Insurance protection is an important part of your overall financial picture. Not having the insurance you need puts all your finances, from your retirement plan at work to the home you live in, at risk. No matter where you are in the financial planning process, chances are you need these common types of insurance coverage.
If you drive a car, you need to have auto insurance. Not only is having automobile insurance the law in most places, but it also provides important protection if you are but it also provides important protection if you are involved in a crash. Automobile insurance protects the investment you have made in your car, which can be quite considerable. More importantly, car insurance protects you from liability if you cause damage to someone else’s vehicle or to another driver.
You can carry comprehensive and collision insurance, which protects your own car. That coverage is optional, and it makes more sense if your car is new and expensive. If you drive an older vehide, you might find that the value of this coverage does not justify the extra cost.
No matter what kind of car you drive, you need to have liability insurance to protect you if another driver or passenger is injured. Financial experts recommend carrying a minimum of $100,000 for medical expenses per person and $300,000 per accident. Recommended minimum property coverage is $50,000.
If you own a home, you need to protect it with a good homeowners insurance policy. The amount of coverage you need will depend not on the current market value of the property but on the cost to rebuild the home and other structures. It is important to look at actual rebuilding costs when determining how much homeowners insurance to buy. It is also a good idea to revisit your coverage from time to time and make sure that the amount you have in place is still sufficient.
When you buy a homeowners insurance policy, you can add an endorsement that covers the full cost of rebuilding. This can protect you and reduce the need to constantly assess and reassess your coverage. Homeowners insurance also includes liability protection, much like your auto insurance policy. That protects you in case someone is injured while on your property. You should purchase at least $300,000 worth of liability protection — more if you have substantial assets to protect.
If you rent a home or apartment, you may need a renter’s insurance policy. Rental insurance works much like homeowners insurance in that it covers the value of the property inside your dwelling.
Many renters assume that their landlords already carry this type of coverage, but that is not necessarily the case. The insurance your landlord has probably covers the actual type of coverage, but that is not necessarily the case. The insurance your landlord has probably covers the actual insurance your landlord has probably covers the actual building he or she owns, but not the property inside.
Renters insurance is designed to fill that gap and keep you protected. Assessing your insurance needs is not easy, but it is important. Insurance is designed to protect you from loss, and that insurance coverage should play a major role in your overall financial planning