Do I Really Need Insurance?

Jimmy Cooper, Marketing Coordinator

With the cost of living expenses on the rise, some people are trying to cut their spending as much as possible. One of the first things people start to ask is if they need insurance for personal or business reasons. However, with all the uncertainties in life you may realize that insurance policies are a must-have, at least with life, auto, health, home, and commercial policies. There are several different types of insurance available, but according to Intuit, the five most critical are health, vehicle, homeowners/renters, life, and disability insurance. Continue reading as we define insurance and break down the importance of life, auto, health, homeowners, and business insurance policies.

What exactly is Insurance?

Our informative blog “What is insurance in simple words?” goes into greater detail, however, simply put, insurance is a way of managing risks in your life. When purchased, insurance transfers the potential loss cost to the insurance company in exchange for a fee, termed the premium. Insurance companies then securely invest the funds so they can grow and pay when there is a claim. Investing in insurance is not just a tax-saving opportunity; making small investments over time will give you security in advance.

Let’s dive into some different policy types together and discuss how needed each policy may be for your unique set of circumstances.

Auto Insurance

Ditching your auto insurance is pretty much off the table unless you plan to stop driving. Most states have a law requiring you to have some form of auto coverage, with all states except New Hampshire requiring at least liability coverage. If you are on the road, you and other drivers need coverage because accidents do happen, and you want those accidents to be covered, particularly when the fault isn’t yours or in a situation where you have no control. Your auto insurance can also protect you if your vehicle is stolen, broken into, vandalized, involved in accidents with uninsured drivers, covers rental vehicle fees, and damaged during a natural disaster.

Homeowners Insurance

As important as protecting your vehicle or yourself, protecting your home has significant benefits. Including protection from disasters like floods, fires, theft/vandalism, and lawsuits from people being injured on your property or even being bit by your pet.

In the event of a total loss, an insurance policy can allow you to rebuild or purchase a new home. Although home insurance is not required by law, it is often a condition by lending institutions for your mortgage.

Life Insurance

We get to plan most of our lives and choose what and when we do or do not do certain things. Unfortunately, one that we cannot determine is when we pass away, and that time can come very unexpectedly.

The best preparation for unexpected events in our lives is to have a plan. Life insurance coverage is that financial plan that can help your family when you are gone. Life insurance can replace lost income, coverage for medical and funeral costs, and even assist with financial obligations of your family, such as a mortgage payment or tuition for education.

If you are interested in learning more about types and plans for Life Insurance, read our Deep Dive into Life Insurance blog, or reach out to one of our professionals here.

Health Insurance

After the global pandemic, it is clear that unexpected disasters that can seriously affect our health can happen anytime and quickly infiltrate our everyday lives. With no telling how an illness will affect us, getting treatment might become costly at an accelerated rate. This reason alone is enough to demand excellent and complete health coverage. The good news is that with many plans and term options available, it is easier to find something that will fit your budget without breaking the bank.

Business Insurance

There are many reasons why you need insurance coverage for your company. The most significant reason is it protects your business from damages, including lawsuits from customers who may have been injured at your place of business, and disasters like flooding, storms, or fires that destroy your inventory or property. Business insurance policies even protect you if a client’s personal information is stolen, ultimately saving you time, finically, and stress.

As with auto insurance, most business insurance policies are required by law or in your contract with your landlord, financial partner, or lending institution.

Providing employee benefits, like group health or short-term disability insurance, for employees can help attract potential employee prospects. With access to more jobs than ever, people like to shop around and find employers who can provide the best benefits for them. The Business News Daily wrote an article, found here, that takes a more in-depth look into the importance of business insurance.

Do I Have the Right Plan or Coverage?

You are already covered in life, auto, health, home, or business, but having the wrong plan or coverage is just as bad as not being covered. If you haven’t consulted with a trustworthy agent recently, there is a chance you are underinsured and not actually covered for what you think you are. You need a plan that will fit your budget and give you the correct coverage in the event you need to use it. Ensure that you are fully covered by a plan that fits your budget.  

What Insurance Plan Do You Perhaps Not Need?

According to Investopedia, the number one insurance that may not be required is Private Mortgage Insurance or PMI. This is very different from homeowners insurance because PMI is to protect your lender if mortgage payments are missed or not paid. Homeowners insurance protects your home, its contents, and you in the case of lawsuits.

Extended warranties are followed when considering plans that you could pass on. We have all had a call, email, text, or even seen a meme about extended warranties. When it comes to an extended vehicle warranty, Consumer Reports found that 55% of people who purchased an extended warranty never used it. The 45% of the ones that did utilize the warranty claimed they saved less on repairs than by buying the extended warranty. Bearing in mind most people who purchase an extended warranty never use it, it’s safe to say this is one you can contemplate avoiding.

Flight insurance and rental vehicle insurance are some other plans you might look into skipping. Your life insurance policy will address all accidents covered by flight insurance. Rental vehicle insurance, even as inexpensive as they are, amortized over your lifetime, you will more than likely spend more than you would ever gain.

Final Thoughts

The one thing in life that is certain is the future is uncertain and potentially full of unforeseen disasters or accidents. If you don’t have enough funds to cover them, you could be setting yourself financial setbacks and troubles. In fact, 59% of Americans are one $500 automobile repair or $1,000 medical bill away from being bankrupt according to The New York Post. Since no one can predict the future and prevent unforeseen things from happening, all we can do is protect as much as we can.

It is easy to see the similarities in the different insurance types by how they protect you or your investments. Price & Ramey’s dedicated team is ready to assist you with any of your insurance needs, whether home, auto, health, life, or commercial Price & Ramey has a plan for you.