Five Types of Insurance

Learn the Basics About 5 Types of Insurance

SAN MATEO, Calif., Sept. 27, 2006 — For most of us, insurance coverage can be about as exciting a topic as the thought of spending a vacation cleaning out the rain gutters. But with either matter, when a major storm hits — whether financial, health-related or actual weather — you’ll be glad you did the work.

Insurance protects us financially from a whole slew of risks. In exchange, we pay premiums to insurers who cover our risk of loss in five general categories:

  1. Auto insurance: In most states, the law requires auto insurance to protect drivers, vehicles and property or people who could be injured in an accident. For the best rates, it often helps to insure car and home through the same company. Agents can advise on how to become a safer driver and also qualify for discounts, such as drivers age 55 and older taking safety refresher courses or young drivers enrolling in specific safety courses.
  2. Home insurance: Mortgages require property coverage that would replace a structure damaged by fire, burglary or other eventualities. Insurance agents will ask about risk factors, which range from roofing types to owning a dog. Additional coverage, called a "rider," insures possessions above standard coverage limits - such as heirloom jewelry, collections or artworks. Some policies or riders also cover business equipment in a home office. Renters’ insurance covers personal property in a rented home. Condo and townhome owners should insure personal property as well as anything the association policy does not cover.
  3. Life insurance: Life insurance usually comes to mind when a baby is born. Some people purchase enough insurance to eliminate all household debt and pay for children’s educations in the event of a parent’s death. Others plan to replace their annual income for a few years to support a widowed spouse’s adjustment. Also consider carrying life insurance policies in the amount of funeral costs for your children if you could not pay those expenses.
  4. Umbrella coverage: Increasingly, private individuals are being sued. Court awards often exceed home or auto coverage limits (which usually total around $300,000). Thus, the "personal umbrella" policy has become popular as a means of covering greater liability. If you run the risk of a lawsuit (even from driving your children’s carpool or owning a swimming pool that neighbors visit), you might consider an umbrella policy. Million-dollar coverage costs a few dollars a month.
  5. Disability coverage: Many full-time jobs offer disability coverage. Check into your individual situation. If your savings couldn’t support your family for a few months or years in the event you became unable to work, consider buying additional disability insurance.

For more details about all types of insurance, visit the Insurance resource page. Otherwise, review your coverage in these areas every year. Then, you can be sure you are covered for the unexpected - and that’s anything but a yawn.

Based in San Mateo, Calif., is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and save money by choosing the best-value products and services. Since 2002,’s partner company, Freedom Financial Network, has provided consumer debt resolution services, serving more than 10,000 customers nationwide and managing more than $250 million in consumer debt. The company’s co-founders and CEOs, Andrew Housser and Brad Stroh, were recently named Northern California finalists in Ernst & Young’s 2006 Entrepreneur of the Year Awards.