I thought I was the one with the bad news. My husband called me on while I was at the auto shop getting the screechy noise on the van checked out. He asked me about my morning and listened patiently as I explained that the van repairs would cost us close to $500.
I asked about his morning and he said his hearing at court went well. Then, cool as a cucumber, he told me that when he went out to his car afterward, he found the passenger window of his car broken and everything of value stolen.
The most painful was his briefcase which had his laptop, the files he was working on, and his notary seal and book. They also took all the other electronics in his car and other random things like his spare deodorant and toothbrush (although they left his toothpaste).
Now for the good news and the point of this post:
Even in the midst of serious debt repayment, having adequate insurance and an emergency fund is essential.
California minimum coverage requirements for auto insurance are so low as to be almost laughable, if this was not such a serious subject. In California you must carry insurance to cover
- $15,000 for injury/death to one person.
- $30,000 for injury/death to more than one person.
- $5,000 for damage to property.
Our auto insurance policy limits are substantially higher and also include collision and comprehensive coverage, with a $250 deductible. Comprehensive coverage includes any damage to our cars or car-related property caused by anything other than a collision with another vehicle (e.g. collision with a deer, hail damage, or theft.) After our $250 deductible, the comprehensive coverage will pay for the cost of replacing the window and all the car-related items like the GPS and power inverter.
If you have a home mortgage, you’ll be required to have home owner’s insurance. That decision is made for you by the lender. For those who rent instead of own, renters insurance is always available, but often overlooked. Renters insurance is generally very inexpensive, but can easily cover all your personal property, whether located in the home you rent, in storage, in your car, or anywhere else. This insurance not only covers loss of your personal property (possessions), but damage to the rental property.
To give you an idea about how affordable renters insurance is, our policy costs us $175 per year, and was substantially less when we lived outside of California. I would never have thought about renters insurance (I never had it when I was single), but my savvy and responsible husband has made sure that we have always had it. In our case, after a $250 deductible, our renters insurance policy will cover, the laptop, briefcase, bluetooth headset, notary seal and book, and other stolen property.
If we were living paycheck-to-paycheck, it would be hard to come up with $500 in insurance deductibles, pay $500 in car repairs (remember how I thought I was the one having the bad day), and purchase replacements for all the stolen items (we will have to wait for reimbursements from our insurance).
In my opinion, trying to tackle debt without an emergency fund is a recipe for failure. Without savings for unexpected expenses, the slightest out-of-budget emergency will send you right back to borrowing. Between living on last month’s income and having our emergency fund, we have money to cover the insurance deductibles, car repairs, and replacement purchases.
While it ended up being an expensive day, it wasn’t nearly as expensive and painful as it could have been. We all sat down to dinner together, safe and well, and just a little bit poorer for the events of the day. I’m just thankful that all we lost was stuff and money.
It’s Your Turn
- Do you have an emergency fund and insurance?
- How has your emergency fund or insurance saved your tail?
- Have you ever had stuff stolen from your car?