Get unbiased facts on insurance, including tips, tricks, and advice aimed at helping consumers get the best insurance policies at the best prices.

This video covers the basics of insurance in the United States.

Insurance Basics

One way or another, most of us will end up holding many insurance policies throughout our lives. Facts on insurance shows you how to choose quality policies that are designed for you at rates you can afford.

• What is insurance? Insurance is a contract in which an insurer agrees to provide compensation for a policy holder’s risk in exchange for a regular payment known as a premium.
• Insurance works best when it comes to protecting against significant monetary loss. The average person can absorb the costs of dropping their ice-cream cone, but may find it harder to absorb the cost of losing their ice-cream truck and associated business.
• Some insurance types are required, and others aren’t.
• Health insurance (or an exemption) is required by Federal law.
• Auto insurance is required by state law for anyone operating a motor vehicle.
• Home owner’s insurance isn’t required by law, but if you finance your home with a mortgage, your lender may require some sort of home insurance coverage.
• Other types of insurance are also required – especially for businesses.

At it’s core insurance is a form of risk management, commonly a group fund that mitigates individual risk. By understanding insurance basics and associated jargon you can literally cut your costs in half while increasing your coverage.

Insurance Statistics

The average family spends roughly between 5 – 10% of their household income on insurance, although for some it’s much more.

• According to a 2013 study on consumer expenditures by the Bureau of Labor Statistics in 2013, over 60% of consumer healthcare spending was on insurance. Average healthcare spending was $3,631.
• According to Census.Gov in 2000, $305.1 billion (net) in premiums were written for property and casualty insurance. In 2009, $422.9 billion were written.
• According to a 2015 study by the National Association of Insurance Commissioners (NAIC), the average family spent $1,034 on homeowners and renter’s insurance in 2012 (for HO-3 the most common type of homeowners insurance).
• According to the National Conference of State Legislatures, the average health insurance premium for the average family was over $16,800 before employer contributions or cost assistance.
• Rates of all insurance types rise every year. In many instances, the increase outpaces both inflation and the income of the average American family.

Annuities can be tied closely to insurance types, investing, and risk. This video will help get you in the insurance mind-set.

Tips and Tricks for Getting the Best Insurance Policies

The best policy differs by demographic, location, and insurance type. There is no single best policy or insurer for everything, but there certainly are best policies for certain markets.

• Insurance rates are almost always based on region. Other important factors often include age and the number of people on the plan. What you can be charged for differs between insurance types.
• For most insurance types, you pay a premium at regular intervals (usually monthly or annual). On some insurance types, you pay out-of-pocket costs per your policies cost sharing agreement. Important out-of-pocket costs include deductibles, copays, coinsurance, and out-of-pocket maximums. The way these work differs between insurance types.
• Over-buying and under-buying insurance can both lead to overspending.
• Under-buying insurance could save you money on premiums, but can mean paying more down the road when you have to meet deductibles and pay out-of-pocket for claims not covered by cheaper plans. There is almost always a catch for a policy of any insurance type that has exceedingly low premiums.
• Over-buying insurance could mean higher premiums and paying for protections you don’t need.
• Missing a payment, not having a required policy type, or not enrolling during an insurance types enrollment period can all mean extra fees. For most insurance types, missing premium payments can cause your policy to lapse.
• Typically, you can save money by getting a high-deductible policy; just make sure you are prepared to pay the deductible in an emergency.
• State and Federal cost assistance is offered on some insurance types – this can translate to free or low-cost assistance.
• Insurers will offer lower rates on some insurance types by participating in programs that lower your policy-holder risk.
• As a rule of thumb, you’ll need to shop for policies when they come up for a renewal. The best plan this year might not be the best next year. Even more importantly, another insurer might offer a lower price or better policy to get your business.
• Most insurance types only pay related claims (health insurance only pays covered medical claims, flood insurance only pays for flood damage, etc). However, umbrella policies cover the gaps in other policies.
• The higher your income and savings, the more important insurance becomes.
• Even those with lower incomes should consider insurance options. Some insurance is free or low-cost for low-to-middle income Americans.

Health Insurance

Over 60% of bankruptcies in the US are due to sub-par or non-existent medical policies. If you don’t get covered, you’ll owe a fee. We can show you how to save thousands.

• Health insurance is the most expensive insurance type. With rising health insurance costs, health coverage alone can cost some higher-income families up to 20% of their income!
• Under the Affordable Care Act, most low-to-middle income families and employees will spend between 2% – 9.5% of their income on health insurance due to cost assistance subsidies.
• Coverage for individuals and families must be obtained during each year’s open enrollment period.
• If you don’t obtain and maintain coverage or an exemption, you’ll owe a fee for each month in which you don’t have health insurance.
• Those with no or low income may qualify for Medicaid or CHIP.
• Those over 65 will typically qualify for Medicare.
• There are a number of supplemental insurance options for Medicare. Seniors can save thousands each year by shopping smart for supplemental insurance.
• Short-term health plans, and other limited benefit coverage, won’t protect you from the fee.
• If you travel, consider a multi-state plan or traveler’s insurance.
• Health insurance also includes dental insurance and vision insurance. These types aren’t regulated the same as comprehensive medical coverage, and cost sharing works differently too.

Auto Insurance

Auto insurance refers to all road-based vehicles. If you want to drive a car, then you’ll need car insurance. Other motor vehicles may require their own auto insurance types. We cover the facts on insurance for everything auto from motorcycles to boats.

• Next to health insurance, auto insurance is one of the highest cost insurance types that American families face. Especially if they don’t own a home.
• The average auto insurance expenditure nationwide was $785 in 2009, compared to $832 in 2005. Source: National Association of Insurance Commissioners.
• There are many types of auto insurance, some of which you are required to have.
• All state’s require at least bodily injury liability and property damage liability coverage.
• Shopping for car insurance can be difficult!  We can help save you thousands by showing you how to find the perfect auto policy for your specific situation.
• All divers need some sort of car insurance. See what types of auto insurance are required by each state.
• If you can’t afford coverage due to your driving record you may still have options in the residual market for high risk drivers.
• You can lower your auto insurance premiums by participating in low milage and low usage programs.

Life Insurance

There are many different types of life insurance policies that insurance you for either temporary periods or for your whole life.

• Life insurance policies, unlike other types of coverage, don’t protect the policy holder. Typically, they’re meant to protect the policy holder’s family.
• “Term” life insurance pays for the period which the policy is held. It won’t pay after that.
• “Whole” life insurance typically involves an investment fund and covers you during your whole life or to an old age. The money built in the investment fund is called “cash value“.
• “Whole” life or permanent life policies all build cash value differently. For example in variable life insurance and variable universal life insurance you can control your own investments.
• If you miss a life insurance payment, you may have your coverage lapse. This is especially important to keep in mind in regard to life insurance as the effects can be pretty drastic. A lapsed policy can mean losing death benefits and cash value.
• Aside from the many different life coverage types, there are a number of different life insurance riders to be aware of.
• A change in health status won’t cause your policy to drop you; once you obtain a policy you are locked in at that rate.
• Some insurers offer convertible policies (term policies that can be renewed). These convertible policies allow a return client to take out another policy at the rate of a healthy person, but you pay a higher premium for the privilege.
• You can lower your life insurance premiums with some insurers by participating in health tracking programs.

Property Insurance

Property insurance refers to coverage for any type of property, commercial or residential. Although a vehicle is a type of property, we are usually talking about commercial, renter, homeowner insurance, or other types of property insurance not pertaining to auto coverage.

Any home owner will want to hold some type of property insurance. Renters may want to hold a renter’s insurance policy. Likewise those who own commercial properties or high-cost items should consider an insurance policy to cover them.

• Home owner’s insurance rates continue to rise at a steady rate throughout the United States, up over 50% in the last 10 years alone.
• The average home owner’s insurance premium rose by 5.7% in 2012, following a 7.6% increase in 2011 (according to a January 2015 study by the National Association of Insurance Commissioners).
• Average home owner’s insurance rates are between $60 – $100 a month.
• In 2013, 4.8 percent of insured homes had a claim. The ISO (Insurance Services Office) says that 97% of home insurance claims are due to property damage, including theft, with the remainder being from liability cases (like personal injury).

CONTENTS CLAIM INDEX, HOMEOWNERS INSURANCE, 2011
Top contents categories as compiled from homeowners claims filed with insurers. Ranked by dollar value as a percent of total claims. Dollar value is based on the cost to replace items that are damaged, lost or stolen. The Index includes over 300 insurers. Source: Enservio.
1. Jewelry	17%
2. Electronics	13%
3. Apparel	11%
4. Furniture	11%
5. Home Goods	9%
6. Tools	4%
7. Appliances	4%
8. Sporting Goods	3%
9. Books & Magazines	3%
10. Bed & Mattress	2%

Travel Insurance

If you are traveling outside of the country, you may want to protect both your health and your assets with traveler’s insurance.

Warranties

From computers, to cars, to whatever other product you purchase, a warranty insures your new product. Knowing if the manufacture’s warranty is good enough (or if an extended warranty is necessary) is the art here.

Umbrella Insurance

An umbrella policy, sometimes called liability insurance, covers the gaps between other insurance types typically focusing on liability.

Insurance Beyond the Basics

Want to insure your hamster or want to know how your money is insured in your bank account? You may be surprised at what some insurers are willing to underwrite and to what extent insurance plays are part in your life. There is, in fact, a price on almost everything, and everything carries risk and reward.