One way of thinking about insurance is as a means to take care of things that you know will happen. Everyone will get sick and need to see a doctor at some point, so health insurance is an obvious need. It’s a simple way of taking care of an inevitable event.
But insurance can also be seen as a means to avoid having to think about the truly bad stuff that could happen. One team member recounts working on a project in the U.S. and talking with a young woman who saw health insurance as a waste of money, until she was involved in an accident. “Riding her bike, she got doored by a standing car and was hit by a van. She said that in the moment before she hit the ground she thought, ‘I really hope this guy has good insurance.’” In that instant, rather than thinking about her own safety, she instead came face-to-face with wondering who would be liable for the accident.
Being insured against catastrophic or just unpleasant situations means that you’re able to set it aside. Whether it’s a flood, your own early death, or liability for a serious accident, no one wants to think too much or too often about the details. It was definitely the case for the young biker in the U.S. and it especially applies to situations that may be extremely bad, but also rather unlikely to happen. As one team member said,
“People want to fade out the worst case. They want to sign the contract and not have to think about it.”
Maintaining your lifestyle
One final way of thinking about the need for insurance that we discussed is a commonsense approach to maintaining your lifestyle, no matter what comes your way. The more valuable your assets, the greater the risk to your existence.
One illustration of this came out of the extreme flooding last year in northwest England. As river banks gave way and homes across a vast area were swamped with dirty water just before Christmas, homeowners knew that their insurance wouldn’t cover the damage in the same way it had when something similar happened a few years previous. In this case, flood posed a significant threat to their continued existence in a way that it hadn’t previously. Insurance was no longer simply about protecting property. Physical damage to the homes become secondary to the hit to the financial well-being of household.
Our team is continuing the discussion about the need for insurance. We’re always mining our personal and work experiences to understand more.
We’ve discovered that even the perceived need for insurance varies widely. Back to the topic of over- and under-insurance, we ran a quick poll on coverage amongst the KXL team. Our winner for most insured was someone with 29 different insurance products. At the other end of the scale, we have someone with just two policies. These are yet more evidence the perceived need for insurance is a complex subject. It’s one that we’ll continue to explore.