Insurance is an essential tool for protecting yourself and your loved ones from high or unexpected costs. There are several different types of policies that you can purchase for different purposes, but here’s a closer look at how you can benefit from having insurance.

Why insurance is important

Insurance helps cover the cost of unexpected occurrences in your life. You often pay a premium, be it monthly, semi-annually, or annually, that keeps your coverage in place. Though it depends on the specifics of the policy and the type of coverage, insurance helps pay for covered incidents like car accidents, theft of personal belongingness, health issues, car repairs, and more. When you have insurance, you file a claim with the company for any incident that you believe falls under your policy coverage. These claims are then investigated, and if it’s covered, you’ll receive a payment from the insurance company. Keep in mind, all policies have a deductible, which is the maximum amount you’ll have to pay before receiving a payout from the insurance company. Deductibles can vary, so be sure to look closely at the fine print of policies before signing. Here are a few of the most basic types of insurance policies you should consider getting if you don’t already have coverage.

Homeowners or renters insurance

Many mortgage lenders require you to purchase homeowners insurance if you are financing your home, and it’s a great thing to have since it protects your home from specific incidents including theft, fires, and damage caused by some natural disasters. If one of these incidents occurs, you can file a claim with your insurance provider who will then send someone out to assess the damage. If they determine that the incident falls within the coverage of your policy, you’ll receive a payment to help cover the cost of repairing your home or replacing the damaged or missing goods.

Renters insurance is similar to homeowners in that it covers the cost of stolen or damaged goods, but it doesn’t cover the structure of the space since that should be covered under the landlord’s own insurance policy. Policies tend to cover electronics, furniture, and the cost to live somewhere else should your rental home or apartment become uninhabitable.

Car insurance

If you own or lease a vehicle, you’re going to want to purchase car insurance. These policies can help if you’re in an accident that then requires repairs or replacement of your vehicle. And if you have liability insurance and are the cause of an accident, the policy will help cover the cost of repairs to the other vehicles involved. Without insurance, you’ll be required to pay for all repairs and expenses related to accidents out of pocket, so it’s a good idea to have auto insurance before hitting the road.

Health insurance

Health insurance helps to pay for your medical expenses, including doctor’s visit, prescriptions, hospital stays, appointments with specialists, and more. While you might pay a high premium, these policies can save you thousands of dollars in the event you or someone else on your policy has a health scare that requires extensive medical treatment. Many employers offer health insurance to employees, but you can also find various plans and coverage options through healthcare.gov.

Life insurance

Life insurance provides financial protection to your family should you pass away. You choose a specific coverage amount to be paid to your beneficiaries—people you have designated to receive your plan’s benefit—in the case of your death. It’s a good idea for everyone to have life insurance, but it’s especially important if you’re recently married, had a child, or bought a home since it can help ensure the financial security of your loved ones.

Insurance is there to help protect you and your loved ones when you need it the most, so it’s worth looking at your coverage options to see which ones work the best for you and your current situation.