3 Insurance Policies You Didn't Know You Needed

Having the right insurance is critical. An insurance policy can help the covered individual pay for damages when things go wrong, rather than having to drain their checking account to deal with issues like a fire or car accident.

There are some kinds of insurance most everyone is familiar with, like car insurance (which is typically required by state law) as well as health insurance. But there are other kinds of policies people may not think about or know they need -- until the worst occurs and they don't have coverage.

No one should go without the insurance protection they need. Check out these three kinds of coverage that are often overlooked but that may be necessary. 

1. Disability coverage

In 2021, only 14% of Americans had disability insurance coverage. This is down from 31% in 2012. That's a huge problem, as around 25% of 20-year-olds will become disabled prior to the time they retire. 

Without disability coverage, losing your ability to work could result in financial disaster. It's important to look into getting a policy that will offer coverage if illness or injury makes holding down a job impossible. 

Short-term and long-term disability policies can replace lost income and help ensure the bills are paid, so shop around with several insurance carriers to get price quotes.

2. Renters insurance

In 2020, around 57% of renters had a renters insurance policy in place, which means 43% did not. A renters insurance policy provides liability coverage, so it will pay if someone is harmed at a renter's home. The policy also provides personal property coverage, which will pay to repair or replace a renter's possessions if they are destroyed or damaged by a covered disaster. 

Unfortunately, many renters assume their landlord's policy will cover them. That's not necessarily the case. A landlord's liability policy would pay for injuries in common areas, but not necessarily injuries someone experienced within a renter's apartment. And a landlord's policy wouldn't provide any property damage coverage to a renter. 

Renters need to get quotes and consider buying a policy covering liability and personal property so they aren't personally out the money if they are sued by an injured person, or if something happens to the possessions they keep in their apartment.

3. Umbrella policy

Older studies have shown only around 10% of homeowners have an umbrella insurance policy.  This type of policy offers secondary coverage when a primary insurance policy isn't sufficient.

See, auto and homeowners insurance both provide liability protection up to the policy limits. But if an injury causes so much damage that the home or auto policy won't be able to pay out enough to cover all losses, then the policyholder could be personally sued for added costs.

Say, for example, a driver with a $50,000 per person bodily injury liability policy caused a victim to become paralyzed in an auto accident. The paralyzed victim could likely sue for much, much more than $50,000, but the auto insurer would pay only $50,000.

Umbrella policies cover added costs once the other insurance policies have run out. There are policy limits on umbrella policies, but getting this added coverage is often cheaper than just raising the limits on a home or auto liability policy. Anyone with assets that would be at risk if they are sued should look into getting umbrella coverage. 

Learning about these kinds of insurance is the first step in determining if they are necessary. Anyone who may need these kinds of protections should get covered ASAP before it's too late.