Everyone understands that an insurance is there to protect you against sudden and unexpected loss. Different types of policies cover against different losses, for example, a homeowner's insurance policy will protect against burglary and damage to the home, whereas a medical insurance policy will cover against personal accidents and illness. Insurance companies pool the risk of loss by insuring multiple people who pay premiums for coverage. This spreads the risk of loss among a large number of insured to distribute money to cover losses for a smaller number of people.
What is the Importance of Insurance?
Without insurance, you would have to pay for damage, illness and accidents from your own pocket. These costs can be considerable, and too much for most people to bear. To find the right insurance policy, you need to weigh up the cost of the policy versus the chances of you ever needing to claim on it. Shopping for the right insurance becomes just as important as the policy.
Generally, you want enough insurance for your car, possessions or your health for the price you can afford. This usually requires searching online or contacting insurance companies and agents for the best deals. Independent agents often have premium quotes for several insurers in your area. Talking with an agent, either in person or by phone, helps you to better understand the costs and coverage of particular policies. State insurance departments regulate and monitor insurance companies. State regulators have information on companies and rates to help you find providers.
Importance of Car Insurance
If you own a car, you need liability insurance at a minimum in most states to cover damage you might cause to others in an accident. If you have a newer car, especially one on which you have a loan, you need additional insurance to cover damage to your car in a collision, as well as fire or weather damage and theft. Auto insurance handles coverage for injury to you or anyone else in your car and helps with expenses if an accident involves an uninsured motorist. You can find an inexpensive policy for low monthly premiums with a high deductible, the amount of damage reached before you get compensated. However, the higher you go above the minimum requirement, the more protection you have for you and your car.
Importance of Renters Insurance
Renters insurance insures your possessions. A landlord’s property insurance usually covers damage or injuries on the property, but it won’t help you if your possessions, such as your computer or flat-screen TV, are stolen or damaged. Some renters insurance policies are so cheap you can afford annual premiums or monthly premiums from $10 to $15. This covers you for $20,000 to $30,000 of property loss. Check the policy for discounts on smoke detectors or fire extinguishers if the home or complex you rent at has them. Take inventory of your valuables once you get insurance in case you ever need to make a claim.
Relevance of Insurance: Looking Ahead
No matter what type of insurance you intend to get, insurance polices bring you peace of mind to cover financial difficulties you could face without coverage. You might not like spending the extra money each month, but you know your valuables are protected. Sometimes you can’t afford certain types of insurance. Employers often have health insurance plans for their employees. Even if you elect not to participate in a plan at your job, discuss the options with the administration at work or friends who have health insurance to consider your future needs and learn more about the value of insurance.
- AXA Equitable: The Role of Insurance in Your Financial Plan
- Bankrate: How Much Renters Insurance for Your Stuff?
- U.S. Centers for Medicare & Medicaid Services. "No Health Insurance? See if You'll Owe a Fee." Accessed June 9, 2020.
- Intuit Turbotax. "Deducting Health Insurance Premiums if You're Self-Employed." Accessed June 9, 2020.
- Transamerica. "Term Life Insurance." Accessed June 9, 2020.
- John Hancock. "Permanent Life Insurance Options." Accessed June 9, 2020.
- Fidelity Investments. "What Is Life Insurance?" Accessed June 9, 2020.
- Fidelity Life. "About No Exam Life Insurance." Accessed June 9, 2020.
- Nationwide. "What Is Personal Liability Insurance?" Accessed June 9, 2020.
- Esurance. "Homeowners Insurance and Natural Disasters: Are They Covered?" Accessed June 9, 2020.
- Progressive. "New Car Insurance." Accessed June 9, 2020.
- California Department of Insurance. "Automobile Insurance Information Guide." Accessed June 9, 2020.
- Nationwide. "What Is Auto Liability Insurance Coverage?" Accessed June 9, 2020.
- Allstate. "What Is Medical Payments Coverage?" Accessed June 9, 2020.
- Washington DC Department of Insurance, Securities, and Banking. "Things to Know About Car Insurance and Rental Cars Before Starting Your Road Trip." Accessed June 9, 2020.
Jerry Shaw writes for Spice Marketing and LinkBlaze Marketing. His articles have appeared in Gannett and American Media Inc. publications. He is the author of "The Complete Guide to Trust and Estate Management" from Atlantic Publishing.