The other day I heard a story on Marketplace about a new product for the fantasy football enthusiast called Fantasy Player Protect. Their tagline is “Fantasy sports, real insurance.” I’m not endorsing this type of insurance; however, I was intrigued by the concept, and it got me thinking about less common, but not necessarily less important, types of insurance. Health, car, home and life insurance might come to mind straight away. But what about other types, such as umbrella liability, pet insurance and directors and officers insurance for nonprofit board members (D&O) to name a few?
My thought is that it’s effective to self insure, sometimes completely or up to a point, depending on what it’s for. It’s appropriate to do this for losses that you can absorb. An emergency account is a form of self insurance. There are bound to be some unexpected expenses or losses that you need money for unexpectedly. It’s important to have insurance when a loss could have a negative effect on your finances that would take significant recovery time or might cause you to add more unnecessary debt.
It seems to me that if you need insurance to protect a few hundred dollars or so in “fun money” spent on joining a fantasy football league, then there are likely other things you need to focus on to improve your finances. This is not to say that the Fantasy Player Protect business model won’t be successful…and maybe fans will have more fun playing knowing less money is at risk!
Here are a few thoughts on the other types of insurance I mentioned:
Umbrella Liability Insurance
This type of insurance covers for liability over and above (hence the name of the policy) the limits that are in your auto and renters or homeowners policy. If your dog knocks someone over at the beach and they sue you, then this type of insurance offers protection. It tends to be inexpensive for the amount of coverage provided. Therefore there is good value and peace of mind provided by this coverage. However, someone could always sue you for more than the amount for which you have coverage. You can talk to your existing insurer about coordinating policies.
Pet insurance has received a bad rap in the past. However, that seems to be shifting. With the higher cost of veterinary bills, it might be worth it. I think the same concept holds that I mentioned above. Try to insure as much of it as possible yourself. Look for a high deductible and pay expenses you can plan for out of pocket. The insurance you purchase can cover a larger “catastrophic” expense that would have a meaningful negative impact on your finances. Here is more info on pet insurance, including reviews and comparisons.
Directors and Officers Insurance
Many non-profit organizations purchase this type of insurance to cover their board members. In fact, if you are thinking about serving on a nonprofit board, it is wise to ask if they have this type of coverage. Basically, it protects you if you were sued for any mistakes you made as a board member. These could range from financial decisions to hiring and firing issues. More information about D&O can be found at Blue Avocado, a resource for nonprofits.
Of course, you can’t insure against everything, but putting some prudent measures in place to combat risk is just as important as any other element of your finances. I hope you’ll take risk management and the right kind of insurance into consideration when creating your financial plan in order to SaveUp!
This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.