The Road to Wealth Requires Insurance
As a project manager, I learned from experience that to get your project done you need to cover your risks. There is a whole sub-section of project management dealing with risk identification, assessment and prioritization.
Covering your risks is essential to implementing on time and in budget with quality.
Covering your risks on the road to wealth is also essential and insurance is one big way to do so. Your need for insurance coverage rises as you grow your wealth. Once you accumulate enough to get into your first home, you will definitely want (and be required to have if you borrow) homeowners coverage.
One home disaster can set you back significantly on your road to wealth.
Our first home was located in a neighborhood that was totally destroyed by a tornado in the 1950’s (we bought in the 80’s). We made sure our homeowner’s policy covered tornadoes. Luckily we had no tornado destruction while we lived there. Although we have moved, we are still here in the Midwest, and get more tornado watches and warnings than most. It is almost a springtime ritual to haul out the emergency kit and hide out in the basement a few times when tornadoes have been spotted. I just checked and, hey, as I write this, there is a tornado watch for our county – fun times!
The EF5 tornado in Joplin was devastating and in our home state, but most residents are re-building, thanks in a large part to having the right insurance coverage. The recent Moore Oklahoma EF5 tornado took out 12,000 to 13,000 homes. We watched as the news interviewed one family who lost their home. As they picked through the rubble that used to be the house, looking for anything intact, the newscaster talked about how they had rebuilt this home after their prior home on the spot was destroyed by another tornado in 1999! My spouse and I just shook our heads. If you know you are in an area with such a high tornado risk why would you rebuild there again. The most amazing part of the interview was that this family is staying and rebuilding ON THAT SAME SPOT yet a third time. It’s a good thing they had insurance coverage.
We saw similar situations after the floods in our area the past few years. There is a residential area around Big Lake State Park in Missouri that floods with regularity. Yet the residents keep rebuilding at that lake. For flood insurance and insurance against hurricanes, policy holders usually have to pay extra to purchase a rider.
At least for tornado damage most people are automatically covered, according to the USA Today article: Policies cover tornado damage, but coverage may fall short. You still need to make sure your policy is updated to keep covering the cost of replacing your home if disaster strikes.
As I write this, a bulldozer is hard at work on the lot next door. A week before Christmas last year, the house that used to stand there went up in a blazing fire that consumed the entire house and left just a shell standing. Luckily our neighbors were not physically hurt. Now they are re-building – because they covered their risks.
So many things in life can go wrong. Protect your castle. Make sure you can recover financially if it burns down, is flooded, or lost in a hurricane, tornado or wind storm.
In order to achieve wealth, you need to hedge your bets along the way with insurance that makes sense for your stage of life, whether that is renters; health; auto; home; umbrella; liability or business insurance coverage. One disaster can wipe out years of hard work and financial wealth building.
Have you suffered a home loss due to disaster? What was your insurance experience?
