Insurance

What would you do if your car accidentally caught on fire and burned to the ground?  What would happen to your family if you were suddenly killed and they were left without your income to provide them with support?  How would you replace your vehicle if you were in an accident that you caused?  If you have insurance in place, dealing with the problems that life throws you on occasion should be far easier to handle.

What is Insurance?

Insurance is a safety measure that you utilize in order to keep yourself protected when something goes wrong in your life.  If you have house insurance and your home is burned down, for example, your insurance company will provide you with a certain amount of money in order to help you recover from your loss.  The amount of compensation you receive, however, will depend upon the type of coverage you have in place as well as the amount of the deductible you decided to carry.

The deductible is the amount of money you are required to pay when you file a claim with an insurance company.  Generally, this amount will simply be removed from the payout before you receive a check from the insurance company.  If you are owned $10,000 in compensation and you have a $1,000 deductible, for example, the insurance company will simply send you a check for $9,000.  The higher your deductible, the less you have to pay to have the insurance coverage in place.

In order to receive the benefit of insurance coverage, you have to pay the insurance company a certain amount of money each year.  The money you pay, which is referred to as your premium, may be paid on a monthly basis.  Or, you may choose to make premium payments every three months, every six months, or once per year.  You will have to make arrangements with your insurance company to determine when you will pay and the method that will be used for payment.  Some insurance companies will automatically withdraw money from your checking account if you desire, while others will send you a bill.  When it comes to house insurance, your lending institution may take care of your house insurance payment through your escrow account.

Why Should I Carry Insurance?

It is important to carry insurance in order to keep yourself and your loved ones protected.  Some types of insurance, such as car insurance, are legally required.  Once you have met the minimum amount of coverage as required by your state, however, you may choose to obtain additional coverage in order to keep yourself better protected.

Although no one likes the thought of paying hundreds of dollars each month in order to carry insurance, it can potentially save you thousands of dollars in the long run.  Therefore, the real question isn’t whether or not you should carry insurance, but how much insurance you should have.  Determining how much insurance you need depends upon your personal financial situation and needs.

What is Auto Insurance?

Auto insurance is a type of insurance that you have to have in place in order to legally drive.  In most states, the legal minimum of car insurance that drivers are required to carry is really in place to protect other drivers.  In other words, if you cause a car accident to occur, your car insurance company will pay for the damages incurred by the other people involved in the accident.  While this coverage is meant to protect the other drivers, it also protects you from the being financially obligated to pay for these damages yourself.

In addition to carrying the legally required liability insurance, you can choose to carry more coverage in order to keep your vehicle protected.  If you borrowed money from a lending institution, that institution will likely require you to carry additional coverage in order to keep its investment protected. 

Some of the additional coverage you might choose to carry is collision coverage.  Collision coverage will pay to repair or replace your vehicle if it is damaged in an accident that you cause.  You might also carry collision coverage, which will replace your vehicle if it is stolen and will repair it if it is damaged through vandalism, by acts of God, or from running into an animal on the road.

What is Home Insurance?

House insurance will provide you with compensation if your home is damaged or destroyed by vandalism or acts of God.  In addition to paying to replace or repair your damaged home, house insurance will also provide you with compensation if you are robbed or if your personal belongings become damaged.  It will also provide you with protection if someone is injured or killed on your property.  If you have a dog that bites a visitor, for example, your homeowner’s insurance will pay for the medical fees that person incurs.

If you rent an apartment or a home, you may also choose to obtain renter’s insurance.  While renter’s insurance does not provide protection for the actual structure, it does provide you with protection if something happens to your personal belongings.

What is Life Insurance?

Life insurance is a special type of insurance that is paid out to your beneficiary at the time of your death. Determining how much life insurance coverage you should have in place depends upon how dependent others are on you for your income.  If you are the only breadwinner in your family, for example, your family would be financially devastated by your death.  Therefore, you want to be certain to have enough coverage in place to allow your family to continue living in the same way as before your death. If you are an elderly individual with no dependents, on the other hand, you may only want to carry enough coverage to pay for your funeral expenses so you won’t be a burden on your loved ones when you pass.

There are many different types of insurance coverage available to help keep you and your loved ones protected and safe.  By doing some comparison shopping and by taking advantage of available discounts, you should be able to obtain the right amount of coverage at a reasonable cost.

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