Learning About Insurance- Part 2

At the end of Part 1 I said I would discuss some good deals you can get in insurance and this is what I intend to do in this section. No bargains can be found in the "must have" type policies, like auto and home insurance. But there are some policies I highly recommend.

The first type of policy I recommend is an umbrella policy. This is a policy that covers you for personal liability. Depending on your insurance company you can get a $1,000,000 umbrella policy for as little as $200-$300 depending on what you are covering. This is usually for 2 cars and one home. Once you add more cars and additional houses the premium goes up. Hopefully you never need to use this type of policy but in this country, where people file law suits for spilling hot coffee on themselves, you need to protect your assets. If you do get sued wouldn't it be nice to know you have a million or more in coverage for a couple hundred dollars a year?

In some cases an umbrella policy can save you some money. How? Some people understand the importance of having the proper amount of coverage. Instead of having an umbrella policy they add more liability coverage on their auto policies and home policies. For example, you can get an umbrella policy if you have $100K in liability coverage on your auto and home policies. Some people carry $250K in coverage on their auto. The cost of increasing from $100K to $250K is usually as much, if not more, than having the umbrella policy. So, these people carry only $250K in liability coverage for the same price, or more, than someone with an umbrella policy and $1.25 million in coverage.

The next kind of policy I recommend to those who don't have it through work is a short-term disability policy. This covers you if you are out of work for any length of time and can't make any money. Anyone looking to start a family should have this because while the new mom is home with the baby she can get paid while on maternity leave. This type of policy is becoming more and more popular as employers are looking to cut costs by reducing benefits.

My wife had a short-term disability policy because the school system she works for does not offer STD benefits. We pay roughly $75 month for the policy that will pay her just under $3000 for a month out of work. As long as you can get a doctor's note saying you should miss work you can receive a predetermined amount of money for up to six months. After six months you will need a long-term disability policy. Let me tell you, this money came in handy when our daughter was born.

Most people will say they don't need this type of policy but I think it is a bargain. We have actually made money on this policy because we have had it 3 years and it has cost us $900 per year. We have made one claim, when my daughter was born, and we got $3000. Unless you commit fraud you cannot make money on an auto or home policy.

I think I have shown you two bargains as far as insurance goes. Anyone with something worth taking should have an umbrella policy. Anyone that is not offered STD benefits through their employer should have this type of policy. In part three of this series I will discuss homeowner insurance in more detail, don't miss it.