Insurance is a protective measure, coverage of an individual, group, or business in which the individual or entity receives financial protection or reimbursement against losses, damages or health-related expenses.  Usually this is done by a group of people (insured parties) paying into one large pool of funds that will cover the risks and associated costs of the entire group of people. When risk of repair, damages or loss of your home or car is not too high and you're a healthy person, one can assume risk. When it is too costly to assume risk, we need other ways to manage it such as insurance. 

There are several different types of insurance, including home owner’s, auto, life, and health, that can save you from paying hundreds, or even thousands in the long run.  Most types of insurance are optional, while some, such as auto liability insurance, are mandatory by law.  It is important to know what each kind of insurance can do for you, in order to make plans accordingly.
 

Auto Insurance

Auto insurance is a type of insurance that covers losses or damages on cars, trucks, and SUVs due to accidents or theft.   Auto insurance also protects the people in the car at the time of the incident.  Typically, a standard auto insurance policy covers:

• Bodily injury liability - protects against injuries or death while operating your vehicle.
• Medical payments - pays medical expenses of the driver and all people involved in the accident.
• Uninsured motorists - covers expenses of injuries and damages if you car is struck by another driver that does not have insurance of their own.
• Collision coverage - pays for damages for the value of your car if you hit or you are hit by another vehicle.
• Comprehensive physical damage -  coverages damages or loss of non-collision related incidents.
• Property damage liability - covers any damage your car has on another person's property.
• Rental reimbursement - covers payment of a rental car while your vehicle is being repaired due to an incident covered by your auto insurance.

With all standard auto insurance policies, there are various types of coverage options based on what best fits your needs.  Each option, however, will have different limits of coverage. 

GAP Insurance

Another important type of auto-related insurance is called Guaranteed Asset Protection, commonly known as GAP insurance. GAP insurance is a type of coverage that comes in handy in the event that your car becomes completely destroyed or stolen, when you owe more money on your car than the vehicle is valued.  In a nutshell, GAP insurance covers the difference between what your car is worth (the book value) and what you still owe on it.

In many cases, the difference between what you owe and what your vehicle is worth is thousands of dollars.  The higher the outstanding balance on your loan, the more you can benefit from this insurance.  For instance, if your car is worth $15,000 and you owe $17,000 on your auto loan, GAP insurance will cover the remaining $2,000 in which you would still be responsible.

Homeowner’s Insurance

Homeowner’s insurance is a type of insurance that can cover many aspects of a person’s home and their private property.  Depending on the kind of coverage you wish to choose, there are seven basic types of homeowner’s insurance (the first four being the more common policies) that cover everything from personal belongings due to theft to complete destruction of homes resulting from natural disasters.

Life Insurance

In the case of a death, life insurance will pay a set amount of money to the person that the insured individual specifies; this person is also known as the beneficiary.  The purpose life insurance is to protect your family and loved ones left behind from financial loss after your death.  There are three main types of life insurance: term life insurance, variable life insurance, and universal life insurance, all of which should be carefully studied so that every individual knows what plan is right for them when the time comes.

Health Insurance

Health insurance protects consumers from the potentially extreme cost of medical care.  The cost of treatment for an extreme illness or accident can be financially overwhelming. Health insurance makes health care more affordable, predictable, and manageable since the risk of expensive health care needs is pooled across a large group of people.
 

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