Whenever you buy something, you cannot wait to use it, try it, or taste it.
When you bought your TV, you could not wait for the delivery man to knock on your door, install the set, and turn it on to your favorite show. When you buy new shoes, are you not tempted to walk out of the store wearing them? When you buy the latest Michael Jackson tape, do you not rush home to play it on your stereo? When you buy assorted chocolates, do you not take at least a bite from a choice piece before asking the salesgirl to wrap the box up?
Not so with insurance. The oddest thing about insurance is that when you buy it, you hope, no, you pray that you never have to use it; that is, collect a claim on it. It can go on this way for years, and you should be happy about it. I am quite content that I have never had to file a claim on the fire insurance policy on my house since I built it fifty years ago, and all that I have “lost” are the annual premiums. My family is more than glad that they have not collected anything on my life insurance policy, and all that my wife went through the years was to plug in the premium in the family budget. There has never been any talk about all those premiums having been wasted.
You cannot even try the policy out. When you buy a personal accident policy, you cannot very well cut you finger off just to find out if the insurance company will really pay. You cannot burn down the kitchen just to see if you can collect enough money on your fire insurance policy to build a new one.
Also, the insurance company is not too eager to pay a claim on your policy although it quite capable of doing so.
If and when the unfortunate day comes for you to make use of your insurance policy, it is usually under the most trying circumstances: the car is a total wreck, the house has burned down, or, worst of all, there is a death in the family.
Then there follows the sometimes tedious process of documenting the claim. In a motor car claim, a police report and repair estimates from competing shops are the minimum requirements to support the claim form. In a fire claim, an architect’s estimate and an inventory of house furnishings are usually needed. A death claim may involve a search for a long-lost birth certificate.
If the claims negotiations become difficult, it is not always because the insurance company does not want to pay, or that the insurance adjuster is playing hardball. Part of the problem could stem from the fact that the unfortunate claimant, quite understandably, is not his normal, jovial self.
But if the policy has been properly designed, the proceeds from the claim will be enough to pay for most, if not all, the damage and will go a long way to ease the pain.
So, why buy insurance, odd as it is? Because, when you really find the need to use it, and you do not have it, it is too late to buy. As the cliché goes, when you are caught bare-headed in a sudden downpour, it is too late to buy an umbrella.
(January 4, 1989)