Insurance Deductibles

When I was a Ford-Mercury dealer, I needed insurance for the business.  This insurance policy was normally referred to as Garage Keepers insurance.  One of the things it covered was damage or losses to vehicle inventory.  The majority of the policies at that time had a per vehicle deductible much the same as the deductible on your personal vehicle with your Family Auto policy.  For example, you might pay the first $100 to $500 of any damage claim.  This is fine for an individual, but presents a risk for an auto dealer. 

The problem with a per vehicle deductible for a dealer is that damage to a lot full of vehicles could be a catastrophic loss for the dealer.  Protecting against catastrophic loss is what insurance should do.  I knew a Ford dealer that had his entire new and used car inventory damaged by a hailstorm.  The damage per car was not huge, but the total damage was devastating.  Since he had a per vehicle deductible, the storm almost bankrupted the dealership. 

For this reason, I demanded an insurance policy with a Per Occurrence deductible instead of a per vehicle deductible.  Some companies would not write the policy at the time, but I found one that would.  By increasing the deductible amount, the premium remained the same.  This meant I had a higher deductible and loss when there was damage to a single vehicle, but I was limited to the same deductible for a catastrophic loss to many vehicles.  The free market system does work if we can keep the government out of it. 

In the early 1970’s car dealers still made a big deal of introducing the new models.  The introduction was usually done at night and dealers often made it a real party with food, drinks, balloons and spotlights in the sky.  Transport companies covered vehicles so the public could not see them until the day they were to be introduced.  I had rented the grandstand at the fair grounds to store and hide vehicles until the introduction day.  Some kids broke into the building and damaged almost all the vehicles.  It would have been a catastrophic loss if I had not had the Per Occurrence deductible. 

All insurance should be meant to protect against catastrophic losses and not first dollar loss that should be assumed risk.  How did we ever get into the mess we are in with health care and first dollar billing medical insurance?  See my blog of 3/8/2012 titled, “The Greatest Marketing Job Ever In The US.”

First dollar billing medical insurance is a joke.  With all this administrative cost, it is no wonder our total health care cost is five times what it should be, and anyone that thinks the federal government can handle this administrative cost better and cheaper than the private sector only has to look at history. 

        Think about the deductibles with medical insurance.  Your deductible is annual.  You start over ever year.  How does this protect you from a catastrophic illness or accident? If you are sick or hurt so you can’t work, how do you pay the premiums and deductible?  Catastrophic medical insurance should have a large deductible per illness or injury, and not an annual deductible.

        The only solution for affordable health care is catastrophic medical insurance with a large per illness or per injury detectable, and medical savings plans.  Why do we continue to look to the federal government and insurance to solve a problem they created?  The government can never to something as efficiently as the private sector with the exception of ……  Sorry, I can’t think of anything.