Don’t be Satisfied With Minimum Insurance

Don’t be Satisfied With Minimum Insurance

August 29, 2018 The Beacon Blog, Uncategorized 0 Comments

I’m not a fan of insurer advertisements on television promoting cheap personal auto insurance. However, one recent ad caught my attention when the insurer admitted their product covered only the minimum legal requirements. At least they were honest about what they’re selling.

In essence, their message was “insurance is a necessary evil, so buy as little of it and pay as little for it as you can”. This can only be called a misrepresentation of the true purpose of insurance.

In the personal auto area, here are two examples why this message is not only wrong but harmful:

  • In Pennsylvania the minimum required limit of Automobile Liability is $35,000. Suppose you hit a pedestrian or cyclist and get sued for $100,000. If you only have minimum limits, are you prepared to pay $65,000 out of pocket? Are you prepared to hire a lawyer when you insurance company pays the claimant the policy limits and tells you “You’re on your own”?
  • Unless you own your home, your automobile is probably your most expensive physical asset. You’re not required to insure against collision, theft, flood or other physical damage. If your new car – which you’re still paying for – is totaled, are you prepared to pay $20,000 to replace it while still  paying off the loan? Physical damage insurance would cover the loss less a small deductible.

Underinsurance can be an issue with a business, too. Many businesses fail to adjust property limits as values increase from year to year. Business income coverage is not adjusted for rising sales or continuing expenses. Crime loss is insured for as little as $25,000 – or not insured at all – by businesses with millions in stealable assets. Exposures like flood, pollution or cyber risk are uninsured because there are no contractual requirements to insure them.

At Beacon Insurance our aim is not to duplicate your present insurance for a lower price; it’s to look for ways to improve it.

About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.