“Um, Dad? Hi. I was driving to work and someone hit me ….” “Yes, I’m okay ….” “They’re okay ….” “The car isn’t.”
My first car accident at age 16. A “T-bone” to the driver’s-side door that I never saw coming. Fortunately for me, and more so for my dad, he had taught me well. I knew to move the car, and myself, safely off the road; to call the police after checking for injuries in both cars; and then locate the insurance card in the glove compartment to exchange information with the other driver.
The word insurance might evoke an ill feeling for some of us, for others a sense of sheer boredom, still others avoid having a discussion about insurance at all costs.
We know. We understand. With more forms of insurance out there than we have fingers to count on, it is certainly a daunting and seemingly esoteric topic. We’d like to simplify that for you. But first, keep in mind our basic philosophy about insurance: Bear the risks you can afford; insure those you can’t.
Here is a list of the general policies that we feel most everyone should have and common types of each:
Know your deductible and maximum out of pocket costs. Be sure you have sufficient emergency fund or health savings account balances to cover these costs if needed. Understand how much of the provider’s charges are covered after your initial co-pay (i.e. 100% , 80%, etc.). Know what type of plan you have and the related coverage. The most common types of plans offered include:
This includes auto, motorcycles, boats, watercraft, golf carts … and airplanes! Most states (including NC) require auto coverage for all vehicles on the road. At a minimum, be sure you have liability coverage, personal injury protection, and uninsured or underinsured motorist coverage. Depending on the value of your car, you may also want to consider collision and comprehensive insurance.
Collision and comprehensive coverage can increase your insurance premiums quite a bit. If your car is only worth $4,000, it might not make sense to pay the additional cost for this coverage. Rather, you can save the money toward a new car when the need arises (be it from an accident or simply because it’s time to replace it). Additionally, each year make sure all vehicles are listed properly; remove any vehicles that you no longer own.
Discuss with your agent what items are included (and excluded) from coverage. Renter’s insurance should cover the cost of your personal property and your liability if a visitor is injured while on property. Be sure your policy covers enough to rebuild or replace your home if it is completely destroyed. Know the difference between replacement value and actual cost value:
Review the monthly benefit that would be payable to you and how long it would be paid to you. Understand how the insurance company defines disability. If you are a professional (for example, a surgeon), be sure you are protected for your ability to work in your specific occupation.
Keep track of the death benefit. Review an annual illustration of the policy (if it is whole life) to ensure it is performing as originally outlined. Life insurance can be used after your death to help pay for the final burial and funeral expenses. It can also help to offset the loss of your income to your survivors. Determine if you should have a term or whole life policy:
Often referred to as excess liability insurance, it picks up where the coverage on your other insurance leaves off. The added coverage is useful for individuals who have significant and/or very expensive assets and are at significant risk of being sued. Those who own potentially dangerous things on their property, such as a pool, trampoline or dogs, or those who engage in activities that increase their chance of lawsuits should consider an umbrella policy (such activities can include volunteering, being a landlord, coaching kids’ sports, and serving on a nonprofit board).
While you may not think your assets have changed in the last year, other changes to your circumstances or to the insurance policy may warrant a second look to make sure everything is in current order.
Thankfully the individual who struck my car that day so many years ago was insured as well. My car was declared totaled after the insurance assessment but, fortunately, finding a replacement car was made less painful by the insurance payout. It’s why we have insurance. For the days when we’re driving along in life and get blindsided by the unexpected.