My Cegep philosophy classes are long behind me. Most of what I had learned back then is a complete blur. Thankfully, I remember bits and pieces of it once in a while. We had studied sophisms, a concept that is pretty vague when you’re 17 years old. But with time, the concept became clearer. To refresh your memory, sophisms are false arguments, a confusing or slightly incorrect argument used for deceiving someone. We’ve all had this kind of reasoning, including myself. However, that type of thought process should be avoided. Today, I will be doing a risky exercise to tie philosophy and insurance together.
“Because it has always been this way, it will always remain this way” is a sophism. A sophism takes into account the past by affirming that something that had always yielded a positive result in the past will always generate the same result going forward. In the insurance industry, such reasoning is rather risky. As an insured, you should never rely on the past to forecast the future — the past is not always an indication of what the future holds. Some insurers will base their insurance decisions on past history, which I strongly advise against. Here are a few mistakes to avoid in order to stay away from useless claims.
“My last water heater hasn’t leaked in 25 years, which means I won’t have to replace my next one before the 25-year mark…” Unfortunately, things are not made as solidly as before. What’s more, the quality of the water is variable from one region to the next and the effect of corrosion can act faster from one environment to another.
“In 15 years, I’ve never had sewer back-up so it doesn’t scare me.” It is important to know that rainfall has been heavier than in the past; we’ve all witnessed it in the past few weeks… And the city’s sewer system may have overspilled because of a new real estate development project.
“I’ve never had an accident in my life so please remove as many coverages as possible” And what if… Because you must always plan for the worst… What if you were in an accident and your car was a total loss? You mustn’t forget to calculate the actual impact of having to replace your car on your finances rather than paying a low premium that you’d be able to afford annually.
“My roof comes with a lifetime warranty and I’m not worried about water damage”… But as all warranties go, there are exclusions and contingencies! The manufacturer is not guaranteed to be in business for as long as his product will last and the warranty does not necessarily cover wear and tear, wind damage, shingles laying, etc.
“It’s okay, it can be dealt with next week. I doubt that there will be a fire this weekend…” Bear in mind that a fire will not warn its victims before striking!
Statistics show 1 in 10 or 20 clients will need to file a claim each year. Undoubtedly, your turn will not come every year, just like it would be abnormal for it to come too often. Ken Scott, a Quebec director, played a role a few years back in which his character said these words that ring very true: “The longer things have been going wrong, the closer you are to things going well.” Tell yourself the opposite — the longer things have been “going well”, the closer you are perhaps to “things going wrong”. Once you experience a loss, you will be happy to have been adequately covered even if at the time of purchasing the insurance you had told yourself that the chances of it happening were slim…