The most successful families often make insurance decisions that seem financially prudent but actually work against them. We see this pattern repeatedly: choosing low deductibles to “get value” from insurance and keeping adult children on family car policies to “save money.”
Both strategies backfire. Here’s why the counterintuitive approach protects your wealth better.
Rethinking Your Deductible Strategy
Picture this: You own a $2 million home but carry a $1,000 deductible. You’re essentially paying the insurance company for claims you’ll never file.
The philosophy shift: Insurance should protect against life-changing catastrophic events, not everyday mishaps. If you wouldn’t file a claim under $10,000, why pay extra premiums for a $1,000 deductible?
The Math Works in Your Favor
When you increase your deductible from $1,000 to $10,000, the premium savings are substantial. Take those savings, invest them, and let compound interest work. By the time you have a claim, you’re likely ahead financially.
High-net-worth carriers sweeten the deal with deductible waivers. If your loss exceeds $50,000 or $100,000 (varies by carrier), they waive your deductible entirely. For homes of significant value, reaching this threshold happens quickly.
Claims Have Long-Term Consequences
Every claim stays on your record for five years. That small bathroom flood you filed for $3,000? It could affect your rates and coverage options for half a decade.
When facing a potential claim, the decision becomes complex. You need to weigh immediate costs against long-term consequences, understand your policy’s deductible waiver provisions, and consider how the claim might affect future coverage options.
This complexity is exactly why working with an experienced advisor becomes invaluable. Before filing any claim, a quick call can help you understand the full financial impact and make the decision that best protects your long-term interests.
The second counterintuitive decision we see families make involves their adult children’s car insurance coverage.
Your 24-year-old graduated, moved to New York City, got a job, and still drives your car occasionally. Keeping them on your policy seems logical—but it’s creating a dangerous coverage gap.
The Real-World Scenario
Your adult child lives in NYC without a car but rents vehicles and rides in Ubers. Here’s what happens when they’re injured as a pedestrian or cause an accident in a rental car:
- As a pedestrian: No coverage from your auto policy
- In a rental car: No liability coverage from your policy
- The result: Your child could face a lawsuit that garnishes wages for life
The Household Member Definition
Insurance policies define coverage based on “household members”—residents living in your home who are related to you. Some policies include age caps (often 25), while others require full-time residency.
If your adult child doesn’t meet these criteria, they’re not properly covered, regardless of what you’re paying in premiums.
The Solution
If your adult child has a car: Transfer the title and help them get their own policy. You can still pay for it, but they need to be the named insured to ensure proper coverage.
If your adult child doesn’t have a car: They need their own non-owner policy to cover rental cars and provide liability protection when driving.
Either way, they’re properly protected and set up for insurance success as independent adults.
Student Discounts You Might Be Missing
Whether your child lives at home or attends school elsewhere, several discounts could reduce your premiums:
- Good student discount: 3.0 GPA or higher (high school or college)
- Student away at school: Significant discount if they don’t have a car on campus
- Driver’s training: Recent completion can qualify for credits
- Distant student: Major discounts for students living away from home most of the year
These discounts recognize reduced risk and can substantially lower your premiums.
Playing the Long Game
Both deductible strategy and adult children coverage require long-term thinking. Higher deductibles build wealth over time while ensuring you’re covered for true catastrophes. Proper coverage for adult children protects their financial future as they start their careers.
The key is working with an advisor who understands these nuances and can guide you through decisions that benefit your family both now and in the future.
These coverage decisions seem small but have significant long-term impacts. Our complimentary reviews identify these opportunities and ensure your family is properly protected at every stage of life. **Contact our Private Client team at privateclient@brunswickcompanies.com or call 1-800-686-8080 to learn more today.
