Tuesday, July 15, 2008

Be Prepared: Insurance

One overlooked topic of disaster prep is having adequate insurance. Insurance is a necessary evil and it comes in many forms. The most common we are almost all familiar with is car insurance. If you are a homeowner you may have home insurance...beyond that is uncharted territory for many folks.

Car Insurance – for many of us this is the most common form of insurance and the one we are most familiar with. Car insurance protects you in the event of an accident. There are many options available collision, comprehensive and liability. The most important of the three is liability, if you cause an accident and someone is hurt and sues you this is the insurance that will protect you. Collision protects your vehicle in the event of an accident, it will cover repairs to you vehicle. Comprehensive is the part of your insurance that covers you in the event of vehicle theft or an act of god…such as a tree falling on your car or hitting a deer. Your coverage is applicable after you pay a deductable. A deductable is the amount you must pay first when filing a claim. The most common deductable people take is $500. This means you are responsible for the first $500 worth of repairs and you insurance will pick up the bill for the rest. If you have a travel trailer, motorcycle or any other vehicle you can obtain insurance for those as well. I recently purchased a brand new pop up trailer I paid cash for. I immediately got my car insurance company to write a policy for it. It cost me $100 for the year and covers a total replacement should someone steal it or hit it while it is parked. Your regular car insurance should cover you just fine while you’re towing it.

Home Owners Insurance – if you have a mortgage you most likely have this insurance. It protects you from liability in the same way car insurance did if someone should get hurt on your property. Most home owners insurance policies cover wind damage, fire, damage caused by objects like trees, flooding due to ruptured pipes. Most policies DO NOT cover you for earthquakes or flooding due to rising water or tidal surge. You need rider policies (additional policies) to cover those items – commonly referred to flood insurance and earthquake insurance. Believe it or not most home owners insurance does not cover a sewer backup by default you usually need to request it and pay additional premiums. Make sure you have adequate insurance on your home. Many Katrina victims were jerked around by insurance companies debating whether their house was actually destroyed by the wind of the hurricane (covered) or the flooding from the ruptured levees (not covered). Don’t give these weasels the satisfaction…if there is a chance you could be affected by flooding get flood insurance. If you are not in a flood plain you can obtain coverage for a couple of hundred bucks a year because it is not required.

Renters Insurance – many people who live in apartments or rent houses have the ability to obtain renters insurance. This type of insurance covers your personal belongings. If you have a lot of stuff you may want to look into it. It is relatively cheap and covers things like fire and theft. It is worth having at least some protection even if you aren’t a homeowners…your possessions cost money don’t they?

Earthquake Insurance – Covers your dwelling should a quake strike your area. This is NOT covered by homeowners insurance. If you live in a quake prone area, such as parts of California, this is a no brainer. There are faults across the country. I live in South Carolina and we sit in an area very close to a fault. I am actually in the process of obtaining quotes for earthquake insurance. Not all insurance companies underwrite this kind of insurance so you may need to shop around.

Flood Insurance – this type of insurance will cover your dwelling in the event of rising water or tidal surge. Your regular homeowners insurance usually covers busted pipes but you will need this if you live in a flood prone area. If you live in a flood plain your mortgage company may require it. If you are not required by your mortgage company but still live in an area that could flood, you can obtain this insurance at a fairly discounted rate. I pay $200 a year for flood insurance because I don’t live in a flood zone, the area could conceivably still flood in we got hit by a major slow moving hurricane so for me $200 bucks helps me sleep good at night.

Medical Insurance – covers you in the event of issues with your health. Most employers provide access to coverage in which they cover a share of the premiums. This insurance is VERY important. One trip to the hospital can set you back THOUSANDS of dollars. This insurance can also be very expensive if your employer doesn’t offer it and you have to go it alone. My advice is find a job that offers decent insurance benefits…try NEVER to go without medical insurance…even if you are young. One moment you are fine the next you’re in the hospital where a Tylenol cost $250.

Life Insurance – If you die this provides a benefit to your spouse and children. This insurance is especially important if you have children. My wife and I don’t have any kids yet so I just have my employers insurance which I pay a bit extra to supplement. If I was killed or dismembered (sounds painful) my wife would get 5 times my salary…this would cover the mortgage, our cars, all our debt (very little), burying me and leave her with a nice chunk of change in the bank. This works for us…you mileage may vary.

Evaluate your insurance needs and make sure you have adequate coverage for your family and possessions.

...that is all.

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8 comments:

  1. Insurance is a scam. It is a government mandated reallocation of wealth. When society crashes it will be the first thing to fall...with you money.

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  2. I couldn't disagree more. It is a necessary evil. I think the chance of accidentally hitting a child with your car, your house burning down, your house being burglarized, you falling and breaking a leg are far MORE likely to happen then the collapse of western civilization. Live without basic insurance coverage on your car and violate the law...without coverage on your health and take a big chance. If you married and have kids...take a chance on them being homeless if you die without life insurance. If this is an acceptable risk to you...go for it.

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  3. One note on the flood insurance. I bought a new house in an area where flooding was not supposed to be able to happen. Guess what, it happened. If you get a new house, even if it sounds crazy, get flood insurance for the first year. It will save you from years of headache, lawsuits, sump pumps, and more.

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  4. I agree I am not in a flood zone...but I have flood insurance and because I am not required to have it...it is cheaper.

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  5. I'm with Big Bear. I get raped every year on insurance. The insurance lobby has done it's job in Texas! I pay $80 a month for liability on 2 cars, with no accidents or tickets. But the real reaming comes in the form of $1,900 a year for homeowner's insurance. The sorry bastards won't cover anyone for windstorms here, and I gotta go to the state windstorm pool, $900 a year! The other $1,000 is for the rest of the homeowner's coverage, which basically covers fire and theft, and nothing else. Mandated by the mortgage company, by law, of course. Man, my ass hurts.....

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  6. Wow, the " confirmation word" was shtfir. Spooky........

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  7. Oh believe me no one said this crap was fair...I hate the fact I need to have 14 different types of insurance to make sure I am not on the hook for a pile of rubble or ash. I would much prefer to keep that cash to myself...unfortunately we live is a SUE happy world...you get into a fender bender and some guy is suing you for 25 million bucks for whiplash.

    I HATE insurance...but I have it.

    BTW that is a freaky confirmation word...kind of ironic.

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