Month: January 2013

Insurance is a cost of living (and doing business) – Period.

Packerland Team

As insurance agents, brokers, advisers, risk managers – whatever you want to call us – we hear it all.  The majority of the time it is negative statements regarding insurance – mostly about premiums, bills, audits, etc.  We always hear from an individual or business owner that one of their friends told them how to save a fortune on their insurance or how to scam the system (see “recording employees as subcontractors”).  You hardly ever hear from one of your friends how insurance saved their lives – literally or financially – or how it rebuilt their home after a Hurricane Katrina or Sandy. Yet, the never ending search for people trying to get ‘something for nothing’ continues.  Frankly, it’s a shame.thCAYTMVMJ

Why does everyone want to save a fortune on their insurance premiums yet they are willing to go buy the latest technological gadget?  They want the social status of having ‘the best’ but are unwilling to pay for the best protection.  Individuals or businesses that pay the extra money for more insurance coverage should be applauded and advertised.   They should be proud that they have the best protection money can buy.  Instead – everyone wants less – less coverage, lower premiums, less headaches and so forth.  The best way to put your family in a position with less risk is to pay for better protection.

I like to use the example of people who pay to heat their homes (for those unaware, we live in WI and therefore, this is mandatory).  What temperature do you keep your thermostat at during the winter months?  I would guess that the average is somewhere between 65 and 70.  Why?  That is where we are most comfortable – not too hot and not too cold.  It also avoids us having to pay for problems that may arise – like illness or freezing pipes.  Why not keep the thermostat at 45 or 50 degrees?  The human body would be able to survive, but your life would be extremely uncomfortable and probably miserable.  We are willing to pay for that comfort – with very few complaints and very few questions asked.  We correlate paying for heating as a cost of living in Wisconsin.

Why don’t we correlate paying for insurance and protection as a cost of living (or doing business)?  My guess is that it is the perception that insurance is a scam, not worth the money, and that insurance companies make billions of dollars.  Some of this is true and most of it is false, but people need to realize the billions of dollars the private insurance industry pays out on a yearly basis to restore individual lives.  Every individual certainly has every right to under insure or not purchase insurance at all (except for auto liability insurance in the state of WI).  However, don’t expect any sympathy from your insurance advisor when an accident does occur and you don’t have proper coverage.  Would you have sympathy for someone who turned their heat down to 30 degrees and then complained about frozen pipes?  I didn’t think so.

As always, talk to an insurance professional when determining what coverage is appropriate for you.  If you are paying for the best coverage you can afford – good for you.  If you are on the other end of the spectrum, consider all possible outcomes and determine what you believe is in your best interest.

Personal Automobile Insurance: Physical Damage Deductibles

Packerland Team
How much do you have to pay in the event of a claim!?
How much do you have to pay in the event of a claim!?

Many consumers choose deductibles for their automobiles haphazardly and without much thought.  Do you know what your comprehensive and collision coverage deductibles are?  Do you understand what happens in the event of a claim?  Did you ask your insurance expert what would be most appropriate for you?!A large majority of the people that our agency talks to are unwilling to take any advice regarding amending their comprehensive and collision deductibles.  This automatically gives the agent the impression that the insured has a full understanding their coverage, deductibles, and how claims will be settled.  That is, until it is claim time and ultimately too late to amend any of your coverage.  The onus is then put on the producer when the insured is unhappy and is generally accompanied with many accusations that the agent did not do their job properly.

We’ll save the definitions of comprehensive and collision coverage for another post; however, just know this:  they provide coverage for physical damage to your auto.  Obviously – if another driver is liable for the damages, then their liability insurance would apply.  For example, let’s say your vehicle is damaged by hail – do you know how the claim would be handled?  How about if you nick the side of your car while pulling into your garage?  First, you’d call your insurance agent to file the claim.  The agent would tell you to go get an estimate for the damage.  Once the amount of damage is determined and the insurance company verifies that there is coverage for the claim, then payment happens.  However, you will be responsible for the full amount of the deductible before the insurance company pays a cent.  The lower your deductible, the less of a deal this is; however, for people that carry $1000 deductibles or higher in hopes of saving some money on their insurance premiums – this may be quite the surprise.

If your vehicle is only worth $3000 or $4000 – does it pay to carry physical damage coverage?  Probably – but it may not make sense for everybody.  In that same scenario – does it pay to carry $1000 deductibles or larger?  Probably not – however, it is up to the individual and/or family to determine their personal risk tolerance and to choose the deductible that makes the most sense for their financial situation.

The bottom line:  don’t choose deductibles based solely on premium savings – which only go so far.  Understand and be comfortable with the deductibles you choose.  If you haven’t already, take a few minutes to review your coverage and make any changes that you may see fit.

Common sense and an understanding of the claims process go a long way in determining the appropriate deductible for you; however, always, speak with an insurance professional when amending any coverage.