If you're a homeowner, minimal home and auto insurance is all you need to get by, right?
Think again. Having sufficient levels of insurance can save you from financial ruin in a number of situations. Consider the following:
Home insurance. Home insurance includes property and liability coverage. It should, at minimum, cover the cost of replacing your home. But basic property coverage may not be enough given your home's location and its contents. Do you have a valuable collection, antique furniture or other expensive personal belongings? If so, you may need to purchase additional coverage called a personal property endorsement. Also, do you live in a place where earthquake, flood or windstorm coverage would be a good idea? These aren't covered under standard home insurance policies, so check on a separate policy for those circumstances.
Car insurance. Make sure your auto insurance liability limits are enough to protect you from a large claim against you. If you get sued for car-accident damages beyond your liability limits, all your assets can be fair game, including your house. Make sure your auto insurance liability coverage is high enough to protect you from losing your home. An umbrella policy, described below, can be valuable additional liability coverage, but it doesn't kick in until your auto insurance coverage limits are exhausted.
Umbrella insurance. No, this isn't for rainy days. Umbrella coverage is extra liability coverage that goes above and beyond your home insurance policy. No one ever expects to get sued for $1 million, but you never know when someone will slip on your sidewalk and seek compensation from you. These policies usually have high deductibles and are coordinated to kick in when your other insurance policies are exhausted. Umbrella policies must be purchased from the same company as your home insurance or car insurance policy.
Life insurance. Your home is likely your largest asset, which means you probably financed its purchase with a mortgage. Particularly if you are the primary income earner in your family, a life insurance policy can help your family stay in the home if you pass away. If you are considering life insurance for this purpose, make sure the coverage is at least enough to cover the cost of paying off your mortgage. ideally your life insurance coverage amount is enough to provide replacement for the loss of your income, an emergency fund for your family and possibly college tuition costs for your children.
If you're researching these different types of policies, keep in mind that purchasing auto and home insurance policies through one company can save you money from a "multiline discount." In the long run, having the proper coverage in the correct amounts will give you peace of mind.
Megg Mueller is a journalist with almost two decades of experience. She has worked as a reporter and editor for the Reno Gazette-Journal, as editor of health care and education manuals for Aspen Publishers, a subsidiary of Wolters Kluwer and wrote a weekly column on the hotel industry during her tenure as assistant travel editor for USA TODAY.com. Mueller is the editor of a tourism-based Web site and also serves as a reporter for a weekly business newspaper.
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