The one expense that seems like a waste of money … until you need it





Insurance might feel like money down the drain, but having been caught out without it in the past, let me tell ya: I learned my lesson early on. It’s one thing my family wasn’t really big on, and so it’s been a case of self-education in my 20s.

Contents insurance (for your crap)

So important IMO, and increasingly cheap. I’m seeing affordable renters’ policies advertised in mainstream media now, which is a new trend, and a good one.

Our flat was burgled while I was at uni and I lost a few things, most devastatingly, my laptop. Annoyingly, I had been pondering taking out contents insurance but decided we couldn’t really afford it at that point while scraping by on a student income.

I took out a contents insurance policy after that incident and it’s served me well since, through multiple break-ins and claims over the years. The cost dropped to just a few hundred dollars once I bought my house, which was a nice surprise.

Plus, if you’re still flatting, contents insurance can cover you in the event that you cause damage to the property you’re renting (just in case you inadvertently cause a fire, flood, that kind of thing).

Car insurance (for your wheels)

Even the shittiest scrap heap needs to be insured. If you own a vehicle, this is a must!

At the very least, third-party insurance covers you if you cause an accident. Even the tiniest ding to someone else’s car – the kind you think can’t possibly cost more than a couple of hundred dollars to fix out of pocket – almost certainly costs way, way more. Trust me on that one.

And of course, comprehensive insurance gives you peace of mind if you know you couldn’t afford to replace your car in a pinch.

House insurance (for the most expensive thing you’ll probably ever own)

After working my ass off to be able to have a place to call home, you can bet I want to protect it in case of fire, flood, earthquake or whatever else might jeopardise the roof over my head. (Also, the bank doesn’t give me a choice :P)

Life insurance (for what you leave behind)

To cover my mortgage in case I cark it. I don’t have dependents but this obviously becomes infinitely more important if there are kids in the picture.

Trauma/disability/income insurance (for your moneyyyyy)

More expensive than life insurance, but arguably more important. Financially speaking, your ability to earn is probably your biggest asset … and yet we often don’t take the appropriate steps to protect this.

ACC is meant to cover you if you have an accident but I can’t say I have a lot of faith in them. As we learned, it needs to have a defined cause – we lost out on a full month of income a few years ago when ACC refused to stump up a few years back. And it doesn’t cover illness, which is obviously another huge threat to your income – they say that illness stops far more people from working than accidents do. Plus, if you’re made redundant, you may not be able to get unemployment benefits (if you have a working partner, as again, we know all too well, and there are probably other exclusions too).

Insurance can help replace your income in the event of temporary or permanent disability, or illness. It’s not something we generally talk about, but I bet you more people than you think around you have income protection insurance (and a lot of those who don’t, quite possibly should). Redundancy cover, from what I’ve seen, is less common and quite pricey, but there are also rent/mortgage protection policies that can help cover your biggest cost, at least.

I prefer to pay my insurance premiums annually, and they almost all fall sometime in the first quarter of the year.

It’s a painful hit to absorb, but when I ask myself how I would feel if I wasn’t covered for at least the very basics, my gut instantly reminds me that I’m doing the right thing for peace of mind.

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

7 thoughts on “The one expense that seems like a waste of money … until you need it

  • Reply Gary @ Super Saving Tips June 4, 2017 at 16:08

    Insurance is critical, for sure. I’m glad you mentioned disability insurance. It’s one that many forget. My wife had disability insurance through her employer and it’s been a lifesaver since she’s no longer able to work. Paying insurance premiums annually not only helps you to get it out of the way, but insurers sometimes give you a discount for paying that way.

  • Reply Chris June 6, 2017 at 12:10

    I actually just wrote a post about insurance as well. Great minds . . . right. Haha, good post. Thanks for sharing.

  • Reply Frugal Desperado June 7, 2017 at 07:03

    I’m in the insurance industry (life, critical illness and disability) so I seriously appreciate this post. Most people view it as an afterthought, preferring to spend money on nights out or a bigger screen TV.

    What I wish I could put on a blimp to share with the world is that every single time, hands down, bar none, when the claim gets paid out, every single person says the exact same thing: “I wish we bought more.” This being said, I don’t know how those who bought none even deal with the shit show that happens financially – whether with debts, final expenses, taking care of dependents, and a mountain of capital gains and taxes – when one dies, or how your world can fall apart with disability.

    Insurance for the win 🙂

  • Reply Revanche @ A Gai Shan Life June 7, 2017 at 07:23

    We’re doing research into private disability insurance – it’s highly critical as we’re getting into quite a large mortgage and we’d really need all of our income steadily. I can’t even begin to imagine how stressful it would be to face all of that with only temporary income replacement at 55% of our normal pay. Awful!

  • Reply Xyz from OurFinancialPath June 7, 2017 at 11:54

    We never talk about it but insurance is super important! Always insure what you can’t afford to loose.

  • Reply Jacq June 10, 2017 at 00:11

    I was required to have renter’s insurance. Then the person in a different unit caused a fire, and I had water damage only, but the people on the top floor lost everything. I was able to replace pretty much everything , and it covered me being in an extended stay hotel while I found a new place.
    So many of our life transitions we get gifts or hand me downs to help out. …towels. pillows. My mom will ask when she visits if I’ve got an old towel, etc, and I don’t. I don’t have one of those beat up old pillows when you need to prop up your foot etc. Thankfully for the towels we make do with my least favorites and or paper towels.
    Insurance is so important because you hope you never need it but you’ll be so glad you have it, in case you do.

  • Reply Natalie @ WalletSage June 13, 2017 at 10:46

    Great post, thanks for sharing. I also like that you included disability insurance–very important. From what I’ve heard umbrella insurance is also great to have, as it’s cheap and covers a lot, at least in the U.S.

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