Most individuals carry insurance to protect against the risks inherent in the modern world. Many of these policies, including life and health, can be quite expensive for a consumer. There are also other less costly policies available to cover minor or intermittent risks that crop up occasionally during the course of life.
TUTORIAL: Introduction To Insurance
1. Travel Insurance
Some people save for years to afford that once-in-a-lifetime vacation to some exotic spot, only to see it ruined due to some reason outside of their control. Travel insurance typically provides reimbursement to a traveler if the trip is canceled, interrupted or delayed due to certain reasons. Policies also cover missed connections or any delay, loss or damage to baggage and other personal effects during a trip. Travel insurance policies are priced based on the cost and length of the trip, and also include medical and accident coverage for travelers. (Before going on your trip, find out what kind of insurance coverage you will need. Check out The Basics Of Travel Insurance.)
2. Mobile Phone Insurance
Mobile phone insurance covers a phone from theft, fire, vandalism, power surges or accidental damage, including water spills and other clumsy acts by the owner. These policies also include protection if a phone is lost or misplaced. One typical policy offers $1,000 of protection for a smartphone for a one time annual premium of $59, with a deductible that ranges from $35 to $75. This coverage can be obtained directly from the service carrier or from an outside insurance agency that specializes in offering this policy.
3. Pet Insurance
Interest in pet health insurance has been growing rapidly since it was first introduced in the United States in the early 1980s. These policies provide medical coverage mostly for dogs and cats, subject to the specified limits, deductibles and exclusions. Some insurers even offer coverage on more exotic pets, including birds, rats, turtles and reptiles.
Pet insurance is structured similar to human health insurance, with pricing based on the age and breed of the pet. The typical cost to insure a two-year old Labrador Retriever, which is the most popular breed in the United States, is approximately $29 per month ($500 deductible).
While those who don't own pets may scoff at this insurance as a waste of money, the cost of medical treatment for pets can be staggering, with the average surgery and treatment cost from some conditions reaching as much as $11,500. (Before you bring a furry friend into your household, make sure you can handle the hefty financial commitment. See The Economics Of Pet Ownership.)
4. Dorm Room Insurance
Teenagers are irresponsible enough as individuals, but when you put thousands of teenagers together in one place and call it a college, the irresponsibility and risk escalates sharply. National Student Services (NSS) and a number of other insurers offer policies to cover personal property against theft, fire, vandalism and other risks. These policies cover laptops, mobile phones, text books, clothes and other personal items while a student lives either in a dorm or off-campus location.
NSS offers $3,000 of coverage for one year with a $50 deductible for only a $77 premium.
5. Moving Insurance
The latest report from the U.S. Census Bureau indicates that 37.1 million Americans moved residences in 2009. Many of these individuals moved long distances and required the assistance of professional moving services.
Although the conventional wisdom is that household items are fully covered by insurance offered by the moving company or carrier, the truth is that moving companies typically include only a basic level of coverage that usually ranges upward from 60-cents per pound. This means that a 200-pound sofa that you paid $1000 for might only have $20 to $120 of coverage. Moving companies offer extra coverage for an additional charge, or coverage can be obtained from outside companies that specialize in this type of insurance.
The Bottom Line
One item to consider before purchasing any of these policies is to investigate whether your current homeowner's policy covers any of these risks. Read the policy carefully, because even if you have coverage, it may come with a high deductible or contain exclusions. (Avoiding unnecessary coverage can save you hundreds of dollars. To learn more, check out Extended Warranties: Should You Take The Bait?)
Also, while these smaller policies are not expensive on an absolute basis, many consider the premiums expensive relative to the coverage received. Shop around to make sure you are buying a cost effective policy to cover your risk. There are many types of inexpensive insurance policies available to cover smaller and less common risks that an individual faces in their daily life. These policies may provide peace of mind at a relatively low cost.
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