Insurance protects you from financial loss in the event of a disaster or other hardship. By purchasing insurance policies, you can receive reimbursement for losses due to car accidents, property theft, natural disasters, medical expenses, disability, or death.
Types of Insurance
Health insurance—helps pay your doctor’s visits and other health care expenses
Catastrophic health care insurance—covers certain types of expensive medical care, like hospitalizations
College tuition insurance—refunds college tuition if you must withdraw because of a serious injury or illness
Dental and vision insurance—helps pay your dental or vision care expenses
Identity theft insurance—reimburses you for the cost of restoring your identity and repairing credit reports if you're a victim of identity theft. This insurance may be part of your homeowner's insurance policy or a stand-alone policy.
International health care insurance—provides health coverage no matter where you are in the world. The policy term is flexible, so you can purchase it only for the time you will be out of the country.
Liability insurance—pays if you are sued for negligence or injury to another person
Host protection insurance—protects you if you rent your home out or use your car to drive others for a fee
Travel insurance—protects against losses during travel.There are four kinds of travel insurance: travel cancelation insurance, baggage or personal effects coverage, emergency medical coverage, and accidental death.
Umbrella insurance—supplements the insurance you already have for home, auto, and other personal property. Umbrella insurance can help cover costs that exceed the limits of other policies.
Every state requires that you carry minimum levels of auto insurance coverage, or the equivalent in financial responsibility waivers, to ensure that you can cover the cost of damages to people or property in the event of a car accident. Auto insurance requirements vary from state to state. Check with your state insurance regulator to learn more about requirements and low cost auto insurance programs.
Take these steps to get the best coverage and best price on your insurance premiums:
Get several quotes from insurance companies and comparison shop.
Consider working with an independent agent who works with several insurance companies in your area.
Raise your deductible on collision and comprehensive coverage. If you have an old car, you might want to drop these coverages altogether.
Take advantage of discounts. You may be eligible for a discount based on the number of miles you drive, your age (turning 25 or 50), your good grades if you are a student, your driving record (no moving vehicle violations or accidents in three years), or if you've taken a safe-driving course. You might also be able to get discounts if you insure more than one vehicle, insure your vehicle and your home with the same company, have anti-theft devices, or have safety features such as air bags or antilock brake system.
Before you purchase a new auto insurance policy, order a free copy of your insurance claim report. Your insurer will use the report to determine if they will sell you a policy.
Since standard homeowners insurance doesn't cover flooding, it's important to have protection against flood damage. If you live in an area prone to flooding, you should take advantage of the National Flood Insurance Program (NFIP).
Homes and businesses with mortgages from federally regulated or insured lenders in high-risk flood areas are required to have flood insurance. While flood insurance is not federally required if you live in a moderate-to-low risk flood area, it is still available and strongly recommended.
Flood insurance protects two types of insurable property: building and contents. The first covers your building; the latter covers your possessions; and neither covers the land they occupy. Flood insurance only covers damage that is a direct result of flooding.
Rates are set nationally and do not differ from company to company or agent to agent. These rates depend on many factors, such as the 1) date and 2) type of construction of your home, and 3) your building's level of risk.
Flood insurance can only be purchased through an insurance agent; you cannot purchase it directly from the federal government. Typically, there's a 30-day waiting period from the date of purchase before your policy goes into effect.
Homeowners and renters insurance protect your personal property against damage or loss, and insures you in case someone gets hurt while on your property. You may already have insurance on your home if you have a mortgage on the property, because most lenders make insurance a condition of the loan.
Renters insurance, or tenant insurance, offers renters coverage similar to homeowners insurance. If you are a renter, do not assume your landlord carries insurance on your personal belongings; you may wish to purchase a separate policy.
What Can Homeowners or Renters Insurance Cover?
Homeowners or renters insurance may pay claims for:
damage to your home, garage, and other outbuildings
loss of furniture and other personal property due to damage or theft, both at home and away
additional living expenses if you rent temporary quarters while your house is being repaired
Homeowners or renters insurance may also:
include liability for bodily injury and property damage that you cause to others through negligence
include liability for accidents happening in and around your home, as well as away from home, for which you are responsible
pay for injuries occurring in and around your home to anyone other than you or your family
provide limited coverage for money, gold, jewelry, and stamp and coin collections
cover personal property in storage
What Doesn't Homeowners or Renters Insurance Cover?
Homeowners and renters insurance policies do not cover some catastrophic losses, such as those from earthquakes, hurricanes, or floods. You may be able to purchase such coverage by adding an earthquake or flood endorsement to your insurance policy, or through the National Flood Insurance Program (NFIP)
Shopping for a Policy
You may be able to save hundreds of dollars a year on homeowners or renters insurance by shopping around. You can also save money with these tips:
Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
Ask your insurance agent about discounts. You may be able to get a lower premium if your home has safety features such as deadbolt locks, smoke detectors, an alarm system, storm shutters, or fire retardant roofing material. Persons over 55 years of age or long-term customers may also be offered discounts.
Insure your house, not the land under it. After a disaster, the land is still there. If you don't subtract the value of the land when deciding how much homeowner's insurance to buy, you will pay more than you should.
Make certain you purchase enough coverage to replace what is insured. "Replacement" coverage gives you the money to rebuild your home and replace its contents. An "Actual Cash Value" policy is cheaper but pays only what your property is worth at the time of loss, minus depreciation for age and wear.
Ask about special coverage you might need. You may have to pay extra for computers, cameras, jewelry, art, antiques, musical instruments, stamp collections, etc.
Before you purchase a renters' insurance policy, check with the landlord. The landlord may require you to carry specific limits of insurance for specific coverages. The landlord may also require you to name him/her as an additional insured on your tenant policy.
Health insurance for pets may help you pay your veterinary bills if your pet has an accident, gets sick, or needs routine preventive care. Most plans cover dogs and cats, and some plans cover other types of animals.
What to Consider Before Buying Pet Health Insurance
Shop and compare: Ask your vet to recommend some pet insurers. Be aware that policies and premiums vary widely. Compare monthly or annual costs, and the differences in deductibles, co-pays, and coverage limits. These may limit payouts by incident, annually, or your animal's lifetime.
Carefully read policies: Read the clauses on deductibles, co-pays, coverage limits, and exclusions before you buy a pet insurance policy. Insurance policies normally exclude pre-existing problems and hereditary conditions such as dysphasia in certain dog breeds, such as German shepherds and retrievers.
Do your math: Make sure you add up the total costs of the policy for the anticipated life expectancy of your pet. Be aware that the age of your pet affects the premium. The older your pet is, the higher the premium you'll pay.
Questions to Ask Insurers
Can I choose my vet?
Is there a waiting period?
Do you cover routine wellness exams?
Do you cover neutering or spaying?
Does the plan include prescription drug coverage?
Do you cover claims annually or by incident?
If the coverage is by incident, is there a time limit?
Is there a dollar limit for vet office fees?
If my pet has a pre-existing or hereditary condition, will this plan cover it?
Does this plan cover chronic or recurring conditions?
How long do you take to pay claims?
Do you give discounts for insuring multiple pets?
Does this plan cover advertising costs and rewards if my pet is lost or stolen?
Does this plan make payouts if my pet dies during treatment?