How I Save Money By Staying Insured
Insurance might not be the sexiest of topics, but I'm a firm believer that the key to staying within your monthly budget is to plan for surprises. And one of the ways I plan for these surprises is to insure everything. :)
Here's a rundown of the costs to insure both my partner and I:
Health Insurance - $100/month
Car Insurance - $90/month
Renter's Insurance - $40/month
Pet Insurance - $22/month
Total cost of insurance - $252/month or $3,024 annually
The insurance we've purchased has saved us on numerous occasions, so I consider $3,000 a year to be a bargain especially when you compare this cost to our cousins across the pond where the cost of just car and house insurance is nearly £2000 = $3101.
All it takes is one accident, one fire, one theft and we lose everything we've built up over the years, not to mention the financial devastation it could cause. In fact, a few years ago one such accident actually happened...
It was December 2005 and we were visiting Colorado for the holidays. We were out driving one afternoon and the roads were extremely icy. I knew as soon as we had left that it was a bad idea and we should head home. Unfortunately we didn't head home and after making a right hand turn we slid into a particularly nasty patch of ice and ran the car right into a tree.
Thankfully we were both okay, but there was more than $10,000 worth of damage to our car. At the time we had very little money and definitely would not have been able to come up with $10,000. Since we were insured our insurance company sent out a tow truck that took our car to the mechanic and gave us a ride home. The next day they sent out an adjuster and bada-boom-bada-bing, within a week our car had been fixed and all we had to do was pay our $500 deductible. What a relief that was...
It's accidents like that have turned me into a bit of a worrier. But, a prepared worrier.
Some people have suggested to me in the past that we just invest the $3,000 a year we are spending on insurance and then we will have a way to pay for the accidents ourselves. That might be true for some of the time, but truly horrific accidents could cost more than we'd ever be able to save. For example, cancer strikes more than 1 in 3 people and the cost of treatment can easily be $100,000 or more.
Hopefully that will never happen, but I don't want to be in a situation where I have to make a treatment decision based off of the costs. After all, one of the only certainties we have in life is that the future is uncertain. So if you plan for the unexpected it limits both your stress and your financial impact.
Good Luck Penny Hoarders!