Why is insurance important?

As we mature, we often hear our parents and grandparents discussing insurance. Their opinions may vary, but as we age, we tend to adopt similar views.

Regardless of the perspectives of previous generations, insurance remains crucial. The world today is different from the one our parents or grandparents experienced. We live in a more litigious environment, with lawsuits becoming increasingly common, irrespective of their legitimacy. While we won't delve into the reasons behind this litigious nature, we will focus on how to ensure you are protected should you become a target.

There are several ways to safeguard yourself. The first is through general auto or home insurance. Ensure that the liability coverage on these policies exceeds the minimum requirements. While millions in coverage may not be necessary, having substantial coverage can be beneficial. Although specific statistics on average claim amounts are scarce, consider the implications of being involved in an at-fault accident where the claimant sues for emotional damages, injuries, and vehicle replacement costs. If a fatality occurs, the financial implications can be significant.

Consider a scenario involving a home incident. For example, if someone falls down your stairs and is permanently disabled, a lawsuit could ensue. Although precise statistics are difficult to find, such situations can lead to legal action.

Your home and auto policies cover losses up to the limits specified in your coverage. For instance, if you have $300,000 in liability coverage, that is the maximum amount the insurance company will pay; any excess would be your responsibility.

While these scenarios may seem unlikely, can we truly dismiss them? In reality, financial desperation can drive individuals to seek compensation through litigation.

What additional steps can you take for coverage? Consider adding options like accidental death and dismemberment (AD&D) coverage. Obtain an umbrella policy starting at $1 million in coverage. There is also personal injury protection (PIP) available for home and auto policies. Home policies may also offer identity theft coverage, which we will address in another article.

These measures help ensure that if you face a lawsuit, your insurance can provide protection. Your insurance agent may recommend an umbrella policy, and this advice is strongly supported.