Ep 130 – What Should You Insure?

Podcast: Play in new window | Download

Join Dave and Nick as they talk about different that require insurance and other things that may be an option. Learn some tips on how you may be able to save money on things you might over-insuring.

Watch on YouTube HERE

Dave got a glossy flyer in the mail recently selling appliance repair insurance that came with a whole caveat of exceptions and exclusions that probably make the offer not worth it in the end.

The guys also break down the ins and out of warranty insurance and when it might be worth it and when it might not be. The rule of thumb is to always look at it in terms of how much of the percentage of what you’re going to get versus how much you have to pay and what that percentage looks like. This comes back to having a contingency fund and being able to cover these kinds of expenses when they arise rather than having to insure them.

To self-insure a little bit which is always a good thing versus paying an insurance company for the potential that something bad might happen but only getting limited coverage for that cost.

Things that Make Sense to Insure

Nick takes a philosophical approach by considering what could potentially happen that would be catastrophic enough that he wouldn’t be able to cover it.

There’s a long list of things that could potentially come into play but the whole point of insurance when it was originally formed if somebody’s house burns down they probably don’t have the money or the capability to replace it.

To cover something that would be catastrophic you need two things to be true for insurance generally to make sense. The event would have to be catastrophic like your house burns down and you still own the bank for your mortgage. You need a lump sum. You need a place to live, right?

Or, you have a brand-new car and you get in an accident. You need to pay the bank back and you need wheels. That’s a catastrophe from a financial standpoint.

A lower probability event is also a good way to distinguish such as a fender bender versus totaling your car. A fender bender happens with much more regularity but it’s not as simple as needing insurance or not needing insurance. But the difference there is what your deductible is so that’s why high deductible policies are so much less expensive than low deductible policies. If you have a zero deductible on your auto insurance the company knows they’re going to need to pay for every ding and dent,  it’s going to cost you.

Listen on as Nick and Dave talk about cell phone insurance and other things to consider. Do you need it or don’t you? Should you insure it or rely on your own contingency fund?

About Shotwell Rutter Baer

Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.

Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.

Call us at 517-321-4832 for financial and retirement investing advice.