Did you know that almost 6,000 insurance companies operate in the US? Of these, more than 2,500 are property and casualty insurers. They make up the brunt of the insurance sector, as they’re the ones that sell home and auto insurance.
All that should already give you an idea of how varied the insurance sector is.
The big question now is, which of these provide essential insurance coverage?
We’ve rounded up 10 of the most vital ones that most people shouldn’t go without, so be sure to read on!
1. Health Insurance
This is one of the types of insurance you should never bypass, even if it’s no longer the law. That’s right: As of January 2019, health insurance, at the federal level, is no longer a requirement in the US.
However, some states, such as California and New Jersey, have state-imposed laws. In these states, health insurance is either mandatory or will become required.
For many good reasons, seeing as a health plan can help ease the burden of medical costs. With health insurance, you can reduce your out-of-pocket spending on health care services. Some comprehensive policies even offer free preventive services, such as check-ups and screenings.
Keep in mind that health care spending in the US may reach a staggering $6 trillion by 2027. That shows how expensive medical care has become, and you can be at risk if you don’t have a health plan. Without a health policy, you may end up facing exorbitant hospital and medical bills.
Not sure where to start when it comes to purchasing health plans? You can compare plans here so that you’ll have a better idea of what each scheme covers and what they don’t.
2. Dental Insurance
Most basic types of health insurance offer little to no coverage at all for dental care services. That’s why for every US adult with no health policy, three adults are without dental coverage.
The thing is, poor oral health doesn’t only cause tooth decay and periodontitis. It can also affect the overall health and well-being of individuals. Researchers, for instance, say that gum disease and heart disease may go hand in hand.
Many other studies found links between oral health, strokes, diabetes, and mental illnesses. Others found evidence that poor dental health can result in nutritional deficiencies. Some researchers also say that the state of the mouth is a risk factor for obesity.
As you can see, dental health is just as vital as general health. As such, it’s best to supplement your health policy with a dental plan. This way, you can improve both, which in turn, can help you have a better quality of life.
3. Motor Vehicle Insurance
There are only two states in the nation that don’t impose the purchase of auto insurance. These two are New Hampshire and Virginia. If you aren’t from these states, it’s your legal responsibility to carry auto insurance.
In fact, even if you’re from the Granite State or the Old Dominion State, you still need “proof of liability.” For instance, if you’re at fault for a car crash in NH, you must prove that you can pay for the damages you caused. Otherwise, you’ll likely end up getting your driving privileges suspended.
In Virginia, you can “skip” auto insurance, but if you do, you need to shell out $500. This is for the “Uninsured Motor Vehicle Fee,” which is only a permit that lets you drive without coverage. It’s not insurance, so, if you end up in a crash, you’re likely to end up paying for the damages too.
Keep in mind that road crashes are so common in the US, and they cause at least 4.4 million serious injuries each year. Overall, these accidents cost the economy and society at least $871 billion per year.
4. Homeowners’ or Renters’ Insurance
Federal and state laws don’t require these types of insurance plans. However, homes purchased through a mortgage, which 62.9% of homeowners did, often do. It’s one of the most common requirements set forth by most mortgage lenders.
Renters’ insurance isn’t a federal or state law, but landlords can demand it from their tenants. It’s usually a part of a rental agreement that protects the rented-out property. However, it also protects renters, as this policy covers their possessions too.
You should get a policy even if you’re already free from mortgage or if your landlord doesn’t require you. A homeowners’ or renters’ insurance policy can protect you from sudden losses. It can also help you pay for the costs to fix or replace property damaged by accidental causes.
5. Flood Insurance
The basic types of insurance coverage for homes exclude flood damage coverage. For properties within a high-risk flood zone, flood insurance is often mandatory. These include homes purchased with government backing.
However, you should still get flood insurance even if your home is outside of a high-risk zone. For starters, the frequency of floods in the US has risen by more than 250% since 2000. This means that even low- to moderate-risk homes are at a severe threat of flood damage.
6. Life Insurance
70% of Americans believe that life insurance can protect their financial well-being. That makes it one of the essential types of insurance, but only half of the respondents said they own one. Others in this group were also unsure if they had a life insurance plan.
Wherever in the US you may be, no law requires you to purchase this type of insurance. However, it’s your life on the line here, as well as the future of your loved ones. A life insurance policy can protect your family’s finances in case you pass away.
Some types of life insurance policies even let you build a “savings” account as you pay for your premiums. These include permanent life policies, such as universal or whole life insurance plans. These come with a “cash value” component that grows every year.
After some time, say ten years, you may already be able to withdraw or borrow against that savings account. You can then use the money as you see fit while you’re still alive and well.
7. Workers’ Compensation
Workers’ compensation is mandatory in 49 states. The Lone Star State is the lone state that doesn’t require this coverage in the US.
Workers’ comp, however, is the legal responsibility of employers. They must be the ones to purchase this for their workers. If they don’t, they will face severe penalties from the federal to the local level.
With that said, be sure that your employer has given you workers’ compensation. This policy should cover you for injuries and illnesses that occur while you’re on the job. It should also pay for lost wages in case you can’t go to work due to a job-related health issue.
8. Disability Insurance
Sixty-one million adults, or 25% of the US adult population, have at least one type of disability. The majority of them have problems with mobility, followed by cognition issues. What’s more, these conditions affect not only older adults but younger people too.
Living with a disability can have a severe impact on one’s ability to work. Moreover, these health conditions cause a massive spike in medical and care costs.
With disability insurance, you can protect yourself and your financial well-being. You also get to safeguard your loved ones who depend on your ability to generate income. It can help you pay for your bills and other expenses if you can’t work due to a disabling injury or illness.
9. Umbrella Insurance
Umbrella insurance provides coverage for claims that existing policies won’t cover. They are “add-ons” to typical insurance plans that have limitations. The “umbrella” part of your policy pays for whatever these restrictions don’t.
For instance, let’s say your homeowners’ policy has a property coverage limit of $100,000. However, a fire occurred, and your home has sustained damages that cost $150,000 to repair or replace. If you have an umbrella policy, it should cover that remaining $50,000 (or up to the umbrella coverage’s limits).
10. Home-Based Business Insurance
As of June 2020, about 40% of Americans work full-time from their own houses. Many others run their sole businesses or sidelines from home.
If any of these is true in your case, know that your home insurance may not cover all of your business properties. A few examples are computers, electronics, and equipment you use for your business. Your policy may also not cover injuries to others that occur due to business activities.
To protect yourself from such losses and liabilities, consider getting home-based business coverage.
Don’t Bypass these Essential Insurance Plans
There you have it, ten of the essential insurance plans that most people would benefit from. There are many others, such as travel insurance, but the ones above should be your priorities. It’s also best to get them as early as now, as the longer you wait, the more expensive they may become.