Risk prioritization vs. comprehensive coverage
The most essential difference between Coverage Cat and traditional insurance recommendations is the core concept:
- Risk control logicThe traditional approach advocates "comprehensive coverage", which transfers all risk through low limits and low deductibles, while Coverage Cat employs a "stop-loss mentality", which guides users to identify the maximum out-of-pocket loss they can afford (e.g., $5,000) before designing a High Deductible Program
- Premium allocation logic: Traditional programs often result in premiums being spread over small claims coverage; Coverage Cat will focus premium savings on purchasing multi-million dollar comprehensive liability insurance (Umbrella Insurance)
- Decision-making starting point: Unlike brokers who are sales-oriented, this tool emphasizes the concept of a "financial safety line", where the recommended insurance amount matches the user's total asset size to avoid major litigation leading to insolvency.
This answer comes from the articleCoverage Cat: An Insurance Allocation Tool to Optimize Individual RisksThe
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