Health, renters, car, life, disability, umbrella, travel and pet insurance explained, and which ones newcomers really need.
Americans buy insurance for many things. Some is required by law or by your landlord, some is smart, and some you can skip. Here is the map.
Words for every kind of insurance
Premium: what you pay each month or year to have insurance.
Deductible: what you pay yourself before insurance starts paying.
Claim: your request to the insurer to pay for a loss.
Policy: the contract. Coverage or limit: the most it pays.
Beneficiary: who receives the money (life insurance).
Usually needed
Health insurance: doctor and hospital bills here are very high. Students and J-1 exchange visitors often have required plans. See Where to get health insurance.
Car insurance: required to drive in almost every state. Minimum amounts differ by state. See Car insurance basics.
Renters insurance: covers your belongings and your liability (if you accidentally damage someone else's property or someone gets hurt in your home). Many landlords require it. It is usually cheap. See Renters insurance: what it covers and costs.
Often smart
Life insurance: pays your family if you die. Term life covers a set number of years and is the cheapest. Whole life lasts your whole life and costs much more. Many employers give a small amount free. Many people on work visas can buy it; insurers ask about your status.
Disability insurance: pays part of your salary if illness or injury stops you working. Often offered at work. Short-term and long-term are separate.
Dental and vision: usually separate from health insurance. See Dental and eye care.
Sometimes useful
Homeowners insurance: required by mortgage lenders if you buy a home.
Umbrella insurance: extra liability coverage on top of car and home insurance, for people with savings to protect.
Travel insurance: medical care and trip cancellation when you travel. Your US health plan may cover little abroad.
Visitor medical insurance: for parents or relatives visiting you. See Health insurance for visiting parents and B-2 visitors.
Pet insurance: helps with vet bills.
Flood insurance: normal home and renters policies do not cover floods. Separate flood policies exist, mostly through the National Flood Insurance Program.
Usually not insurance
Extended warranties and home warranties are service contracts, not insurance.
Phone protection plans are optional; compare their cost with the price of a repair.
How to compare
1
Compare the premium and the deductible together. A low premium often means a high deductible.
2
Read what is excluded (not covered).
3
Check the company's complaint record with your state's insurance department.
Common mistakes
Thinking the landlord's insurance covers your belongings. It does not.
Buying whole life insurance from a friend before understanding term life.