Why Do We Actually Buy Insurance?

I hear it a lot from people: INSURANCE IS A SCAM! they say. While I can understand the sentiment if you haven’t had a claim in a while it might feel like your insurance costs go up and up and up even if you haven’t had a claim. So let me share some numbers. 

1. $107,012
2. $83,467
3. $57,543

What are those? Those are claims settlements that I have seen paid out in the last year for our clients. What do they have in common? If our clients hadn’t had insurance they would have been financially devastated. So insurance is not just about rates going up. It’s about making sure you have the coverage you need to help you when you have something disastrous happen in your life. 

 

How Much Insurance Do We Need?

So how much insurance do you need? At Gila Insurance we believe a pragmatic approach is best. Buy as much insurance as you can afford. For young newlyweds and students that might not be a lot, but as you gain assets and get set in a career it becomes more important to increase your limits. 

For buildings (homes or commercial buildings) it’s important to purchase an amount that will allow you to rebuild the home you have. This might be different than what you can sell it for, or even what you bought it for. 

Cars will be insured at their actual cash value. Usually as determined by something like Kelly Blue Book. 

Determining how much Liability coverage you need can be a little more tricky because it is hard to know how much is enough? Liability covers you for the bodily injury or property damage you do to others. For example, it covers you if you cause an auto accident, or if you get sued. As a general rule, you’ll want enough liability insurance to cover your net worth. That is all your assets (cash, home equity, cars, other investments) minus your liabilities (loans and other debt, etc). Learn more about liability insurance here!

If you don’t know what coverage you have, contact us today so that we can do a comprehensive review. You might be surprised at how often we get our clients better coverage AND lower their rate. Around here, it happens daily.