Essential Insurance Types to Have for Individuals and Businesses

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Life is full of unexpected events. Most of these unexpected events can cause monetary losses that disrupt your life, your family’s well-being, and your business. However, you can minimize the effect of these disruptions by purchasing the right insurance types.

Insurance is available in many types. Depending on the type, you can get health protection, life protection, car protection, or other protections from the insurance policies you purchase. Consequently, you must have more than one insurance policy to get comprehensive protection.

Essential Insurance Types Everyone Must Have

Insurance companies offer at least 8 types of insurance policies for individuals. However, you don’t need to have them all because all these insurance policies may not suit you. Having 5 essential insurance types is typically enough for most people.

1.  Health Insurance

Medical bills can be very expensive. It can cause financial disruption in your life. However, you can avoid it if you have a health insurance plan. It will cover most of your healthcare costs stated in the contract.

Generally, this insurance pays for surgical, medical, and prescription drug expenses. Some health insurance plans also include dental expenses. To get these protections, you must pay monthly premiums. Moreover, you must also pay a deductible before the coverage starts.

These are 4 health insurance types you can choose.

  • HMO or Health Maintenance Organization – HMO delivers all health services via a network of healthcare facilities and providers. Therefore, you can get medical treatment or procedures only from these facilities. Moreover, HMO requires you to have a referral to see a specialist.
  • PPO or Preferred Provider Organization – It allows you to see a specialist without a referral. It also allows you to get medical treatment from out-of-network providers. However, you will spend more out-of-pocket costs if you see out-of-network providers.
  • POS (Point-of-Service) Plans – You may see out-of-network providers if you have the plans. Moreover, POS plans do not require you to have a referral to see a specialist.
  • EPO or Exclusive Provider Organization – You can only get medical treatment or procedures from in-network healthcare facilities and providers if you have an EPO plan. However, EPO gives you more freedom in seeing specialists; no referrals needed.

2. Auto Insurance

Every year, over 31,000 people die in traffic accidents in the US. It is no wonder that almost all the states in the country require drivers to have an auto insurance policy. This insurance is not only for cars but also for other types of vehicles.

Auto insurance will protect you against litigation that may result from traffic accidents. Moreover, this insurance will guard your vehicles against vandalism, natural disasters, and theft. Insurance companies offer auto insurance types with various coverage.

Below are the car insurance coverage types that you can get.

  • Bodily Injury Liability Insurance – It will pay medical costs for others if you injure them in a traffic accident in which you are at fault.
  • Property Damage Liability Insurance – This insurance pays for repairs to other property or vehicles you may damage during a traffic accident.
  • Personal Injury Protection Insurance – It covers medical expenses when you or the passengers of your vehicle get injuries in traffic accidents.

It also covers funeral expenses if someone in your vehicle dies or lost wages if he cannot work due to injury.

  • Collision Coverage Insurance – This insurance pays for repairs to your vehicles or your property.
  • Comprehensive Coverage – This coverage will reimburse you for theft, loss, and damage to your vehicles due to non-collision causes.
  • Uninsured Motorist Coverage – It will protect you if you have traffic accidents in which the drivers who are at fault do not have auto insurance.

3. Life Insurance

Life insurance is ideal for you who are a primary wage earner in the family. This insurance will provide for your family if you die unexpectedly. Insurance companies offer several life insurance types. Some of them are:

  • Whole life insurance;
  • Term life insurance;
  • Universal life insurance;
  • Mortgage life insurance.

4. Disability Insurance

Disability insurance is one of the essential insurance types for you who have a high-risk job. This insurance will replace a portion of your wage if you can not work due to disability or illnesses.

5. Home Insurance

No states in the US require you to have a home insurance policy. Consequently, you may not have this insurance. However, if you plan to finance your home, your lender will ask you to have it. Home insurance protects the structure of your house and your personal belongings.

Essential Insurance Types for Business

If you are a business owner, you must have some essential insurance types for business. Below are business insurance policies you need to consider having.

1. General Liability Insurance

General liability insurance is one of the most essential business insurance types every business owner must have. It protects you from claims or lawsuits from people outside your company. It pays someone else’s property damage or bodily injury caused by your business.

2. Commercial Property Insurance

Your commercial property, such as office buildings and equipment, is a valuable business asset. Therefore, you must protect it with commercial property insurance.

This insurance covers certain losses or damage to this physical property. However, it doesn’t cover damage from floods and earthquakes.

3. Business Income Insurance

Business income insurance reimburses you for lost business income when a disaster or certain situation prevents you from operating your business. You can use the reimbursement for paying rent, payroll, utility bills, and other ongoing expenses.

4. Workers’ Compensation Insurance

Most states in the US require business owners with employees to have workers’ compensation insurance. Businesses that do not have this insurance may get fines or face criminal charges.

Workers’ compensation insurance gives your employees certain benefits if they get injured on the job. This insurance covers their medical bills, lost wages, and funeral costs.

5. Commercial Auto Insurance

This insurance protects your employees and commercial vehicles on the road when you drive them for business. Commercial auto insurance covers medical bills of the people who suffered injuries and damage or possession loss caused by your commercial vehicles.

Having essential insurance types will free you from particular financial worries. However, to be truly free of these worries, you must purchase insurance policies only from trusted and reliable insurance companies. Therefore, when the time to file the claims comes, you get what you have paid for.

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