It's My Stuff (S3E10)

Tuesday, August 15th

00:25:45

Renters Insurance, Car Insurance and everything we're talking about taking care of your stuff. 

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

The next two episodes of whom were even podcasts. Are pretty special because we're gonna break down one of the most confusing. Things in the whole world it's insurance. When this episode we're gonna talk about ensuring your stuff. Completion Liz good car you drive. The jury that you mean Monty viewing she passed on insuring your stuff that's this episode of her money to podcasts. Her money is sponsored by kill financial high. This is in rolling that's all financial advisor with Carol financial. They're ready to match retirement can be Kirby confusing and Foley. Approaching retirement or fall somewhere in the middle join us for our new series of workshops this summer we college retirement. Simple for more information visit our website and Carol financial dot com. It's Carol financial it's retirement simple. Chris there are so many. Confusing aspects. Of the home insurance car insurance renters insurance. Jewelry she insurance all of their where we began. OK well let me let me start with one thing just before you took part of this and say. Who I am not. Trying to sell anybody insurance your not an insurance program insurance agent. It for what what I'd like to do is just trying to help us think about insurance from a financial planning perspective from a big picture perspective what are pretty good at this thinking about it from. Finance and math perspective so here's you're gonna start okay. When you insure something there's two things you wanna think about one is. How frequently. Is something bad going to happen and the second is. How expensive how financially impact full would it be if that bad thing happened. Okay no concern frequency. And impact is what army or call from does that make sense. We see an impact to write that down. Okay and and let's let's do this let's tackle this the way it makes you know your basic life cycles and this tech do you you grow up we get out into the world in the ditch first department at. Renters insurance. Okay now how frequent is it that something happens like you're you're harming its broken into your. For renders in church stuff kid stole and maybe there's a fire that destroys its not very frequently right words probably pretty rare depends on where you Rhode. Larry let me play devil's advocate and Larry let me go. Well would be even need renters insurance is the apartment complex that I rent from isn't that there responsibility he played he strikes served almighty broken well yeah but. There are gonna replace your stuff put out con because it's inside their buildings and click. The how and why is it not there this thing this is the reason why a lot of people don't have renters insurance because you assume that happy glee. There were every year rat yes sir how do you collision that yeah I wouldn't we be happy glades burns to the ground. You're gonna stay in their lives behind a whole bunch of other people who wants happy grades to pay for their stuff. And they are not and on the hook for the what are they gonna do you're gonna file for bankruptcy in pain nobody. God it. But I mean that seem now you're homeless and stop fooling yeah and so here's the thing so we said frequency maybe it's not that often that something happens to let's talk about the impact if you're renter Kosher very young. And you don't have anything that's worth very much you don't need renters insurance OK okay because the impact would not be that bit. You're just missing a few times did a great isn't you can replace or suffered goodwill you'll be all right you know thank. Does she give you know as you accumulate more stuff. In your stuff starts to have value. I think you make sense to have burners insurance now you've got you know achieving either through the couple thousand or maybe got a lot top maybe you've got you know. Jewelry that grandma gave you or some collections that you inherited or whatever it is but you've got more stuff in your stuff is more valuable. Now the impact is bigger if something happens praying. So now even though it might not be very frequent. There's higher impact if it does happen does happen. Keno and our last episode of her money we talked about Randy vs buying a house. And there are people now who are increasingly cheesy to be lifelong renters. Absolutely and I do wonder I'm sure there's data on it but I do wonder how many of those people. The cheesy B renders you say this is great I not to pay homeowner's dues are things mourners don't pay homeowner's insurance. I wonder how many of them have really sat down and thought about frequency impact and are carrying renters and Kerry. There's insurers I don't know you know. Renters insurance. It's something if you have anything worse something. You probably need to consider but again and frequency and impact is what you wanna think about an insurance and here's the thing. You want to ensure things that are low frequency. High impact. God it okay and why do you want to ensure things are low frequency high impact wolf something is high frequency. High impact. It's going to be very expensive to share. Yeah so you think of it this way if I'm if if I'm getting group Laura things are gonna talk about things art car insurance is used so if I'm getting car insurance and have never been in Iraq and I'm forty years old. My insurance costs a super low rates. Right low frequency low look I've showed there is a low frequency. Who would have come seventeen of our young men five accidents here hot mess somehow mess and what are the insurance the insurance companies only want is to sell me car insurance is that gay rights of the Jack up the price is incredibly high school now your church Wright be so high you need to think about not driving. I have a cousin Micah Wright's hate. What happens what happens when you get a DU ride did you insurance company wants cover you anymore oh now now I'm not at all right do they do not want recover people that are drinking and driving while I because. What happens to their. One higher frequency if your person that drinks and drives is more likely that you get an accident greater impact be impact try to insert the drum guy who drives in the side of how search. You know kills school bus for nuns or whatever you know write the impacts to grade. So you wanna be Euro from an insurance company's perspective. They're okay if the impacts how high as long as the frequencies is low guy. And from from a person who's buying insurance what I really want insurance against this things that are high impact low frequency. So let's move from we you know you're raining and we've upgraded the showtime and now we're gonna house are. So as a homeowner I know that my homeowner insurance. On involves among other things something called replacement value group. And then replace the values interesting because her replacement value and check me if if I misunderstood disc replacement value isn't. What my house costs to buy a it is that factored in the land and the inflation in the marking the great schools and how that. Their replacement value is what it would cost to. Still another dwelling. On that same footprint crashed so the replacement value isn't necessarily what you paid for the huh I know it's globally. Caution to rebuild the house of confirm to the ground in your ad basically started with a flat nothing piece of land okay. OK so you soup do you think about it in catastrophes it's very rare for the land to disappear guests. Atticus sing sing a whole host producer I think physically go or insulting you're you're entire property just drops into the of nine deaths of what Africa. We just happened just recently an which can Land O'Lakes county Florida a couple of homes were just recently discarded swallowed up and why don't get the feeling they beat some big blue it doesn't take your calls it the committee. My house is just army and everything is just. Dog there's a giant hole where my house used to be I really suddenly act of god is getting thrown my way and I anyway I hope so for those key yes it covered. So you understand when you insure your home I would encourage everyone. To work with someone. On your on your homeowner's insurance. Don't go online and try to find the cheapest deal in the world because those kind of for these things exist. I would encourage you work with someone who specializes in property and casualty insurance. But I shall we call that little brand of insurance that the property and casualty insurance do you see. Work with somebody on that I would just really encouraging to do that because it a good person and we'll listen to. You what's important to you what kind of things are in your house because that might change. What kind of coverage more so by state by state or certain things that are required to be covered on like sort of base for homeowner policy so Austria with the number is stored in North Carolina wanna say it's like. Five or 6000 or proof of firearms recovered. Why and I am guessing no wind or some weird stuff like that and but if you work with someone who actually in the sincere pays attention and they can basically customize your homeowner's policy a lot now there are gonna do is. For your tiny little rumors insurance policy you know our story is up in unit to a maximum of a thousand dollars. Our culture stuff I will tell you horror story Kursk has I did their sense I mean I still know that the worst. And my ex husband had chosen the insurance company. So I broke up with them to. Pairings you know well you do sir Shirley Q do. And and I went online shows you how can you name names but a lot of very fine insurance companies you could go on line. And input your data and their price match for fun whoever you are called. And so why I am I got new insurance yes I did and for about a year and half are still in very good about my cellphone dress and then one day. My mom was in a conversation at the bank with my everybody has a personal banker now makes you feel like Republican tycoon. And my personal banker was looking at some paperwork. And said I don't wanna scare you but you're so underinsured that if lightning structure house you're bankrupt. I had so under insured my house and what I didn't understand my assistant their website the algorithm. Wasn't gonna catch that and except for me it didn't. A year and a half I was radically under insured by not fixed at that day sure I learned what you just said. These people are in this for reasons yeah. Go let somebody knows what they're going to be hard to somebody in there are some great people we work through some great people so if you ever you know were no spot moved just wanted to recommendation. And I think two Europeans there's. Just ask him neighbor probably that probably a lot of people have somebody do it in the property cash into the space. I have a question and you hear about this so you've got your homeowner's insurance and the person covers the replacement value and home. And some of the contents and maybe your firearms or jewelry were never. She's here like someone comes your house is slips on your dad can break their legs. Yeah that is that is normally covered under a hundred no motors as well that is that that is claiming to ensure homeowners as well. If if someone hurts themselves or their property. Because of something having to do extra property now it's so rare that it happens. That it doesn't cost much to insure those kinds of things but it is part of your sister. This kind of sitting there in the back. Do what is difference between that and think I the personal liability policy where someone slips on your deck they can't see you for everything that's that's. So we cult plot personal liability umbrella policy. Now this is actually one of the reasons that I I suggest people go work with a person that specializes in property casually in the reason is. A plop this personal liability or liberal policy. It protects you or somebody sues you for some large amount of money we beyond what would normally be tougher. So. You were homeowners policy. It probably. First if somebody injured themselves are probably has a maximum coverage number it might be 50000 dollars for a guy like. So what if the guy who's you know who's your friend he's ever try how's your hang out have a beer. He slips cornerback Jackie breaks his hip Peters the hospital. Gets infected at the hospital and loses a leg oh boy. That's where you better hope you have a plot that's where you wanna have a plot so. But a plot dispersal liability umbrella policy it needs to be integrated. To your homeowners in your auto. Because the reason it's called an umbrella secure sits above everything else correct covers everything does things right so so whatever their car insurance and home understated calm very it would I don't love that guy OK so so it's got to be integrated it's all got to kind of work together a lot of times all one company will come sell all. Well you know make sure that they're also are glued together exactly because here's here's the thing if if something really bad happens. And you can be sued for for basically everything you'd path and nagging you will beloved why it. It is there aren't your your insurance. You do the best example I never heard of marijuana name names there's a there was a professional wrestler. That probably everyone has heard of James and his son. I was in a terrible car accident were he had been drinking was driving his father's car and he killed somebody oh my gosh. And the family of the person that he killed pursued. The wrestler of course yeah for everything can basically bankrupted them. I can see and half and he. Never had an umbrella policy. So here's the thing about our umbrella policies if you have assets you don't have to be a multimillionaire. But if you're somebody who has done well for yourself has saved well for yourself. You need an umbrella policy. Because it any because two things sure what do I talk about it talked about in our packed in frequency. Frequencies. For these for these things is incredibly. Small. It is how often does somebody fall off your roof doing something legitimate and great for American die you're right I mean that that whenever I have an impact. But the impact can be huge because they can sue you for every cent okay. I work with a family who did not naming names or work with a family worth their little girl was hit by the neighbor's car. And it was totally accidental. You just a terrible situation but their little girl was hit by the neighbor's car and draws armed with a car and had to have all of these surgeries and she's fine she's actually a really happy little girl and I think there aren't you know blood. Over time she had to have all these surgeries and all this you know it's just something that was very difficult to fix. You know sushi survived that without a problem but for huge huge impact and so Lou. Thank goodness the driver of that car had an umbrella policy and they were able to settle with the insurance company for. A lot more than they would've gotten only from homeowners community normal homeowners were repaid them 50000 dollars. What are. Let's jump back to car insurance which we talked about your briefly with the frequency impact of car insurance what are. The things that you absolutely need to know because you have you have the option in some cases if you own your car out right. To carry only liability insurance caps liability and collision itself up. Talk to me about water there at the mosque they must know things for car insurance. I would tell you the exact same thing with every other evolves it's all about impact. If I have a thirty year old feeder. That I know and Brian again who cares have argued interactive. But I'm I was I was kind of wait to get in Iraq anyway right so Lotto I mean collision insurance you know. Now I have to carry liability because it might hurt somebody else. But let's think about impact I would argue that people there are a lot of people out there were fairly well off who drive driver car this not worst that much money and they're caring owner and comprehensive insurance that's comprehensive insurance coverage win if something bad happen they just get a new car. It doesn't have to be a twenty year old beer. For you to be able to easily afford to fix it. It's just hard you back and back again as we always do on this podcast. The psychology. Oh yeah I think it takes a certain kind of person to go this PL us from vocal group. I'm good right most of us in a lake well better safe it's right you're just right. Judge kitty shirt you're exactly right you're exactly right did. There there are psychological aspects of this as well but I would tell you gotta think about the impact. I think for a lot of people they don't need collision coverage. Blood they might feel better doing it and that's fine. You wanna make sure that you have. Good liability coverage you wanna make sure that you have. Uninsured motorists and things like that and and you wanna make sure the amounts. One of the things that people do in this teenager he can go online and find the cheapest in June asked. You know. They'll go online and their count why don't know with this part of the assurances wanna like care for its 25000 dollar should tell you that I and they just go through like choose to achieve the change and want yeah right never never. Well that didn't always makes sense you know again. Impact so. If you're the type of person that 2000 dollars. Is more than you have in the bank. He can't have a 2000 dollar deductible on your car insurance. Because that's your first 2000 dollars is on year to re right. Same thing with homeowners insurance you know you can have deductibles and your homeowner's insurance as well. And you can often save yourself money by making them higher if you're the kind of person where that wouldn't be an impact to you. What's an example of a typical deductible on home insurance on car insurance. Whom it's very common for homeowners policies to bureau in 2000 dollar to deductibles. Right sometimes they're more like five cuts we have to look but I mean once again our user person that 5000 dollars would be heating lay hands on it yeah yeah yeah there is so assume it's about the impact right. And impedes on how big your house is that there's coming our guidelines on all the stuff for a very common on Herman nurses a 1015102000. On automobiles they can really range anywhere from about. 200 dollars or 500 dollars all the way up to maybe like 5000 dollars while you can get very high deductibles if you drive a nice car. Franks so you can get very high deductibles on your collision. So one answer to cover of guitar and our pollution well my driver really nice car but you might be able to afford. Anything but a terrible terrain. So that. I don't have to replace a bumper and a panel or whatever yet no biggie the question is would that be an impact to you. But one you know we just had every citizen advocates only children we will be blend of timely and one of the boys. Had the most minor I can't even called an accident it was slick little pain treating him apart if you live where it. And there have done thus. Like a good lead so I was like do not call the mortgage insurance companies abolishes run a check can we just pay for this. But the other driver was not a lynch. The other driver want it to be led by the book. So here come the police are comes ensure its long story short little bit of pain treated in a parking lot not even a dance. Aren't sure it's skyrocketed. And and my insurance agent called me and said the only thing that makes sense here. Is to split him off of your car insurance let him go into the bad boy teen driver risk pool yup. And viewing your husband stay over here with a good kind decent people because otherwise you're gonna pay 3000 dollars a year more than you need to know. I was stunned by that stunned so we all know I mean you sure the urban legends about teen drivers have a lot of money sure it's through. And then and the I think they took away were they can't discriminate between male and female I think the Big Dig nation still doing by age but if you're sixteen or seventeen years old we get in Iraq good luck people you're a lot of trouble because because the data shows absolutely. That 1617 year old should get into a wreck given to a bunch more wrecks ha ha ha. So no offense I'm sure that the lynch family will be completely different to how he never has been. I I can't make your us army dollars and like five or six Rex my first year driver. What's really where you can I just ask re not paying any attention now are you overly enthusiasts can't click I. I drove a little too fast but it wasn't out of out of the world too fast I had a little bit of a lead foot but I didn't. I didn't look up enough. I think is right I agree I didn't pay attention to what was going on way ahead of oh you're just there and of years bureau affront it exactly and and so not all of them were my fault and I was driving constantly yard sham I mean I've I've. Drove everywhere console all the time. You know I got into Rex who were very clearly someone else's fault one of which were one where I was rear ended the one where someone made a left turn around and no left turn into the side in my car. You know very warily not my fault you rate but the other seriously are you that he was five in the first year that are striving vote. But yes so there is some evidence as you and one that we'll hear more from personal experience. Six catastrophically expensive and depending there are some states in the country where. On car insurance for every one is insane New Jersey is legendary for having really expensive car insurance. A teen driver with an accident on their record in New Jersey. It's figure on the green mile drive I mean you really cannot afford car insurance at that Korea. So when you're shopping car insurance. And again you know I'm not slamming any of those companies that you can go online I'm getting yourself. I don't know. The you've just our ownership and it just got to understand which are getting. And you know don't don't just go get the cheapest stuff you can possibly get that's that's not right you have to understand which are paying for. So when we think about because I think a lot of people are more likely charted by the un car insurance and we still look absolutely sure so trick Chris this formula for frequency and impact. What's gonna cost to replace your ride which is maybe dearly transportation to work can be raised. How much money can you lay hands on that factors easily choose the doctor Donald ball. And liability liability liability yeah. Are well. I feel better about it cut a miniature umbrella. And I did your role updated and on the next episode of her money now that we've ensured our stuff. We're gonna ensure ourselves and that is a lot more complicated. Than you can ever have imagined that's on the next episode. A reminder podcast. K if you want more information about what we talked about entity shows or if you just have other questions about money. Does our website it's WWW Doug Carol financial dot com or you can only shoot meaning mill workers through the podcast or through my website. I'd be happy to help this I can't. Her money is sponsored by killed financial hi this is only natural financial advisor with Carol financial. They're ready to match retirement can be Kirby confusing and Foley. Approaching retirement are false somewhere in the middle join us for our new series of workshops this summer. We college retirement simple. For more information visit our website at Carol financial dot com. It's Carol financial it's retirement simple. They're hurt already my guess is hosted by me Sherry lynch and meet Chris Carroll. Our executive producers or new trial broke. Jonathan mini and Carol Poteat our producers have their fur and our technical director and editor is Billy black special thanks Emily Nestle and Marion Edwards threw information from this episode or to listen other episodes and subscribe to this podcast visit her money podcast dot com. Her money podcasts is now on Twitter. Follow us tweet us at her money projects email us your questions at questions at her when he podcast dot com. You can even use your phone's voice memo out to record your question. And email it to questions at her money podcast dot com and listen we might even played on the shelf to. The Herman we podcasts production of inner calm Charlotte and Carol financial securities offered through security advisor networks LLC never finreg SIPC advisory services offer from Carol financial associates anchor registered investment advisor. 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