Insurance

6 types of insurance I would never do without

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Do other consumers also need this type of coverage?


Key points

  • There are certain types of insurance that I will always make sure to buy.
  • This includes, among other things, health insurance and car insurance.
    • Having sufficient coverage is crucial for asset protection.

When it comes to insurance, I tend to want more coverage rather than less. Insurance is a fairly affordable way to transfer the risk of large losses and protect my assets. Because I want to minimize the risk of financial catastrophe if something goes wrong, here are six types of insurance coverage I will always make sure I have.

1. Health insurance

Health insurance is the most crucial type of insurance that I would never pass up because this type of insurance literally helps keep me and my loved ones alive. I never want to worry about paying treatment fees or going without care, so I make sure I have comprehensive health insurance every year.

2. Car insurance

Car insurance is another essential type of insurance. It’s required by law, for one thing, and I’m not interested in having my car impounded and facing fines if I’m pulled over and caught driving without coverage.

I also buy more car insurance than the minimum, mainly because I want extra protection. I buy collision and property insurance so that my car is covered against theft, vandalism, falling trees, incidents with animals, accidents that are my fault and a variety of other calamities. I also buy more liability insurance than is mandatory, so if I cause an accident and get sued, I won’t have to pay out of pocket.

3. Life insurance

My husband and I also have life insurance and we won’t be without it, at least not for many years. We have coverage in place because we have children and we want to make sure they are taken care of if anything happens to us. And because our lives and expenses are built around being a two-income household, we have coverage to make sure that if one of us dies, the other can still pay the bills.

Now, technically one day I will be going without life insurance once we are old and essentially self-insured because we have enough money in the bank and no longer have dependents. But that won’t happen for decades, so life insurance still deserves a spot on this list.

4. Home insurance

I would never leave without home insurance either, even on my vacation home which we paid for in cash, so no lenders require coverage. I don’t want to lose all the value of my house if something goes wrong, like a fire. And I don’t want to have to pay out of pocket to replace all of my belongings or to cover injury costs if someone gets hurt in my home and sues me.

5. Flood insurance

My vacation home in Florida is near a small lake, so I have flood insurance. I made this choice even though I have no lender to require it because my standard home insurance policy excludes flooding and I want to make sure I’m covered for any water damage that occurs.

6. Umbrella insurance

Finally, I have umbrella insurance because this policy provides additional liability protection on top of my other policies. If a claim is made against me that exceeds the limits of my auto or home insurance, my umbrella insurance will pay so that my personal property is not at risk.

Although paying for all of this insurance costs thousands of dollars a year, it’s worth it to protect against catastrophic losses that could occur if I gave up on one of these important types of coverage.