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When Life Changes, Your Insurance Should Too

Life Changes

There comes a point in nearly every parent’s life where they realize that “everything in life changes when you have a baby” also includes your insurance coverage.  For some parents, it’s shortly after that trip home from the hospital, with life insurance becoming the new priority.  For others it might be scheduling some sports equipment, or increasing personal property – or that dreaded day when your not-so-little one comes home with their brand-new driver’s license! We’ll get back to all of that in a bit.

For me, it was my wife’s decision to have our son’s 2nd Birthday Party at our house. The thought of 7-12 excited toddlers attempting to navigate my ancient wooden steps, both pre- and post-cupcakes, was enough for me to call my agent back within minutes of hanging up with my wife. “Hey man, remember that Personal Umbrella we talked about? Let’s do it. I’ll pay it in full today too.”  Slip and fall injuries account for more claims than many people realize, and with the cost of medical bills and legal defense increasing (along with everything else), that’s probably not going to change anytime soon.  You unfortunately never know which parent will dust their kid off and laugh, which will hand you the medical bills for a broken leg, and which will decide to sue for the “Big M” ($1 Million) in the hopes of possibly making your address their own.  While I won’t tell you what my Umbrella cost, I will tell you it was more affordable than I expected, and definitely cheaper than hiring a lawyer would have been.

The other examples mentioned earlier are all valid concerns as well.  When I sold life insurance, the discussion typically went in either of two directions:

First, you owe it to your kid(s) to have the future somewhat mapped out. If you want them to stay in their current home, you need enough life insurance to pay off the mortgage when you’re gone.  Or if that’s not a concern, at the very least, you’ll want enough to cover your final expenses.

Second, you can start a policy for your child. Now before you think of this as depressing and morbid, let me remind you that many companies offer guaranteed-issue permanent life policies for kids.  Your child could get a small policy, maybe $25,000, that they could one day borrow money from (permanent Life builds cash value). They could avoid a medical exam that might become difficult with issues developed later in life. Or at the very least, when they reach adulthood, you’ve given their future kids a gift, by already paying off their eventual final expenses.  While that cost will go up over decades, interest will help more than you might realize.  My grandma finished paying her own $1,000 policy in 1964 and when she passed in 2014, the benefit we received was over $9,500 all thanks to interest.

Anyone who has kids will instantly nod when I say something like “they have so much stuff” – though, let’s be honest, we probably have more than they do, we just notice theirs because it isn’t “ours” and it’s in our space.  If you lost your home or apartment to a fire tomorrow, who’s replacing all of it?  Sure, you have the essentials and appliances covered, but after you replace the toaster, what about the dollhouse or the RC Cars – who am I kidding, this is 2022, what about their video game systems?  If they’re very young, who’s replacing all the items you received at the baby shower?  Take an hour and make a list of everything your kids have, come up with a rough estimate, and call your agent or account manager to raise your Personal Property accordingly.  If your kid isn’t quite a kid anymore, and has some hobbies or is into playing a new sport, you might want to look into scheduling some of that personal property too. I spoke about that in a recent blog, so I don’t think we need to get too deep into the details today.

That being said, if the little one is not so little, it’s time to have THAT conversation. The one you’ve been avoiding. You know the one. They’re learning to drive, aren’t they? 

I used to work for a carrier that would send out a 30-day notice when a child in your household passed their road test – you had to give some very good reasons (along with proof) for that change not to happen.  Show me proof they live elsewhere – a utility bill, a dorming/tuition receipt from a school over 100 miles away.  It felt like we were the “secret police” sometimes, but that being said, I can’t tell you how many times an “out of household” driver managed to have an unexpected accident, mainly because over the years I’ve lost count. 

There’s an old saying that goes “a lie has very short legs,” meaning that it won’t get you very far.  This holds true for all methods of rate evasion – once an accident happens, your carrier’s SIU team (special investigators) will be asking some difficult questions.  The consequences could be anywhere from a partially uncovered claim (the carrier could defend you but may not fix your car) to a non-renewal, to criminal penalties for insurance fraud.  All of which can be avoided by being honest with your carrier from the start. 

I’m not saying the costs are easy to absorb, but I am saying that there are ways to cut those costs, including traditional Defensive Driving courses, various carrier-based teen driving programs, and telematics apps.  The end result is still an increase, but just like the umbrella I mentioned before, it’s far less expensive than hiring a lawyer.  By the way, if your young driver really does live outside of your home, keep photocopies or scans of that proof alongside your policy, so if an accident does happen when they’re home for a visit, you already have your ducks in a row when the carrier asks you to verify their status, and you will have one less thing to panic over.  I used to tell my customers all the time that if we did things right, we probably won’t have to do them twice. Your own account manager might say something like that too – why not give them a call today and review your coverage?

Allan Block Insurance, Professional Service with the Personal Touch

We are located in Tarrytown, NY, in the heart of Westchester County, a key business district just north of New York City. We write auto, home, renters, condo, co-op, personal, business, life and group insurance for clients locally and in NYC, CT, NJ, PA, MA and many other states. For more information or answers to your insurance questions, please contact us.

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