Insure Your Health: Don’t Risk a Lot for a Little
Spending a little now makes more sense than spending a lot later. Most people who buy insurance can’t afford to buy unlimited quantities so they tend to buy a limit that feels comfortable and doesn’t blow their budget.
Many people are considerably under-insured, and, tragically, they’re seldom aware that better insurance would cost them very little.
Liability is your financial obligation to another person for injuries or property damage you cause. Liability coverage is a promise in an insurance policy to defend you in court and pay what you owe another person for injuries or property damage you cause, up to the liability limits you chose.
Using car insurance as an example, the most commonly purchased liability insurance limit in the United States today is $100,000 per person for injuries you cause to others.
Is that enough to pay for a seriously injured person’s medical bills and lost wages, as well as compensation for that person’s pain and suffering?
Just the medical bills alone could easily use up the entire coverage limit, leaving you to personally pay all other costs, plus some of your own defense costs. Your personal, uninsured financial loss could easily reach several hundred thousand dollars.
Following the rule to not risk a lot for a little means that you shouldn’t buy only $100,000 of coverage when each additional $100,000 of coverage costs so little. In fact, you can usually pay for an extra cost simply by boosting your policy deductibles to the next level.
Increasing your deductible by $250 to $500 often saves you enough on your insurance bill to pay for most or all of the added cost of additional liability coverage.
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