August 13, 2010

Insurance or Paying for Peace of Mind

Why is it that when a "disaster" strikes that you then wonder "will my insurance cover this?"  We do not have flood insurance as we do not qualify. The flooding that has occured around us has been in the low lying flood plain areas and areas near rivers.  We live on "higher ground."  Because of all the rain and with the ground being so saturated, we have had 1 inch of clean rain water that has seeped into 1/2 of our unfinished basement, while being a big pain to deal with, it is manageable. 

While cleaning up our basement I started wondering about our homeowner's insurance, specifically if we were covered if the sanitary sewer would ever back up into our basement.  It has never happened before, but I couldn't remember if we were covered.  A phone call to our agent confirmed that we were covered.  Which leads me to this, I really believe that when looking at your insurance needs, you need to deal with an agent that you are comfortable with.  You need to be able to say to your agent "I have no idea what you just said.  Could you please explain it to me in laymen's terms?"  Know and understand your policy.  Know what you are paying for.  Know that you are comfortable with the amount that you are paying for the peace of mind that insurance brings to you.

Our agent reminded me of the conversation that she had with us when we originally got the policy back in 1997 and a couple of years ago when we reviewed all of our insurance needs with her.  She advised us on what she truly felt we needed based on her experience as an agent and also as a person that had lived in our community all of her life.  Our agent has never steered us in the wrong direction and I have always liked her.  I have admitted to her that I did not understand some things about insurance and she was happy to explain things to me.  Insurance is one of those things that you really can't do without, yet if you don't understand what you are getting, you may be overpaying.

We are not over insured nor underinsured.  We are very comfortable with our policy.  It isn't frugal to cut back on your homeowner's policy to save a few dollars and then find out that you aren't covered for a major problem.  As an example a sewer backing up into your basement can cause a lot of damage and cost a lot of money to clean up. The clause on our policy costs us a small amount. 

I have the assurance that if our house burns down that we can replace the contents and the home without worry.  So, I don't believe that cutting our policy down to bare bones is a frugal notion if in case of a disaster you have to come up with tens of thousands of dollars that you don't have.

When we went to one income, we reviewed our policies and talked with our agent about raising deductibles to save money.  We did this knowing that we would be able to pay the difference when filing a claim. 

It is frugal to shop around to see if you can save some money, keeping in mind that you need to review the company's record as to handling claims and such.  We have stuck with the same company for 24 years and because we have our homeowner's, life and car insurance with them, we get a discount.  Also, we have had a few fender benders along the way and dealing with our insurance company and getting the vehicle fixed has been very easy. On occasion we have checked out other companies but we continue to remain with the same company as their prices are competitive and frankly, it is a very painless process when we have to file a claim.

In my mind insurance is like groceries.  You have to have it.  You just have to shop around to find the best deal and the company that you feel comfortable with doing business. 

No comments: