What happens if something goes wrong?
If something goes wrong or something unexpected happens, do you have the funds to cover it? Would you need some help paying for the cost of a loss? We often can’t stop things from happening and we don’t have a crystal ball. So it’s worthwhile thinking about what you would do if something went wrong. Would you raid your savings and investments, borrow money, ask family and friends for financial help, or sell your assets to pay for repairs, building or outstanding debts.
Government organisations and community groups will usually help in disaster situations such as floods and bushfires. But their assistance may not reflect the extent of your loss and might not totally help you rebuild your life.
Protecting What’s Important
When you look at buying insurance, you need to do some thinking about what’s important to you. How much you are willing to put aside to protect your assets if you were faced with their loss. Most people are willing to pay an insurance premium to protect things such as their home and contents, their car, boat or caravan. Business owners usually take out insurance cover to protect assets and stock, and to provide financial help if they face legal issues.
Some forms of insurance are compulsory. Mandatory motor vehicle accident personal injuries insurance is taken out when your car is registered to protect anyone you might injure while driving. Business owners pay premiums to a Workers Compensation Scheme in their state or territory. Property owners taking out a home loan may also be required to buy Mortgage Lenders Insurance.
Reasons People buy Insurance
The 4 main reasons people buy insurance
- High Value – To protect something which has a high monetary value which would be expensive to replace
- Catastrophe – To protect property and possessions against a disaster, such as fire, flood, storm or cyclone or some other type of event
- A Specific Event – To protect them when they are doing something not covered by their normal insurance policies, such as a specific contract or travelling overseas
- Liability – To provide financial protection if sued – for example if a visitor to your home or business should sue you for negligence after injuring themselves on your property
What Can You Protect?
Most people generally consider buying insurance when the cost of a particular financial risk is greater than the cost of protecting yourself against that risk.
A risk must have a value in monetary terms for it to be included in an insurance policy. It must also be an uncertain risk, something that no one can be sure will happen. You must also have a direct interest in any loss that you insure against.
Nearly anything that’s valuable can be insured, however in practice, most insured items share the following:
- the loss or damage has a reasonable monetary value
- the risk being covered could happen across a relatively large number of people
- the premium is cost-effective.
As Insurance Brokers, we talk to insurers about the risks people face every day. If you’d like to have a discussion about protection for what’s important to you, give us a call on 07 5482 7485.