Insurance…one of the many things about adulthood that school may not prepare you for. In case you missed my first post, I’m covering the very basics you need to know about insurance, because everybody has to buy insurance at some point in their life. Previously, I covered how insurance works and the types of insurance available. Today, let’s continue with some of the basics.
Which type of insurance should I get?
The types of insurance you invest in is completely up to you and what you feel is important to protect. For all of us that don’t know any better, most insurance agents will recommend you get automobile, renters/home owners and health insurance (if not provided by your employer).
Life insurance is another type of insurance to consider if you have people to protect in case you are no longer here. A few examples would be a spouse, a child or significant other.
What does my insurance cover?
Insurance policies (plans) cover multiple aspects/scenarios and cover you for different amounts depending on what you choose. Your insurance agent will walk you through these options and help you decide what is best for you and your financial situation. So don’t worry, you will have help through the selection process.
Here are a few things covered by the different policies:
Property damage - Any damage that happens to your car whether it was your fault or not. (Even though it's always the other person's fault, right?)
Liability coverage - Covers you to a set amount (depending on the plan chosen) from payments accrued through damage to anybody involved in the wreck separate from your vehicle. Liability also covers a set amount per accident. For example, the insurance company will give you a number like 50,000/100,000. That means for every person in the wreck, insurance will cover up to $50,000 of their personal expenses and up to $100,000 worth of total expenses per incident.
Medical payments - This amount covers medical expenses to any passenger in your automobile.
Comprehensive coverage - This covers hail, vandalism, fire, water and anything else that doesn't include hitting something.
Collision coverage - This covers incidents in which your vehicle hits something, whether it's another automobile, a pothole or the always sneaky garage door.
Rental - This is an option that gives you coverage toward a rental vehicle in case your sweet ride is in the shop getting repaired after a collision.
Roadside assistance coverage - This is basically tow coverage. They will help cover the expense of towing your vehicle should the need arise. It also covers locksmiths, running out of gas and tire changes.
Uninsured or underinsured coverage - This means your insurance company will help cover you in case you get into an accident with an uninsured or underinsured motorist. Let's say you just traded in your Civic for a new BMW and someone T-bones your new car; this coverage helps insure you for costs the other person's insurance won't cover because they simply don't have enough money in their plan to pay for all the repairs.
Renters insurance covers anything you own inside a house or sweet new bachelor/bachelorette pad you are renting. It also covers any personal items you may have inside your car. Renters liability insurance covers any damage to the rental property. For example, when your best friend leaves the candle burning while you both are away at work and you come home to an overcooked apartment building, insurance will have your back.
This insurance helps cover costs you incur when seeking medical attention. This can range from your annual flu shot to surgeries and emergency room visits.
Insurance policies often come with deductibles. A deductible is an amount you must pay before your insurance benefits kick in. For example, let's say you need surgery on an arm you broke during a neighborhood flag football game. If your health insurance deducible is $1,000, you are responsible for paying that amount, and any expenses after that will be picked up by your insurance company. Different types of insurance may handle deductibles differently. It's best to have that explained by your insurance agent before you purchase any policy.
In the upcoming third and final installment of this series, I'll cover how to prepare for your meeting with an insurance agent and general tips when dealing with insurance companies.