Do you find the various types of insurance illogical? While there are many types of insurance and the names can be confusing, here are a few things that you need to know in order to shop and compare insurance types and coverages.
Car insurance is legally required in every state except two, Wisconsin and New Hampshire. In all other states, you will be required to have some kind of car insurance to drive. What amounts and kinds of insurance you must carry are different in different states. Beyond the legal requirements, if you have a loan on your vehicle your loan holder will also require that you carry comprehensive and collision insurance to protect the vehicle itself.
Car insurance in Arizona, Colorado, Delaware, Louisiana, and most other states is required to cover a minimum amount of personal injury liability and property liability. This protects the other driver in case you are at fault in an accident. You will still be responsible for any amount you are charged beyond your coverage amount.
A few other states, such as Maine, Kansas, and Louisiana, also require uninsured motorist coverage to protect you in case someone else is at fault and carries no insurance. Finally, some states, such as Minnesota, New York, and Vermont, require even more coverage.
Your auto insurance provides several different areas of protection. Liability pays someone if you are at fault in an accident and they are injured. Uninsured motorist coverage protects you by paying what an at-fault driver should be responsible for, in case they are uninsured and cannot pay. Personal injury protection and medical payment coverage provide payments to you and your family in case you have been injured in a car accident no matter who was responsible. Comprehension and collision coverage cover the vehicle itself and will help you pay for repairs or replacement if it is damaged. This applies whether tha damage occured in an accident or in some other way, such as a natural disaster, hitting an animal, or a tree falls on it.
While your home is not mandated to be insured by any state law, most lenders will require it. Homeowner’s insurance protects you in the case of disasters, such as fire, a tornado, or a hurricane. It also protects you in smaller situations such as leaks, theft, or falling tree branches.
Your homeowner’s insurance, like car insurance, contains several parts. Coverage to the building itself provides you with payment to cover repair or replacement costs of the home. Personal property coverage protects the items inside and outside the home, such as your clothing, TV, and valuables. You may need extra personal property coverage if you have an unusual amount or types of items needing to be covered. Lastly, your homeowner’s insurance will provide liability protection in case someone is injured on your property or tries to sue you.
In addition, your policy should also cover the rest of your property including a garage and any outbuildings, as well as provide you with living arrangements until your house can be repaired or replaced in time of disaster.
This type of insurance is for those who are renting their home and provides coverage for your personal property in case of disaster. It consists of the personal property, liability, and living expenses portions of homeowners insurance. These policies are usually inexpensive, and no renter should go without them. In fact, many landlords and property management companies now require tenants to carry renter’s insurance for the liability coverage.
Umbrella insurance is personal liability insurance that protects you in case someone tries to sue you for something that isn’t covered under your auto or homeowner’s insurance policies. These usually have a higher limit than the two other liability policies and can also protect you in case you are sued for more than those policies cover. For example, if you are sued for $200,000 but only have a $100,000 liability policy, your umbrella policy will cover the rest of the amount.
Term Life Insurance
Life insurance is designed to provide you with income and financial help in the case of someone’s death. If a wager earner dies, it can leave the rest of the family feeling the loss of the income as well as the person. Life insurance provides money to help pay bills until the family is back on its feet. Life insurance can also help pay for funeral expenses. This insurance is less expensive and lasts for a specific term- usually 10 or 20 years.
Permanent Life Insurance
Permanent life insurance, such as whole life insurance universal life insurance, and variable life insurance, works differently. It is designed to last someone’s whole life. It is more expensive but also includes a cash value and you can take money out on it like a loan.
Often purchased with life insurance, disability insurance protects lost income in the case of a wage earner becoming disabled and no longer being able to work. If you are disabled because of a work-related injury, you should be covered with group disability insurance through your employer as part of your workman’s compensation plan. If you are disabled outside of work, such as an accident at home or illness, you will not be covered unless you purchase disability insurance coverage.
Health insurance covers medical bills for you and your family. Most health insurance is provided by employers, but if your employer-offered health insurance is too expensive or if you are self-employed you can also buy health insurance through the marketplace. This will allow you to take advantage of subsidies and lower rates based on income and other factors.