Your Guide to insurance basics

What Is Car Insurance?

When you buy a car insurance policy, you’re getting financial protection for both your vehicle and damages caused by your vehicle in case of an accident or injury. For example, if you’re involved in an accident, collision insurance would help cover the cost of the repairs. Your insurance would kick in after you’ve met your deductible and cover you up to the limit of your policy.

Why Do You Need Car Insurance?

Two reasons. First, because accidents happen even to the best drivers. And second, it’s the law — car insurance is legally required in almost every state.

Having car insurance offers peace of mind and ensures that your financial responsibilities are limited. In cases where you’re responsible for damage to your vehicle from an accident, the amount you owe typically won’t exceed whatever deductible you have pre-arranged with your agent for comprehensive and collision insurance. If you’re responsible for damage to another person’s vehicle or injuries, your liability coverage would help cover the cost — and that doesn’t require a deductible.

Car insurance can also cover you against medical expenses and possible lawsuits after an accident, protect you against uninsured motorists, and often covers expenses for repairs due to theft, vandalism or natural disasters.

What Is Renters Insurance?

Renters insurance is a commonly misunderstood and underappreciated form of insurance. Unlike homeowners insurance, renters insurance doesn't cover the structure of the home or apartment you live in — that’s the responsibility of your landlord.

What you do get coverage for, however, is all of your property within your home — or when you’re on the go — as well as liability coverage against lawsuits. For example, if someone breaks into your apartment and steals your laptop, your policy would cover the cost of replacement up to the limit of your policy after you pay your deductible.

Why Do You Need Renters Insurance?

Renters insurance is an easy and affordable way to protect your personal property, provide liability coverage and even has your back on the go. Keep in mind that if disaster strikes and you’re robbed or lose everything in a fire, your landlord almost certainly is not responsible for covering your belongings. By paying a little now, you can avoid the possibility of paying a lot more later. 

What Is Homeowners Insurance?

Homeowners insurance is protection for your home that helps cover repairs or replacements to your home’s structure, belongings and even covers you if you’re liable for injury to another person when they’re on your property or accidental damage to their property. For example, if your home is damaged by a fire, your policy would likely cover the cost of the repairs (once you’ve met your deductible).

A standard home insurance policy includes essential coverages that offer protection from a specific set of common damages. Just as every home is unique, so is every home insurance policy. And you’ll have the option to customize and purchase additional coverages as they fit your needs.

Why Do You Need Home Insurance?

Simply put, your home is a major investment that should be protected. Unexpected damages and losses can happen, and if you’re insured, your financial responsibility is limited — the amount you owe won’t exceed a certain set amount (your deductible) up to a certain total (your coverage limit). If you don’t have coverage, you’ll likely be on the hook for the total cost of the damages.

So why not pay a little now to avoid the possibility of paying a lot more later? Also, while home insurance isn’t typically legally required, it is likely required by your mortgage company or bank.

What Is Umbrella Insurance?

Think of umbrella insurance as an additional financial safety net on top of your existing coverage. Sometimes the liability limits in your auto, home, boat, or recreational vehicle policy are not enough to cover the damages from an accident or judgments from a lawsuit. An umbrella policy protects your assets and future earnings from being at risk should your other liability limits not be enough.

For example, if you were in an accident that caused $1,000,000 worth of damages but your auto policy only covered up to $300,000, you’d be responsible for the remaining $700,000. But if you have an umbrella policy, you get an additional level of coverage that’ll help cover that remaining amount.