4 Types of Insurance You Should Be Familiar With

You’ve probably come across several articles, blogs, and YouTube videos explaining the great benefits of paying for insurance, including how it can protect you financially. However, do you know the different types of insurance available today? You can get coverage for almost all the assets you own with the right policy, but there are some that you should prioritize learning more about than others. Here are four of the most common types of insurance you should take your time to familiarize yourself with.

1. Auto

Auto insurance protects you financially in case of an accident by paying for any work you may need from a reputable auto service professional, like auto glass repairs, and it can also take care of your medical bills. Some policies also cover claims resulting from injuries to another party. Besides that, even if you don’t drive your car, you’re legally required to get third-party insurance, which is the most basic type of coverage, as long as it’s roadworthy.

You can only qualify for an exemption if you formally register your vehicle as off-road and provide a Statutory Off-Road Notification (SORN). Driving without insurance has consequences that can include being banned from driving altogether, a fine, and a minimum of six points on your license. The relevant authorities may repossess in some cases.

Within auto insurance, you can purchase different types of insurance coverage. If you’re mainly looking to cover damage to your car, collision coverage is what you want. With this, if you hit a stationary object or another automobile, the insurance company will cover the cost of any resulting repair needs for your vehicle.

For instance, if your vehicle flips over due to the impact of the accident, damaging your windshield, your collision coverage will kick in. However, don’t expect it to apply to any property damage you cause. A collision cover isn’t necessarily state-mandated. Still, your financing company may ask for it.

Most people buy collision and comprehensive coverage together, but they’re quite different. For starters, a comprehensive cover won’t pay for damage to your car. Instead, it applies when the cause is a natural disaster. Think floods, fires, earthquakes, and hail storms. This cover will also pay for damages caused by animal contact and compensate you in case of theft or vandalism.

You can also buy liability insurance to protect yourself from the financial implications of accidents where you are at fault. For example, if you damage someone’s property and they need medical attention, you won’t have to compensate them using your money. In most states, the law requires you to have liability coverage as one of your types of insurance.

Your insurance provider may also offer underinsured motorist (UIM) and uninsured motorist (UM) coverage as a bundle. If a driver who doesn’t carry insurance hits you, UMBI, or uninsured motorist bodily injury, will cover the costs of medical care for your injuries. UMPD, or uninsured motorist property damage, will kick in when an uninsured driver strikes your vehicle, causing damages that necessitate the work of auto body companies. If the at-fault party has a limit that’s too low to compensate you for your damages fully, UIM will help supplement it.

A MedPay or Medical Payments cover is another type of insurance your agent may recommend. This type of coverage is somewhat similar to personal injury protection, but the coverage scope is much more limiting. When you purchase it, it’ll provide you with a financial cushion for the costs of medical care for you, your family members, your passengers, and any other policyholders.

If you already have health insurance that pays for accident-related costs, it can serve as a complement. However, if you currently don’t hold health insurance coverage, MedPay is a great alternative. You can also use it to cover co-pays and deductibles for your other policies, including your health insurance.

You can also get personal injury protection (PIP), sometimes known as no-fault insurance. In jurisdictions where there are no-fault accident laws, PIP coverage is a requirement. In a collision, PIP will pay your medical bills, regardless of who’s to blame. You can extend coverage to your household members, passengers, and any other driver you list on your policy. PIP coverage is more comprehensive than MedPay and might help with burial costs, child care, and lost wages, among other things.

2. Boat

If you own a boat or are considering purchasing one, you probably picture enjoyable days spent on the water with loved ones. However, your boat is both an asset and a liability. You must guard it and yourself from accidents, theft, and damage. Boat insurance can help with that better than the other types of insurance.

Also known as marine insurance, this policy gives you peace of mind because you know you’re protected if the unfortunate occurs, even if your boat is stored in your garage on a trailer. Boat insurance is similar to auto insurance in many ways.

If you injure someone else or cause damages to their property or damage your boat, you gather all the relevant evidence and file a claim with your insurer to get them to pay for the damages and medical bills. If an incident is covered, they’ll cover the injuries or losses up to your coverage limit.

One of the most common misconceptions regarding boat insurance is your homeowner’s insurance policy provides sufficient coverage, so you don’t need it. Your home’s insurance policy might somewhat protect a smaller boat on your property, but it won’t give you the coverage you need when out on the water. The extent of your boat insurance coverage depends on your state, your insurance provider, and what you select.

When you meet with your agent, they’ll present you with a couple of options. One of the types of insurance you can expect to hear about is physical damage coverage. It’ll protect you against damage caused by a collision with an underwater object or another boat.

You’ll also want to look into adding liability insurance to your policy. When you purchase this coverage, you hand over the financial liability if your actions result in an accident or someone gets injured while on the boat. Your insurance will cover the property damage or bodily injury.

Personal property coverage is another great investment. It’ll come in handy if the boat sinks, and it takes things like your fishing gear, cameras, and phones. You can file a claim to get compensation for the costs of replacements.

There are times when you may need assistance. For example, when your boat becomes inoperable, you need to transport it to the nearest repair facility, or you’re out of gas. For such situations, you can purchase towing and assistance cover to cushion yourself from the cost of roadside assistance and towing services. In most cases, you’ll get coverage for theft of the boat itself.

There are two areas that your insurance may or may not cover. These are uninsured boater and hurricane coverage. It’s in your best interest to ask about them.

With an insured boater cover, you get protection if you get hit by a boater who lacks insurance or doesn’t have enough to cover the damages. It’ll help you pay for injuries or damages. If you cause or get into an accident with an uninsured operator, the financial responsibility for things like legal fees, medical bills, lost wages, property damage, and repairs may fall on you. Find out if your boat is insured against storm-related loss or damage if you reside in the eastern or southeast regions of the United States or any place where hurricanes are possible to determine whether you need to buy separate hurricane coverage.

So, as you prepare to go shopping for new boat sales, ensure you budget for the purchase of boat insurance. It’s one of the best investments you can make as a boat owner. It’ll protect your investment for as long as you own it.

3. Health

Health insurance, one of the most popular types of insurance, acts as a safety net for your medical care costs. It typically covers any costs you incur, like when seeing an orthopedic doctor due to injury, illness, or an accident. It’s ideally an agreement between your health insurance provider and yourself. It indicates that you will pay a specific amount (premium), and the insurer will cover all or part of your medical costs.

The insurer may pay your medical bills in two ways. You either get cashless treatment where you don’t pay anything. Your insurer pays the hospital directly. Your other option is to cover your medical costs out of pocket before requesting the insurance provider for reimbursement.

While the benefits of purchasing health insurance are clear, you’d be surprised to learn that most people don’t do it willingly. They only start looking for their available options after it’s too late. Even if an emergency doesn’t arise, there’s often a significant lag between when people intend to buy and when they do so.

A medical emergency can strike at any time. Even if you’re generally healthy and your odds of getting sick are low, have you considered accidents? The related medical costs from such incidents could leave a big dent in your wallet. You can protect yourself and your savings from such financial hits with a solid health insurance plan. It’ll give you the much-needed buffer to cover the costs of medical visits, tests, medications, and other treatments.

Healthcare costs are at an all-time high. This may discourage you from getting treatment or cause you to cut corners to get the help of a medical professional. When you have a valid health insurance cover, you can access the care you need without taking any shortcuts. The best part is that, up to a certain amount, the premiums paid are tax deductible!

The health insurance you purchase may cover things like telehealth services or even the costs of enrolling in an alcohol detox center, depending on the type of policy you settle on with your insurance provider. Work closely with the insurance agent you get to customize a package that’ll best serve your needs. Of the different types of insurance you can get, health is perhaps the most important one.

4. Homeowners

As a homeowner, you know how valuable your investment is. Besides costing a lot of money, it provides shelter from the elements for you, your family, and your belongings. You’ll want to protect it in any way you can.

Homeowners insurance helps cover damages to your belongings and property. It also protects you in case someone suffers injuries on your property. You may wonder, of the different types of insurance, ”how does homeowner’s work?” Well, here’s what you need to know.

You must first buy a policy, which will specify the covered structures, the circumstances that make you eligible for coverage, and the maximum amount of coverage you’ll get, whether you need roofing or sewer repairs or furniture moving services. Depending on the insurance provider you get your policy from, you’ll likely need to schedule a home inspection. While you could search for an insurance provider and policy independently, knowing where to shop and whether you’re getting a great deal can be hard. Luckily, some professional services can help you with this part.

After successfully purchasing your policy, you must continue paying monthly premiums like you would for health or life insurance. If your home and other covered assets suffer damage during a covered event, you can file a claim with your insurance company.

You must pay your deductible, the amount you must pay out of pocket before the insurance company pays a claim. Depending on the policy you take out, your deductible may vary based on the occurrence you claim against. That’s why it’s important to ensure you know exactly how much you will be required to pay.

You may want to create an emergency fund with enough money to cover the deductible. Note that by paying higher premiums, you can reduce your deductible. However, learning how this aspect of your coverage works is important because the deductible may reset annually or for each event.

Insurance may seem unnecessary when everything is okay. However, when an emergency strikes, it may get you out of a tight financial spot. Consider the types of insurance mentioned in this article.

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