Thursday, May 21, 2015

Insurance and Its Importance

Today’s topic is insurance. There are several forms of insurance which are important, usually mandatory, to have: car, medical, house or rental, and dental. The budget aspect of this topic will be discussed in a post on budgeting. I will admit, this post is on the dry side, but insurance is an important topic. I have learned a lot, both through my area of study and personal experiences; I will write the short version first, then get into more detail for those who want more information.

BASIC

Car, medical, house/rental, and dental insurances are important to have. Locating insurance paperwork in an emergency is the next step. Making sure claims are supported with photographs/videos and receipts is another necessary step.

Proof of car insurance should be kept within the car’s glove compartment/box; the policy should not be. The best place to store insurance papers is a safety-deposit box. The second best place is a waterproof, fire-proof home safe, either wall or portable. One of the worst places is in a filing cabinet/box, because they can be ruined in case of fire or flood there; one might want to keep copies of the policies there, though, for easy reference.

Taking pictures or videos can prove the home’s contents; the same with a car’s contents. It is best if the photos are date stamped. Copies of the photographs should be stored with the receipts, which should be stored with the insurance papers. I recommend having a binder with copies of insurance papers, receipts, and photographs be kept readily accessible. Warranties should also be kept with this information as they are types of insurance policies. How-to manuals kept with everything else is optional, but I like having everything in one place.

Binder:
  • Dividers
  • Sheet protectors
  • Copies of insurance policies
  • Warranties
  • How-to manuals
  • Photograph
  • Receipts 
  1. Have one section for each type of insurance.
  2. Hole-punch the policies and place behind each section’s dividers
  3. Staple or paperclip each receipt to each warranty.
  4. Place each warranty with how-to manual, photos and receipt in a sheet protector in the appropriate section.
Insurance Information Form
DETAILED

I live in a state that does not require car insurance if the car is paid for. This is not a good idea by any stretch of the imagination. As far as I am concerned, car owners need to have liability and collision insurance. One accident can change a life forever, and a person without insurance could end up bankrupt. A minor accident can be costly without the proper coverage, too, so it is important to make sure the deductible amount is placed in savings just in case.

Medical insurance is mandatory in the United States now. Once again, without medical insurance, a person could end up bankrupt with one trip to the emergency room. I was in the ER for more than six hours last year. Thankfully, I had insurance, because that trip cost me over $700 out of my pocket above what the insurance covered.

I do not want to get into the politics of it, but I was able to buy health insurance because of the Affordable Care Act. My insurance had run out at the end of 2013, through no fault of my own - the person who provided my insurance was laid off that December, and we each needed to provide our own insurance after that.

Homeowner’s insurance provides a huge safety net should there be theft, fire, or a personal injury on the property. If the home is in a flood zone, then flood insurance should be included in the policy. The value of the insurance should replace the home and its contents.

Renters should also buy property insurance. Then landlord is responsible for what happens outside of the door to the apartment, but should the contents be ruined or stolen or someone be injured inside the apartment, insurance will cover all or most of the financial damages.

Outside of the property’s door depends on the lease. I had a slip and fall at a rental property in New York State. New York State law requires the landlord be made aware of the conditions to be responsible. It was not enough that the weather had provided slippery conditions – in my case, water over ice at the foot of the stairs to the building. As the first person out of the building that day, I was the only one who could have told the landlord about the conditions, but I was not aware of it until I fell.

However, because of the law, I had no recourse – trust me, I went to a lawyer and was given a very detailed explanation of why my landlord was not liable according to the laws of that state. My point here is to make sure you know the laws in your area so you can cover your assets. That slip cost me over $8,000, which included moving costs because I could not manage the stairs anymore. I had renter’s insurance, but only for the interior of my apartment.

Dental insurance. Ugh! I live in an area where employers do not provide dental insurance to their employees. My ex worked for the most in-demand employer in the entire northern part of this state. They did not provide dental insurance for 100 years of business; they finally provided a dental savings account. A dental savings account takes an employee’s money from their paycheck and sets it aside for dental expenses in a calendar year. If the employee does not use all of the money in the account, the money is returned to the employer, not the employee whose money funded the account. My family chose to save our own money so that 1) we earned the interest for ourselves, and 2) any unused money at the end of the year stayed in our savings account.

My family happened to move at just the time my two youngest were getting braces on. Luckily, where we were moving from was only three hours away from where we were moving to. I put in the time to investigate the costs of braces where we were moving to, including appointments and retainers. It turned out that it was less expensive to make the trip back and forth than to put braces on in this area.


If a person has the proper insurance, it makes life easier to

Enjoy!

- Amelia