Well, this whole business of me asking you guys questions about how you prep and what you like to use to prepare has been working quite well – at least I think so.
Last time (the first time I did something like this) I asked you for your prepper gear recommendations, and honestly, I got some absolutely excellent recommendations, both in terms of specifics and just general ideas for what to grab. A few things listed just flat out slipped my mind to buy that are so cheap and easy to grab, I don’t know how I missed them. Military grade ponchos, for example? How the heck do I keep forgetting to buy a couple of those when I live in the UK? Thanks Ben!
If you’d like to see a summary of the recommendations and don’t want to go through the comments one by one, I’ve compiled them into an article for you: Reader Recommendations: Preppers List Their Favourite Gear.
Preparedness & Insurance
Today’s question is a little different. I’ve always felt that insurance and prepping go hand in hand, and that our preps are to us like insurance policies to others: essentially guarantees that even if some of the worst things in life happen, we won’t be left with little to absolutely nothing. Obviously, insurance policies and preps are different in many regards, but when it comes for thinking and planning for the worst, I think they’re very similar overall.
I don’t feel like the types of insurance we invest in is a topic we talk much about as preppers, though. Maybe because it’s just something we do automatically and thus don’t bother to discuss much because it’s so normal, but either way, I’d love to know where you guys stand on insurance. Specifically, the kinds you have and are willing to invest in, versus the ones you think are just plain not worth it.
Obviously there are types of insurance I’m sure near 100% of us have – home insurance & car insurance for example. But what about the others? I’ve, for example, only lived in Canada and the UK – both places where health care insurance is not necessary, and yet over the past 6 years being married to Thomas, he’s been telling me over and over that we really should get health insurance anyway, while we’re young – so we don’t have to pay high premiums for it later in life in case we do end up needing health insurance when we’re old. I agree with him – this makes perfect sense. You never know what kinds of health problems you may end up with, and just because your country’s health care covers a lot, doesn’t mean you’ll necessarily be getting the doctors you want/need to help with your case – especially if you end up with something that requires a specialist. So investing in healthcare even when you live in a country where you’ve got healthcare technically taken care of still makes sense to me.
We’ve considered life insurance, but haven’t invested in it yet. Not sure how I feel about it in general. Any opinions on this one in particular?
Thomas and I have never bought contents insurance because we don’t really keep anything valuable in the house, ever. Not that we invest in valuable items in general, but regardless – the most expensive things we have at home are pretty much our computers, and if something happened to them, we’d just buy new ones anyway. We make sure we have enough of a financial emergency blanket to make sure we could cover the cost of replacing anything we needed that was broken or damaged – so this is I guess a replacement for a contents insurance policy to us.
Pet insurance? Don’t have any, but our pet basically never gets sick. I’ve known people whose pets do seem to get sick a lot more often than ours and I 100% would have pet insurance if I regularly needed to visit the vet for things besides booster shots. But we’ve got an indoor cat with impeccable health, so I don’t see this as worth buying either. Correct me if you think I’m wrong!
Not sure what else to say. There are so many kinds of insurance besides your basic home & auto insurance (and even then there are so many different types of home & auto insurance), it can be hard to decide which are and aren’t worth getting for you.
Quite frankly, I was considering doing a post on the types of insurance Thomas and I have & what we eventually want to get – but seeing as how you guys often change our minds with your comments, it seemed pointless to do that kind of article before first asking you guys what you did.
Okay so now you –
What Kinds of Insurance Do You Feel Are Worth Investing In?
As the title of this section says – what types of insurance do you feel are worth investing in? Have you always felt this way about them? Did something make you change your mind?
What kinds of insurance do you feel are definitely worthy of a pass? Is there a kind of insurance you feel would absolutely never be worth getting?
Of course, if you have any other insurance advice for me, don’t hold back – let me know! Always love learning from what you have to say.
Are there past examples in history of insurance companies going bust and shafting their customers? What are the odds? Are the odds lower for some of the newly-ish formed insurance groups/co-ops/whatever, I have read of a few religious ones. Which are more likely to survive hard times?
Can some type of, Go-FundMe and/or Bitcoin club fill the insurance gap in some way more efficiently?
Elise Xavier says
These are really good questions that I unfortunately do not know the answer to! Let me know if you find out anything interesting, Helot!
Since flooding is the most common natural disaster, it would pay to check out whether you are in a flood zone and if so, consider buying flood insurance. Your homeowners insurance will NOT cover damage from flood. And it won’t give you money to live somewhere while you are trying to dry out and/or rebuild your house.
I’m not an expert but I echo the experts above who say, READ YOUR POLICY! Will your homeowners’ policy cover rain damage? wind damage? damage from earth slippage? Every one of these things could happen in a big storm. so it would be good just to KNOW!
Elise Xavier says
My parents’ house in Toronto that they’ve had since I was a kid floods pretty frequently. Though usually nothing serious, one time it got I don’t even know how many feet high and it had to be redone completely. Encouraged me to look for a house I knew would not flood when I bought in Toronto (got one 3/4 way up a hill basically), and still now I do my best to get flats/apartments that are not on the bottom floor just in case. If/when I get a house I will make sure it’s not in an area that floods, too.
It’s so frustrating to deal with, even if you have flood insurance! Jeez sentimental stuff, the pain of redoing your home (or even just your basement), the worry that there’s only so many floods that will happen before the insurance company will no longer insure you.. Yeesh!!
Thanks for the reminder about the flooding, definitely a good insurance way I see it.
I am an Insurance Adjuster and have been for about 20 years. Most of what is above is correct. Especially about the value of your contents. The video is what I always recommend because it helps you remember what you had and is proof you were in possession of the items.
I would add is in regards to Renters Insurance. It is usually very in expensive and not only covers your contents but also a place to stay while your dwelling is being repaired. That is a big help as reconstruct on a fire could take 6 months or more. Having your temp residence covered would be a blessing.
Also it is terribly boring but READ YOUR POLICY! Know what is covered and what is excluded. Make some notes and ask your broker if you have any questions. A policy is a contract and you definitely want to know what you are purchasing.
Lastly check on the company before you purchase the policy regardless of what type of policy. Focus on customer service. When you buy insurance you are really buying a promise from the carrier to pay covered claims. Some carriers are easier to deal with then others.
Thanks to Thomas and Elise for hosting this site and providing thought provoking information and ideas. It is much appreciated!
Elise Xavier says
Read your policy should be the #1 rule of buying insurance. If you don’t know what’s covered how can you know if it’s worth buying into at all?
Focus on customer service – 100% the first thing I’d imagine people overlook and yet is probably the single most important thing behind knowing what’s actually covered in your insurance policy. The amount of headache people get into when there’s bad customer service is insane…
Thanks for stopping by with your thoughts, really loved reading them!
David E Brock says
Love your site.
I think you’d be surprised how much stuff you have concerning your contents. Take your phone in movie mode and walk around the house taking in every thing you have. Open doors and pull out cabinet drawer. Once done, go back and look it over and put an estimate on everything you see. Plus renters insurance or homeowners insurance also covers you against most liabilities that may come your way.
As mentioned by one other reader, umbrella coverage is really great coverage and usually very cheap.
Once you start having children, life insurance usually become a must.
No I don’t sell insurance. But there have been many times in my 67 years that I’m glad I’ve had it.
Elise Xavier says
Thanks so much! :)
Definitely you don’t need to sell insurance to understand its value ;)
I absolutely agree with bdc. An umbrella insurance policy is well worth the peace of mind it brings…and it costs about 50 cents a day. What other “good thing” does 50 cents buy you…a postage stamp, maybe?
Also, a life insurance policy which will at least pay for your funeral expenses and burial costs, and that’s another 50 cents a day for a “low value” policy.
No, we NEVER “expect to die” tomorrow or next week or next year. But more and more nut jobs are becoming unhinged and there are plotting terrorists hiding amongst us. It is foresight (prepping) when a “loved one” does this for his family/spouse to take care of that one big ticket item during their time of grief.
Elise Xavier says
Okay I really need to look into umbrella insurance policies then.
I swear I want to write into my will that I do not want a funeral… cremation, sprinkling ashes into a river or something, & maybe if the relatives really want, a small ceremony at somebody’s house. I can’t believe the absurd prices funerals cost. It’s depressing enough for the living without the enormous price tag.
If you own a home, you should have homeowners insurance to cover the cost of the building(s) and contents (which would include much of your prepping supplies). Note that telling your insurance agent about the supplies could be a violation of OPSEC (OPerational SECurity) and should be avoided to the degree possible. Such insurance will likely also include some liability insurance which is also necessary in this lawsuit happy environment.
If you rent, renter’s insurance is the equivalent to cover your contents and basic liability.
Note that some contents are not normally covered under homeowners or renters insurance. Jewelry, cash or collectable money or precious metals, firearms and other things are almost always limited to a small amount of coverage, and adding a “rider” to cover them is often relatively expensive and requires substantial documentation. Make sure you read your policy closely to find out what is and is not covered. In the case of firearms, the NRA used to offer a firearms policy which was dirt cheap and did not require any documentation; I don’t know if this is still a viable option. If insurance for any item is too expensive or too intrusive, concealment and enhanced security may be a more practical option.
Also, find out WHERE you are covered. Ideally, your “stuff” is covered no matter where it is located; home, car, work, shed, storage locker, camp site, etc.
If you drive, automobile liability, and depending on the value of the vehicle, fire, theft and possibly collision.
The more liability you have in any policy, the more it will cost. A good option is an “umbrella” liability policy, which with one policy extends the liability on ALL your policies to a substantial amount. It is a good idea to have liability coverage greater than your net worth.
Life insurance is a moral responsibility if you have dependents; if you don’t, it is kind of a waste of money. Term life is the only one which is reasonably priced and you want enough to pay off all your debts at a minimum and better would be to provide your loved ones years of support. Life Insurance as an investment is usually a poor choice; its primary design is (or should be) to support your dependents after your death. The earlier you get it, the cheaper it is likely to be.
Health insurance needs to be reviewed to make sure you can get the care you need (not the care they are willing to allow you) at a cost and in a time frame which you can afford and survive. “Government” provided health care is usually inadequate; if not “now”, almost certainly “later” when the cost exceeds their desire to pay
Long Term Care insurance can be invaluable if you have to be in a care facility for a long period of time. These places are wildly expensive and will run through your resources quickly. After you are broke, the government may or may not take over the costs, but still you will be broke, and at the mercy of whatever amount of care they will provide. LTC can allow you to keep your resources and control, but might be too pricey. Again, the earlier and healthier you are when you apply, the cheaper it is likely to be.
Extended Warranties are often a bad idea; they are designed to make the issuer money, not your benefit (only a small percentage of customers do benefit). If you consider one, make sure you read all the fine print to find out how long it really is (a “three year” warranty usually uses the “free” warranty for one of those years), what the cost is compared to what it covers (I’ve been offered a $10 warranty on a $12 item), what your deductible is and any other costs, limitations on what is covered or what “maintenance” you must do and when, requirements on documentation you must have and where and under what conditions you can use the warranty.
Elise Xavier says
Thank you for the comment, John, this is an excellent breakdown!
Couldn’t agree more about government provided healthcare either currently being or later will be inadequate. I think things are headed that way for sure. I feel that way about retirement pensions from the government, too. The only way I’d feel truly safe is having myself and my retirement and any dependents, if I have any, well taken care of in terms of finances with my own savings. Nothing is a guarantee.
I didn’t realize there was Long Term Care Insurance.. need to look into this further, it sounds like a really good idea considering we’re all living longer and longer.
Thomas likes to say that if something is going to break, it’s likely going to break in it’s first year, and that’s normally covered in the regular warranties you get. Only time I would get an extended warranty is if it was on an item I knew would break and yet still wanted to buy (like earphones), and if it’s a walk in and replace kind of deal rather than a we help you send it back to the manufacturer kind of thing. Even then, rarely.
Again, thanks a lot for the comment; lots of food for thought and really helpful!
Mark Chow Young says
I’m a former actuary with 26 years in life insurance in Canada and I’ve worked in US and Canadian business, so that would be my bona fides for answering your question. In general life insurance is necessary if you have dependents and if you need a tax free investment vehicle. If you only need life insurance then I would suggest either a term or low cash value life insurance contract (and be disciplined enough to invest the money saved , not buy Spyderco knives)…if by looking at a Canadian example you had maxed out your RRSP and wanted to tax shelter your money then I would suggest either a universal life or variable life insurance contract where you can build up the account value. I’m not sure how UK retirement benefits work so take my advice accordingly.
Elise Xavier says
That’s a really good point about dependents making life insurance basically a necessity. I definitely would get it before having kids, I guess I never thought about it before that way, but you’re 100% right.
And then using it as a tax shelter – should’ve realized people used it this way. Kinda genius. Need to look into this over the next few years.
medi-care and supplement
general liability-umbrella – most people don’t have a clue as to what this insurance covers. It is well worth a lunch with an insurance broker to have the concept explained
earthquake – only because the state reserves under this program are now at a level to cover losses without bankrupting the program
Elise Xavier says
Great advice, and thanks for the list! Need to look into general liability-umbrella myself.