Insurance and You

Buying insurance isn’t the easiest task in the world, in particular because if you’re like the rest of us, you have multiple policies for various things and much of it comes through a friendly smile at work that says ‘Sign here’ and you do. Below are some common FAQs about insurance.

1. What type of insurance do I need to have?
There are four basic areas you need to concern yourself when it comes to insurance. In general, the four large umbrellas relate to life insurance, insuring your finances, your health, and all of your worldly possessions–i.e., your things.

2. Car Insurance.
Car insurance is a no-brainer. You need it, period. There’s no way to get around that. All states require you have coverage on any vehicle that you drive–even if it just sits in your driveway. It’s also a great way not to have to take the full brunt of a car accident in terms of money–your car insurance will cover much of the repair costs after your deductible.

Liability protection covers bodily injury and property, which is where the money is likely going to go when you have an accident. You want to cover at least $100k worth per person, and another $100k-$300k for property. While it may hurt a little to pay a higher monthly payment, you should try to push your deductible up to cut your premium down some.

Clearly, however, the best insurance is a good driving record with good driving habits–defensive driving is a sure way to at least do your best when preventing accidents.

3. Homeowner’s insurance.
Homeowner’s insurance is a very important type of insurance because it protects what is likely your costliest investment. Guaranteed replacement coverage is a smart move–if you’re house is destroyed, guess what? Yep, you get a new one.

Make sure you know exactly what is covered and what isn’t covered. After hurrican Katrina, for instance, many homeowners lost their homes due to flood damage. While this may seem like it would have been covered under the insurance, it wasn’t. Many homeowners were stuck with skeletons for homes, and the insurance companies basically got out on a loophole. A little research and due diligence in advance can save you a lot of headache further down the road.

Make sure you also know the liability limits. You want to ensure that your insurance policy is covering everything you want it to cover. An umbrella policy, which covers everything under that umbrella, may be the ticket if you want to play it safe.

4. Life Insurance
Life insurance can seem like a waste of money, because you’ll be gone. But if you’re married, or have kids, life insurance is a must have if you want to ensure that your loved ones continue in the same lifestyle they’ve become accustomed to. If you’re married, you may want to cover both spouses–just because you’re the breadwinner doesn’t mean your stay-at-home spouse isn’t working. If they go, someone has to take over.

The above is by no means a comprehensive explanation of all insurance you should consider having, simply a quick guideline for you to begin your research. Good luck, and happy insurance hunting!