No one is sure how June 28 became National Insurance Awareness Day, but the need for the date is clear: it’s a reminder to renew your insurance policies, and to also check to make sure you have all the coverage you need for your home, car, and other assets.
National Insurance Awareness Day is an opportunity to remember the importance of insurance. It’s easy to think that we don’t need insurance … until we do. Your teenager takes the family car out and causes an accident, now you’re on the hook for tens of thousands of dollars of medical expenses, plus the cost of car repairs. A fire caused by food left unattended on the stove overtakes your kitchen and now you need a complete remodel. If you’re a business owner with debts, you may worry about the future of your family and your employees if something should happen to you.
Insurance is designed to protect you in all of those scenarios. Insurance shields you, your loved ones, and your assets from unexpected accidents and disasters. Insurance is peace of mind and it is an investment in your future. Below are the three major forms of personal insurance (other than health insurance). Do you have them? If you do, do you have all the coverage you need in each policy?
Homeowner’s insurance
As one investment site notes, homeowner’s insurance is not optional for homeowners; it’s a must-have. Any number of things could go wrong in your house—a pipe could burst, food on your stove could start a fire, mold could break out—and insurance is designed to deal with these unexpected issues. Homeowner’s insurance also has you covered if there is a burglary or someone gets injured on your property. Remember: the typical policy not only applies to your physical home, it also covers all of your valued possessions you keep in it.
It’s also important to be aware of what your homeowner’s insurance does not cover. Although it anticipates a wide range of possible disasters, from hurricanes to falling objects in the sky, there are two natural disasters that are excluded: earthquakes and floods. For these, you will need add-ons, or separate riders. Now might be a good time to review your homeowner’s insurance policy to see what is and what is not covered and determine if you need to add to it.
Auto insurance
Like homeowner’s insurance, car insurance is a necessity, and not only because state law requires it. Basic liability insurance deals with any injuries you or another driver of your car causes. It also pays for any damage to other cars or property that you are responsible for. However, liability insurance won’t help you if your car is damaged. For that, you will need collision insurance. You may also consider comprehensive insurance, which is for damage that isn’t caused by accidents, such as vandalism, falling objects, fires, and floods. Likewise, you may want to buy glass coverage. You’ll be grateful when a flying rock cracks your windshield, requiring a replacement.
Life insurance
Life insurance is a long-term investment. The two most common types of life insurance are term and whole life. Term life insurance is for a fixed period of time. The risk is that there is no benefit paid out if you live beyond the term. (However, you’re not without any options in these scenarios. For one, you can just renew it.) The main advantage is that this type of insurance is considered the most accessible and affordable. The key difference with whole life insurance is there is no set term—a benefit is paid out to your dependents or designated recipients whenever you pass away. Life insurance is especially important if you are a business owner or have a family. Life insurance can also be set up as a long-term savings whose payouts will help with future expenses, such as college for your kids. For example, most whole life insurance policies will allow you to make cash withdrawals.