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Cheap vs. expensive insurance is much about the same as the “price perception” principle, as it differs from one person to the next. For one person cheap can mean, only paying for car insurance and totally neglecting the fact that he/she also owns a house, with household content, jewelry, clothing and the like; for another person, cheap can mean “well within his/her spending capabilities.”
When shopping for car insurance, for example one usually hears people say they are looking for the cheapest premium as this can make quite a significant difference in their monthly budget. But does the fact that you have found cheap premiums mean you are adequately covered? Maybe, maybe not as this is quite a contentious argument. There are so many factors playing a role and to put this in context, one needs to understand the requisites behind insurance and why essential value is more important than cheap insurance premiums.
When looking for insurance one tends to want to go for the cheapest and quickest way, but this is not always possible as there are so many factors playing a significant role for instance, type of asset, replacement value of the asset, area where the asset is kept, claims history, insurance history etc. It is vital to fully understand what is in it for the “looker” as well as the insurer preparing to accept the risk offered.
The essential value of insurance might not necessarily refer to the actual premium one pays, but in the authentic delivery of the promise by the Insurance Company to carry the risk in return for premiums received. Once you enter into the process of insuring one’s assets you need to know what it is that you want out of it, and also what risk you are preparing to take, and what not. What does this mean? It simply means that if you have an asset that needs to be insured in the best way possible, you need to ensure that you understand how it works, what is involved and required from a risk perspective.
It is understandable that in these financial pressing times people will look for the cheapest premium, but shouldn’t we rather look at this from a point of: Best cover for the best price? There is nothing more unsatisfactory than a claim not going the way it should because of the fact that cheaper premium was more important than being covered properly.
In conclusion, it is absolutely worth your while to pay attention to all the detail and ask the right questions when insuring an asset as opposed to looking for the cheapest premium. Essential value of insurance lies in the no pain experience when claiming for an asset you have worked so hard for.