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Gardiner Marek Agency Blog

All You Ever Wanted to Know About Insurance


"How much insurance should I buy?"

I get asked that a lot. It makes me wonder why people buy car insurance.

Sure, someone might buy it because the state laws require his car to be insured. That guy usually buys the “state minimum” – the lowest amount required by law. He doesn’t understand that car insurance is his friend.

Did you know that there was a time when you could legally drive a car without insurance?

You could buy your car, jump in wearing a long dustcoat and goggles (because those cars didn’t have windshields) and you could be on your way without worrying about whether or not your insurance ID card was in the glove compartment.

Yet people bought car insurance anyway. Why did they do that? The answer to that question gets us closer to the real value of insurance.

My “smarty-pants” answer to the question, “How much insurance should I buy?” is this…

“You tell me how much you are going to be sued for, and I’ll tell you how much insurance to buy”.

That’s snarky, isn’t it? So I say it with a smile on my face, (pilgram).

 But, it gets to the heart of the matter. We buy insurance because we might hurt someone or damage someone’s property (maybe even our own) and, hence become obligated to fix the things we broke and pay the doctor bills of the injured.

It might take a pile of cash to make things better. Wouldn’t it be great if we could pay for it with someone else’s pile of cash? That’s what insurance does for you.

If you mess up, someone else pays for it. Oh, you’ll pay for a fraction of it due to higher insurance costs for a few years, but that’s nothing compared to having your bank account raided or making payments to the injured party’s trust fund from now until your retirement.

Your annual premium payments (along with the premium payments of many other people just like you) will enable the insurance company to pay for the damages you caused while keeping intact your financial future.

That’s why you buy insurance. So, how much insurance should you buy?



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