Young adults are well known for being under-insured. It makes sense. Not only do that have lower paying jobs, but they are probably paying back student loans from college. I know from personal experience that while I followed the law to get car insurance right away, I procrastinated when it came to get renters’ insurance. I had rented for several years, both in college and after getting married before I made the change. While I think this is typical of young adults (to be under-insured), some buy too much insurance. We’ve all heard the horror stories of bad things happening, so it only makes sense that some people will buy too much.
Why I Pay Higher Premiums
One of the unique approaches that I take when it comes to insurance is paying higher premiums for lower deductibles. Many people will tell me that this is the worst approach to insurance. People often argue that insurance is only for the worst case scenario. But, I disagree. I would much rather pay a couple more dollars a month than have to pay a few hundred dollars more in an accident or emergency – especially an accident/emergency that I didn’t cause. Like just last year, someone broke into my car and there was about $1,000 worth of damage. Because I pay a higher premium, my deductible was only $100, instead of $250 or even $500. It’s easy to see that I saved money in this situation, especially since I had only had the policy for under 2 years.
Can You Have Too Much Insurance?
Despite my position to pay higher premiums for better coverage, I do still believe that you can have too much coverage. Because there are so many different types of insurance, there are many ways that people can over insure. The first is life insurance. Too many people over insure because they hate to think about their loved ones passing away. Other people get payment protection insurance (after getting ppi claims advice) even after being covered through one of their other plans. Last but certainly not least, some people have too much car insurance. An obvious case of this is when you are diving a really old car with maximum insurance on it. At some point, it isn’t worth paying the extra premium for a car that is too high.
If you want to figure out if you have too much car insurance, ask yourself these questions:
- Am I covered on any other plans that I have?
- Would I be in a really bad spot if I didn’t have it?
- Can I afford to pay the premium? Or would paying this premium put me in a bad position financially?
Don’t ever tell yourself that it is better to be safe than sorry when getting insurance. Spend time to do your homework and get the right amount of insurance.