Insurance Is the One Bill That Can Save You From Losing Everything

By Daniel Purvis | First-Year Business Administration & Entrepreneurship Student, UNC Chapel Hill

What insurance actually is:

• You pay a small amount regularly (your premium) to a company

• If something big goes wrong, they cover the loss instead of you

• You're not saving money — you're buying protection against bills that could wipe you out

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How deductibles and coinsurance work together:

• You're in an accident. The bill is $5,000

• Your policy has a $500 deductible and 20% coinsurance

• You pay the $500 first, then 20% of the remaining $4,500 = $900

• Your total out of pocket: $1,400

• Insurance covers the other $3,600

• Without coverage, you're writing a $5,000 check yourself

  
  

Why your credit score affects your premium:

• Lower credit score = higher insurance premiums

• Insurers charge more to people with lower scores because data shows they file more claims

• Building your credit isn't just about getting loans — it literally lowers your monthly insurance costs

  
  

Coverage that matters most right now:

• Health insurance — one ER visit without it can run $10,000+. Employer plan or ACA marketplace, just get covered

• Renters insurance — covers your belongings if your place is robbed or damaged, plus liability if someone gets hurt in your space. Costs about $15/month

• Auto insurance — required by law if you drive. Know what your policy actually covers before you need it

  
  

The mindset shift:

• Don't think about insurance as money wasted

• Think about it as the one bill that keeps a bad day from becoming a bad decade

• When you're young, insure against the big losses first — health, car, your belongings

• Raise your deductible to lower your premium, but only as high as you could actually afford to pay in an emergency

Start there. Add more coverage as your income and responsibilities grow.

Daniel Purvis is a first-year student at UNC Chapel Hill studying Business Administration and Entrepreneurship. Originally from Fairfax, VA, Daniel writes about financial literacy to make money concepts accessible and actionable for everyone.