Do You Need Insurance?

Sometimes! A friend was recently in a car crash – no major injuries but my friend was cited for the accident and that’s when he thought – “Do I have enough insurance if I get sued?”

Insurance is a risk mitigation strategy. It allows you to transfer the risk to someone else. Obviously that someone else (insurance company) expects some premium for taking on that risk and that becomes the cost of the risk mitigation effort.

And what is the risk we try to mitigate by buying insurance. The risk of devastating events occuring which would leave us financially exposed. You may never have an accident but that is not what insurance is about. It is about that one time when something unwanted may happen. That is the risk which insurance guards you against.

Bottomline – review your insurance policies and make sure you have the right kind of insurance and the right amount of insurance. Make this a regular habit and not only will you have the right insurance when you need it – you will save money by comparison shopping and keeping up with new insurance products.

References
The Black Swan: The Impact of the Highly Improbable
Insurance Information at Yahoo Finance
Insurance Center at Fool.com

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Insurance Risk Mitigation Coverage