The insurance gamble: Are you rolling the dice? - East Idaho News
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The insurance gamble: Are you rolling the dice?

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Everyone has seen insurance ads for Geico or Progressive. They’re funny, memorable and, most importantly, the advertising works.

Turning insurance into a laughing matter has become a full-time business for national insurers. They’re betting customers will chose insurance based on gimmicky entertainment and brand recognition, rather than taking a serious look at the terms inside their policies.

But the truth is insurance is more than talking lizards and memorable celebrities.

What is insurance?

The most important thing people need to understand about insurance is that it transfers risk from one person or group to another. In other words, you are paying your insurance company to pay out money if something happens to you, someone else or the property inside your home, car or business. When bad things happen to you or someone else, and you are at fault, insurance helps you shoulder the responsibility.

What does that mean to you?

Let’s look at auto insurance.

Auto insurance covers a lot of things, starting with your liability (or the pain and suffering you cause in your automobile). Liability coverage is required in every state in order to have your vehicle on the road and in some states, just to have it registered. Liability protection is a guarantee to everyone else on the road that if you cause them pain and suffering, you will be able to compensate them for it.

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But it’s much more than that for you, the driver. Liability is protection for you from your insurance company so you won’t be sued by the people that you injure or the property owners.

That’s where the risk transfer part comes in. The limits you set with your insurance agent are also the amount of risk you’re transferring to your insurance agency. Essentially, insurance companies are saying if you go out with your car and cause an accident, the other people won’t sue for things such as medical bills, lost income, pain and suffering, and many others.

In Idaho the minimum limits required by law are $25,000 per person in an accident and $50,000 maximum bodily injury coverage for the whole accident. Then you have to have at least $15,000 worth of property damage insurance, which is enough to cover a small fender bender or an older car’s replacement value. If the damage to the car is more than the car is worth, it’s typically considered totaled, and the insurance has to pay to replace the car.

With newer cars, it can run $30,000 or more. The insurance would cover up to $15,000 of that, and you get to pay the rest out of pocket. Unfortunately, most people tend not to take I.O.U.s in those situations.

Make sure you take your time to find the coverage that is right for you. Then figure out the cost for that coverage. The three “C”s to remember when shopping for insurance are:

  • Cost
  • Coverage
  • Customer service

Always remember that properly shopping for your plan will probably not be as exciting as what you see in the media. Indeed, it may be long, tedious and boring. But it’s worth the extra effort to be sure you’re getting the best coverage for the best value.

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