For a lot of us, it is exceedingly difficult to justify spending money on something that we will probably never use. But we all do it, and we do it more often than we would like. Yes, we all spend large amounts of money on insurance even though we all know that we will probably never use it for anything. While it is true that health insurance and dental insurance do indeed come in handy, it is much more difficult to see the reasoning behind dropping thousands of dollars each year on home and auto insurance.
So why do we spend so much money each year on home and auto insurance when we will probably never end up using it? The answer lies in a seemingly simple series of questions.
First, have you ever known anyone who has lost their home or car? They could have lost their home because of some natural disaster or because of a fire caused by their own foolishness. As for the car, it must have been totaled in an accident.
Second, of the people you know who lost their home or car, how many of them had more than enough money (without any insurance coverage) to replace it? If you did not know anyone who lost
their property, then just skip down to the next paragraph.
Third, if you lost your home or car, would you have enough money to pay to replace it right away?
These questions, as simple as they may seem, actually provide a lot of insight into the whole desire to spend money on insurance for your home or your car. To start with, when you really start to think long and hard about it, there is a good chance that we have all known someone who has lost their home or their car as a result of an accident or natural disaster.
Next, when you think back about that person who lost their home or car, most of them were not able to replace it immediately after it was destroyed. They were left without a car, without a way to get to and from work, for several days or even months - certainly not a productive situation.
Finally, there is a good chance that you do not have enough money to replace your home or car should something terrible happen to it. Most people may only have a thousand dollars or so saved up for such emergencies - and that is why it is so important to own home and auto insurance.