What is Risk? Risk is the uncertainty in life. It is the potential of what could happen. Probability or likelihood is a natural tendency most people assume when it comes to insurance. Many say, "I would never need that much property damage coverage." A better perspective to have is rather the black and white principle that the loss could or could not happen to you. If it can happen to you, then don't you want protection in case that loss was to occur? For example, instead of me saying, "What is the likelihood that I would total that guy's Bentley?" A better question would be "Could I damage a car of that value?" The answer would be yes, it is possible. If it is possible, shouldn't my policy create a level of certainty to cover that form of loss. One might find that if one thinks of the loss first, and then how they would like the insurance to perform, then you might start thinking about an insurance portfolio that is working to protect your assets. Because if your insurance doesnt pay for the Bentley, then you will! You may find your policy may only pay enough for a used kia.
Thinking in probability and likelihood lead to justification and a skewed perception of protection. With a growing litigatious society, it is better to have enough insurance and never use it, than to need it and not have enough. Uncertainty in any form leads to a fear paradigm and decisions based off fear. Purchasing insurance should never be based on fear, but rather a logical decision to create certainty in an uncertain world. Wouldn't you like to know for some amount of certainty that your assets are protected? Certainty in an uncertain world is the value of insurance.
Monday, October 13, 2008
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