It is typically recommended that we purchase insurance for catastrophic, infrequent events and we self insure for everything else.
So we should insure our lives and our ability to work if people depend on our income with life and disability insurance, our home because its loss would be difficult to recover from with homeowner’s insurance, our cars because the damage we can do to others is enormous with auto insurance, and our other assets if they are significant with an umbrella policy.
But we should not insure things that are relatively easy to replace or dollar amounts that are small relative to our net worth.
Using that rule, it would not make sense to insure my wedding ring. While it is valuable to me, it isn’t valuable compared to our overall net worth. It was when we got engaged but it isn’t now. For $35 to $50 in premium each year, we’ve had the peace of mind that comes from not worrying about replacing my ring. We’ve paid that premium for 28 years. We filed a claim once and may be filing another claim Monday.
About 15 years ago, I noticed my diamond was cracked. I thought that wasn’t possible but apparently it is. State Farm sent me to their jewelry replacement company and we picked out a new diamond. No deductible, no questions, easy peasy.
And now for the future claim . . .
We had a lovely day yesterday celebrating my best pal’s birthday. Cross country skiing followed by a visit to new hot springs in our area and dinner at our local brew pub. When I woke up this morning at 5:30, I realized my ring was not on my finger. Since there was no going back to sleep, I got up and checked everywhere I can think of. I’m getting ready to race to the hot springs before they open to have a look around.
If I can’t find it, I’ll file a claim and I suspect go through the same process as last time. It should be pretty easy. I would be FREAKING OUT right now without that coverage. Replacing my wedding ring is not what I want to do with my contingency budget in my first full year of retirement.
I’m considering purchasing another insurance policy that doesn’t meet the rule of catastrophic, infrequent events. I’m looking at an accident policy that would cover our out of pocket costs on our health insurance.
Mr. Ms. Liz and I are very healthy other than some pesky worn out joints and such. But we are very active and enjoy hiking, mountain biking, pickleball, skiing, and boating. We suspect (and hope!) we are much more likely to have health claims as a result of an accident than a disease.
When we signed up for our Obamacare insurance with the $15,000 max out of pocket costs, our agent mentioned that she uses a policy to cover her out of pocket costs in the case of an accident. She had a cast on her ankle at the time so we listened up. The premium is $383 per year for both of us, it covers the $15,000 out of pocket costs with a $100 deductible. But we didn’t sign up for it and didn’t even think about it until a couple weeks ago.
I fell off my mountain bike week before last. After I dusted myself off, assessed what hurt and berated myself for how stupid the fall was, one of my next thoughts was that we should have gotten that accident insurance. Because my thumb just wasn’t right–apparently you shouldn’t try to cushion a fall by putting your thumb out. I’ve decided it is just sprained and I’m waiting for the swelling to go down. But if I had that coverage, I would have paid the $100 deductible, gotten an x-ray and I would know it was ok. I know that’s dumb, I should have gone anyway, I have money in my budget for stuff like this but . . .
Probably stupid coverage but for me probably the right move. I suspect we’ll buy it this week and look forward to more mountain biking.
It’s not always smart to do the “smart” thing. You have to filter the “smart” thing through your personal situation and your personality and decide what is smart for you.
***Update–I found my ring on our bedroom floor-WHEW! Did I have a “I divorce you” dream and throw my ring across the bedroom??? I’ll never know . . . ***