From Renter’s Insurance to Disability Insurance, Find the Best Insurance for You

Allison Kade

Human psychology makes no sense sometimes. We buy high and sell low, act against our economic best interest, and insure things that we can afford to lose while we fail to insure the most important assets. Think about it: Are you more afraid of your computer crashing or of becoming disabled for the rest of your life?

Insurance Is All About Understanding Risks

The key is to think out how much risk you can take on. If something goes wrong (like you wind up in the hospital) and the potential downside is $300,000, decide if buying insurance is worthwhile—you’d be spending a little money now to manage a big risk. Similarly, you could insure your computer, but if you have the money to replace it when it breaks or is stolen, then you might choose not to insure it, which is essentially self-insuring. Not getting insurance is still a choice; you’re making the choice that, if something bad happens, you’ll pay for it with your own money.

It’s often tricky to navigate which kinds of insurance you do and don’t need. So, we break it down with some simple rules of thumb:

We break down what each kind of insurance does and things to note:

Health Insurance
This covers you if you become sick or injured. Read our health insurance basics to learn more.

Disability Insurance
This insurance will replace your income if you become disabled and can’t work. There are short and long term policies available—note the distinction of “own-occupation” coverage, which states that you will receive insurance money if you are too disabled to perform your job. Otherwise, imagine a business executive who gets injured but is told that she won’t receive disability insurance because, even though she can’t work at her old job, she could still work in the fast food industry…

Renter’s or Homeowner’s Insurance
This will cover you, for example, if your apartment floods and all your stuff is ruined. While your landlord will be responsible for the structure itself, renter’s insurance will give you somewhere to stay in the meantime and replace belongings that you’ve lost. Sometimes, acts of God or certain kinds of flood or fire damages aren’t covered. Understand what is and isn’t covered under your plan. We know that the thick packet you receive is long and complicated, but make sure that you at least read the outline of it, generally the first couple pages. If you don’t understand it fully, get someone to help you. If you live in an area that’s known for flooding or fires, find out if there are holes in your current policy.

Riders for Additional Property
Coverage for items like jewelry or electronics will normally be included in a rider to your homeowner’s or renter’s insurance policy.

Auto Insurance
This is non-negotiable. For more info on your options, check out our auto insurance basics.

Life Insurance
Life insurance will provide money to your loved ones when you die, so that those who depend on your income aren’t left in a bad situation. If you’re considering life insurance to avoid giving debt to your loved ones when you pass away, note that this only applies if your loved ones have cosigned for those loans.

Long Term Care Insurance
Long term care insurance will cover the costs if you or a loved one becomes incapacitated and needs perpetual care, such as entering a nursing home. Especially with the decline of the Social Security system, consider talking to your parents about this for their sakes.

Travel Insurance
This will insure the cost of your trip if you need to cancel, and will provide care for you if something bad happens while you’re abroad, like an injury. Many credit cards provide this, but to reap the benefits you have to have bought your tickets with the card that has coverage.

Professional Liability Insurance
If you own a business, you need to be covered in case you’re sued for negligence in some way.

Umbrella Insurance
An umbrella policy covers you when your liability is higher than the total coverage from your other policies. So, if your homeowner’s insurance covers up to $300,000 and you are sued for $500,000, then you’d use the $300,000 liability coverage of homeowner’s first, and then umbrella would pick up the balance. This insurance often makes the most sense for people with high net worth, as it’s sold in increments of $1 million.

Title Insurance
This is almost always required to get a mortgage to buy a house. It insures that you have all of the rights to the property you are buying.

Pet Insurance
Do the math: If you don’t get pet insurance, you’ll have to pay for vet bills on your own. If you plan to spare no expense for your pet’s health, consider it.

Identity Theft Insurance
To ward off identity theft on your own, check your credit report regularly at

  • Anonymous

    I didn’t get travel insurance for a planned summer trip to Europe. Due to extenuating circumstances I couldn’t go and lost a lot of money. Lesson =ALWAYS get travel insurance! Also, the author is in Ecuador right now but had to spend her first night in JFK airport b/c of riots in that country. I’m guessing travel insurance would have provided better accommodations

  • LoveLV

    Insurance is such a boring topic. Thanks for making it readable!

  • SimoneSimone

    How much will all these insurances cost? I need insurance for my purse

  • Guest

    Pet insurance is NOT only for radical treatments such as transplant or open heart surgery, both of which are rarely done in pets. However, 1 in 3 dogs will have cancer at some point in their lives, and the frequency of orthopedic injuries (such as torn ACL) or catastrophic events (hit by car, severe illness that requires hospitalization, etc) is very high in the general population. Some insurance policies even cover basic care – physical exams, vaccinations, routine bloodwork, etc. Pet insurance is necessary if you could not cover a multi-thousand dollar vet bill on your own, and you want more options than watching your pet suffer or euthanizing.

  • LAino

    Along with renter’s insurance, I also have an earthquake policy. Living in LA, it just makes sense.

  • Heather Johnston

    This is so true … pet insurance is not worth it, trust me. Been there, done that. It makes a lot more sense to sign up for a discount program. Personally I use Pet Assure; very happy with their system :)

  • sfcat

    I totally disagree with the Pet insurance opinion. the pet insurance is 124 per yr, and that’s less than the total for the cat’s vaccination annual appt. Maybe the complainers have a bad company. When one of the cats needed relatively simple surgery for a broken leg, my bill was only 200 out of 2500. took it from major to easy.