Slicing Through Money's Mysteries
Recently, one of my tenants had his car “broken into” while it was parallel parked outside the house. The robber took his new set of golf clubs worth ~$3,000. I put “broken into” in quotes because no window was smashed. He apparently left his car unlocked.
So who pays for the damage and loss if your car is broken into outside your home? Well as it turns out, it’s not your auto insurance that pays, but your renter’s, landlord’s, or homeowner’s insurance!
If you have assets that amount to more than what your car insurance and home insurance coverage provides, then you should probably get an umbrella policy for protection. The amount of umbrella policy coverage you should have is an individual choice. If you want to be safe, get an umbrella policy equal to your estimated net worth.
I’ve personally taken a “riskier” approach by getting an umbrella policy less than my net worth. I figure, I’m not doing anything particularly offensive or risky in day-to-day life, nor is my business putting anybody in physical danger. If I was running a roller coaster amusement park on the other hand, you bet your buns of steel I’m getting maximum coverage!
The point of this article is remind people to protect their assets, have a talk with your insurance company since you’re paying for coverage, and make sure the insurance coverage is aligned to expectations. Spending a lifetime of work only to see it get wiped away by some random act would be unfortunate.
Every winter, I make the 180 mile trek from San Francisco to Squaw Valley, Lake Tahoe to enjoy the epic snow. There is truly nothing more magical than spending hours riding on powder and having a beer or two in the outdoor hot tub when you’re finished! Oh, the stories I could tell you about what happens in the hot tub.
On the other hand, there’s nothing more frustrating than getting a flat tire at night in the mountains while it’s snowing. I know how to change a tire, but I sure as hell don’t plan to risk my life changing a tire in darkness on a one lane road in the mountains while cars zoom by. I might get a nice settlement if I do get into an accident. But, I also might lose a leg in the process!
Every month, I spend 98 cents to get roadside assistance insurance for Moose. Add up the cost over 84 months of ownership, and we’re talking $83 worth of premiums. And you know what? My roadside assistance insurance is worth every penny! I already mentioned how my alternator died just as I was pulling into my garage thank goodness. A tow truck came when I got back from vacation to follow me to my mechanic thanks to roadside assistance. What I haven’t told you about are my other more traumatic incidences!
I was driving downtown to drop my wife off at the museum when a car started drifting dangerously into my lane. I beeped the horn to alert the driver and when I drove by, the teenage kid in the back seat flicked me off! I didn’t have a long annoying horn, nor a machine gun type rat-ta-tat-tat beep. All I did was beep once so we wouldn’t collide. The father was reading a map and driving at the same time.
I have to admit that my blood started to boil and I was tempted to blast him a new one when their car stopped next to me in front of the light. Instead, I buzzed down my window, stared intently, and told the kid, “Don’t embarrass your parents. I beeped at you guys because you were halfway in my lane and didn’t even know it.”
The dad was still clueless as to why I was talking to his punk kid and he also rolled down his window to ask, “What’s up?”
The first thing I did when I got home after receiving a speeding ticket was call my car insurance company to find out how much my car insurance premiums would go up. Interestingly, they couldn’t give me a straight answer.
If I get convicted and don’t go to traffic school, I will receive one point on my driving record for the 10 mph over the speed limit violation. When I asked the car insurance agent for specifics, she kept on ducking the answer. For all of you who have received a traffic ticket or will get one, this post should help give you a good idea of what’s at stake when it comes to insurance premiums going up.
The cost of a funeral has risen from just $983 in 1971 to over $7,000 today. Meanwhile, as a result of the rise in funeral costs, cremation rates have SOARED from just just 6% to now over 43% in the same time period. Cremations “only” cost $3,000 a body, or roughly 55% less than a funeral.
Take a look at these charts by the National Funeral Director’s Association:
Every year I review my home insurance policy to make sure I’ve got the proper coverage. The reason why it’s important to check is because insurance policies change all the time. There might be discounts or special offerings for one. Meanwhile, your insurance company might slip in some extra charges without you even knowing. Finally, and perhaps most importantly, building costs are always rising thanks to inflation.
One of the worst things that can happen after a mishap is your home insurance policy covering much less than the true replacement cost. Even if your home appreciates by only 2% a year, if you don’t update your home insurance policy for 16 years, your policy will only cover half the rebuild cost! Let me share with you one of my rental property insurance mishaps and things you should think about when figuring out how much home insurance to get.
Whether you are unemployed by choice or due to unfortunate circumstance, having health insurance is a must. According to The American Journal Of Medicine, 62% of all bankruptcies in 2007 were health related and that’s before the economic meltdown. What’s more frightening is that back in 2001, health related bankruptcies were “only” 45% of total. The epidemic is growing!
Say what you will about Universal Healthcare, with a nation as rich as ours going bankrupt at the rate of 62% due to health expenses is an absolute travesty. Genetics and a drunk driver hitting you while crossing the street doesn’t discriminate between rich and poor. So why should one die while another lives when all it takes is money to save a life?
In 2009 roughly 2.3 million people were unemployed for longer than six months. By June 2012, the ranks of the long-term jobless soared more than 100 percent to 5.3 million. The employment market is thankfully recovering with a rise in corporate profits, but we are still at levels much higher than the natural rate of full employment.
You do not want to be unemployed AND uninsured. You’ve already lost your steady paycheck. The last thing you want is to have a medical disaster that wipes out your savings, emergency fund, and retirement funds. If you lose everything while unemployed, it will be brutally difficult to rebuild. You might very well enter a cycle of poverty and never get out.
Before my COBRA (healthcare for departed employees) ran out, I decided to get a physical exam. It’s been three years and it was about time. Many insurance companies offer one free physical every year. Give your insurance company a call to find out if yours is one of them. That’s a $200-$500 “savings” every year if you take advantage of the perk. Depending on your insurance coverage, you will either typically pay a co-pay ($25 in my case), or a co-insurance (generally 20% of the overall bill).
Beyond the co-pay or co-insurance, sometimes there’s something called a “draw fee” as well. The word “draw” in this term refers to the drawing of blood, which is then sent off to a lab to get a multitude of tests done. My draw fee, to my surprise was $24 dollars. Hence, what I thought was initially “free” turned into a $49 dollar physical ($25 co-pay + $24 draw fee). Depending on my blood work, I may have to come back for more, which means another $25 in co-pay.
A $25 co-pay isn’t particularly cheap. I’ve had as low as a $5 co-pay before until I decided to change my plan to be more for “disaster prevention.” You want a low co-pay if you are chronically sick. In 10 years, I’ve seen the doctor perhaps seven times, including physicals. Hence, it makes sense for me to pay a higher co-pay in return for a lower monthly premium. I could take it a step further and do co-insurance, but I elected not to.
Why you need auto insurance!
Besides the purchase price of a car, one must also calculate the potential maintenance cost, and auto insurance cost. We often focus on the first two costs, but seldom do we realize the auto insurance cost differential until we’ve purchased the car!
I was so happy to negotiate $2,000 off the initial asking price of a $14,000, black on black, BBS wheels equipped 1997 M3 in 2003 that I didn’t realize my auto insurance would jump from just $500 a year to $2,000 a year!
Had I realized my auto insurance would jump so much, I probably would have negotiated even harder, or reconsidered buying a sports car altogether. Always get an auto insurance quote before you purchase a car please!
Having auto insurance is a law you don’t want to break. Accidents happen all the time whether they are your fault or not. If you end up wrecking someone else’s car and injuring a passenger, not having any car insurance could literally wipe you out financially and put you in poverty for the rest of your life! Check for a better auto insurance quote via Esurance online. They provide comparison quotes so you know you’re getting a great deal.
