Many people did not know what is the right time for him to buy insurance. Well, to tell you the truth, I would advise you to buy insurance only when it’s the best and most cost-effective solution. Insurance can be one of the solution if you are given many options in treating your risk. If you can treat your risks with non-insurance strategies first then you probably should do it.

To make you clear and understand what I want to tell you by writing this, I would give you an example how this principle that being practices by many other works. Let say you have inherited grandmother’s heirloom sterling silver. It is very precious to you. So what come to your mind would be to provide the best coverage possible. Your agent will come and has you get an appraisal that costs you around $100. Then, you buy a special rider to your homeowner’s policy covering the silver’s appraised value of $10,000 at a premium of $90 a year.

One year later, burglars break into your home and they steal your precious heirloom. At the same time, the value of the silver increase to around $15,000. You collect the $10,000 insurance proceeds from policy. If you realize that you actually just suffered from three disappointments if you think back. The three disappointments would be: 

1. The $5,000 difference between the value if the stolen silver and the amount that insurance covered. It is a lot of money.
2. Your grandmother’s heirloom sterling silver would absolutely has been discontinued long time ago. For you to find the identical match of the silver would be very difficult.
3. Even if you manage to found one with the same pattern as your grandmother’s silver, it does not have the same sentimental value as the grandma’s exact set had.

The truth is insurance is not the best solution for managing this kind of risk. It is because the cash is a poor substitute for treasures that being safely kept by your grandmother. Other than that the hassle and cost of the appraisal and also the insurance premium that’s due every year will give you headache.

The smartest way and non-insurance method to manage the grandmother’s silver risk is to store the silver an off premises safe deposit box. Thus will prevent the lost almost entirely. If you think that this is not practical, maybe because you want to use the silver for special occasions, hide it well. This will reduce by about 90 percent the chance of a loss through theft. Also equip your house with central burglar alarm. This will further reduce the risk.

Always remember that when it comes to irreplaceable treasures, preventing the loss is a far better strategy than insurance, without the costs or the pitfalls of insurance coverage. Now you should understand why sometime insurance is not a good choice to replace what you have lost. It is good to know whether to buy insurance or not, its your choice.