Since it’s been raining for the past 3 days, I thought I’d write a quick post about umbrella insurance and why I’m going to be adding another line item to my annual budget. I guess I should start by talking about why I’m a little insurance crazy. You see, about 1/2 of my life now has been pretty darn peachy. I have a good job, a nice family, a wonderful husband and I’m ultra paranoid that the good times will not last forever. How many of us are lucky enough to go through our entire lives without encountering some hardships along the way? I know I paid in some karma points as a child with my horrible dad, but I’ve always been one to hope for the best and plan for the worst.
The first thing I did when I had my kids is I maxed out my work life insurance policy. If you’re new to insurance shopping, you may want to jump over to About Life Insurance. The site has a good overview of why you’d want insurance and the different types of policies out there. It is kind of morbid planning for the worst, but I can’t help it. Even as a child I always wondered which of my parents would die first. I think it’s because they were so much older than the other parents I knew. I was paranoid of going into an orphanage. I must have watched Annie one too many times as a child.
The Incident the Prompted My Umbrella Interest
So, back to Umbrella Insurance. What prompted all of this? Well, as with anything, it was an incident that happened to a friend of mine. She was celebrating her son’s graduation down south somewhere and she was invited to a party. It was her son’s professor that hosted the party and he had a big gorgeous house with a new 2 story deck that everyone at the party congregated on. The deck had just been rebuilt by a contractor. Midway through the party, the unthinkable happened. The deck collapsed with 38 people on it, two of them being my friend and her 83 year old mom. Her mom broke a hip, and my friend majorly screwed up her back. Thankfully no one died, but a lot of people were seriously injured. The only insurance this guy had was $300K in liability on his home owner’s policy and that got wiped out almost immediately. I’m pretty sure he’ll go bankrupt through no fault of his own. Not only do I feel bad for the people who got injured, but I also feel bad for the host who just wanted people to have a good time and celebrate. The negligent contractor on the other hand, I have no pity for. Did this guy not realize his corner cutting could literally put people’s lives at risk? Probably not.
Even though the odds of getting sued are low, it’s worth the piece of mind knowing I’m doing all I can to prepare for the worst. Although I can do my best to be responsible, I can’t always control the actions of the people around me. Because the likelihood of tapping my policy is low, that will keep my monthly costs to just $13/month. It’s pretty scary thinking that a lifetime of hard work and savings can be taken away in an instant.
Is anyone wondering what Babci would think of these types of policies? She never had them and she’s a bit superstitious about it all. Although she has a will, she doesn’t like talking about death at all…unless you’re already dead, then it’s okay. She feels like if you talk about your own death, the grim reaper might hear you and get reminded you’re still out there in the world living happily along. Perhaps this is why the insurance companies call it life insurance and not death insurance. Whoever thought to call it life insurance was a marketing genius. In general, Babci feels that these types of policies are wants not needs. If she died young, I have wonderful godparents that would have taken care of me, but she also prayed like heck that she’d live long enough to raise me til adulthood. Luckily, it all worked out for us.
I also consider insurance a nice luxury that gives me piece of mind. As far as priorities go, I’d probably pay into life and umbrella insurance before I paid for a nice vacation. To me, it’s that important. When it was just me, I paid in the minimum, but now that I have other people to think about, my priorities have changed.
Do you have all your financial crisis bases covered?