Did you know that we have been experiencing an economic recovery since the Great Recession of 2008-2009. Has it felt like a full recovery to you?
Although the economy has trended upwards, people just haven’t been saving. 44% of Americans are either in debt, have no savings at all, or have only enough savings to tide them over for up to three months if they lose their jobs, as stated by an Assets and Opportunity report last year.
A recent report found that nearly half of Americans are saving no more than 5% of their income, while 1 in 5 or 18% are saving nothing. Literally nothing at all.
Not a lot of American have nests with nest eggs.
Now let’s add consumers insurance buying habits into the conversation. One of the most common cost-cutting tactics is calling up your insurance company and requesting an increase in your deductible – the amount you have to pay before the insurance kicks in.
On the surface, this works well. If you increase your deductible, your premiums will go down, meaning your monthly bills are lower. People chop hefty percentages from their insurance bill just by making this move.
The first thing to note is that the purpose of auto insurance is to insure financial survival due to an unforeseen accident. With automobile insurance – if you total your car without insurance, you might be left holding just a car loan and nothing to show for it.
Obviously, for those consumers in a higher tax bracket, insurance premiums are a lot less important.
A consumer saving money by raising their deductible should then be sure to have the cash on hand to cover the deductible in such a situation. But mostly they don’t. Americans are just not good money savers. Instead they only consider that, if they raise their auto deductible from $200 to $1,000, they’ll see a big drop in their bill. Like a premium saving of 40%. Also, by car insurance industry estimates, an insured files a claim for a collision about once every 17.9 years. They all think they are average drivers, and roll the dice. However when something goes wrong with the car, they’re going to need that $1,000. If they don’t have that $1,000 in an easy-to-access place, then they are in real trouble.
Now this person who has rolled the dice, lost. They have little or no emergency fund and walk into your shop asking f