You know, sometimes the most basic concepts are the most important concepts. I wanted to talk to you about why you should have insurance. A lot of people ask that question, “What should I insure?”, or “Why should I have insurance?”
Well, let’s start with the most basic premise of what insurance is. Insurance is a tool to transfer risk. And typically, the risk you want to transfer is a risk you couldn’t afford to absorb yourself. Let’s say if you injure somebody in an auto accident, or if your home burns down to the ground.
Those would be very expensive items to have to pay for out of your own pocket. So what you do is, you transfer that risk to an insurance company. The insurance company sets a premium, you agree to pay for it, and if one of those occurrences takes place, then the insurance company will reimburse you for your loss.
That is the true point of insurance. Now many people sometimes start to insure for things they can afford to lose. And at that point, we try to advise our clients to maybe reevaluate their insurance needs and say, “Do you need to pay a premium for something that you can actually afford to pay for out of your own pocket?”
Now, no one ever wants to suffer a loss, but sometimes you are better off not insuring for a loss, and absorbing that yourself. In return, you get to keep the money for yourself, instead of paying a premium to an insurance company.
So what we do with our clients is, we evaluate their risk to see if they have a need to insure all of the items that they want to. Sometimes yes, sometimes no, but we want to make sure that we’re not wasting our money or insuring items that you can certainly afford to manage the risk yourself.
And that’s the true definition of insurance. Make sure you have an agent though, that can work with you regarding that. If you have any questions of what to insure, or how to insure it, you can always visit us here at Phileo Agency, or go to the website at phileo.com.