You’re at the rental car counter reading the punishing consequences of not buying the additional coverage. You’re trying to remember if your auto policy covers you, or if the credit card you’re using does that, or if your travel insurance protects you. Looking back at the line of impatient people behind you, you swallow hard, initial the waiver, and walk to your car wishing you’d remembered to look up your actual coverage before you left on your trip.
Additional insurance coverage and extended warranties for products and services can dramatically raise the price of things that initially look affordable. Conversely, you don’t want to end up holding the bag on a big loss that you could have avoided by spending just a few more bucks. It’s all about risk assessment and mitigation and, therefore, well worth understanding and weighing the trade-offs. Bottom line… the insurance companies are not in the business of betting against themselves, so the odds favor them. The sellers of “extra coverage” are betting on your anxiety and they know the buttons to push.
At the Eddy & Schein Group, we bring clarity to the options by helping our clients sort through what is often a labyrinth of policies and extended warranties. The goal is to reduce redundancy while making sure all the bases are properly covered.
Here Are Some Useful Tips.
Create a list of typical activities where additional insurance is offered or recommended.
- Vehicle rentals
- Renting a residence and/or storage units
- General travel/business travel
- Vacation travel and vacation packages/trips
- Health coverage when traveling abroad
- Major home appliances and business equipment
In the COVID economy, travel and medical insurance are quite complex. It is imperative to understand in detail what is and what is not included, as well as the coverage windows, any pre-travel requirements and conditions, and the specifics of coverage for deposit refunds.
Make a list of your insurance policies, major warranties, and credit card coverage.
This list covers the major types of policies that may or may not cover the aforementioned activities:
- Homeowners Insurance
- Home Warranties
- Business Insurance
- Renter/Household Insurance — contents, property damage, and casualty
- Life Insurance
- Medical and Dental Insurance
- Auto Insurance
- Credit Card coverage for travel, rental, purchases, and other amenities and benefits
- Supplemental insurance policies — medical coverage and income replacement
(And while you’re at it, if you’d like to know more about managing your standard policies, read our article “When Was the Last Time You Reviewed All Your Insurance Policies?”)
Align the Lists.
Read the details and match coverage with activity. Then, identify the overlaps and gaps so you can assess your vulnerabilities. Be sure to factor in the frequency of the activity. In some cases, you can adjust a major policy for a reasonable up-charge versus buying additional insurance for every specific transaction.
Do the Math.
Essentially, risk mitigation is your best guess as to your liability should something go wrong. It’s the same thing the insurance companies do, and their bet is that nothing will go wrong. But if something does go wrong, consider whether the out-of-pocket costs and hassle are things you could tolerate. And this brings us to the option to self-insure.
- Determining whether you have the temperament and financial means to cover costs is best done in concert with some combination of personal finances advisor, financial advisor, accountant, or estate planner, and sometimes your attorney.
- For extended warranties on household appliances, electronics, business equipment, or other such purchases, the self-insurance risk assessment is less complex and the financial trade-offs are pretty basic.
The bottom line is that, for most people, the extra coverages and policies can add up quickly; so, there is good reason to do some level of cost/benefit analysis to guide your decision making. Once you do the work, you won’t have to agonize at the rental car counter ever again.
Call us at Eddy & Schein Group to get some additional perspective so you can make the insurance decisions that make the most sense for you. For more information, have a look at our Services page or call 212-987-1427 in the New York Tri-State Area or 917-881-7042 in Southern California.