The right insurance policy can save you money and headaches not to mention financial trouble in the long run.
Looking into insurance for the first time can feel daunting.
Before you go into a policy-and-premium-induced tailspin, know weve got you covered.
That way, you might make an informed decision on how to protect yourself andyour belongings.
When Insurance Falls Short…
Unfortunately, insurance doesnt covereverything.These resourcescan help you manage those unexpected expenses.
Why is Insurance Important?
Our answer to that is pretty simple:Yes.
Insurance is financial protection against unexpected expenses.
These events are often completely outside of your control.
You might have enough savings to cover a night or two at the hospital.
However, events like these rack up costs quickly and can land you in financial trouble.
What Are the Basics of Insurance?
Insurance is a contract between the insurance company and you.
Insurance companies take these premiums and pool the money to cover any losses.
Its all about probability.
How Do I Get Insurance?
When it comes to signing up for insurance, each throw in comes from a different place.
For example, if youre fully employed, you might get health insurance through your employer.
Private companies on the open market provide most other forms of insurance.
You simply research different companies, fill out your information and gather quotes.
you could use sites likeInsurifyandQuoteWizardand to shop around for car insurance quotes.
Sites likeEverQuotecan connect you with various kinds of insurance providers.
You also can work with an insurance broker.
An insurance broker is a person who specializes in matching people with insurance policies.
They are not employed by the insurance companies and should represent you as the consumer.
Understanding the terminology insurance companies throw around is key to feeling confident when reading through a new policy.
The insurance company will open an investigation to determine the validity of it.
If the claim is validated, then the insurance company will issue a check to cover the damages.
In theory, this limit should be enough money to replace your covered object.
Often, a higher coverage limit means higher monthly premiums.
It can look like a preset dollar amount or a percentage of the total.
Loss
A loss refers to the damage on a piece of property that is insured.
A covered loss means damage that is covered by this specific insurance policy.
A total loss means the piece of property is completely ruined and must be replaced.
The conditions also might include requirements that have to be met so you can file a claim.
These are important to read carefully before signing up so youre aware of any gaps in coverage.
Policyholder
The policyholder is the person who owns the insurance policy.
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We gathered the most common types of insurance and the basic information on whats included and excluded.
It normally covers damage from wind, fire and snow.
However, it does not cover flooding, earthquakes, or any damage that results from neglect.
Your monthly premium will also depend on the size of your home and where you live.
There are a lot of good companies out there for homeowners insurance.
If youre looking for more advice, our list ofbest homeowners insurance companiesis a great place to start.
Or, you might turn toEverQuotefor this as well.
However, it doesnt protect the structure of the home thats the owners responsibility.
Renters insurance has the same exclusions as homeowners insurance in that it doesnt cover floods or earthquakes.
Often, if youre renting youll be required to have renters insurance to sign a lease.
If you have more questions about renters insurance, check out ourguide to renters insurance.
Auto Insurance
Auto insurance financially protects you on the road.
There are three main types of car insurance: liability coverage, collision coverage and comprehensive coverage.
Liability protects other people and their property from accidents you may cause with your vehicle.
Normally, it also covers damage to your car if you run into an object or hit a pothole.
On the other hand, comprehensive covers other events that may damage your car besides vehicles.
This often covers hitting an animal, fire, flooding and the theft of your vehicle.
The coverage limits for both depend on the value of your vehicle.
There are many other more specific types of coverage that can be included in your auto insurance policy.
Health Insurance
Health insurance helps cover your medical expenses if youre injured or sick.
It is often provided by an employer, but you also can buy it on the open market.
Most health insurance policies have a deductible that you must pay before insurance begins covering costs.
This max is the total amount that you will be responsible for that year.
You brew coffee at home, you dont walk into Target and you refuse to order avocado toast.
(Can you sense my millennial sarcasm there?)
The cost of your premium will depend on your overall health and age.
There are two main types of life insurance: term and whole life.
Because whole life represents more risk for the insurance company, it does cost more than term life insurance.
Umbrella Insurance
Umbrella insurance is extra insurance to cover any gaps in your existing policies.
It provides extra protection in case you are sued by someone injured on or by your property.
Pet Insurance
Pet insurance helps cover some of a pets unexpected health costs.
Some types cover broken bones while others specifically cover sickness like cancer.
Ways to Save Money on Insurance
Insurance can be expensive and add up quickly.
But there are a couple of ways you might protect your bank account while getting the coverage you need.
These discounts might be small, but it never hurts to ask.
Added bonus: bundling often makes keeping track of policies simpler, too.
Shop Around
Rather than simply re-upping your insurance policy each year, explore other options.
You could reach out to an insurance broker to double-check your current company is offering you the best deal.
Choose a High Deductible Plan
Choosing a higher deductible plan often will lower your monthly premiums.
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Contributor Whitney Hansen covers banking, credit cards and investing for The Penny Hoarder.
She also writes on other personal finance topics.
However, most insurance policies dont cover floods or earthquakes.
There are three main types of car insurance coverage.
Liability insurance covers any harm both bodily and property you might cause to another person with your vehicle.
Collision coverage covers any damage that occurs on your car even if the damage is entirely your fault.
