“Education is what you get from reading the small print; experience is what you get from not reading it.” -Lonnie Rashid Lynn, Jr.
Insurance is filled with small print and big consequences.
Sometimes it’s about reading between the tiny lines.
Nobody likes reading it, but it’s important. Why else would they make it so small?
Insurance policies are fun, right? Sure they are…
Well, at least the good news is that we don’t have to read them very often.
So why should you be reading them? What should you be looking for?
Our Renter’s Insurance Horror Story
Renter’s insurance is a necessary expense, but only if you get good insurance.
Take fire insurance for example. Here’s a quick story:
When my wife and I downsized to pay off our debt, one big step we took was moving into a tiny mobile home.
This saved us a tremendous amount of money each month, which ultimately allowed us to get out of debt.
One thing we weren’t familiar with was renter’s insurance. We knew we needed it, but we knew nothing about it.
When we went to our insurance company and told them we needed renter’s insurance, it took a while.
It’s next to impossible to get renter’s insurance on a mobile home in some states. Eventually, we left the office with insurance.
But when our policy came in the mail, we soon realized that we didn’t really have insurance at all.
As I was saying earlier, fire insurance…
Our fire insurance policy was about as effective as investing in a lottery ticket.
It covered our house in the event of a fire. Great! That is, unless the fire was:
- Related to anything electrical
- Caused by arson or other vandalism
- A result of something faulty with the home
- Caused in any way by us (purposely or accidentally)
- Caused by a natural disaster
- Caused as a result of war
Yeah, it actually said “as a result of war”.
So basically we were covered in the event of a fire, as long as nothing actually started the fire.
How to Read the Fine Print
If we had never read into our insurance policy, we wouldn’t have known that it wasn’t much of an insurance policy in the first place.
It was long. It was boring. But reading it was worth it.
Honestly, it always looks more intimidating than it is. It only took about 20 minutes to read the entire thing.
Spending 20 minutes can save you 100% on your renter’s insurance. (Beat that, Geico)
At least, until you find new insurance that actually ensures something.
Insurance policies are something you just have to read.
If you really don’t want to read your insurance policy, you can always take it to a lawyer.
Lawyers can read any legally binding document and let you know what it says in layman’s terms.
It may cost a little bit, but it will pay off. Either by dropping the insurance, therefore saving money or actually buying insurance that covers what it’s supposed to cover.
What to Look For in Insurance
Insurance is really pretty basic, especially auto and home policies.
You have a deductible. You have a payment. You have a coverage amount.
That’s basically it (for the sake of this article).
- For your deductible, the higher the better, usually. If you think you need a lower deductible, you really just need a bigger emergency fund. You will pay a high price for a low deductible. Just put the money you save each month into your emergency fund and you will quickly make up for having a higher deductible.
- For your payment, it has to be affordable. That means it’s within your budget. Shop around for the best price, as long as you are still getting the coverage you need.
- For your coverage, this is where the fine print comes in. Don’t take your insurance agent’s word for it, you actually need to read your policy. Make sure you have enough coverage, but not more than you need. You can usually drop coverage that you know you won’t need. There is no reason to pay for it, if you don’t use it.
Now you have my personal story of why you should read your insurance policies carefully, but I am only one of thousands of insurance horror stories. Don’t be the next one!
Be smart about insurance, or it will end up hurting you worse than the disaster it’s supposed to protect you from.
Remember, insurance is simple. Reading the polices can be hard, but finding insurance is simple: deductible, payment, coverage.
Always shop around and know what your are paying for and read your polices!