How Does the 70/30 Insurance Rule Affect Your Finances?

The 70/30 Insurance Rule: What You Need to Know

As an insurance advisor, one of the most common questions I receive from clients is about the "70/30 insurance rule". This rule is often referred to as the 70/30 rule of insurance, and it can have a significant impact on your finances. In this article, we’ll take a closer look at this rule and how it affects yourinsurance coverage.

What is the 70/30 Insurance Rule?

The 70/30 insurance rule is a concept that suggests you should allocate your insurance budget in a specific way. According to this rule, you should spend 70% of your insurance budget on standard coverage, such asliability insurance, collision insurance, and comprehensive insurance. The remaining 30% of your budget should be set aside for additional coverage, such aspersonal injury protection, uninsured/underinsured motorist coverage, and roadside assistance.

Why is the 70/30 Insurance Rule Important?

The 70/30 insurance rule is important because it helps you prioritize your insurance coverage and ensure that you have the right level of protection in case of an accident or unexpected event. By allocating your budget in this way, you can ensure that you have the coverage you need without overspending on unnecessary insurance products.

What Types of Insurance Should You Consider?

When it comes to insurance coverage, there are many different types of policies you can choose from. Here are a few types of insurance that you should consider as you plan your insurance budget:

1. Liability Insurance: Liability insurance is a type of insurance that covers damages or injuries that you may cause to another person or their property.

2. Collision Insurance: Collision insurance is a type of insurance that covers damage to your own vehicle in the event of an accident.

3. Comprehensive Insurance: Comprehensive insurance is a type of insurance that covers damages to your vehicle that are not the result of an accident, such as theft, vandalism, or natural disasters.

4. Personal Injury Protection: Personal injury protection, or PIP, is a type of insurance that covers medical expenses for you and your passengers in the event of an accident.

5. Uninsured/Underinsured Motorist Coverage: Uninsured/underinsured motorist coverage is a type of insurance that covers damages caused by a driver who does not have enough insurance to cover the full cost of damages.

6. Roadside Assistance: Roadside assistance is a type of insurance that provides help in the event of a breakdown or other mechanical issue with your vehicle.

How to Choose the Right Insurance Products

Choosing the right insurance products can be overwhelming, but there are a few key factors to consider as you make your decision. Here are some tips to help you choose the right insurance products:

1. Consider Your Budget: As you allocate your insurance budget, be sure to consider your overall financial situation and choose insurance products that fit within your budget.

2. Evaluate Your Needs: Consider your driving habits, the age and condition of your vehicle, and your overall risk level as you evaluate which insurance products to choose.

3. Compare Quotes: Shop around and compare quotes from different insurance providers to ensure that you are getting the best value for your money.

4. Consult with an Expert: Don't be afraid to consult with an insurance expert who can help you evaluate your insurance needs and choose the right products for your situation.

Conclusion

In conclusion, the 70/30 insurance rule is an important concept to consider as you plan your insurance budget. By allocating your budget in a specific way and choosing the right insurance products, you can ensure that you have the coverage you need without overspending on unnecessary insurance products. As always, be sure to consult with an insurance expert to evaluate your needs and choose the right products for your situation.