Insurance is a necessary safety net for anyone’s health, property, or business. However, it can be confusing. The confusion stems primarily from an insurance contract being comprised of pages and pages of stipulations, conditions, and clauses. One clause impacts another. Conditions rest upon conditions until it is difficult to determine the final result of any sudden event for which insurance might be required. If you feel insurance is impossible to decipher, you are not alone. In fact, many of the most common questions center around common situations that anyone would think were easily answered. To make matters even more confusing, the questions vary from industry to industry and contract to contract.
1. Do I really need a renter’s insurance policy?
Anyone who rents instead of owns their residence could be liable for negligence that results in physical injury. For instance, you could be responsible if you are required to clear the sidewalks of snow but someone falls before you do.
Additionally, renter’s insurance protects your personal property. For instance, a landlord’s property insurance will often not cover the loss of a tenant’s property due to theft, fire, or flooding. Because of these two realities, you need renter’s insurance.
2. How much homeowner’s or renter’s insurance do I need?
The simple answer is vague in that it depends on what you own, the area in which you live, and how many people come into contact with your property on a daily basis. For instance, replacing personal property worth $50,000 along with jewelry, guns, and rare collectibles will require you to place these individual items on a property list, along with serial numbers and photos, and insure them for replacement costs.
If you live in a busy neighborhood where people and kids trespass across your yard as they walk to work or school, you might consider additional coverage in case someone falls and injures himself or herself. If, however, you have a property of little value and people rarely walk on your property, it might be advisable to purchase the minimum required by law.
3. What is a co-pay?
A co-pay is the amount of money you must pay a doctor for a visit. Depending on the insurance plan you have, this amount will usually vary from $10 to $50. That said, some people will have no co-pay. The co-pay for other plans might be higher. The co-pay is typically not part of your deductible. It is simply the fee you are required to pay for going to see a doctor or dentist.
4. Is a health savings account worthwhile?
If you have a high deductible or are on a budget, you might experience a time where you are struggling for money that needs to be spent on a doctor’s visit. A health savings account is an escrow account that stores deposits you make either through your paycheck or at frequent intervals.
This money is then issued for visits you make to a doctor’s office. Because you can never really plan when you might be faced with a health emergency, you similarly might not plan to have enough money set aside if you need it. A health savings plan is an easy way to automate the
process of saving for health-related events.
Moreover, if you are faced with an emergency and have a health savings account, you will likely not have to dip into your 401(k) or IRA. Because dipping into a retirement account can carry tax penalties, a health savings account can provide you peace of mind and save you money.
5. Why do I need liability insurance?
Any time you run a business, you are vulnerable to the risk that an employee, customer, or colleague might suffer some type of physical injury. Additionally, property damage resulting from business activities is also a possibility. Liability insurance for commercial businesses will protect you against these rare but potentially devastating events.
6. Is the legal minimum protection advised?
The amount of protection you require depends on your assessment of the probability that extreme or worst-day events will occur. If you are engaged in extreme events, such as mixed martial arts, the possibility of extreme injury is present. Consequently, ensuring your business for more than the legal minimum is likely a good option. Similarly, if you run tiling business, additional tilers insurance might be warranted if you are handling expensive marble tile that is difficult to obtain. Without such coverage, an unexpected event could leave you financially liable.
Eric Reyes is a content writer appearing on more than 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.