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Do I Need Insurance?

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Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency...

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Reviewed byJoel Ohman
Founder, CFP®https://res.cloudinary.com/quotellc/image/upload/insurance-site-images/truthaboutins-live/2020/03/joel-ohman.jpg

UPDATED: Mar 13, 2020

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The answer is likely a resounding “YES!” From renting an apartment to driving a car to breathing air, you probably need insurance coverage.

In short, insurance is referred to as a transfer of risk.

Basically, you transfer your potential risk of illness, liability of injuring others, and/or damaging their property to the insurance company for a small, guaranteed sum of money, known to as a insurance premium.

Do you drive a car?

Operating a motor vehicle poses certain risks. You may cause someone bodily injury or damage their property if involved in an accident.

Or you may damage a vehicle you don’t own outright. Either way, you need auto liability coverage at the very least in most states.

If you have a loan on a car, your lender will likely require you to purchase a full coverage policy, which includes liability coverage and physical damage coverage for your own vehicle.

Additionally, you may want underinsured or uninsured motorist coverage so your insurance company will cover damages caused by those with insufficient coverage, or no coverage at all.

Do you own a home?

Homeownership has its own set of unique risks. The largest risk is the chance your home is destroyed by any number of perils…especially if you have a mortgage.

Without insurance, you would be stuck paying a 30-year mortgage for an empty plot of land if your home burnt down or was destroyed by a tornado.

Also, owning a home presents liability risks. Imagine if someone was injured while visiting your home. You’d be on the hook for their medical bills in that event.

A proper homeowner’s policy is designed to cover you for both of the situations described above, and more (what is covered by a homeowner’s policy?).

Do you rent an apartment or a home?

Renter’s might be the least properly insured people on this list, mainly because many renters mistakenly believe they’re covered by their landlord’s insurance policy or their auto insurance policy…not the case.

You likely signed a hold-harmless agreement as part of your lease.

This means you agree not to hold the landlord responsible for your personal property or your liability resulting from tenancy on their property.

If your apartment building burnt down, you would simply lose all of your possessions. Also, if someone slipped and fell in your unit, you would be personally liable for their injuries.

A renter’s insurance policy is similar to a homeowner’s policy, it just doesn’t provide coverage for the actual building, which is usually the only thing covered on the landlord’s policy.

Do you value your health?

Of course, we all do…or at least we do when we fall ill. Health insurance is a hot topic these days.

Many Americans don’t have access to it or simply cannot afford the premiums associated with a policy. Health insurance is designed for major medical expenses or serious illness (why do I need health insurance?).

While health insurance is expensive, the cost is a drop in the bucket compared to what you would pay out-of-pocket in the event you became seriously ill.

The government has passed bills such as HIPAA, which was designed to help individuals maintain coverage in the event they change jobs and have an existing illness.

Additionally, COBRA benefits are available for those who have recently become unemployed.

Do you plan to live forever?

Life insurance is a great way to ensure your surviving family members are either left with a financial cushion or in the least not left with bills resulting from your passing.

It’s not difficult to figure out how much life insurance coverage you need based on your personal situation. And it’s a good idea to obtain and maintain an active life insurance policy, as costs go up as we age.

As you can see, insurance is the best way to transfer the daily risks we take on in everyday life. From driving a car to leaving family members with a financial cushion, every one of us likely requires some form of insurance.

It is recommended that you shop online for insurance quotes or contact an independent insurance agent for a personal insurance evaluation.

This is the best way to make certain you’re covered properly at the right price point for all your insurance needs.

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