Guide to Essential Insurance (Renters/Home, Health, Car)

By Jon Scott

Abstract: This article details different types of insurance including car, home, renters, and health insurance and what consumers should be aware of when purchasing each. Lastly, the article explains how to shop for these different types of insurance and how often to shop around for a better deal.

No one plans for catastrophic loss to their property, bodily harm, or health issues, but there is an important factor that stands between being financially prepared and financially ruined for these events. That factor is insurance. Whether it be home, renters, car, or health insurance, it is important to know the right policy and coverage that will protect you if an unexpected tragedy occurs.

Car Insurance

Factors to consider when choosing a policy

  • How much cash (liquidity) do you have in the case of a crash? If the amount is more than $1,000, consider insurance with a higher deductible.

  • How many drivers are driving the vehicle?

  • What type of car are you driving, and how often?

    • For example, the insurance you choose for a classic car you only drive a couple dozen times a year will be different from the policy for your everyday car.

  • There are many discounts available for drivers

    • Includes discounts for student drivers, low mileage, car safety, occupation, among others.

Renters Insurance

Factors to consider when choosing a policy

  • What the policy covers. If you lose everything in a fire or some other catastrophe, you need to know how much your policy covers. If there are gaps in coverage, you will want to consider a more comprehensive coverage or seek additional coverage through other policies. Items to consider include jewelry, electronics, and other expensive items in the home.

  • Consider the premium. Yearly premiums are usually relatively affordable averaging $179 a year. However, this varies by state and you’ll want to do your research to make sure you are paying a fair rate.

Homeowners Insurance

Factors to consider when choosing a policy

  • Personal liability for damages or injuries. This element of home insurance even covers your pets if they were to attack someone. Experts recommend $100,000 worth of coverage.

  • Consider the additional living expenses covered by your policy. This covers the expense of home or hotel rental in the case your home is uninhabitable.

  • Replacement cost, which should cover the cash value of your house and everything inside of it in case both are all lost. If you do not have a large amount of cash on-hand or want protection against damage or destruction of your home you will want to make sure your replacement value is large enough for repairs or building a new house that matches the value of your house before the damage/destruction.

Health Insurance

Factors to consider when choosing a policy

  • Plan Type and Provider Network

    • The number of healthcare providers (hospitals, doctors, clinics) that accept that insurance.

  • Premiums

    • The monthly amount paid for the insurance coverage. Typically, a higher premium correlates with a lower deductible.

  • Deductible

    • The out-of-pocket expense paid by the insurance holder before the insurance provider begins paying for medical expenses. Typically, lower deductible plans will mean higher premiums. If you pay less out-of-pocket, you’ll need to pay more for the coverage via premiums.

  • Co-pay

    • The amount the insurance holder pays for certain expenses (such as prescriptions). Co-pay is often still required even after the deductible is met.

How to shop for insurance (Auto & Home)

  • Do it yourself

    • Research online for different insurance providers. You generally have the ability to submit your information and receive a quote, or you can call the provider’s phone number, where a customer service representative will prepare a quote.

  • Use an insurance broker

    • There are insurance brokers who will shop for insurance on your behalf and present you with the best rate and coverage.

    • However, it is important to do some research on your own to make sure you are getting the best deal.

How to shop for insurance (Health)

  • Employee-provided insurance plans usually have a number of options varying in premium and deductible amounts. Refer to the section “Factors to consider when choosing a policy” to decide which premium, deductible, and other factors are best for you (and your family if applicable)

  • You can shop for insurance through the Affordable Care Act by visiting https://www.healthcare.gov/ and filling out your information. From there, the site will provide different healthcare options and you can decide which plan best fits you.

  • There are private insurers who provide healthcare coverage as well. Private insurers would be classified as not offered by your employer and not a healthcare provider through the Affordable Care Act.

How often to shop around or switch policies

  • It is best to compare rates at least yearly before renewal time, but there are some specific events that should trigger a re-evaluation or a policy switch:

    • Car insurance

      • Buying a new car–even if you are keeping your previous car(s)

      • Changes to your discount status

    • Home Insurance

      • Large new home upgrades or purchases within the home

      • Buying a new pet

      • Geographical factors in your area such as increase risk for a severe weather event

    • Renters

      • The purchase of new items

      • Buying a new pet

      • Increased theft rates in your area

    • Health Insurance

      • Changes in your health status

      • The addition of a partner or child to your coverage needs