Insurance: Sometimes You Need It, Sometimes You Don't

Auto Insurance

You must have car insurance, because the liability risk if you're in an accident is too great to ignore. Auto insurance is expensive, but it's required by law in nearly every state. Even if it weren't, you couldn't afford to be without it.

Different types of coverage are associated with car insurance, but the one that's re-quired by almost all states is liability. Liability coverage is twofold: bodily injury and property damage. The bodily injury liability coverage protects you against lawsuits in the event that someone is injured in an accident in which you're involved. Althoughit varies from state to state, most states impose a minimum amount of bodily injury coverage, between $10,000 and $30,000 per person, and up to $100,000 per accident. If you lend your car to someone else to drive, remember that the insurance follows the car. Thus, your coverage is the primary insurance in the event of an accident.

The property damage liability covers damage to other cars and property that's caused by your car. It would not only cover the cost of fixing a car that you hit, but it would pay to repair or replace the fence you ran over, too. Most states require a minimum of $10,000 in property coverage.

If you have a loan on your car, you'll need collision and comprehensive coverage, as well. Collision coverage pays for damage to your car if you're in an accident or pays to replace a car that's totaled. Com-prehensive coverage protects you from car theft or weird things that could happen to your car, such as a tree falling on it or it being damaged during a riot, fire, or flood.

If you get hit by someone who doesn't have insurance (this isn't as unusual as you might think), you'll need uninsured motorist coverage. This insurance covers your medical expenses and lost wages in the event that you're injured by an uninsured motorist.

When you rent a car, your policy provides coverage unless it states otherwise. Read your policy, and always call before you go on a trip. If your deductibles are high, you should purchase coverage from the rental company.

There's a big difference in auto insurance rates, so be sure you look around. Be aware that a poor driving record will dramatically increase your insurance rates. Look for cars with good safety records (a Volvo anyone?), and stay away from hot sports cars or convertibles if you're interested in keeping your rates down.

If you're over 25, you'll generally get a better rate than someone who is younger. Also, being married, living in what is considered a safe neighborhood, and having a relatively short work commute (driving less than 7,500 miles/year or not using your car for work) will lower your insurance rates.

Property Insurance

You're required to buy property insurance before you can get a mortgage, so if you own a home, you already have homeowners insurance.

If you're renting an apartment, you'll need renters insurance if you have a lot of stuff you want to protect. Damage to the building is not your responsibility, but if your TV or VCR is stolen or damaged, you'll need insurance if you want to replace it without paying out-of-pocket. If you have a bunch of good computer equipment or a rare coin collection, you definitely should look into renters insurance.