I understand thinking about insurance is right up there with thinking about what happens with your money when you die (estate planning). Or thinking about taxes. All are horribly boring and can often be depressing to consider. To take the sting out of the thought of insurance, here is part two in a six-part series about what insurance you need, and what you don’t, if your aim is simplicity.
First up is property insurance. If you own stuff, you should insure it against loss or damage. That loss or damage might be from theft or natural disasters. There are three main categories of property insurance: your abode, your ride, and your other stuff. Protection for your ride is the subject of this blog post.
Auto insurance is mandatory if you drive a car. If you travel via alternative transportation, such as a motorcycle or boat, you would have corresponding insurance on that vehicle.
Auto insurance covers three main things: damage to your car, your liability for damage to someone else’s property or injury to their person, and supplemental liability insurance in the event that it was the other driver’s fault and their insurance is inadequate to cover the damage they inflicted on you or your car.
Depending on how new and/or expensive your car is, carefully monitor the coverage for damage. There are rampant horror stories about someone totaling their vehicle, and discovering the insurance payment is nowhere near enough to replace it.
As for liability insurance, don’t skimp. If you are sued for damages that exceed the liability coverage you carry on your vehicle, you might be forking over some of your hard-earned income or assets. It might feel like a money-saver to carry minimal liability coverage, but that will come back to haunt you in the event of a big claim against you.
Likewise, don’t overlook the uninsured/underinsured coverage. If you are in an accident that was someone else’s fault, they may or may not have coverage. Or they might have coverage that is inadequate. Without uninsured/underinsured, you are at risk financially in this situation.
If you carry around a bunch of stuff in your car, you should know that it is your homeowner (or renter’s) policy that covers your stuff in the event of loss. Auto insurance does not provide any coverage for things you had in your car when the loss or damage occurred.
Wrapping up this brief overview of property insurance for your vehicle, here are a few additional thoughts for you to consider.
- Seek advice: It is best to get a licensed insurance agent to sit down with you to discuss your needs. The guide provided here can help you get the conversation started. Pay close attention to the recommendations an agent might give you, and if you feel you are being oversold, get a second opinion.
- Review your coverage regularly: Don’t buy auto insurance and then forget it. Review it annually to make sure all the coverage you have is still needed, or if any new coverage is required due to new purchases or other changes.
- Simplifying your stuff simplifies your insurance: Remember if you downsize your home, buy a cheaper car, and drive your car longer, you’ll save a bundle on your insurance coverage. Just sayin.’
Your turn. How have you handled (or not) your auto insurance needs?
Check out our entire six part Insurance Simplified series:
- Insurance, Simplified: Your Wealth (Part Six in a six-part series)
- Insurance, Simplified: Your Income (Part Five in a six-part series)
- Insurance, Simplified: Your Bod (Part Four in a six-part series)
- Insurance, Simplified: Your Stuff (Part Three in a six-part series)
- Insurance, Simplified: Your Ride (Part Two in a six-part series)
- Insurance, Simplified: Your Abode (Part One in a six-part series)