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What You Need To Know About Property And Casualty Insurance

What You Need To Know About Property and Casualty Insurance

No one cares about this stuff, but it’s also super important.

I’m going to make this short and sweet and give you just what you need to know and nothing more. You’ll know more about insurance than 95% of the population in about five minutes.

First thing to understand: there are two main categories of insurance.

  1. Insurance for stuff
  2. Insurance for people

In this lesson, you’re going to learn about insurance for stuff, and the good news is that you already know something about this. Two common types of stuff insurance, more commonly called property and casualty or P&C insurance, are auto insurance and homeowner’s insurance.

You may already have this kind of insurance, but why?

Why have stuff insurance? Everyone says you need it, so you get it? Doesn’t insurance seem like a waste? You’re paying your hard earned money for what? The truth is that insurance is a waste . . . until it’s not a waste.

Here’s what I mean. You get a bill a couple of times a year and reluctantly pay it. But what do you get? Probably nothing, zilch, nada, zip, zero. So, on one hand, you are paying for something and not getting anything in return.

But the best insurance is the kind of insurance you pay for and never need. Because when you actually use insurance, something bad has happened. Think about it. If you use your auto insurance, you’ve probably been involved in an accident. If you use your homeowner’s insurance, your house probably burnt to the ground or a tree has fallen on it.

The only thing worse than paying for insurance and never needing it is paying for insurance and needing it.

But what are you really getting with stuff insurance – that is, property and casualty insurance? You pay a little bit, called a premium, to protect an expensive asset.

Pop Quiz:

Which of the following would it make sense to have insurance for?

• Lawnchair
• Diamondring
• House
• Car
• Miley Cyrus CD collection

It only makes sense to have insurance on expensive assets, where it would be really expensive for you to replace it if something happened. So the answers are obviously your diamond ring, house, and car. I don’t care how big your Miley Cyrus CD collection is; it’s definitely not worth having insurance for it.

But so far, we’ve only talked about getting insurance on stuff, on things like jewelry, cars, and houses. There is another type of P&C insurance which could not be more important that you absolutely, positively, definitely will want to know about and have because if you don’t, your entire financial future could go up in flames. How’s that for a teaser for the next lesson?

The proceeding blog post is an excerpt from Get Money Smart: Simple Lessons to Kickstart Your Financial Confidence & Grow Your Wealth, available now on Amazon.

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About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

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