Few people like to talk about insurance, but it is a necessity of life and you need a good understanding of the types of insurance and the coverages you require.   I am going to focus on property casualty, life and health insurance.

Let’s start with property casualty insurance.  Consumers are most familiar with auto insurance.  If you own a car, you need car insurance.  Rates will depend on your driving record, where you live, type of car and the type of coverages you want.

Another determining factor is the amount of your deductible in the policy. How much will you pay out of pocket before the insurance kicks in?  Often, rates will be lower if you include a higher deductible than the standard policy. If you have adequate savings, you can afford to pay out the higher deductible.

How do you shop for auto insurance?  Online tools make it much easier to shop around for the best product and price. You can use NetQuote.com, Insure.com, and InsWeb.com that represent multiple insurance companies.  Some companies like Progressive, Geico and others offer insurance online. Or you can work directly with an agent that represents one or a number of insurance companies.

Now we move on to another familiar type of insurance. If you own your home, you need homeowner’s insurance and if you rent you need rental insurance. Rates will be determined by the scope of your coverage, your deductible, where you live, type of dwelling and size of your home.

If you have a home based business, you need to find out if your homeowner or rental policy protects you on business pursuits in your home. Are you covered for theft of business equipment or if someone falls on your sidewalk delivering a business package? If you are not covered, you can buy a rider to your existing policy or buy an in home business policy.

Now let’s talk about an unfamiliar type of insurance – an umbrella policy. If you have significant assets including your home equity or significant future income you may need this coverage. You may also need this coverage if you own high-risk vehicles, a pool, a trampoline, etc.

An umbrella policy gives you a layer of additional coverage above the limits on your home and auto policies.  If you get sued, the courts could come after your personal assets and your future income. The umbrella policy gives you another layer of protection. This insurance is usually reasonably priced. You should consult with an insurance agent to see if you need this additional insurance coverage.

Kowalczyk comment: Insurance Information Institute, a non-profit clearinghouse, is a great resource for all types of insurance.