Avoiding common short-sighted insurance mistakes

After your mortgage, your combined home and auto insurance premiums are likely the second largest line item on your monthly budget.

I remember as a young parent struggling to make ends meet, I was tempted to cut expenses where ever I could and insurance seemed like low hanging fruit. I visited my insurance agent and told him I wanted to eliminate any coverage that I wasn’t obligated to purchase.

Fortunately, I had an insurance agent at the time that cared enough to explain my coverage and how it protected me.

Recently, a very good friend called for a quote on an umbrella policy and agreed to let me review his home and auto coverage’s.

My friend has always been a fastidious saver and a generous giver. He and his wife live modestly and have been loyal stewards of what they’ve been given. I can’t recall a single instance where they’ve splurged on anything. Consequently, they are also blessed with an abundant net worth any of us would be proud of.

Instead, now a multi-millionaire, he still carried only minimal liability coverage that protected a very small fraction of the assets he’d sacrificed to accumulate. While he was saving a few hundred dollars a year, we was risking the loss of millions.

Penny-wise and pound-foolish

The temptation to decline discretionary coverage can be great, particularly when times are lean, but it’s important to not make decisions that can work against your own interest. Benjamin Franklin called this “Penny-wise and pound-foolish”.

Insurance is a financial contract that transfers a risk that can not be borne to another in exchange for a premium. If one can afford to bear all their risks, they would be foolish to pay to transfer it. Conversely, if one has a risk that endangers their future and livelihood, they would be wise to insure against it. There may be very good reasons, for some, to carry state minimum coverage’s or decline coverage’s like Personal Injury Protection, Medical Coverage and UN-insured/Under insured motorist. Others could be risking everything they have including the ability to retire.

Each of us are individuals. Our financial circumstances likewise, are peculiar to each of us. Just as there is no single investment that makes sense for all, the vehicles required to protect our future and fortunes must be adequately matched to your needs.

Carruth Insurance is here to help you with these decisions. If you’d like a no-obligation, independent review of your insurance policies we would be honored to get to know you and be that trusted friend and advisor.

Book a meeting with me when your’re ready to talk about your insurance needs.

All the best,


Richard Carruth is Principal and Owner of Carruth Insurance.