Many people feel that insurance is a “necessary evil” because their premiums continue to go up every year. They turn in small claims but have to pay a deductible. Once they pay the deductible the insurance portion is minimal. So why bother?
Rule # 4- Sometimes a small loss is worth taking.
This rule appears to be counter intuitive. A loss, no matter what the size, is unpleasant. It seems that common sense would say that no loss, no matter how small, is acceptable, if instead it could be paid by an insurance company. But you have to understand that insurance is designed to protect against catastrophes. It is not designed to be a maintenance policy. You are better off paying small frequent losses out of your pocket. If you increase your deductible, you can help yourself in a couple of ways. First, it will decrease your premiums. Secondly, by turning in less small claims, your cost of insurance will be reduced over the long run. The summation of this rule is that insurance is most effective when it is used to protect against large unexpected losses.