What's the Point in Having Insurance?

A few years ago I decided it was time to trade in my four story walk-up in the East Village for something a little more stylish (and by stylish I mean something with an elevator and working AC.)

As you might guess for a newer building, there were a few extra conditions as part of the lease agreement. Besides needing several cosigners to satisfy the exorbitant Manhattan rental contingencies, the building required that I take out a $150,000 renter’s insurance policy to cover catastrophic events such as burglar intrusions, fire, flooding, etc. Thankfully none of these events took place and I enjoyed a peaceful year in my new place.

Skip ahead to the present – living in a new apartment and recently engaged. The only dark cloud in those happy first weeks of blissful wedding planning was the constant paranoia I experienced about dropping my new ring down the sink drain, knocking the stone loose at the gym, or leaving it at the nail salon. The solution – get good insurance on that sucker.

Doing my due diligence to find the proper policy, I decided the best solution would be to take out the familiar rental insurance policy and add a rider for the jewelry. Chatting with Kathy, my friendly insurance agent, I was informed that in addition to fires, floods and burglary, a renter’s insurance policy also covers things like accidental damage and accidental loss. This set off an alarm – during my aforementioned policy term I had “totaled” a brand new Macbook in a tragic water spill. The purchase of a second laptop in a three month period was painful to say the least. I asked Kathy what she thought of this.

 “Of course it would be covered! That’s what the accidental damage clause is for, did you not file a claim?”

No, Kathy, I did not know…

This was rather frustrating for me and it stayed with me a while after our conversation. I had essentially paid for insurance, and not used it; like totaling a car and paying for a new one out of pocket, or insisting to pay the whole bill at the doctor when insurance would cover the visit in full. I was so annoyed with the senselessness of the whole thing.

Which brings me to my next point – there’s a good chance that your company is doing a version of this on a regular basis. Are you starting to feel my frustration? 

All fifty states require employers to pay for Unemployment Insurance for their employees as part of payroll tax obligations, and unlike car insurance, making use of these benefits virtually never increases due to use, not to mention that most companies are already paying the maximum rates. Why is it then, that the most commonly used severance strategy is for a company to pay former employees their full wage during their unemployment - including the very tax that pays for the Unemployment Insurance that they are not using!

Do your business a favor and be informed about your rights to claims. Don’t fall prey to senseless spending like I did.

By integrating the benefits of state UI, a company can free up significant employee benefits dollars to reallocate where they are most needed. At a time when employee benefits dollars are already stretched, integrating State UI into your severance plan has the potential to dramatically enhance your employment offering and deliver a competitive advantage in the area of attracting and retaining talent.

To learn more about how to utilize this type of strategy, visit www.transitionservices.com