The Fine Line Between Too Much Insurance and Not Enough

A few weeks ago I wrote a guest post on one of the biggest personal finance blogs around, Free Money Finance, about the ten insurance policies that everyone should own. There is a fine line with having too much insurance.

I took some heat in the comment section of the post from people who said that the ten different types of insurance policies I listed would leave me insurance poor. Maybe they would do that, but maybe they wouldn’t. How many insurance policies are too many?

How Many Policies Do You Need?

Do you need ten different insurance policies? Maybe you do need them, and maybe you don’t need that many. One commenter actually listed a few policies that you should have that I didn’t write about. Everyone needs some type of homeowner’s insurance or health insurance policies.

I did not want to list those in the article because I felt that it was fairly obvious that you should own those types of insurance policies. I say this, but one of my coworkers recently lost a lot of items from her home when it was burglarized and she had no renter’s insurance. This is so sad because renter’s insurance is so cheap. For as little as $15 per month, you can have thousands of dollars in protection.

Everyone should have renter’s insurance, but so few own the protection. When I asked my coworker why she wasn’t protected, she told me that she didn’t realize that it was so cheap.

Can You Have Too Much Insurance?

Can you actually own too many insurance policies? I guess you can. You can make yourself insurance poor. The beauty of some wide-ranging insurance policies is that they are inexpensive. For example, a one million dollar umbrella insurance policy can cost you only a few hundred dollars per year. One reason that the umbrella insurance is fairly inexpensive is that the likelihood of a payout is extremely rare.

You could go a lifetime without needing a payout. Hopefully, that is the case, and you are never sued. But, would that mean that you have too many insurance policies if you truly needed its protection? I would almost rather err on the side of caution and have too much than not enough if I needed.

I Like Those Ten Insurance Policies

I really like those ten insurance policies that I listed in the guest post. I think that everyone should really consider owning those ten insurance policies. Many people simply do not realize the risks that they are taking by not having adequate insurance coverage.

Do you have flood insurance for example? Did you know that over 30% of all the homes damaged by flooding were not even in a flood zone or plain? That is incredibly sad seeing how flood insurance for a home outside of a federally designated flood zone is incredibly inexpensive.

There seems to be a fine balance between not having enough insurance policies and being over insured. How many insurance policies do you own? Is ten different types of insurance policies too many? How many different types of insurance policies do you own?