I see it all the time. "I just want the cheapest option". "Whatever saves me the most money". "I'm a good driver, I don't need that much insurance"...
All I can say to that is... "Yikes".
It's one thing to want an affordable insurance policy that adequately meets your needs, as well as your budget, but it's another thing to just be cheap and ignorant. If you're one of these people that consistently states they want the "cheapest" policy, allow me to change your mind with some examples as to why buying adequate insurance coverage IS the cheapest policy:
Tom is 23 years old, currently in school, and working full time. Since Tom lives close to campus and his place of work, he doesn't feel the need to have a lot of insurance coverage because in his eyes, the odds of getting into an accident are very slim-to-none with the little amount of driving he actually does. With this mentality, Tom decides to get an auto insurance policy with the lowest possible liability limits to save money, in New Jersey this is $15,000/$30,000, also known as "state minimums". In addition, Tom also decides to take the cheapest possible "PIP" Coverage available as well, $15,000.
One night after studying for a final exam in library on campus, Tom accidentally falls asleep on his way home, rear-ending someone at a stop light. Tom and the driver of the other vehicle involved in the accident were rushed to the hospital, incurring medical bills of $25,000 for Tom, and $35,000 for the other party. Because it was Tom who was at fault, his auto insurance is liable to pay for the damages, but unfortunately, Tom only has a limit of $15,000/$30,000 for General Liability, meaning the most the insurance company will pay out on an accident is $15,000 per person, $30,000 per accident. Tom also only has $15,000 in PIP coverage to pay for his own personal injuries.
Tom has $60,000 in damages to pay for, but unfortunately only has $30,000 in coverage, meaning the rest of the money will have to come out of Tom's pocket. What seemed to be a good idea to cut costs, actually ended up being much more expensive than just increasing the policy limits.
Dianne's landlord is requiring her to carry a Renter's Insurance Policy while renting his property. Dianne sees this as an unnecessary expenditure, and decides to get the cheapest policy she can get, which only provides $5000 in Personal Property coverage. Dianne keeps a safe in her apartment which holds extra money, jewelry, and other expensive items, all totaling up to $50,000. One day while Dianne is out at work, her apartment is broken into and the safe is taken. Although Dianne's renter's policy will cover the stolen property, it will only cover up to $5000, leaving $45,000 of Dianne's money stolen without ability to recoup the loss.
Jamie is currently a junior in college who plans to spend a semester studying abroad in a different country. Before leaving the country, Jamie considered getting a life insurance policy, just in case anything were to happen, but she decided against it in order to have extra spending money while abroad. While out of the country, Jamie contracts a deadly virus, which resulted in her unexpected death.
Because Jamie's parents are the co-signer's for her student loans, the loans are now deferred to them, and without a life insurance policy in place to cover those loans, they will now have to come out of her parent's pockets.
So what can I do?
Prepare for the worst.. within reason. I'm not saying you need to carry a billion dollars of every single kind of coverage you can get your hands on, but rather saying that: things happen, and with that, everyone should have a plan in place to avoid tragedies ruining the remainder of their lives. Take some time and analyze the risks that you are subjected to, and ask yourself: "if the worst possible thing were to happen to me right now, would I be properly covered to handle the situation"? If the answer is no, you might want to consider bumping up your limits, or buying that extra policy before you wished you did.
We understand sometimes it helps to have a second opinion. Here at Raymond G. McCarthy & Company, we encourage everyone and anyone to reach out to us for expertise and guidance on how to go about properly protecting yourself at a price that meets your budget. For over 75 years and counting, we are here to serve you and your families!