The Real Purpose of Insurance

October 25, 2019

Let’s face reality. No one likes paying for something and seemingly never getting anything back. Many people feel this way about insurance.

This can lead to using your insurance for unintended purposes in order to get something back. I’ve seen this with auto insurance, home insurance (homeowners, renters or condo), motorcycle insurance, and commercial (business) insurance policies!

However, this can be a really bad idea. The real purpose of insurance is to cover losses you couldn’t cover yourself or that would force you into bankruptcy.

If you back into an object (pole in a parking lot, a fence, a mailbox, etc.) and cause $600 damage to your vehicle, you can cover that loss. You can also replace a $500 cell phone or replace a small number of shingles blown off your roof during a strong storm. If you’re a business, you can also take care of these small claims. It may make things tight in the budget or even take a few months to save up the money to fix these situations, but it won’t ruin your finances. But if you cause $10,000 in damage to someone else’s car and another $10,000 to yours, if all your electronics are stolen during a break in, if your entire roof is damaged from a storm, or (for business owners) having a bad slip and fall claim from a customer, well, those are very different situations!

This is what insurance is intended to cover. A good agent will work with you after you have had any type of loss to help you determine if it is worth reporting. I do this a lot. And I am not looking out for my companies if I tell you to consider paying for a loss yourself.

I have YOUR best interest in mind. Here’s what I look at! As an independent insurance agency, I have a lot of options for you. But when you start having claims, those options can be limited and if you have 2 or more claims, some options disappear all together! Also, most claims cause your rates to go up. So when you call with $600 in damage to your vehicle, I will analyze your policy and give you sound advice to not report that claim. After you pay your deductible and your rates increase for at least 3 years, you are going to pay more to the insurance company than they pay to you.

Unfortunately, some captive insurance companies push you to turn in that claim because they know this could be the case. I don’t run Eden Insurance & Financial Services this way. It is in the company’s best interest, not yours! That is the beauty of using an independent agent like me!

Feel free to comment with any questions or input you have. If you are not a customer and would like to look into what I can do for you, please email me or call 309-807-0900.