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Where's the Beef?

“You get what you pay for”—how true that is with insurance. Sadly, though, a lot of what we see from new customers are insurance policies that are all bun and no burger. This raises the question: what elements should every insurance policy have?

Remember the ingredients in a good old-fashioned burger? A juicy beef patty, signature sauce, lettuce, cheese, pickles, and onions—all nestled between that classic sesame-seed bun. You knew what you were getting. But once the processing methods were uncovered, the idea of a simple ingredient list disappeared.

So what quality ingredients should you look for in a policy? Here are the top 3.

1. Adequate replacement cost

Simply stated, replacement cost is reimbursement for the full value of what you lost—possibly more depending on the policy. But overall, most policies are written on an Actual Cash Value (ACV) basis. While that is enough to cover some losses, ACV leaves the vast majority of customers with a bad taste in their mouths. You’re only getting back what the item is worth now.

For example, could you expect to sell your used, four-year-old TV for the amount you originally paid? Unlikely. The same is true of ACV—when the item you lost has depreciated in value since original purchase, you won’t be fully reimbursed for your investment. That’s why having a policy with an adequate replacement cost is crucial. This is an element that requires expertise.

2. The right deductible

You used to be able to keep it low and pay a minimal out-of-pocket sum at the time of a claim. But these days, it’s better to have a higher deductible—which will lower the overall premium—and set that monthly “extra” aside in case of a claim. In the end, that’s less money out, and more on standby.

3. High liability limits

How much is enough? As much as you need to be well-protected—know your assets and be sure they’re covered. In today’s sue-crazy world where lawsuits are televised as entertainment, we’d always recommend higher liability limits. $1M is a good bet and will be money well spent should a lawsuit arise. More safe and less sorry is always a solid equation.

While these guidelines only scratch the surface, my point is this: it shouldn’t be complicated to get a nice, juicy policy with all the trimmings. And a quality agent can make sure the bun-to-burger ratio is just right for you. So where’s the beef? It's in a well-crafted policy with simple, quality ingredients—all available at your local insurance joint.

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