We’re obviously big fans of car insurance — and so is your state government, which requires you to carry at least some level of liability coverage. But while the decision to carry car insurance is fairly straightforward (do you own a car or not?) there are plenty of other types of insurance where the waters of decision become murky.
Renters insurance, life insurance, disability insurance — and what the heck is umbrella insurance anyway? If you’ve got car insurance taken care of, here’s a primer on a few other common types of insurance.
What is renters insurance?
Renters insurance typically covers your items in the apartment or house you rent. If a pipe bursts inside your apartment and water ruins everything inside, renters insurance can help cover your damaged items. Thief breaks in and steals your laptop? Renters insurance can save the day.
Though home-ownership occupies a central space in the American mythos, being a renter has many perks — no property taxes or homeowners association fees, minimal responsibility for upkeep, and more.
Renters insurance can be incredibly affordable; sometimes just a few dollars a month.
What is life insurance?
Life insurance provides some money to your loved ones in the event of your death. Those with shared debt, those whose loved ones depend on their income, or those with future plans that would get bungled by their untimely death are all people who might consider life insurance.
Life insurance is designed for you if, for example, you and a spouse co-signed a mortgage but they would have trouble making the payments alone; if you have a child whose education you’d like to provide for when they’re grown; or if you’re a business owner who wants to ensure your business partners can keep the business afloat.
Certain types of life insurance (namely, term life) can be fairly affordable if purchased in your 20s or 30s.
What is disability insurance?
Disability insurance replaces all or a portion of your income if you’re unable to work due to illness or an accident.
There are two types of disability insurance: short term and long term. Short term, just like it sounds, is designed for shorter periods of income loss — generally 90 days — while long term kicks in after that and can last for years, sometimes until Social Security kicks in.
It’s not uncommon for employers to provide disability insurance that covers a fraction of income (in fact, this is required by law in five states); consumers have the opportunity to buy up to 100% of income on their own, either through a payroll deduction or on the private market.
What is umbrella insurance?
Umbrella insurance is a form of liability insurance that sits on top of your existing car, renters, or homeowners insurance policies. An umbrella insurance policy goes above and beyond claims directly relating to your home or auto insurance, and kicks in if those policies ever hit their cap.
Umbrella insurance usually protects your assets in the event of a lawsuit, and is usually designed for people with significant assets.
The Bottom Line
Insurers offer different policy packages and coverage options, and we can’t speak to your precise needs; be sure to speak to a licensed insurance agent about which policy is right for you, if any.
Knowledge is power, and we hope you’re feeling empowered to make insurance decisions that are right for you. And when it comes time to shop for car insurance, we’ll be here with great rates and premium features.
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Julianne Sawyer is a freelance writer, app producer, and real-life Metromile customer living in the San Francisco Bay Area.