Insurance explained simply

By / September 19, 2025

liability coverage minimums
your car is a little corgi.
with a very small doggy jacket.
this is the minimum coverage.
one day you bump into a giant fancy show poodle.
the poodle is not happy.
its fancy haircut is ruined.
its diamond collar is scratched.
your little jacket only pays for one small fluff of the poodle’s hair.
the poodle’s owner is mad.
you have to sell your corgi toys.
and your comfy dog bed.
to pay for the rest.
a bigger jacket would have been smart.
collision vs. comprehensive
your car is a shiny red apple.
you are driving your apple.
you get distracted by a worm.
and you drive the apple into a fence post.
that’s a collision.
your apple is now applesauce.
collision coverage buys you a new apple.
now imagine.
your apple is just sitting in the driveway.
minding its own business.
a big angry bird drops a bowling ball on it.
that’s comprehensive.
your apple is now a tragedy.
comprehensive coverage buys you a new apple.
it’s for when life happens to your apple.
the uninsured motorist puzzle
you are a happy little bee.
you have good bee insurance.
you are flying your bee-car.
following all the rules.
a crazy hornet with no insurance crashes right into you.
your wing is bent.
your bee-car is busted.
the hornet just laughs and flies away.
who pays for your wing?
it’s a puzzle.
but wait.
your uninsured motorist coverage solves it.
it acts like the hornet’s insurance.
it pays for your doctor bills and your bee-car.
so you can get back to buzzing.
personal injury protection (pip)
you are a banana.
you are riding in a car with your fruit friends.
the car slips on a peel.
and crashes.
you get a big bruise.
your friend strawberry is smushed.
it does not matter who slipped.
pip is like a fruit basket doctor.
it pays for your bruises.
it pays for strawberry’s smushing.
it even pays for the work you miss at the fruit stand.
it helps you and your passengers heal.
no questions asked about the peel.
medical payments coverage (medpay)
your car is a happy little Roomba.
zooming around.
it crashes into another Roomba.
you are riding on top.
and you fall off and bump your head.
ouch.
your health insurance might be slow.
or have a big bill you pay first.
medpay is different.
it’s like a fast little helper robot.
it shows up right away.
and pays the doctor for your head bump.
it pays for your friends on the Roomba too.
it’s just for medical bills.
fast and simple.
the magic of gap insurance
you bought a brand new shiny robot.
it cost 10,000 dollars.
you borrowed that money.
a year later.
you still owe 8,000 dollars.
but your robot had a sad accident with a magnet.
it’s broken forever.
your insurance says your robot was a year old.
so it was only worth 6,000 dollars.
they give you 6,000.
but you still owe 8,000.
that’s a 2,000 dollar gap.
you are sad.
poof.
gap insurance appears.
it pays the extra 2,000 dollars.
it’s like a magic trick for your wallet.
rental reimbursement rules
your car is a loyal camel.
it carries you everywhere.
one day your camel gets a sore hump.
it has to go to the camel hospital for a week.
but you still need to get to the oasis.
what do you do?
you have rental reimbursement.
it’s like a service that gives you a temporary camel.
maybe a slightly smaller camel.
or a different color.
but it gets the job done.
it pays for you to rent this new camel.
so you are not stuck walking in the desert.
while your best camel gets better.
roadside assistance add-ons
your car is a moody donkey.
sometimes.
it just stops.
and refuses to move.
the battery is dead.
or its tire-shoe is flat.
you are stranded on the side of the road.
but you have roadside assistance.
it is like a donkey whisperer you can call.
they send a friend.
the friend comes with carrots (a jump start).
or a new tire-shoe.
if the donkey is extra moody.
they will bring a special trailer.
and tow your donkey all the way home.
it’s a little bit of money for a lot of peace.
the role of a deductible
your car is a big chocolate cake.
you get in an accident.
and a huge slice of your cake is ruined.
the baker says it will cost 500 dollars to fix the cake.
your insurance is like your rich uncle.
he will help you pay.
but first.
he wants to see you pay a little bit.
to show you are responsible.
your share is called the deductible.
let’s say it’s 100 dollars.
so you pay the first 100.
then your rich uncle pays the other 400.
the cake is whole again.
declarations page deep dive
your insurance policy is a giant rulebook.
it’s very long and boring.
who has time to read that.
the declarations page is the cheat sheet.
it’s the first page.
it’s like the back of a baseball card.
it has all the important stuff.
your name.
your car’s name.
the dates you are covered.
how much you pay.
and the big numbers for how much they will pay for different crashes.
it’s everything you need to know.
on one simple page.
no need to read the whole boring book.
dwelling coverage (coverage a)
your house is a gingerbread man.
strong and sweet.
the walls. the roof. the floor. all gingerbread.
a big angry fox with a blowtorch comes.
(this fox is named fire).
he burns your gingerbread man to a crisp.
just a pile of sad crumbs.
dwelling coverage is a magic baker.
the baker comes.
and builds you a brand new gingerbread man.
just as strong and sweet as the first one.
so you have a home again.
other structures on your property
in your yard you have a little gingerbread doghouse.
for your gingerbread dog.
it is not attached to your main gingerbread man.
it is an “other structure”.
the angry fox also burns down the doghouse.
your gingerbread dog is now homeless. and whimpering.
this is a tragedy.
this special coverage builds a new gingerbread doghouse.
it even adds extra frosting.
the dog is happy.
the yard is complete.
the fox is still a jerk.
personal property protection
inside your gingerbread man are all your things.
your gummy bear sofa.
your candy cane lamp.
your chocolate coin television.
this is your personal property.
a burglar breaks in.
he eats your entire living room.
the sofa. the lamp. the tv. all gone.
you are left with nothing but crumbs and sadness.
this coverage is like a magical shopping spree.
it gives you the money.
to go buy a new gummy bear sofa.
a new candy cane lamp.
and a new, bigger chocolate coin television.
loss of use benefits
your gingerbread house has been burnt.
it is a crime scene.
covered in yellow tape and sadness.
you cannot live in a pile of crumbs.
so where do you go.
loss of use is like a golden ticket.
it pays for you to live in a fancy hotel.
the gingerbread inn.
it pays for you to eat at restaurants.
because your kitchen is a melted mess.
it keeps you safe and fed.
until your house is a home again.
personal liability shield
your gingerbread dog gets out.
he is very excited and clumsy.
he runs into the mailman.
the mailman trips over the dog.
and breaks his leg on your gumdrop walkway.
he is not happy. he wants money.
personal liability is your lawyer-knight in shining armor.
it shows up with a big bag of money.
it pays for the mailman’s broken leg.
it pays for his missed work.
it keeps you from having to sell your gingerbread man.
all because your dog was a doofus.
actual cash value vs. replacement cost
a thief steals your 10-year-old candy cane lamp.
actual cash value (acv) looks at your old lamp.
it was old. faded. a little sticky.
it was only worth 2 dollars.
acv gives you 2 dollars.
you can’t buy much of a lamp for that.
you are sad.
replacement cost doesn’t care how old your lamp was.
it says “you had a lamp. now you don’t.”
it gives you the 25 dollars it costs to buy a brand new lamp today.
shiny and bright.
you want replacement cost. always.
named perils vs. all-risk
your house is a beautiful sandcastle.
a named perils policy is a very specific list of approved sea monsters.
it covers damage from the giant crab.
and the angry seagull.
if a rogue wave (a flood) melts your castle.
too bad.
the wave was not on the list. you get nothing.
an all-risk (or open peril) policy covers damage from everything.
every monster. every wave. every falling coconut.
except for a tiny list of things it won’t cover.
like an earthquake shark.
you want this one. it’s much better.
the wind & hail deductible
wind and hail are two playground bullies.
they throw rocks (hail) at your house’s roof.
and try to blow it off (wind).
your roof is now damaged.
your insurance will show up to fight the bullies.
but it wants to see you are serious first.
you have to pay your deductible.
it’s like you have to throw the first punch.
a special, separate punch just for these two bullies.
once you pay your part.
insurance pays the rest to fix the roof.
scheduled personal property
your grandma gives you a famous diamond.
the hope diamond’s smaller, anxious cousin.
it is worth a million bucks.
it is a superstar.
your normal insurance policy covers your regular stuff.
your socks. your pans.
it has a limit, like 1,000 dollars for jewelry.
it doesn’t know how to handle a superstar.
you have to “schedule” the diamond.
give it its own private insurance policy.
its own bodyguard.
so if it gets lost or stolen.
you get the full million bucks. not just a grand.
understanding your policy exclusions
your insurance policy is your new best friend.
it promises to help you.
but even best friends have limits.
exclusions are the things your friend absolutely will not do.
it won’t help if your house is damaged by a flood.
or an earthquake.
or a termite invasion.
or a nuclear monster attack.
this is all written in the “we don’t do that” section.
read it.
so you’re not surprised when your friend says no.
why landlord’s insurance isn’t enough
the apartment building is a giant turtle.
the landlord owns the turtle’s shell.
his insurance protects the shell.
if a meteor hits the shell. his insurance fixes it.
you just live in a small room inside the shell.
your stuff is your tv, your bed, your clothes.
if a pipe bursts and ruins all your stuff.
the landlord’s policy just shrugs.
it only cares about the shell. not your stuff.
you need your own insurance for your little room.
protecting your personal belongings
imagine all your stuff is a collection of cute, fluffy kittens.
your laptop kitten. your sofa kitten. your sneaker kittens.
you love them.
one day, a fire happens.
all your fluffy kittens are gone.
you are heartbroken and own nothing.
it is the worst day ever.
renters insurance is a magic kitten store.
it gives you the money to replace all your lost kittens.
it can’t replace the memories.
but it can replace the fluffy.
which is a pretty good start.
renters liability explained
your friend comes over.
you just mopped the floor. it’s wet.
you forgot to tell him.
he slips. flies through the air.
and breaks his arm on your coffee table.
it is your fault. you are clumsy.
renters liability is your “i’m sorry i’m a clumsy oaf” fund.
it pays for your friend’s hospital bill.
it pays for his pain and suffering.
it protects you from being sued into oblivion.
because you are a danger to society.
but a well-insured one.
condo insurance (ho-6) walls-in coverage
your condo is a chocolate truffle in a big box of chocolates.
the condo association’s insurance covers the big box.
and the little paper cup your truffle sits in.
your condo insurance (ho-6) covers the good stuff.
the chocolate shell. the creamy ganache filling.
your floors. your paint. your fancy kitchen cabinets.
if someone takes a bite out of your wall.
your insurance fixes the chocolate.
the association just fixes the paper cup.
loss assessment coverage
the condo building’s elevator (the magic moving room) breaks.
it will cost 20,000 dollars to fix.
there are 20 units in the building.
the condo association doesn’t have enough money.
so it sends you a bill.
your share is 1,000 dollars.
this is a loss assessment. you are sad.
but wait.
your special loss assessment coverage kicks in.
it pays the 1,000 dollars for you.
the magic moving room is fixed.
and you are not broke.
it’s a lifesaver.
temporary living expenses
a fire in your neighbor’s apartment.
sends smoke and water into yours.
your apartment now smells like a swampy campfire.
you can’t live there for a month.
you are basically homeless.
this renters insurance benefit is your fairy godmother.
she waves her wand.
and pays for you to stay in a nice hotel.
she gives you money for food since your kitchen is gross.
she makes sure you have a safe, clean place to sleep.
until your swampy campfire is a home again.
roommate coverage conundrums
you and your roommate are two peas in a pod.
but your renters insurance is selfish.
it only cares about you. your pea.
if a thief breaks in and steals your laptop.
your insurance helps you get a new one.
if the thief also steals your roommate’s laptop.
your insurance says “not my pea, not my problem.”
your roommate just sits there, laptop-less and sad.
every pea needs its own insurance policy.
the myth of “i don’t own much”
you look around your apartment.
“i have nothing,” you say.
a cheap bed. an old tv. some clothes.
maybe 1,000 dollars worth of stuff. tops.
now imagine a fire burns it all to ash.
go to a store.
try to buy a new bed. a new dresser.
new shirts. new pants. new socks. new shoes.
a new microwave. new forks. new towels.
suddenly, your “nothing” costs 15,000 dollars to replace.
the myth is busted. you own a lot.
documenting your possessions
an insurance adjuster is a grumpy detective.
after a theft, he shows up with a clipboard.
“prove you owned a 60-inch tv,” he grunts.
you have no pictures. no receipts.
he does not believe you.
he offers you money for a tiny black-and-white tv.
this is why you document everything.
walk through your home with your phone.
video every single thing.
open the drawers. film the serial numbers.
now when the grumpy detective shows up.
you show him the movie.
checkmate. you get your big tv.
affordable peace of mind
you spend 20 dollars on brunch.
for eggs that are gone in 15 minutes.
you spend 15 dollars on a movie ticket.
for a movie you will forget tomorrow.
renters insurance is about 15-20 dollars a month.
for that, it protects literally everything you own.
from fire. from theft. from your own stupidity.
it is the single best and cheapest deal in the world.
it is buying a giant, invisible force field.
for the price of avocado toast.
motorcycle insurance essentials
your motorcycle is not a car.
it is a metal horse.
it is fast. loud. and tippy.
cars don’t see it. potholes try to eat it.
the risks are different.
you need special metal horse insurance.
it covers your medical bills when you inevitably fall off.
it covers your cool leather jacket and helmet.
it covers the bike when it slides into a ditch.
it is a special shield for a special kind of crazy.
boat and watercraft policies
your boat is your happy place.
a floating island of freedom.
but the water is a chaotic soup of danger.
other boats. hidden rocks. sudden storms. jet skis.
what happens when you hit a hidden sandbar.
and need a very expensive tow.
what happens if your boat sinks in a storm.
what happens if you crash into someone’s fancy yacht.
boat insurance is what happens.
it saves you from financial ruin.
so the water can stay your happy place.
rv and motorhome coverage
an rv is a house that moves.
which means it can get in a car crash.
and also have a kitchen fire.
at the same time.
it is a special kind of chaos.
you need a special hybrid policy.
part car insurance for the driving parts.
part home insurance for the living parts.
it covers your awning, your septic system, your satellite dish.
and your liability when your grandpa trips on your fold-out steps.
it’s a policy as weird and wonderful as the rv itself.
classic car agreed value
your 1967 Mustang is not a car.
it is a time machine.
a rolling piece of art.
a normal insurance company sees a 50-year-old car.
they think it’s worth 500 dollars.
you see a priceless legend.
agreed value is the solution.
you and the insurer hire an expert.
you all agree the car is worth 80,000 dollars.
you sign a paper.
if the car is totaled, that is the check you get.
80,000. no arguments. no low-ball offers.
just respect for the legend.
atv and off-road vehicle protection
your atv is a mud-loving monster truck for one.
it lives for dirt trails and questionable decisions.
your car insurance wants nothing to do with it.
your homeowners insurance laughs when you mention it.
it needs its own special mud-monster policy.
it covers theft from the trail.
it covers damage when you flip it into a ravine.
(don’t do that).
most important, it covers the big hospital bill.
when you crash into your friend’s mud-monster.
and you both need to be airlifted out.
travel trailer insurance
a travel trailer is a metal tent on wheels.
you pull it with your truck.
your truck insurance covers the trailer while you are driving.
if you swerve and it hits someone, you’re covered.
but the moment you unhook it at the campsite.
it becomes a tiny, stationary home.
your truck insurance goes on vacation.
you need trailer insurance for when it’s parked.
to cover theft of your stuff inside.
to cover a fire from your little stove.
or if a bear decides to use it as a scratching post.
golf cart liability
you are cruising in your golf cart.
in your quiet retirement village.
you are distracted by a beautiful flamingo.
you swerve.
and you drive directly into your neighbor’s prize-winning rose garden.
roses are everywhere. your neighbor is furious.
your homeowners insurance might not cover it.
you need golf cart insurance.
it’s cheap.
but it will pay to replant the entire garden.
and maybe buy your neighbor a very nice fruit basket.
it saves you from the wrath of the garden club.
snowmobile seasonal policies
your snowmobile is a snow-shark.
for 8 months a year, it sleeps in your shed.
it is a dormant, harmless shark.
for 4 months, it screams across frozen lakes.
it is an active, dangerous shark.
it is silly to pay for active-shark insurance.
when the shark is sleeping.
so you get a seasonal policy.
you have full, robust coverage in the winter.
and in the summer, it switches to a cheap storage-only policy.
just covering fire and theft.
it makes sense for the shark’s lifestyle.
custom parts and equipment
you bought a normal, boring jeep.
then you spent 20,000 dollars on it.
a giant lift kit. huge monster tires. a powerful winch.
a light bar that can be seen from space.
it is no longer a jeep.
it is a rock-crawling god.
your standard insurance policy only covers the normal, boring jeep parts.
if you roll it, they will give you money for boring, tiny tires.
you need custom parts coverage.
it specifically lists and covers your god-level upgrades.
so you can rebuild your monster exactly as it was.
lay-up and storage insurance
your beautiful speedboat is a summer creature.
in october, you pull it from the water.
you shrink-wrap it.
and you put it in a storage yard for the winter.
this is a “lay-up” period.
it can’t crash into another boat.
so you don’t need expensive liability coverage.
but a fire could sweep through the yard.
or a thief could steal its fancy motor.
lay-up insurance is a cheaper policy.
that only covers it for these storage-specific risks.
saving you money while your boat hibernates.
the extra layer of liability
your car insurance is a small umbrella.
it is good for a little rain shower.
a small accident.
an umbrella policy is a giant golf umbrella.
you cause a huge, expensive, multi-car pileup.
it is not a rain shower. it is a hurricane.
your small umbrella is useless.
you need the giant umbrella.
it covers everything and keeps you dry.
when you really mess up.
when your auto limits aren’t enough
your car insurance has a money bucket.
it holds 300,000 dollars.
you cause an accident that hurts a brain surgeon.
the total bill is 1 million dollars.
your bucket is empty.
but you still owe 700,000 dollars.
they are going to take your house. your dog. your future.
your umbrella policy is a giant, magic lake of money.
it easily fills the rest of the bill.
your dog is safe.
your future is safe.
the lake saved you.
protecting your future earnings
you cause a very bad accident.
the court decides you owe millions.
you don’t have millions.
so they will take your money forever.
a piece of every paycheck you ever earn.
for the rest of your life.
you are now working for the person you hit.
this is a sad life.
an umbrella policy is a force field.
it steps in and pays that massive bill.
the court is happy.
your future paychecks are safe inside your force field.
you get to keep your own money.
the libel and slander clause
you get angry on the internet.
you write a very mean review about a business.
you call the owner a clown who sells garbage.
it was a lie. you were just mad.
he sues you for a lot of money for ruining his business.
this is libel.
your homeowners policy just laughs.
it does not cover your big mouth.
but your umbrella policy does.
it pays for your dumb, angry words.
so you don’t go broke because of a tweet.
defense costs outside your limit
you get sued for that huge car accident.
the lawsuit lasts for two years.
the lawyers are very expensive.
they cost 200,000 dollars.
your regular auto policy pays for the lawyers.
but that money comes out of your 300,000 dollar bucket.
so now you only have 100,000 left for the actual damages.
not good.
an umbrella policy pays the lawyer bills separately.
from a different bucket of money.
so your main bucket stays full.
it’s like having a whole separate insurance policy.
just for lawyers.
the self-insured retention (sir)
imagine your umbrella policy covers something.
that your home or auto policy does not.
like that libel lawsuit for calling someone a clown.
your home policy offers zero dollars.
the umbrella policy will help.
but first, you have to pay a little bit.
like a deductible. this is the sir.
maybe 1,000 dollars.
you pay the first 1,000.
then the umbrella’s giant lake of money.
pays the rest of the massive clown-related lawsuit.
global coverage benefits
you are on vacation in italy.
you are renting a scooter.
you crash the scooter into a famous statue.
the statue’s arm falls off.
italy is very mad. they want millions of euros.
your american car insurance policy does not work in italy.
it is on vacation too.
you are in big trouble.
but your umbrella policy is a world traveler.
it works almost anywhere.
it pays to fix the statue.
and saves you from an international incident.
who needs an umbrella policy?
you have worked hard.
you have a nice house. some savings. a good job.
this is your big, beautiful sandcastle.
you are proud of your sandcastle.
a lawsuit is a giant wave.
it can wash your entire sandcastle away in one second.
the more you have, the bigger a target you are.
an umbrella policy is a giant seawall.
it protects your beautiful sandcastle from the big waves.
so you can keep what you built.
high-value asset protection
your assets are your precious jewels.
your house is a diamond.
your stock portfolio is a pile of rubies.
your fancy car is a sapphire.
you have a nice collection of jewels.
a lawsuit is a master thief.
coming to steal all your jewels.
your normal insurance is a flimsy lock on the door.
an umbrella policy is a giant, thick, steel vault.
with lasers and sharks.
it is the ultimate protection for your most valuable things.
the thief does not stand a chance.
the million-dollar safety net
your homeowners and auto insurance.
they are a small trampoline.
if you have a small fall, a fender bender.
you bounce right back. boing. you are fine.
but what if you fall from the roof of a skyscraper.
a catastrophic lawsuit.
you will go right through that little trampoline.
splat.
an umbrella policy is a giant, fireman-style safety net.
held underneath the trampoline.
it is there to catch you in the worst possible fall.
and save your life.
the national flood insurance program (nfip)
your house is a sugar cube.
a flood is a big cup of hot coffee.
your homeowners insurance does not cover coffee spills.
your sugar cube will melt.
the nfip is the government.
they show up in a big, slow, official boat.
they are the only ones who will sell you sugar cube insurance.
it can be clunky and complicated.
but when the coffee is rising.
you will be very glad you are on the list for their boat.
what standard homeowners excludes
your homeowners policy is a cat.
it is very good at protecting you from certain things.
like fires (catching the red mouse).
and theft (scaring away the burglar raccoon).
but if a flood (a giant swimming pool) appears in your living room.
the cat will just stare at it.
then run and hide under the bed.
it does not do swimming pools.
it is an exclusion.
it is not the cat’s job.
private flood insurance options
the government’s flood boat (the nfip) is one-size-fits-all.
the coverage is limited.
the rules are very strict.
it’s like a government-issued cheese sandwich.
it’s better than nothing. but not great.
private flood insurance is like a fancy deli.
you can buy a bigger, better sandwich.
with more cheese and better bread.
it often has higher limits and more options.
it can be cheaper and faster.
you are no longer stuck with the government cheese.
earthquake damage coverage
your house is a beautiful house of cards.
an earthquake is a giant, clumsy puppy.
bumping into the table you built it on.
your house falls down.
it is a sad pile of cards.
your homeowners insurance does not cover clumsy puppies.
it is a specific exclusion.
you need to buy a special, separate policy.
an earthquake endorsement.
it is puppy insurance.
it pays to rebuild your beautiful house of cards.
volcano and lava flow policies
a volcano is your neighbor’s new barbecue pit.
except it is a million times bigger.
and it is very, very angry.
one day, it erupts.
and sends a river of hot, melted cheese (lava) right for your house.
your house is a cracker.
your homeowners policy does not cover cheese-related disasters.
you need special volcano insurance.
in most places it is part of fire coverage.
but in hawaii, you need a specific policy.
to protect your cracker from the angry barbecue.
sinkhole endorsements
the ground beneath your house is a big brownie.
a sinkhole is when a giant, invisible spoon.
scoops out a huge chunk of the brownie.
right under your foundation.
your house cracks and falls into the hole.
this is very bad.
this is not covered by your normal policy.
it is a brownie-scooping exclusion.
if you live in a place like florida.
where the brownie is soft and full of holes.
you need a sinkhole endorsement.
to protect you from the spoon.
landslide and mudflow protection
your house sits at the bottom of a big hill of pudding.
one day, it rains very hard.
the pudding gets soft.
and the whole hill slides down.
a river of mud and pudding buries your house.
your house is now a raisin in a pudding cup.
your homeowners policy says no.
your flood policy also says no.
this is considered “earth movement.”
you need a very rare, very specific policy.
for pudding-related disasters.
it is hard to get and very expensive.
the waiting period trap
you see on the news.
a giant hurricane named bob is coming.
bob is bringing a lot of water.
you think “i should buy flood insurance.”
you call an agent. you buy a policy.
you are very smart.
too bad.
there is a 30-day waiting period.
the insurance does not start for a month.
bob arrives in three days.
your house floods.
your new policy just waves at you from the shore.
you were not smart enough.
understanding flood zones
some houses are built in the middle of a dry desert.
this is flood zone x.
the risk of a flood is very low. like a chihuahua.
flood insurance here is very cheap.
some houses are built right next to a big, angry river.
this is flood zone a.
the risk of a flood is very high. like a great white shark.
flood insurance here is very expensive.
and required if you have a mortgage.
know if you live with a chihuahua or a shark.
post-disaster claim stories
a hurricane hits.
10,000 houses are flooded.
everyone calls their insurance company at the same time.
the phone lines are busy for days.
adjusters are overwhelmed.
there are not enough contractors to rebuild.
supplies are scarce.
your claim is a little paper boat in a giant ocean of other paper boats.
it takes months.
you have to be patient. you have to be organized.
it is a second full-time job.
getting your life back is a slow, frustrating marathon.
not a sprint.
accident-only vs. comprehensive plans
your dog is a chaos agent.
an accident-only plan is for when he does something stupid.
eats a bee. jumps off the roof. runs into a wall.
it covers the ER visit for his bad decisions.
it is cheaper.
a comprehensive plan covers the stupid stuff.
plus sickness.
like when he gets dog cancer. or a weird skin thing. or the flu.
it covers almost everything.
it costs more. but dogs are very good at getting sick.
the pre-existing condition clause
you adopt a cute little cat.
the cat has a limp.
the shelter said he was born that way.
you buy pet insurance the next day.
a month later, you take him to the vet for his limp.
the insurance company will not pay.
the limp was there before you bought the policy.
it is a pre-existing condition.
it is like buying fire insurance when your kitchen is already on fire.
they will not cover the fire that was already burning.
wellness and routine care riders
your pet insurance is for surprises.
a broken leg. eating a sock. a sudden illness.
it is not for the normal, boring stuff.
a wellness rider is a special add-on.
it is for the boring stuff.
it helps pay for the yearly check-up.
the vaccines. the teeth cleaning. the flea medicine.
it is like a health savings account for your pet.
it makes being a responsible pet owner a little cheaper.
the reimbursement model explained
your cat gets sick.
you take him to the vet.
the vet says “that will be 2,000 dollars.”
you cry a little.
you pay the 2,000 dollars on your credit card.
then, you send the vet bill to your pet insurance company.
they look at your policy.
they do some math.
and they send you a check back for 1,600 dollars.
you get reimbursed.
you still have to have the money or credit up front.
exotic pet coverage challenges
you have a pet parrot named kevin.
kevin is very smart. and very expensive.
you want insurance for kevin.
most pet insurance companies only know about dogs and cats.
they do not understand parrots.
what if he gets beak-and-feather disease.
what if he needs a tiny parrot mri.
you have to find a special, niche insurance company.
that speaks fluent parrot.
it will not be cheap.
hereditary and congenital conditions
a bulldog is born to have problems.
its cute smushed face makes it hard to breathe.
its wrinkly skin gets infected.
its hips are a mess.
these are hereditary and congenital conditions.
they are baked into the breed.
some insurance plans will not cover these known issues.
they see it as a ticking time bomb.
you need to find a good policy.
that specifically says it will help you pay.
when your bulldog’s factory settings start to fail.
choosing your deductible and limit
your pet insurance is a deal you make.
the deductible is the amount you agree to pay first.
a high deductible of 1,000 dollars means a cheap monthly bill.
but you have to pay a lot before they help.
the limit is the most they will ever pay.
a low limit of 5,000 dollars a year might not be enough.
if your pet gets cancer.
you have to balance what you can afford each month.
with how big of a disaster you want to be ready for.
the cost of emergency vet visits
it is 3 a.m.
your dog ate a whole bag of chocolate.
he is very sick.
you rush him to the 24/hour emergency vet hospital.
the lights are very bright.
everyone looks very tired and very expensive.
they save your dog’s life.
and hand you a bill for 6,000 dollars.
this is not a normal vet visit. this is an emergency.
pet insurance is built for this exact moment.
it is a financial life raft in a sea of 3 a.m. panic.
the age and breed factor
insuring a 2-year-old mixed-breed puppy.
is very cheap.
he is a blank slate of good health.
insuring a 10-year-old golden retriever.
is very expensive.
he is old. he is a breed known for cancer.
he is a walking, lovable, pre-existing condition.
the insurance company knows this.
they will charge you more because the risk is so much higher.
get it when they’re young.
is pet insurance worth it?
you pay 50 dollars a month for your dog’s insurance.
that is 600 dollars a year.
for three years, nothing happens.
you have spent 1,800 dollars. and gotten nothing.
you think “this is a scam.”
then, year four.
your dog gets hit by a car.
he needs two surgeries. it costs 12,000 dollars.
your insurance covers 90% of it.
you pay 1,200 dollars instead of 12,000.
suddenly, it is very, very worth it.
it is a lottery ticket for bad luck.
trip cancellation and interruption
you planned a dream trip to the beach.
two days before you leave, you get super sick.
you can’t go.
all that money for the flight and hotel is gone.
unless you have trip cancellation.
it gives you your money back.
interruption is when you are already on the beach.
and you get a call that a family member is sick.
you have to fly home right away.
it pays for the last-minute flight home.
and the part of the trip you didn’t get to use.
emergency medical evacuation
you are hiking in the remote mountains of peru.
you slip and break your leg in three places.
the local hospital is a small hut with no doctor.
you need to get to a major hospital in the capital city.
fast.
your health insurance will not help you here.
this is where evacuation coverage is a superhero.
it pays for a private medical helicopter.
to come rescue you off the mountain.
and fly you to a real hospital.
it can cost 100,000 dollars. it saves your life.
lost luggage nightmares
the airline loses your suitcase.
it had everything in it.
your nice clothes for the wedding.
your swimsuits. your medicine. your toothbrush.
you are in a foreign country.
with only the clothes on your back.
this is a nightmare.
lost luggage coverage gives you a pile of cash.
so you can go buy new clothes.
new medicine. a new toothbrush.
it doesn’t fix the frustration.
but it lets you survive the nightmare.
without wearing the same stinky shirt for a week.
travel delay reimbursement
your flight is delayed for 24 hours.
because of a snowstorm.
you are stuck at the airport.
you have nowhere to sleep.
you are hungry and angry.
travel delay coverage is your fairy godmother.
it gives you money.
to go get a hotel room near the airport.
to eat a decent meal.
to buy a book.
it turns a miserable night on the airport floor.
into a boring but comfortable night in a bed.
“cancel for any reason” policies
this is the god-tier of cancellation coverage.
it is very expensive.
but it is very powerful.
you can cancel your trip for literally any reason.
your boss is being a jerk and you need to work.
your dog looks sad and you don’t want to leave him.
you just have a bad feeling about the trip.
it does not matter.
as long as you cancel in time.
you get most of your money back.
it is insurance for your anxiety.
pre-existing medical conditions
you have a heart condition.
you are stable, but it’s a known issue.
you buy travel insurance for your cruise.
on the cruise, you have a heart-related problem.
if you did not get a special policy.
that specifically covers pre-existing conditions.
the insurance company will not pay your medical bills.
they will say “we told you we don’t cover that.”
you have to be honest about your health.
and buy the right plan. or you have no coverage at all.
adventure sports exclusions
you are going to new zealand.
you plan to go bungee jumping.
and skydiving.
and whitewater rafting.
you are an adrenaline junkie.
your standard travel insurance policy.
thinks you are insane.
it has an “exclusions” list.
and all of your fun activities are on it.
if you get hurt bungee jumping.
it will not pay.
you need to buy a special, extra “adventure pack” for your policy.
rental car damage waivers
you are at the rental car counter.
the agent is trying to scare you.
into buying their expensive insurance waiver.
it costs 30 dollars a day.
“if you get one scratch, you’ll be sorry.”
but wait.
you check your fancy travel insurance policy.
it often includes rental car coverage.
for way cheaper than the rental company charges.
your credit card might have it too.
always check before you get to the counter.
and save yourself from the scare tactics.
the 24/7 assistance lifeline
it’s midnight in tokyo.
your wallet and passport have been stolen.
you don’t speak japanese.
you are alone and panicking.
what do you do.
you call the 24/7 assistance number on your policy.
a calm person who speaks english answers.
they tell you how to contact the embassy.
they help you cancel your credit cards.
they can even arrange for an emergency cash transfer.
it is a magic phone number.
that connects you to a global problem-solver.
annual vs. single-trip plans
a single-trip plan is like buying one donut.
you are going to paris for a week.
you buy a policy just for that trip.
it covers you. then it’s done.
an annual plan is like buying a “donut a month for a year” subscription.
if you travel 3, 4, 5 times a year.
it is way cheaper and easier.
to buy one policy that covers all your trips.
for the whole year.
it is for people whose suitcase is never fully unpacked.
the cost of restoring your name
your good name is a clean, white t-shirt.
a thief steals your name.
and wears your t-shirt to a mud wrestling party.
your shirt is now filthy. ruined.
it takes hundreds of hours.
and lots of phone calls and special soap.
to scrub the shirt clean again.
this insurance pays for the expensive soap.
and for the time you missed from work.
while you were scrubbing.
credit monitoring services
your credit score is a very important, sleeping kitten.
credit monitoring is a tiny security guard.
who watches the kitten 24/7.
if a bad person tries to poke the kitten.
or pick it up.
the security guard’s alarm goes off.
he sends you a text.
“hey. someone is poking your kitten.”
so you can stop them.
data breach notifications
you gave your secret cookie recipe (your data) to a big company.
they put it in a giant cookie jar with a million other recipes.
a sneaky raccoon breaks into the jar.
and steals a bunch of recipes. including yours.
the company is required to send you a letter.
“dear friend. a raccoon has your cookie recipe. sorry.”
this is a data breach notification.
it’s a warning that a raccoon is on the loose.
lost wallet assistance
your wallet is a toolbox full of your most important tools.
your driver’s license wrench.
your credit card screwdrivers.
one day, you lose your whole toolbox.
you can’t do anything. you are stuck.
this service is like a magic button.
you press it. you make one phone call.
a helper immediately starts canceling your old tools.
and ordering you all new ones.
the toolbox is refilled for you.
cyberbullying and ransomware
cyberbullying is when mean people on the internet.
throw digital spitballs at you.
over and over.
it can make you very sad and cost money to fix.
ransomware is when a digital dragon.
locks up your computer-castle.
and says “pay me 1,000 gold coins or i will burn it down.”
this insurance helps you hire knights.
to fight the spitballers and the dragon.
legal fees and expense reimbursement
fixing your stolen identity is a legal marathon.
you have to file police reports.
swear in front of lawyers.
mail certified letters.
all these things cost money. lots of money.
this insurance is a big wallet.
that pays for all the annoying little costs.
the lawyers. the postage. the notary stamps.
it makes sure the process of getting your name back.
doesn’t also make you broke.
the emotional toll of theft
identity theft is a ghost that haunts you.
it makes you feel scared. angry. and stupid.
you don’t trust the phone. or your email.
you have trouble sleeping.
you need to talk to a professional ghost hunter (a therapist).
good identity theft insurance.
will help pay for the therapist.
it knows that the worst part of the crime.
isn’t the money.
it’s the feeling that a ghost is wearing your clothes.
proactive vs. reactive protection
reactive is a smoke detector.
it only screams after your house is already on fire.
it’s helpful. but the damage has started.
most identity theft services are reactive.
proactive is a little robot that lives in your house.
and looks for sparks.
it sniffs for gas leaks.
it stops the fire from ever starting.
this is much better.
but much harder to do.
the rise of synthetic identity fraud
this is a frankenstein monster.
a thief takes a real social security number from a kid.
a fake name from a hat.
and a fake address.
he stitches them together.
and creates a brand new, fake person.
this monster then gets credit cards and loans.
it lives a whole fake life.
and ruins the kid’s credit before he’s even old enough to drive.
it is a very sneaky, very modern monster.
protecting your digital footprint
every time you go online.
you leave little footprints in the digital sand.
your name. your birthday. your pictures. your location.
thieves are very good at following these footprints.
and using them to build a map of your life.
this service is like a digital broom.
it helps you sweep away some of your old footprints.
it makes the map harder for the thieves to read.
so they can’t find their way to your front door.
scheduling jewelry and fine art
your regular home insurance covers your regular stuff.
your toasters. your socks. your lamps.
your diamond necklace is not a toaster.
it is a tiny, sparkly unicorn.
you cannot put a unicorn in a regular policy.
you have to “schedule” it.
give it its own special unicorn insurance.
with a big, magical limit.
so if the unicorn runs away, you can buy a new one.
the mysterious disappearance clause
your expensive watch is a pet rock.
you love it.
one day, you go to get your pet rock.
and it is just… gone.
it was not stolen. there was no fire.
it vanished into thin air. poof.
this special clause in your policy.
covers you for the “poof.”
it is insurance for when your things.
decide to become tiny magicians and disappear.
appraisal requirements
you say your painting is a priceless masterpiece.
your insurance company says “prove it.”
an appraisal is when you hire a fancy art expert.
to look at your painting.
and write an official letter that says:
“yes, this is a very fancy painting worth 100,000 dollars.”
now the insurance company believes you.
protecting wine and spirits collections
your wine collection is a library of sleepy grape juice.
it is very old. and very valuable.
but it is also very sensitive.
a power outage could ruin the temperature.
an earthquake could break the bottles.
you need special insurance for your sleepy juice.
it covers spoilage from equipment failure.
and breakage from clumsy accidents.
it protects your liquid investment.
firearms and collectibles
your gun collection is a very specific, very valuable set of tools.
your stamp collection is a book of tiny, expensive stickers.
your normal homeowners policy is scared of these things.
it has very low limits for them.
like 1,500 dollars.
if your collection is worth more than that.
you need a special policy.
a rider. an endorsement.
to properly cover your expensive tools or stickers.
musical instrument coverage
your cello is not just a big wooden violin.
it is your partner. it is your voice.
it is also a very fragile, very expensive piece of wood.
you take it on planes. you play it in crowded rooms.
danger is everywhere.
you need special musician’s insurance.
it covers it if it gets dropped.
if it gets stolen from a green room.
if an airline decides to use it as a soccer ball.
it protects your partner.
damage during transit
you are moving to a new house.
you hire movers to transport your priceless statue of a squirrel.
the movers drop the squirrel.
its tiny marble tail breaks off.
a tragedy.
your normal policy might not cover this.
because the squirrel was not in your house. it was in a truck.
valuable articles insurance often includes transit coverage.
so your squirrel is protected.
even when it’s on an adventure.
worldwide coverage for valuables
you are wearing your fancy diamond ring.
on vacation in paris.
you are so happy. you are eating a croissant.
a thief on a scooter zips by.
and snatches the ring right off your finger.
you are now very sad in paris.
but your special jewelry policy has worldwide coverage.
it doesn’t matter if the ring was stolen in ohio or in paris.
it is still covered.
so you can get your money back.
and buy a lot of croissants to feel better.
the “vault” requirement
you own a famous, giant diamond.
the doom diamond.
the insurance company is very nervous about this.
they will give you a policy.
but only if you agree to their rules.
“the diamond must be kept in a bank vault.”
“it cannot be in a shoebox under your bed.”
this is a vault requirement.
inflation guard for your collection
you bought a famous painting for 50,000 dollars in 1990.
you insured it for 50,000 dollars.
today, that painting is worth 500,000 dollars.
if it gets stolen, your old policy will only give you 50,000.
that is a big problem.
inflation guard automatically increases your coverage amount.
a little bit each year.
to keep up with the rising value of your art.
so you are not stuck with 1990 prices.
premises and operations liability
your business is a monkey.
premises liability is when someone comes to visit your monkey.
and your monkey bites them.
the bite happened on your property.
operations liability is when you take your monkey somewhere else.
to perform a job, like fixing a cable box.
and your monkey bites the customer in their own home.
both bites are your fault. this insurance pays for them.
products-completed operations
you are a baker. you make a cake for a wedding.
the wedding happens. the cake is eaten.
your job is completed.
a week later, everyone from the wedding gets very sick.
it was your cake. bad eggs.
this insurance protects you from your own bad cake.
long after you have sold it.
it covers the harm your product causes.
out in the world. after it has left your hands.
the bodily injury claim
a customer is in your store.
you just mopped the floor. it is wet.
there is no sign.
the customer slips, flies, and lands on their head.
ow. ow. ow.
this is bodily injury.
this part of your liability policy.
is a big pot of money.
to pay for the customer’s hospital bills.
their ambulance ride. their missed work.
all because of your slippery, slippery floor.
property damage explained
you own a painting company.
you are painting the inside of a fancy house.
you trip.
and you spill an entire gallon of red paint.
all over a giant, white, fluffy, expensive sofa.
the sofa is ruined.
this is property damage.
you damaged someone else’s property.
your general liability insurance.
will pay to buy them a new fluffy, white sofa.
it pays for your clumsy mistakes.
personal and advertising injury
this is when you hurt someone’s feelings or reputation.
not their body.
you run an ad that says your competitor’s pizza tastes like garbage.
he sues you for slander.
or you use a picture in your ad that you didn’t have permission for.
this is not about slipping and falling.
it is about words and ideas.
it protects you when your marketing department.
gets a little too spicy.
medical payments for others
a customer is in your shop.
they trip over their own feet and get a small cut.
it is not your fault. but they are bleeding a little.
and they look sad.
medical payments coverage is a small pot of “goodwill” money.
you can use it to pay for their stitches.
right away. no questions asked.
it is to make them feel better.
so they don’t get mad and decide to sue you later.
it’s a small fix for a small problem.
damage to premises rented to you
you are renting a small office space.
one night, you leave a space heater on.
and it starts a small fire.
the fire damages the wall and the carpet.
the landlord is very angry. he wants you to pay.
your general liability policy.
has a special section just for this.
it pays for the damage you cause.
to the space that you are renting.
so your angry landlord doesn’t sue you.
the “occurrence” trigger
an occurrence is an event. a happening.
most liability policies are “occurrence” based.
this means the policy that pays the claim.
is the one that was active when the event happened.
you installed a bad pipe in 2020.
it slowly leaks for three years.
and causes a huge flood in 2023.
your 2020 policy is the one that has to pay.
because that is when the “occurrence” (the bad installation) happened.
third-party lawsuit defense
a person sues your business.
they say your product exploded and ruined their life.
it is a lie. your product is very safe.
but you still have to hire lawyers.
and go to court to prove it.
lawyers are very, very expensive.
your liability policy pays for these lawyers.
it pays for your legal defense.
even if the lawsuit is totally fake and crazy.
it is your financial shield against legal attacks.
the certificate of insurance (coi)
a coi is a report card for your insurance.
it is a one-page summary.
that proves you have insurance.
and shows how much you have.
a client wants to hire your construction company.
but they are scared you will break something.
they say “show me your coi.”
you show them the paper.
it proves you have a big liability policy.
they feel safe. you get the job.
protecting your building
your business is in a big, beautiful building.
the building is a sandcastle.
a hurricane is a giant, angry toddler.
who comes and kicks down your sandcastle.
now you have no building. just a pile of wet sand.
commercial property insurance.
is a magic bucket and shovel.
it gives you the money to rebuild your sandcastle.
exactly as it was before the toddler got angry.
business personal property (bpp)
bpp is all the stuff inside your sandcastle.
your desks are tiny chairs made of shells.
your computers are shiny pieces of sea glass.
your inventory is a pile of pretty pebbles.
when the angry toddler kicks your sandcastle.
all your shell chairs and glass computers get scattered and lost.
this coverage buys you all new stuff.
to put inside your newly built sandcastle.
business interruption coverage
the toddler has destroyed your sandcastle.
it will take three months to rebuild.
for those three months, you cannot sell your pretty pebbles.
you are making no money.
but you still have to pay your bills.
you are going broke.
business interruption is a magic money-seashell.
it pays your lost profits and your normal expenses.
while your business is closed.
it keeps you alive until you can reopen your castle.
extra expense insurance
your sandcastle is gone.
but you have a huge order for 1,000 pretty pebbles.
due next week.
you have to keep the business running. somehow.
extra expense insurance pays for the crazy, extra costs.
of operating in a disaster.
it pays to rent a temporary tent down the beach.
it pays to have computers delivered overnight.
it pays whatever it takes to stay open.
the coinsurance penalty
your sandcastle is worth 100,000 dollars.
the insurance company says “you must insure it for at least 80% of its value.”
that is 80,000 dollars.
but you are cheap. you only insure it for 40,000 dollars.
this is a bad idea.
a fire causes 20,000 dollars in damage.
the company sees you were cheap.
they say “you only bought half the insurance you were supposed to.”
“so we will only pay half of your claim.”
they give you 10,000 dollars.
you are punished for being cheap.
equipment breakdown
your business has a giant, important machine.
it is the heart of your company.
one day, the machine’s internal motor just explodes.
shrapnel everywhere. it is broken.
it was not a fire. it was not a flood.
it just… broke.
standard property insurance does not cover this.
it covers external threats.
equipment breakdown covers the internal ones.
it pays to fix or replace your machine.
when it decides to self-destruct.
inland marine for movable property
your business has a very expensive tool.
a fancy camera.
it does not stay in your building.
it travels all over the country. to different job sites.
it lives in a van.
your standard property policy only covers stuff at your address.
inland marine insurance is for property that wanders.
it is a special policy for your traveling camera.
so it is protected wherever it goes.
builder’s risk for construction
you are building a brand new sandcastle.
it is only half-finished.
it has walls, but no roof yet.
a big storm comes and washes away your half-built walls.
builder’s risk is insurance for a building that isn’t done yet.
it protects the materials. the supplies.
and the partially completed structure.
from disasters that happen during construction.
so you can start over without losing all your money.
commercial flood policies
your business is in a low-lying area.
next to a river.
your standard property policy has a big exclusion.
a giant stamp that says “no floods.”
it thinks floods are too risky.
so you must buy a separate, special flood policy.
from the government or a private insurer.
it is the only thing that will protect your building and your stuff.
when the angry river decides to visit your office.
the peril of arson
arson is a very angry, very sneaky dragon.
it is not an accident.
it is when someone burns down your building on purpose.
maybe a rival business. maybe a random crazy person.
commercial property insurance covers fire.
and it does not care if the fire was an accident or a dragon.
it will still pay to rebuild your building.
then, the insurance company’s investigators.
will go hunt the dragon for you.
the no-fault system
in most states, if two cars crash.
you have to figure out who was the bad driver.
it takes a long time. lots of fighting.
in a no-fault state.
it doesn’t matter who was the bad driver.
if you are injured.
your own workers’ comp insurance pays for your medical bills.
right away.
it is a system designed to be faster.
and have less arguing.
medical benefits for injured workers
your employee is a bee.
he is working in your honey factory.
he slips and falls and breaks his little bee wing.
he cannot fly. he cannot work.
workers’ comp pays for the bee hospital.
it pays for the doctors to fix his wing.
it pays for his medicine.
it covers 100% of the medical costs.
to get the bee healthy again.
so he can get back to making honey.
disability and lost wages
the bee’s wing is broken.
the doctor says he cannot work for two months.
but the bee has bills to pay. rent on his beehive.
he is very worried about money.
workers’ comp pays the bee a part of his normal salary.
while he is sitting at home, healing.
it is not his full paycheck.
but it is enough to keep him from going broke.
it replaces his lost wages.
vocational rehabilitation
the bee’s wing never heals quite right.
he can’t fly well enough to work in the high-speed honey department anymore.
his career is over. he is very sad.
vocational rehabilitation is a special service.
it pays to retrain the bee for a new job.
maybe a desk job, like a honey-taster.
or a security guard.
it helps an injured worker find a new way to work.
when they can’t do their old job anymore.
employer’s liability (part b)
workers’ comp (part a) stops the employee from suing you.
most of the time.
but sometimes, they still can.
maybe they claim you intentionally tried to hurt them.
or the injury was caused by extreme negligence.
part b, employer’s liability, is your backup shield.
if an employee finds a loophole and sues you over their injury.
this part of the policy pays for the lawyers.
and the potential settlement.
it is protection for when part a is not enough.
the experience modification rate (e-mod)
an e-mod is a report card for your company’s safety.
the average, normal score is 1.0.
if you have lots of accidents and hurt workers.
your score goes up. maybe to a 1.5.
this means your insurance will be 50% more expensive.
you are being punished for being unsafe.
if you are very safe and have no accidents.
your score goes down. maybe to a 0.75.
you get a 25% discount.
you are being rewarded for being safe.
state-funded vs. private insurance
in most states, you buy workers’ comp from a normal insurance company.
like geico or progressive. this is private insurance.
you can shop around for the best price.
in a few states, like ohio and washington.
you have to buy it from a giant, state-run monopoly fund.
there is no shopping. there is no competition.
you pay what the state tells you to pay.
it is like having only one place in town to buy milk.
the dangers of misclassifying employees
you hire a worker.
you want to save money.
so you call them an “independent contractor.”
you don’t pay for their taxes or their workers’ comp.
you are very clever.
then, the worker gets hurt on the job.
the state investigates.
they say “this person is not a contractor. he is an employee.”
you are in huge trouble.
you have to pay for the injury yourself.
and you get giant fines for cheating.
it is a very expensive mistake.
navigating return-to-work programs
your employee, the bee, is healing.
he can’t do his old job.
but he can do a simple, one-winged job.
like answering the phone.
this is a light-duty, return-to-work program.
getting him back in the office, even for simple tasks.
is good for him. he is not bored at home.
it is good for you. it lowers the cost of the claim.
it is a smart way to get everyone back on track.
the premium audit process
when you buy your policy.
you guess what your payroll will be for the year.
you pay a premium based on that guess.
at the end of the year, an auditor shows up.
he looks at your actual payroll records.
if you paid more people than you guessed.
you owe more money.
if you paid less than you guessed.
you get some money back.
it is a final exam to make sure you paid the right amount.
errors and omissions explained
you are a professional. an architect. a consultant.
you give advice for a living.
errors and omissions (e&o) is for when your advice is bad.
an “error” is when you make a mistake. a typo. a bad calculation.
an “omission” is when you forget to do something important.
a client follows your bad advice.
and loses a lot of money.
they sue you.
e&o insurance pays for your expensive brain-mistakes.
protecting against negligence claims
negligence is a fancy word for being sloppy.
you are a lawyer.
you forget to file an important paper by the deadline.
your client loses their case because of your mistake.
this is professional negligence.
the client sues you for malpractice.
they claim your sloppiness ruined their life.
e&o insurance is your shield.
it pays for your defense. and for the settlement.
it protects your career from your own human error.
the “claims-made” policy form
a claims-made policy is a tricky box.
it only covers claims that are made against you.
while the policy is active.
you make a mistake in 2022. when you have policy a.
the client doesn’t discover it and sue you until 2024.
by then, you have switched to policy b.
policy a will not help you. it is expired.
policy b will not help you. the mistake happened before it started.
you are in a coverage gap.
this is the danger of a claims-made policy.
retroactive dates and prior acts
a retroactive date is a magical time machine.
you buy a new claims-made policy in 2024.
the insurer agrees to set your “retro date” back to 2020.
this means your new policy.
will cover claims made today.
for mistakes you made anytime after 2020.
it covers your “prior acts.”
it closes the gap.
and protects you from the ghosts of your past mistakes.
the hammer clause in settlements
your client sues you for 1 million dollars.
the insurance company wants to settle.
they negotiate a deal for 200,000 dollars.
they think it’s a good deal.
but you say no. “i am innocent! i want to fight in court!”
the hammer clause says:
“ok. you can refuse. but if you lose in court.”
“we will only pay the 200,000 we wanted to settle for.”
“you have to pay the other 800,000 yourself.”
it is a hammer to force you to accept a reasonable settlement.
industry-specific e&o policies
a doctor’s mistakes are very different.
from a real estate agent’s mistakes.
one involves a misplaced comma in a contract.
the other involves a misplaced scalpel in a person.
you need an e&o policy that is built for your job.
it speaks your language.
it understands your unique risks.
a generic, one-size-fits-all policy.
is a recipe for disaster.
malpractice insurance for doctors
this is a super-powered e&o policy for medical heroes.
the stakes are higher. life and death.
the lawsuits are for millions of dollars.
so the insurance is very, very expensive.
it protects a doctor when a surgery goes wrong.
or a diagnosis is missed.
it is the shield that allows them to practice medicine.
without being terrified of financial ruin.
every single day.
coverage for financial advice
you are a financial advisor.
you tell your client to invest all their money in a new company.
that makes silly hats for squirrels.
the company goes bankrupt.
your client loses their entire life savings.
they are very, very angry.
they sue you for giving them terrible advice.
your e&o policy is what stands between you.
and a lifetime of angry phone calls.
and financial ruin.
it is insurance for your bad stock picks.
defending your professional reputation
a client sues you.
even if you win the lawsuit, your reputation is damaged.
people hear your name and think “isn’t that the guy who got sued?”
good e&o policies include money for a public relations firm.
a pr expert can help you clear your name.
issue press releases.
and repair the damage done to your good reputation.
it is insurance for your legacy.
the cost of a frivolous lawsuit
a crazy client sues you for a billion dollars.
they claim your bad haircut advice.
caused them to be abducted by aliens.
the lawsuit is completely insane.
the judge will throw it out immediately.
but you still had to hire a lawyer.
to show up and say “your honor, this is insane.”
that lawyer still costs 10,000 dollars.
e&o insurance pays for that lawyer.
it protects you from the cost of fighting.
even the dumbest, most ridiculous accusations.
any auto, hired auto, non-owned auto
these are insurance symbols. they are codes.
“any auto” (symbol 1) is the king. it covers any car, truck, or van.
the ones you own. the ones you hire. the ones your employees drive.
it is the best and most expensive coverage.
“hired auto” covers cars you rent or borrow.
“non-owned auto” covers your employee.
using their own personal car for your business errands.
it is a menu of options for your car risk.
symbols and their meanings
on your commercial auto policy.
there is a little box with numbers in it.
symbols 1 through 9.
each number is a secret code.
that tells you exactly what kind of vehicles are covered.
symbol 7 means “specifically described autos.”
only the cars on the list are covered.
symbol 8 means “hired autos only.”
you have to learn the secret code.
to understand what your policy actually does.
employee use of personal vehicles
your employee, sally, needs to go to the post office.
she drives her own honda civic.
on the way, she crashes into a bus full of lawyers.
it is a very expensive accident.
because she was on an errand for you.
your business is getting sued.
your business needs “non-owned auto” coverage.
it protects the company.
when an employee has an accident.
while using their own car for your work.
fleet safety programs
you own a fleet of 50 pizza delivery cars.
your drivers are teenagers. they are crazy.
they crash a lot. your insurance is super expensive.
a fleet safety program is a plan to stop the crazy.
you install gps monitors in the cars.
you have strict rules about speeding.
you train your drivers on safety.
if you can prove you are serious about safety.
your insurance company will give you a big discount.
the mcs-90 endorsement for truckers
a big semi-truck is a rolling earthquake.
if it crashes, it can cause a huge, terrible mess.
a normal insurance policy might not be enough to clean it up.
the mcs-90 is a special promise.
attached to a trucker’s insurance policy.
it promises the public.
that no matter what, the insurer has enough money (usually 750,000 or more).
to pay for any environmental cleanup or public injury.
it is a guarantee of financial responsibility.
cargo and freight liability
you are a trucker.
you are hauling a truck full of 100,000 dollars worth of new iphones.
you take a turn too fast. the truck tips over.
all the iphones are smashed.
apple is very, very mad.
your auto liability pays for the other cars you hit.
cargo insurance pays for the stuff inside your trailer.
it pays apple for their smashed iphones.
so you don’t have to.
on-hook towing coverage
you own a tow truck.
you are towing a brand new mercedes.
you hit a pothole.
the mercedes falls off your hook.
and rolls into a lake.
the car’s owner is having a very bad day.
on-hook coverage is special insurance for tow truck drivers.
it pays for the damage you cause.
to the car you are towing.
it protects you from the expensive mistake.
of dropping someone else’s car.
the impact of driver records
you hire two new drivers.
bob is 50 years old and has a perfect driving record.
he is a golden angel of the road.
insuring bob is very cheap.
dave is 22 years old and has three speeding tickets.
and a dui. he is a chaos goblin behind the wheel.
insuring dave is very, very expensive.
the driving records (mvr) of your employees.
are one of the biggest factors in your insurance price.
telematics and fleet monitoring
telematics is a tattletale you install in your trucks.
it is a little gps box.
it tells you if your drivers are speeding.
if they are braking too hard.
if they are taking long, unapproved naps.
you can use this information to train your drivers.
and prove to your insurance company that you are safe.
it is like having a tiny supervisor.
riding shotgun in every single truck.
and it can save you a lot of money.
the difference from personal auto
a personal auto policy is a little puppy.
it is designed to cover you driving your family to the store.
it is simple. and has low limits.
a commercial auto policy is a giant, armored watchdog.
it is designed to cover a dump truck.
or a business van making deliveries all day.
the risks are bigger. the trucks are heavier.
the lawsuits are for more money.
so the policy is much stronger, more complex, and more expensive.
first-party vs. third-party coverage
a hacker is a dragon.
the dragon burns down your lemonade stand.
first-party coverage pays to rebuild your stand.
it is for your stuff.
the dragon also burns down your neighbor’s flower garden.
your neighbor is mad and sues you.
third-party coverage pays your angry neighbor.
it is for their stuff.
data breach response costs
a thief steals your mailing list.
it has all your customers’ secret addresses.
your customers are scared and angry.
this insurance pays for the cleanup crew.
it pays to mail apology letters.
it pays to give everyone free credit monitoring.
it pays to make your customers feel safe again.
it is a very expensive cleanup.
ransomware attack reimbursement
a digital goblin locks your computer with a magic spell.
a message appears.
“pay me 100 bitcoins or you will never see your files again.”
this is ransomware.
you pay the goblin.
he gives you the magic key.
this insurance is a special pot of gold.
it gives you the money back that you paid the goblin.
so you are not broke because of magic.
business interruption from hacks
your toy factory is run by a happy robot.
a hacker gives your robot a computer virus.
the robot gets confused and stops working.
your factory is shut down for a week.
you are making no toys. you are losing money.
cyber business interruption coverage.
pays you the money you would have made that week.
it keeps your business alive while the robot is at the doctor.
regulatory fines and penalties (gdpr, ccpa)
you lose a lot of your european customers’ data.
the kings of europe (gdpr) are very strict about this.
they send you a giant bill.
a fine for being careless with their people’s secrets.
it is for a million euros.
your cyber policy has a special bag of money.
just for paying angry kings and governments.
it pays the fine so you don’t have to go to euro-jail.
the cost of public relations
a data breach makes you look like a clumsy fool.
the news calls you “the company that can’t keep a secret.”
all your customers are leaving.
your reputation is mud.
this coverage pays for a “reputation wizard.”
a public relations expert.
they go on tv and cast spells.
to make everyone trust you again.
it is very expensive magic.
social engineering fraud
you get an email.
it looks like it’s from your boss, the ceo.
“i am on a secret mission. please wire 50,000 dollars to this bank account immediately.”
you do it. because he is the boss.
it was a trick. a fake boss. a clever thief.
this insurance covers you for being too trusting.
it gives you the 50,000 dollars back.
it is insurance for your own gullibility.
the human error element
your employee is kevin.
kevin is a sweet person, but he is tired.
he gets a weird email with a link that says “free puppies.”
kevin loves puppies.
he clicks the link.
it unleashes a virus that destroys everything.
it was kevin’s fault.
90% of cyber attacks are because of a kevin.
a tired, curious human clicking a bad thing.
this insurance is really just kevin insurance.
cybersecurity best practices
your company’s data is a pile of gold.
cybersecurity is the castle you build around it.
with a big moat. and strong walls. and archers.
(firewalls, multi-factor authentication, training).
if you have a good castle.
the insurance company sees you are smart.
they will give you a cheaper price for your policy.
they reward you for not being an easy target.
the rise of deepfake threats
a deepfake is a magic potion.
it can make a video of your ceo.
saying things he never said.
“hello everyone. the company is bankrupt. we are all doomed.”
the video looks perfectly real.
this causes chaos and panic.
it is a new, powerful, scary kind of magic.
cyber insurance is racing to create new spells.
to fight this new kind of monster.
protecting personal assets of leaders
the captain of a big ship makes a bad decision.
the ship crashes.
the ship’s owners sue the captain personally.
they want to take his house. his car. his savings.
his personal treasure chest.
directors & officers (d&o) insurance is a personal bodyguard for the captain.
it protects his personal treasure chest from the angry ship owners.
side a, b, and c coverage
this is a three-layered shield for the ship’s captain.
side a is the captain’s personal shield. it pays when the company can’t.
side b is the company’s shield. it pays the company back for defending the captain.
side c is a shield for the company itself when it gets sued.
three shields for three different kinds of cannonball attacks.
lawsuits from shareholders
the people who own little pieces of the ship are shareholders.
the captain decides to paint the whole ship pink.
the shareholders hate it. the value of the ship plummets.
they all get together and sue the captain for his bad pink-painting decision.
d&o insurance pays for the pink paint lawsuit.
claims from employees (epli)
a sailor is fired by the captain.
the sailor claims he was fired because he is a pirate.
this is discrimination. he sues the captain.
this is usually covered by a separate policy called epli.
but sometimes it can be bundled with d&o.
it protects leaders from angry crew members.
regulatory and criminal investigations
the king’s royal navy thinks the captain might be breaking the law.
they launch a big investigation.
the captain needs to hire a very expensive lawyer.
even if he is innocent.
d&o insurance pays for that lawyer from the very beginning.
it is a legal war chest.
to help the leaders defend themselves against the king.
the fiduciary duty standard
a captain has a sacred duty.
to always act in the best interest of the ship and its owners.
this is fiduciary duty.
if he uses the ship’s money to buy himself a solid gold hat.
he has broken his duty.
and he will be sued into oblivion.
non-profit d&o risks
the leader of a charity that saves sad puppies.
can still get sued.
a big donor can claim their money was wasted.
a volunteer can claim they were treated unfairly.
even leaders of good deeds need a bodyguard.
the bankruptcy cut-off
the ship company runs out of money and sinks.
it goes bankrupt.
it cannot help the captain anymore.
all the company’s shields are gone.
the only thing left is the captain’s personal shield.
side a coverage. it is his last line of defense.
entity vs. insureds coverage
“insureds” coverage is for the people.
the captain and his officers.
“entity” coverage is for the ship itself.
the company.
when the company is sued along with the leaders.
d&o can protect the whole gang.
the cost of mismanagement allegations
someone claims the captain is bad at his job.
he is always drunk. he steers the ship terribly.
this is an allegation of mismanagement.
it might be a lie.
but the captain still has to spend a fortune on lawyers.
to prove he is a good, sober captain.
d&o pays for this defense.
the three-party agreement
a surety bond is a promise made by three people.
you (the principal). you promise to do a thing.
the person who needs the promise (the obligee).
the surety company. the rich uncle who backs up your promise.
if you break your promise, your rich uncle pays.
and then you have to pay him back.
contract bonds (performance, payment)
you are hired to build a big lego castle.
a performance bond is a promise that you will finish the castle.
a payment bond is a promise that you will pay the workers who helped you.
they are guarantees that you are a good and honest lego builder.
commercial surety bonds (license, permit)
you want to be a professional dog walker.
the city says you need a license.
and to get a license, you need a bond.
the bond is a promise to the city.
that you will follow all the dog-walking rules.
and not be a bad dog walker.
fidelity bonds for employee theft
you own a cookie shop.
you hire a new cashier.
the cashier is a secret cookie monster.
he steals cookies and money from the register every night.
a fidelity bond pays you back for the cookies and money your employee stole.
the janitorial services bond
you hire a cleaning crew for your office.
they have the keys. they come in at night.
what if they steal your computers.
this bond protects your business from the cleaning crew.
it is insurance against dishonest janitors.
erisa bonds for pension plans
the person who manages your company’s retirement fund.
is in charge of a giant pot of money.
an erisa bond is a special lock on that pot.
it protects the retirement money.
from being stolen or badly managed by that person.
the role of the underwriter
the surety underwriter is a promise-judge.
he looks at your history. your money. your character.
he decides if you are the kind of person who keeps their promises.
if he thinks you are honorable.
he will approve your bond.
protecting against dishonesty
insurance pays for accidents.
bonds protect against lies.
they are a financial tool to make sure people do what they say they will do.
and to protect you when they are intentionally dishonest.
it is a shield against crooks.
indemnity agreements
a bond is not insurance. it is credit.
when you get a bond, you sign an indemnity agreement.
it is a paper that says:
“if the surety has to pay because i messed up,”
“i promise to pay the surety back for every penny.”
you are on the hook.
when a bond claim is made
you promised to build the lego castle. but you quit.
the client files a claim with your surety.
the surety investigates.
they hire a new builder to finish the castle. and they pay for it.
then the surety sends you a very large bill.
it is a very bad day for you.
the small business package
a business owner’s policy (bop) is a pre-made lunchbox.
for a small business.
inside, you get a peanut butter sandwich (property insurance).
and a juice box (liability insurance).
all packed together and ready to go.
combining property and liability
it is the peanut butter sandwich and the juice box.
in the same lunchbox.
one protects your stuff.
the other protects you when you make a mess.
it is a simple, perfect combo.
eligibility and industry classes
not every business can order the lunchbox.
it is only for small, safe businesses.
like a small office or a little flower shop.
a fireworks factory or a skydiving school (a risky business).
is not eligible. they need a much bigger, special lunch.
built-in endorsements
the lunchbox comes with extra snacks already inside.
a bag of chips (business interruption coverage).
and a cookie (equipment breakdown).
these little extras are built right in.
you don’t have to order them separately.
the convenience of one policy
one lunchbox.
one price.
one insurance company to call when you are hungry.
or when you spill your juice.
it is the easiest way to pack your insurance lunch.
limitations of a bop
the lunchbox is small.
it is not enough food for a big, growing company.
the sandwich is a standard size. the juice box is small.
if you need more protection, or have weird risks.
the lunchbox is not for you.
when to graduate to a cpp
a cpp (commercial package policy) is an all-you-can-eat buffet.
when your business gets big and complicated.
you need more than a simple lunchbox.
you need to go to the buffet.
and build your own giant plate of custom coverages.
optional coverage add-ons
most lunchboxes are standard.
but sometimes, you can pay a little extra.
to add a brownie (a special coverage).
or a different kind of juice box.
you can customize your lunchbox a little bit.
streamlining small business insurance
the bop was invented to make life easy.
for the millions of small shop owners.
who do not have time to become insurance experts.
it is the “simple button” for business insurance.
cost-effective risk management
buying the lunchbox.
is almost always cheaper than buying the sandwich and the juice box separately.
the insurance company gives you a discount.
for buying the convenient, pre-made package.
it is a smart, easy, cheap solution.
extending liability limits
your business has a big umbrella for rain (your liability policy).
it covers you for 1 million dollars.
a commercial umbrella policy is a giant, invisible tent.
that you put over your normal umbrella.
it adds another 5, 10, or 50 million dollars of protection on top.
following form explained
the giant tent is lazy.
it doesn’t have its own rules.
it just agrees to “follow the form” of the little umbrella underneath it.
if the little umbrella covers a certain type of rain.
the big tent also covers that type of rain.
dropping down for broader coverage
sometimes the little umbrella has a hole in it.
a weird type of accident it won’t cover.
sometimes, the big tent is better.
and it will “drop down” to cover that hole.
acting as the primary insurance when your main policy can’t.
catastrophic loss scenarios
a truly terrible, company-killing disaster happens.
a hurricane of a lawsuit.
your little umbrella is instantly shredded.
it is a 10-million-dollar storm.
only the giant tent can save you now.
when primary policies are exhausted
your little umbrella can only hold so much rain.
(1 million dollars).
once it is full to the brim, it is useless.
the umbrella policy is a giant bucket.
that catches all the overflow.
after your primary policies are completely used up.
protecting your business’s future
one huge, freak accident.
one catastrophic lawsuit.
can wipe out a 50-year-old company in a single day.
an umbrella policy is the one thing.
that can stand between your healthy business and total bankruptcy.
the high cost of a single event
a single highway pileup caused by your truck.
a faulty product that hurts hundreds of people.
a poorly-maintained crane that collapses.
these are not small mistakes.
these are multi-million-dollar disasters.
that happen in a single, terrible moment.
required by contracts
you want to do business with a huge, important customer.
like walmart or the government.
they will look at your tiny little umbrella.
and they will laugh.
they will demand you buy a giant tent (an umbrella policy).
before they will even talk to you.
global business operations
your little american umbrella.
might not work in your new factory in germany.
a good commercial umbrella policy is a world traveler.
it provides coverage for your business.
no matter where on the planet you cause a mess.
the ultimate safety net
it is the final shield.
the last line of defense.
it is the insurance you buy, hoping you will never, ever need it.
it is the “what if the absolute worst thing imaginable happens” policy.
it is the ultimate peace of mind.
the health insurance marketplace
it is a giant website.
a supermarket of health insurance plans.
you go there. you put in your information.
and all the different brands of health-cereal.
appear on the shelf for you to choose from.
bronze, silver, gold, platinum tiers
the cereal comes in four boxes.
bronze is the cheapest. but has a huge deductible (you pay a lot).
platinum is the most expensive. but it pays for almost everything.
silver is the most popular. it’s the honey nut cheerios of health plans.
gold is for people who want to pay more for better benefits.
the power of the premium tax credit
if you don’t make a lot of money.
the government will give you a magic coupon.
a tax credit.
it makes the price of the cereal much cheaper.
for some people, the cereal becomes almost free.
it is a very powerful coupon.
understanding your deductible
the deductible is the amount of doctor bills you have to pay yourself.
before the insurance company starts to help.
it is a giant pile of money you have to climb over first.
a bronze plan has a giant, scary mountain.
a platinum plan has a tiny little hill.
copayments vs. coinsurance
a copay is a small, flat fee.
you pay 25 dollars every time you see the doctor. like an entry fee.
coinsurance is a percentage.
after you meet your deductible, you pay 20% of all future bills.
it is the difference between a small toll and a permanent tax.
the out-of-pocket maximum
this is a magical safety net.
it is the absolute most you will have to pay for medical care in one year.
if you have a terrible year and your bills are a million dollars.
once you have paid your maximum (maybe 8,000 dollars).
the insurance pays 100% of everything else.
it protects you from bankruptcy.
hmo, ppo, epo, and pos networks
these are clubs of doctors.
an hmo is a very strict club. you can only see their doctors.
a ppo is a relaxed club. you can see anyone, but it’s cheaper if you stay in the club.
epo is like an hmo, but sometimes bigger.
pos is a hybrid. it’s all very confusing.
the special enrollment period
the health insurance supermarket is only open in the fall.
this is open enrollment.
but if you have a baby, or lose your job, or get married.
a secret door to the supermarket opens just for you.
this is a special enrollment period.
it lets you shop when everyone else can’t.
short-term medical plans
this is not real insurance.
it is a plastic toy that looks like insurance.
it is cheap. and it does not cover anything.
pre-existing conditions. prescriptions. maternity care. no.
it is for healthy people who want to gamble for a few months.
it is a terrible idea for almost everyone.
catastrophic health policies
this is for young, invincible people under 30.
it is a very, very cheap plan.
with a giant, terrifyingly high deductible.
it covers basically nothing.
until you have a true catastrophe.
like getting hit by a bus.
it is a “hit by a bus” plan.
the employer-sponsored model
most people in america get their health insurance from their boss.
it is a benefit of the job.
like a parking spot or free coffee.
the company is a big boat.
and the health plan is a giant life raft attached to it.
small group vs. large group plans
a small business with 10 employees.
has to buy insurance from the small group market.
it is more expensive and has more rules.
a giant company with 10,000 employees.
has more power. they get better prices and more options.
it is better to be in a big boat.
the employee contribution
your boss pays for most of the health plan.
but not all of it.
a little bit of the cost is taken out of your paycheck every month.
this is your contribution.
you are helping your boss paddle the boat.
open enrollment season
once a year, usually in the fall.
your boss says “it’s time to choose your life raft for next year.”
they give you a menu of options.
plan a, plan b, or plan c.
you have two weeks to decide.
then your choice is locked in for a whole year.
the summary of benefits and coverage (sbc)
this is a simple, easy-to-read map of your life raft.
the government designed it.
it tells you what the deductible is.
what the copays are.
it lets you compare plan a and plan b fairly.
it is a very helpful map.
cobra continuation coverage
you get fired from your job.
you are no longer on the company boat.
but the law says the company has to let you stay on their life raft.
for up to 18 months.
the catch: you now have to pay the full, gigantic price yourself.
it is very expensive.
the rise of self-funded plans
a really big company gets tired of paying an insurance company.
they decide to build their own life raft.
they pay their employees’ medical bills directly from their own bank account.
it is risky. but it can save a lot of money.
they become their own insurance company.
level-funded health plans
a small company wants to be like a big company.
they want to self-fund, but they are too small and scared.
a level-funded plan is a self-funding plan with training wheels.
it lets them pay a flat, level amount each month.
and gives them special insurance to protect from a huge claim.
employee assistance programs (eaps)
this is a secret, free lifeboat that comes with your main life raft.
if you are feeling sad, or stressed, or having problems.
you can call the eap.
and they will connect you with a therapist or a counselor for free.
it is a mental health first aid kit.
the cadillac tax myth
this was a scary monster that lived in the affordable care act.
it was supposed to be a giant tax.
on companies that offered really fancy, expensive health plans.
“cadillac” plans.
everyone was scared of the monster.
but congress kept delaying it, and then they killed it.
the monster is dead. it never came to life.
medicare part a: hospital insurance
when you turn 65, you get medicare.
part a is your hospital room.
if you get admitted to the hospital, part a pays for your bed and your food.
you paid for it your whole life through taxes.
so it is mostly free.
medicare part b: medical insurance
part b is your doctor insurance.
it pays for your regular check-ups, your lab tests, and your specialist visits.
it is not free.
you have to pay a monthly premium for it.
that comes right out of your social security check.
medicare part d: prescription drugs
medicare does not cover your pills.
you have to buy a separate, private plan for that.
from a company like humana or unitedhealthcare.
this is part d.
it is a very confusing world of different plans and prices.
the medicare advantage plan (part c)
this is an all-in-one package.
a private company takes over your medicare.
they bundle part a, part b, and usually part d into one plan.
it often has extra benefits, like dental or vision.
it is like trading in your government-issue parts for a private-company car.
medigap supplemental insurance
medicare has holes. it doesn’t pay for everything.
there are deductibles and coinsurance.
a medigap plan is like spackle.
you buy it from a private company.
and it fills in the holes in original medicare.
it pays the bills that medicare doesn’t.
the donut hole explained
this is a famous, weird part of part d.
at the beginning of the year, your drug plan works great.
then, if you spend a certain amount, you fall into “the donut hole.”
suddenly, you have to pay much more for your drugs.
if you spend even more, you get out of the hole.
and your coverage is great again.
it is a strange and frustrating journey.
medicaid for low-income individuals
medicaid is a health care safety net.
it is for people who do not have a lot of money.
children, pregnant women, adults with disabilities, and the elderly.
it is run by each state.
and the rules are different everywhere.
the dual-eligible population
some people are old (they have medicare).
and they also have very low income (they have medicaid).
these people are “dual-eligible.”
they are a special group.
medicare is their primary insurance.
and medicaid helps pay for the things medicare doesn’t.
navigating medicare enrollment
when you turn 65, you have to enter the medicare maze.
you have a 7-month window to sign up.
if you sign up late for part b or part d.
you will be punished with a financial penalty.
for the rest of your life.
it is a very stressful and important maze.
the future of government healthcare
this is a giant, complicated, political tug-of-war.
one side wants to make it bigger and stronger.
the other side wants to make it smaller and more private.
they will be arguing about it forever.
it is the most expensive and complicated puzzle in the country.
preventive, basic, and major services
your teeth are tiny kitchen appliances.
preventive care is a gentle cleaning for your toaster.
insurance pays 100%.
basic care is fixing a small dent in your microwave.
a filling.
insurance pays 80%.
major care is when your whole refrigerator breaks down.
a crown or a root canal.
insurance gets nervous. it pays 50%.
you pay the rest.
the waiting period for major work
you buy a new fire extinguisher for your house.
the rule book says you can’t use it for six months.
tomorrow, your kitchen explodes.
it’s a major fire.
you have a fire extinguisher.
but you are not allowed to use it yet.
you just have to watch the fire burn.
this is very dumb.
annual maximums and deductibles
your dental insurance is a small bucket of water.
it holds 1,500 dollars.
this is your annual maximum.
the deductible is a little cup.
you have to fill that cup with your own money first.
then you can use the bucket.
if you have a big fire, the bucket will be empty very fast.
then your house is on your own.
in-network vs. out-of-network dentists
in-network dentists are members of a secret club.
they have a secret handshake.
and they have agreed to give you a discount.
they are cheaper.
out-of-network dentists are not in the club.
they think clubs are silly.
they charge whatever they want.
they are more expensive.
your insurance pays less for them.
orthodontia coverage for adults
your teeth are a row of crooked little soldiers.
braces will make them stand up straight.
most insurance plans think your crooked soldiers are “good enough.”
they see it as a cosmetic parade. not a real war.
they will not pay for adult soldiers to learn how to march.
you have to pay for the drill sergeant yourself.
the vision exam benefit
your eyes are two very important cameras.
a vision exam is when a camera expert.
checks your focus. your settings. and looks for dust inside.
most vision insurance thinks this is very important.
it will pay for the expert to check your cameras once a year.
usually for just a small copay.
frame and lens allowances
your glasses are the fancy case for your cameras.
your vision plan gives you a gift card.
it is worth 150 dollars.
this is your frame allowance.
you can buy any case you want.
but if you pick the designer case that costs 500 dollars.
you have to pay the extra 350.
contact lens coverage
contact lenses are tiny, invisible camera covers.
they are very magical.
your insurance usually makes you choose.
you can have the gift card for a new camera case (frames).
or you can have a gift card for a box of magic camera covers (contacts).
you cannot have both.
choose wisely.
the standalone plan advantage
getting vision and dental from your health plan.
is like getting a free, tiny spork with your meal.
it’s better than nothing. i guess.
a standalone plan that you buy separately.
is like having a real, heavy, shiny fork and spoon.
the benefits are better. the networks are bigger.
it is a real tool. not a toy spork.
the value of routine check-ups
a small problem in your tooth is a mouse.
a routine check-up finds the mouse.
it costs 100 dollars to trap the mouse.
if you skip your check-up.
the mouse invites all his friends.
they have a party. they start a fire.
now you have a dragon in your tooth.
it costs 5,000 dollars to fight the dragon.
go find the mouse.
the triple-tax advantage
an hsa is a magic wallet.
the money you put in is invisible to the tax man. (tax-free contribution).
the money grows inside the wallet with magic, invisible sparkles. (tax-free growth).
you take the money out to pay a doctor, and it is still invisible. (tax-free withdrawal).
it is a ghost wallet. the tax man can never see it.
high-deductible health plan (hdhp) requirement
to get the magic wallet.
you must first prove you are brave.
you must sign up for a health plan with a giant, scary deductible.
an hdhp.
it is a test.
if you are brave enough to face the giant deductible-monster.
you are worthy of the magic wallet.
qualified medical expenses
the magic wallet can only be opened at special stores.
the doctor store. the dentist store. the pharmacy store.
these are “qualified medical expenses.”
if you try to use the magic wallet at the toy store.
a loud alarm goes off.
and the tax man comes and takes a lot of your money as punishment.
the hsa as a retirement vehicle
if you don’t spend the money in the magic wallet.
it just stays there. and grows more sparkles. forever.
when you turn 65, the rules change.
you can now take the money to the toy store.
and the tax man is okay with it.
it becomes a secret, second retirement fund.
investing your hsa funds
the money in your magic wallet can learn to do tricks.
you can send it to an investment school.
where it can learn to grow much, much faster.
it is like planting your money-seeds in a magic garden.
so they grow into giant money-trees.
instead of just sitting in a wallet.
the catch-up contribution
when you are over 55.
the keeper of the magic wallets feels sorry for you.
he says “you are old. you need more magic.”
he lets you put an extra 1,000 dollars into your wallet each year.
it is a small bonus for having gray hair.
the portability of an hsa
the magic wallet belongs to you.
not your boss. not your job.
if you quit your job.
you pick up your wallet and you walk away.
it follows you everywhere you go.
for the rest of your life.
it is your magic wallet forever.
using an hsa for long-term care
when you are very, very old.
and you need to hire someone to help you live in your house.
this is very expensive.
but you have your magic wallet.
which is now a giant, overflowing treasure chest from 40 years of sparkles.
you can use it to pay for your helpers.
the difference from an fsa
an fsa is a sad, disappearing wallet.
you put money in it at the beginning of the year.
if you don’t spend it all by the end of the year.
poof. the money vanishes in a puff of smoke.
your boss keeps it.
an hsa wallet never disappears.
the health savings snowball
you put a small snowball of money at the top of a very long hill.
every year, you give it a little push.
as it rolls, it picks up more snow (interest).
the bigger it gets, the faster it grows.
after 30 years, you look down the hill.
and there is a giant, unstoppable avalanche of money waiting for you.
the cost of nursing home care
a nursing home is a hotel where a room costs 300 dollars a night.
and you can never, ever check out.
it will patiently and politely eat your entire life savings.
and then your house.
and then it will look at your children and ask “dessert?”
activities of daily living (adls)
these are the six things that prove you are still a functioning human.
eating. bathing. dressing.
toileting. continence. transferring (getting out of a chair).
if a doctor says you cannot do two of the six things.
the insurance company agrees you are officially broken.
and they start sending you checks.
the elimination period
you are officially broken. you need help now.
your long-term care policy says “great. so happy for you.”
“we will start paying you in 90 days.”
this is the elimination period.
it is a three-month waiting room.
where you have to pay for everything yourself. before they help.
daily and lifetime benefit maximums
the insurance company gives you a bucket of money for your care.
this is your lifetime maximum.
but they will only let you have one small cup of that money each day.
this is your daily maximum.
so you can’t spend it all at once on a fancy robot nurse.
you have to spend it slowly.
inflation protection riders
the cost of the sad hotel goes up every year.
a cup of money that is enough today.
will be a thimble of money in 20 years.
an inflation rider is a magic spell.
that makes your bucket and your cup get a little bigger.
every single year. so they stay useful.
in-home care vs. facility care
the insurance gives you money.
you can use that money to pay a nice person.
to come to your own house and help you.
this is in-home care.
or, you can use the money to pay for your room.
at the expensive sad hotel.
this is facility care.
partnership-qualified policies
this is a secret handshake with the government.
you buy a special, “partnership” approved policy.
you use up all the benefits. the bucket is empty.
but you still need more care.
you ask medicaid for help.
because you had the special policy.
medicaid will let you keep more of your own money.
it’s a reward for planning ahead.
the high cost of waiting
when you are 50, you are a healthy unicorn.
long-term care insurance is cheap.
when you are 70, you are a tired, old horse with a cough.
insurance is very expensive.
or they will just laugh at you and say “no thanks.”
buy it when you are a unicorn.
hybrid life/ltc policies
this is a magic life insurance policy that does two tricks.
trick one: if you get sick and need long-term care.
you can take money out of it while you are still alive to pay for your care.
trick two: if you die healthy.
it pays the whole pile of money to your kids.
it never goes to waste.
the future of senior care
soon there will be a giant tidal wave of old people.
more than ever before in history.
there will not be enough young people to take care of them.
the costs will be insane.
the solution will probably involve robots.
and a lot of broke families.
it is a slow-motion demographic crisis.
the lump-sum payout
you have a heart attack.
a few weeks later, after you survive.
the insurance company shows up with a wheelbarrow full of cash.
this is the lump-sum benefit.
it is yours to keep.
it is not attached to any medical bill.
it is just a pile of money for having a very bad day.
covering non-medical costs
your health insurance pays for the doctor who fixed your heart.
the wheelbarrow full of cash is for everything else.
your mortgage payment for the months you can’t work.
your groceries. your car payment.
a nice vacation to a place that is not a hospital.
it is life money. not medical money.
surviving a heart attack
your body is a machine.
a heart attack is when a critical part of the machine breaks.
you survive. but you are not the same.
you are tired. you are weak. you are scared.
you can’t go back to your stressful job for a long time.
this insurance pays you for the “surviving” part.
the financial toll of a stroke
a stroke can change your life in one second.
you might need to re-learn how to walk. or talk.
you might need to put a ramp on your house.
you might never work again.
the financial cost is a hidden, second stroke.
that can wipe out your family’s savings.
a cancer diagnosis story
one day, a doctor says the word “cancer.”
your world stops.
your new full-time job is sitting in waiting rooms.
and getting treatments that make you feel terrible.
you are too sick to do your old job.
but your bills don’t stop.
this insurance becomes your paycheck.
the list of covered conditions
this policy is a very picky club.
it only lets in a few specific diseases.
heart attack, stroke, cancer are the big three.
sometimes kidney failure or a major organ transplant.
if you get a rare, weird disease that is not on the list.
the club’s bouncer will not let you in. you get no money.
benefit triggers and waiting periods
you have to prove you are actually sick.
a doctor has to sign a form.
and you can’t die right away.
most policies have a “survival period.”
you have to stay alive for 14 or 30 days after the diagnosis.
before they give you the money.
supplementing your health insurance
health insurance is a shield.
it protects you from the dragon’s fire (the hospital bills).
critical illness insurance is a bag of gold.
it helps you rebuild your village.
after the dragon has gone.
you need both the shield and the gold.
the peace of mind benefit
life is a tightrope walk over a canyon.
a critical illness is a sudden, strong gust of wind.
this policy is a giant, bouncy safety net underneath you.
you might still fall.
but you know you won’t go splat at the bottom.
the walk is less scary with a net.
return of premium riders
you buy the safety net.
you pay for it for 25 years.
but you never fall off the tightrope. you are a great walker.
this special add-on says “congratulations.”
“here is all the money you paid for the net back.”
“thanks for being so healthy.”
the virtual doctor’s visit
a doctor’s visit is now a tv show.
you are the star. the doctor is on your laptop.
you can be in your pajamas.
the doctor can be in his pajamas.
it is called telehealth.
it is weirdly normal now.
24/7 access to healthcare
it is 3 a.m. your kid has a weird rash.
you don’t have to go to the scary emergency room.
you can just open an app.
and a sleepy-looking doctor will appear in five minutes.
to tell you it’s just ketchup.
and you should go back to bed.
the rise of remote monitoring
your apple watch is a spy.
it is watching your heart. your sleep. your blood oxygen.
it sends secret messages about you to your doctor.
if you are about to have a problem.
the doctor’s phone will get an alert.
your watch is a tattletale.
mental health therapy apps
you have a therapist that lives in your phone.
you can text them when you are sad.
you can have a video session when you are anxious.
it is therapy on demand.
it is cheaper and less scary than a couch in a quiet room.
digital prescription services
your doctor sends a magic signal.
from his computer to the pharmacy computer.
the pharmacy fills your pills.
and then a robot or a person in a car.
drives the pills to your front door a few hours later.
you never have to leave your house to get medicine again.
the impact on rural healthcare
you live on a farm.
the nearest specialist is 200 miles away.
it is an all-day trip.
but now, that specialist can just appear on your ipad.
telehealth brings the big-city doctors.
to the people who live next to cows.
insurance coverage for telehealth
at first, insurance companies were suspicious of the tv doctor.
then a pandemic happened.
and they said “we love the tv doctor! he is amazing!”
now, most insurance plans cover telehealth visits.
just like a normal, in-person visit.
the future of wearable tech
soon, your watch won’t just be a spy.
it will be a doctor.
it will analyze your sweat. it will monitor your blood sugar.
it will have tiny sensors that can predict a heart attack days in advance.
your watch will know you are sick before you do.
ai in medical diagnostics
an artificial intelligence is a robot brain in a computer.
you show it a million pictures of skin cancer.
it learns to be better at spotting skin cancer than any human doctor.
it can read an mri or an x-ray in a second.
and see things that human eyes miss.
the robots are coming. and they are very smart.
the privacy of your health data
all your secret health information.
is now a ghost floating in the cloud.
your watch knows when you sleep. your phone knows where you are.
the pharmacy knows what pills you take.
hackers would love to have a party with this information.
protecting the ghost is a very big, very scary job.
the middlemen of drug pricing
a pharmacy benefit manager (pbm) is a troll.
he lives on a bridge between the drug company and you.
no pill can get across the bridge without paying the troll a toll.
the troll is a very rich and powerful middleman.
and he is mostly invisible.
creating drug formularies
the troll has a secret list.
it is a list of the drugs he likes.
these are the only drugs he will let cross his bridge easily.
this is the formulary.
if your doctor prescribes a drug that is not on the list.
you are in for a long, annoying fight with the troll.
the rebate system explained
a drug company wants to get their new pill on the troll’s secret list.
so they secretly give the troll a giant bag of money.
this is a rebate.
the troll takes the money, smiles, and puts the pill on the list.
this secret bag of money is a huge reason why drugs are so expensive.
mail-order pharmacies
the troll owns his own pharmacy.
it is a giant warehouse with robots.
he really, really wants you to get your pills from his warehouse.
he will make it cheaper and easier for you.
so his warehouse can make even more money.
specialty drugs and high costs
a specialty drug is a magic potion for a rare disease.
it costs 100,000 dollars for one dose.
the troll sees this magic potion coming.
and he charges a giant, super-sized toll to let it cross his bridge.
he takes a big piece of that 100,000 dollars for himself.
the prior authorization hurdle
your doctor wants you to have a pill that is not on the troll’s list.
the troll says “no.”
your doctor now has to spend an hour on the phone.
arguing with the troll’s minions.
he has to fill out long, boring forms to prove you need it.
this is prior authorization. it is a giant wall of “no.”
step therapy requirements
you have a sore knee.
the troll says “first, you must try rubbing dirt on your knee for a month.”
“if that doesn’t work, you can try this cheap, useless pill.”
“if that doesn’t work, then maybe we will let you have the good medicine.”
this is step therapy.
it forces you to fail on cheaper drugs first.
the impact on your copay
the drug company gives the troll a giant rebate.
you would think that would make your price lower.
nope.
your copay is based on the fake, high price of the drug.
before the rebate.
the troll and the insurance company keep the rebate money.
the transparency debate
the troll’s entire business is a secret.
no one knows how much money he makes.
or who he makes it from.
people are starting to demand that the troll open his books.
and show everyone his secrets.
the troll does not want to do this.
the power of pbm negotiation
the troll is very big.
he buys pills for 100 million people.
he can go to the drug company and say:
“give me a 50% discount, or i will not put any of your pills on my list.”
he has the power to lower drug prices.
the big question is… does he?
healthcare for expats
you are an american flamingo.
you move to france to become a painter.
your american health insurance does not work in france.
it is scared of croissants and foreign germs.
you need special, international flamingo insurance.
global medical networks
the international insurance company.
gives you a map of all the doctors in paris.
who are not afraid of giant pink birds.
this is their global network.
it is a list of pre-approved, flamingo-friendly doctors.
emergency evacuation and repatriation
you get very, very sick in france.
the french doctors are confused. they have never seen a flamingo this sick.
this insurance pays for a special airplane with a giant nest.
to fly you back to a flamingo hospital in florida.
this is evacuation.
repatriation is if you die, and they fly your body home. morbid.
covering war and terrorism zones
you are a journalist flamingo.
you decide to go report from a very dangerous, war-torn jungle.
your normal international plan will not go with you.
it is a coward.
you need to buy a special, very brave policy.
that includes war and terrorism coverage.
the portability of global plans
a good international health plan is a backpack.
you can take it with you from france.
to japan. to brazil.
it works everywhere.
it is designed for a life of adventure.
and questionable decisions.
pre-existing conditions abroad
you had a bad wing before you moved to france.
many international plans will say:
“we will cover your beak and your legs. but not your bad wing.”
“that is a pre-existing condition.”
getting coverage for your old problems in a new country is very hard.
the cost of healthcare overseas
in some countries, a doctor’s visit costs less than a sandwich.
in other countries, it costs more than a car.
the prices are a wild rollercoaster.
an international health plan protects you from the expensive rollercoasters.
navigating different medical systems
in some countries, you have to bribe the nurse to get a clean pillow.
in others, you get a private room with a butler.
every country’s hospital is a new, weird adventure.
your insurance company often provides a helper.
to be your guide through the weirdness.
maternity and newborn care abroad
having a baby flamingo egg in a foreign nest.
is a very big deal.
you need a policy that specifically covers this.
many plans have a one-year waiting period.
so you can’t buy the insurance after you are already pregnant.
you have to plan ahead.
the short-term mission trip policy
you are going to peru for one week to build a school.
you do not need a big, expensive annual plan.
you just need a tiny little plan for one week.
in case you fall off a ladder.
or get bitten by a llama.
it is a small policy for a short trip.

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