avoid underinsuring) so in the event of a catastrophic loss you will be properly protected, and will not incur any insurance penalties. If you follow these simple rules you will hopefully feel you are spending your insurance dollars more wisely, and may even start to feel "less pain at the pump".
Brian E Matthias