We need insurance for so many aspects of our lives. From our homes to our vehicles to just our lives, there are many important types of insurance everyone should know about.
That doesn’t mean we need to purchase all types of insurance. By learning about several important types of insurance, you can also learn which types of coverage are right for you. There are varying degrees of coverage that come with all forms of insurance, so there is no one right path for everyone.
Here, we will take a look at a wide variety of insurance types. Information is your best tool in deciding if you need insurance and how much you require. Check out these 5 important types of insurance in order to get all the knowledge you need to make informed choices.
1. Disability Insurance
Perhaps one of the most wide-ranging types of insurance is disability insurance. Disability can mean a lot of things, which makes disability insurance even more complicated and confusing that it might be otherwise.
Broadly speaking, disability encompasses both physical and mental illnesses and injuries that would prevent someone from working. However, it can also include things like pregnancy and elective surgery.
The qualifications for whom can get disability insurance, when, and for what conditions varies from state-to-state. Different states may define “illness” or “injury” differently and have different requirements for people looking to apply for this type of insurance. In addition, there are differences between state disability programs and federal disability programs.
You should also be aware of the difference between private and public programs. A public program would be something like Social Security Disability Insurance, which is funded by taxes. However, many jobs include benefits packages that can include disability insurance, if employees sign up for it. Check to see if you already have access to disability insurance this way before searching for other plans.
Despite all the complexity, disability is one of the most important types of insurance. If you can not work for some reason, it may be your lifeline, keeping you afloat financially while you deal with a health issue or recovery.
2. Business Insurance
A related type of insurance is business insurance, which is especially important for owners of small businesses.
Small business owners already know to expect the unexpected when it comes to running their businesses. So much can happen that you simply can’t plan for or prevent. Natural disasters, lawsuits, and accidents can all harm your business if you are not properly insured.
If you own a business, this is easily one of the most important types of insurance you can have. That said, there are several types of business insurance, including:
- General liability insurance
- Product liability insurance
- Professional liability insurance
- Commercial property insurance
- Home-based business insurance
- Business owner’s policy
All of these important types of insurance do slightly different things. General liability insurance is good for any business, while home-based insurance is for businesses to run out of a home. A business owner’s policy will cover most small businesses, but commercial property insurance is for businesses with lots of property and assets. Product liability is good if you have products you manufacture and retail, but professional liability is good when you are providing a service, as when someone is an attorney or massage therapist or other professional.
Think about your risks and shop around before committing to one type of insurance for your business. And keep thinking about this as your business grows.
3. Home Insurance
Most people who buy a home end up getting home insurance. While not a legal requirement, many mortgage lenders will require it, and with good reason. Home insurance protects that investment should anything unforeseen occur.
If you have or are thinking of getting a home, you should learn exactly what home insurance is and how it works. Most, 52%, of homeowners only vaguely understand how their home insurance works and what it covers. It’s time for that to change.
At its most basic, home insurance is a way for you to be protected if something happens to your home or belongings. This could be a fire or other natural disaster, but it could also be something like a break-in. If you found yourself in a situation where you had to stay in a home, for example, your home insurance would help defray the cost of that.
Most of the time, home insurance will cover theft, fire, vandalism, some types of water damage, wind, and hail. How much coverage you have depends on the specific type of insurance you purchased. Even within this, insurance will break up how much coverage they’re willing to provide for each type of potential issue. So wind may be covered to a different extent than theft or fire. Check your insurance thoroughly to see exactly how you are covered.
When it comes time to use your home insurance, it may cover things like living expenses from temporary lodging, damage to structures other than your home, medical payments from injuries, and more. You can even be covered for personal liability if you’re sued over an issue related to your home.
There is also home title insurance, which is different from just home insurance. This is one of the most important types of insurance because it provides protection in the event of someone challenging the legal ownership of your home.
When you buy a previously owned home, that can bring with it some legal issues. If the title company misses some issues with the title during the buying process, this can come back to hurt you if you don’t have home title insurance. Some common title issues include:
- Simple errors with the filing
- Back taxes that might show up
- Leins and bills
- Forgery
- Previously unknown heirs
- Wills that complicate the ownership of the estate
- Easements
All of these issues can be major headaches and put a damper on your exciting new purchase. You definitely don’t want to be caught trying to deal with these kinds of legal and financial issues alone. Many of them are extremely messy and complicated.
In addition to getting the help of a professional like an attorney, you may get some peace of mind from having home title insurance in this situation. It can help you financially so you can focus on clearing up issues and getting the title sorted out quickly and painlessly.
Homebuyers don’t always need to seek out their own home title insurance. It doesn’t hurt to have if you want to protect yourself against legal troubles, though. If you suspect you might run into any of those sorts of issues, it’s a good idea to look into home title insurance.
4. Auto Insurance
Auto insurance is one of the most important types of insurance and perhaps also the one you’ve heard the most about. Just about every state mandates that drivers have auto insurance. It is a thing most of us encounter at some point in our lives, and yet so many people don’t truly understand what it does and why it’s important.
Put simply, auto insurance protects us if there is an automobile accident of some sort. The prevalence of auto accidents is part of what makes it one of the most important types of insurance we can have. Auto insurance can protect you in several different ways if you’re involved in an accident of some sort. It helps cover your property, your legal liability, and your health costs related to the incident.
When an accident happens, there is obviously damage to cars and other property. Even a small fender bender can result in big costs. Auto insurance helps with many of those costs so they don’t have to break your budget just because an accident occurred.
However, many types of auto insurance will also help you financially if your car is broken into. If you are the victim of a theft, you might lose valuable items stored inside the car or the entire car itself. This is a situation where auto insurance can help you recover the cost of lost items, even if the lost item is an entire vehicle.
This is not all that auto insurance does, however. When an accident occurs, there are instantly many tough legal questions that need to be answered. Who is at fault? How much are they at fault? What kind of cost has each party incurred?
Many people may not realize it, but their auto insurance can also help with costs relating to liability, meaning who will have to take legal responsibility for an accident. There are several scenarios where a lawyer or attorney has to get involved to sort out these kinds of situations. That is an even more expensive prospect if you are uninsured, making auto insurance one of the most important types of insurance.
Finally, there can be medical costs that come with an accident, unfortunately. Even a relatively minor accident can result in injuries. The cost of treating those injuries can be defrayed by auto insurance.
In more severe cases, you might be facing costs related to loss of work or even, unfortunately, a funeral. This is a difficult time. Having adequate auto insurance can make it slightly less hard by helping cover those unforeseen expenses.
When shopping for auto insurance, talk to an insurance agent about your needs and budget. Even though auto insurance is mandated in most U.S. states, it is not one size fits all. You should customize your policy to suit your needs.
5. Life Insurance
We can’t talk about important types of insurance without mentioning life insurance. It can protect you and your loved ones even in death by guaranteeing certain payments to beneficiaries you name.
Life insurance is a big decision. It is a legally binding contract, as well as a financial safety net at some of life’s darkest moments. That’s why it’s good to think about life insurance before it becomes a dire necessity.
Life insurance isn’t right for everyone, but there are many types of people who can benefit from it. This includes Adults who own property together, parents of young children, elderly parents with assets to pass down, young people looking to secure a lower rate, families who might struggle with funeral expenses, and wealthy families with estate taxes, among others.
If you think any of these categories might apply to you, start searching early for affordable life insurance. Securing life insurance early is the best way to get the lowest rate possible. However, even if you are looking for life insurance later, it’s still worth it to invest in this among other important types of insurance.
Be advised that there are many different types of life insurance. Term life insurance lasts only a certain number of years, or term, while permanent life insurance lasts forever. If you get insurance on an increasing term it will be cheaper when you are younger and increase in price as you age.
Whole life insurance accumulates value and is permanent. Meanwhile, universal life insurance contains components that earn interest over time. Burial or final expense insurance has a smaller death benefit.
There are even more important types of insurance that fall under life insurance than the ones listed here. Ultimately, you will have to think about where you are in life and what, and whom, you want to protect when shopping around for life insurance.
Finding the Right Insurance
There are so many important types of insurance. It can be overwhelming to think about. Start in places where you know you need insurance, such as auto insurance, which is mandated by law in many places.
You can also get help and information from the insurance companies themselves. Do not be afraid to ask a lot of questions while talking to an agent about an insurance quote. The more information you have at the ready, the better able to will be to make the right decisions for you and your family.
Insurance can be as frustrating as it is reassuring. Whether it’s home, auto, life, or something else, insurance is complicated, but worth the hassle for the protection and peace of mind it can offer. The work you put into research will pay off in the security you get to feel by knowing you’re covered no matter what life throws at you.
