What Is Insurance Good For? Let Us Count the Ways

A dad looks up at the ceiling where water is dripping while Mom, holding their toddler, is on the phone in the background.

(Image credit: Getty Images)

By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS

published 7 February 2025

What good is insurance? You have probably asked yourself this question countless times before. You have an insurance policy and pay the premiums, but what good is it, really? What is the true value of having an insurance policy? When do you utilize it, when do you keep it tucked away for the proverbial rainy day? Read on, young Padawan, and let me share 30 years of wisdom to answer these questions.

At its very foundation, insurance is there to reimburse you for a financial loss you have suffered. Period, mic drop, end of story. If you never have a loss, then you don’t need an insurance policy. The funny thing with losses, though, is their characteristic unpredictability. You just don’t know when or if something bad will happen. So accept this nugget of reality right off the bat: You may never in this lifetime have a need to utilize your insurance policy. And guess what? That is good. Very good, very lucky, very fortunate, because it means you have not suffered a loss. Keywords there — suffer and loss.

In truth, bad things happen to all of us, and the majority of us will in fact suffer a loss at some point, likely more than once in our lifetime. Some idiot will rear-end you while you’re on your way to work. A pipe will break in your house and flood the place. A storm will tear apart your roof. Some jerk will break the window of your car and steal your MacBook from the front seat. You’ll get hurt and need to see a doctor. You’ll get really hurt or sick and be unable to work. And yes, you are going to die, possibly leaving behind loved ones who depend on your financial support.

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In order to help you through these downturns, you need a backup plan, an assist, a phone-a-friend, and it’s called insurance.

Karl Susman

Karl is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies.

A need for car insurance and disability insurance

There are nearly 6 million car accidents every day in the U.S., according to the latest data from the Bureau of Transportation Statistics. That equates to about 680 accidents every hour. Every hour. So if you think you’ll never be involved in a car accident, think again. You will. It may or may not be your fault, but you’re going to go through that joy.

Having a strong insurance agent or broker and insurance company to back you up is one of the best things, if not the best thing, you can do to be prepared for that inevitability.

You may be in the “nothing can hurt me” phase of your 20s, the “some stuff can hurt other people” phase of your 30s or, like the rest of the population, in the “I don’t want to get hurt” phase. Regardless, thousands of people every day are injured to the extent that they are unable to work. Most people don’t have enough money saved to live without income, so in that case, a solid disability insurance policy would be your bestie.

A need for homeowners insurance

Homeownership. The American Dream. Work hard, save up and then, if the stars align, find a house or condominium you want to buy. Congratulations! Now take that hard-earned savings and hand it over to the bank while at the same time promising to pay them a large chunk of your income every month to boot. You are now a homeowner.

With that accomplishment comes the reality that ever day, thousands of people file claims for losses they have suffered in connection with their home. All that time, all that hard work, all that savings poured into that roof and four walls, and then Mother Nature or something else comes out of left field and takes a bite out of your home. I guarantee you that when that happens, one of the first calls you will make is to your insurance company to ask for help.

A need for life insurance

The old saying goes that the only things guaranteed in life are death and taxes. The time will come when you will die. Of course you will be missed. Know what else? The money you generated will be missed, too, by those you supported. A solid life insurance policy that pays out to your beneficiaries can literally be the difference between your loved ones staying in the family home or being out on the street.

I get it. The value of an insurance policy is sometimes difficult to see since, well, you’re not seeing it. Remember, if all you are doing right now is paying premiums and not filing any claims, that is the best place to be. The alternative means something bad has occurred, and in those circumstances, you will see exactly what insurance is good for.

Want to learn more about insurance? Visit KarlSusman.com.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Karl Susman is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies.