You probably already know that good insurance plans for home, health and auto are basic elements of smart financial planning. But there are other kinds of insurance you may want to consider in order to protect yourself from potential financial risks.
For example, you may not realize that the cost of medical treatment for a pet can rival the cost of treatment for a human. Advances in pet health care have made it possible to treat illnesses like cancer and joint pain, but the bills can be enormous. As a result, more people are turning to pet insurance, which is relatively inexpensive and can provide serious protection against surprise health care bills for your four-legged friends.
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Niche insurance plans, however, are often complicated and often have some important exclusions that smart consumers need to understand before making a purchase. In general, it’s important to shop around for coverage, read the fine print and understand what your existing insurance or credit card programs cover. Beyond that, here’s what you need to know about some of the plans you might consider:
1. ID theft insurance.
Offered as an add-on to home insurance and increasingly as a voluntary workplace benefit, ID theft insurance will help cover the cost of straightening out your financial records if you’ve been the victim of identity theft, including lost wages, phone bills, and possibly attorney fees.
How much does it cost: Around $25 per month.
Who should consider it: Those with broad and varied financial accounts and little time to deal with the paperwork and phone calls necessary after a breach.
Who should skip it: The actual cost of an identity breach is typically fairly low for most consumers, although it may take up a good chunk of time.
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What to watch out for: If a bank or another institution has notified you of a recent breach, they may offer free coverage to potential victims, so you may not need to pay for an additional policy.
2. Travel insurance.
Travel insurance comes in two flavors: trip cancellation insurance, which will reimburse you for the cost of a trip if you’re unable to go due to bad weather or a family illness; and medical insurance, which pays for health care costs overseas. “It’s meant to protect you from losing money that you’ve invested in a trip that you can’t take,” says Megan Singh, a spokeswoman for Squaremouth, an insurance comparison site.
How much does it cost: Between 4 percent to 8 percent of the total cost of your trip, depending on your age and the location of the trip.
Who should consider it: Trip cancellation insurance can be a smart purchase for an extremely expensive trip. Medical travel insurance makes sense for older travelers, especially those who use Medicare, which doesn’t work overseas.
Who should skip it: Travel insurance isn’t worth it for a moderately priced, domestic trip, or for those whose medical insurance has international coverage. Also, if the cost of your trip is refundable, insurance is not necessary.
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What to watch out for: You typically have to purchase insurance several weeks ahead of your trip in order for it to pay for a trip cancelled due to the weather. If you have a pre-existing medical condition, make sure you purchase a rider for it along with your medical travel insurance, otherwise you may not be covered for related events.
3. Pet insurance.
Operating similarly to human health insurance, pet insurance is an increasingly popular voluntary benefit offered by employers. You pay monthly premiums for coverage of Fido’s vet bills. Some policies cover accidents only, while other include accident and illness protection.
How much does it cost: Accident and illness coverage averages $465 annually for dogs and $316 for cats, although it varies by the age and species of the pet.
Who should consider it: Those who may not have the cash to cover a large pet bill but would spend anything to save their pet, and those with breeds that have known health problems. “If you have an English bulldog, you know that they’re going to have issues,” says Nick Braun, founder of PetInsuranceQuotes.com.
Who should skip it: Many pet owners may be better off financially if they self-insure, setting aside cash in a savings account dedicated to covering unexpected vet bills instead of paying premiums.
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What to watch out for: Pet insurance plans typically don’t cover pre-existing conditions, so if you already know your cat has diabetes or arthritis, a new policy won’t cover any medical costs associated with that. Keep an eye on deductibles, which (as with human health insurance) can make a low-premium plan more expensive than you think, and avoid plans with low annual limits.
4. Wedding insurance.
Basic insurance for you big day can protect your investment from unexpected expenses such as a flaky vendor, stolen gifts or a natural disaster.
How much does it cost: $155-$550 for general coverage, according to TheKnot.com.
Who should consider it: If you’re having a large, expensive wedding, or a destination wedding with many guests, it may make sense to protect your investment with wedding insurance.
Who should skip it: Wedding insurance may not make sense for those having a small, inexpensive wedding. And indoor weddings are inherently less risky than those held outdoors.
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What to watch out for: Purchase your policy early in the planning process to get full protection, since it won’t cover a wedding hall’s bankruptcy, for example, if you already knew about it when you purchased the plan. “You want to buy your plan as soon as you have picked your venue or other vendors and have started outlaying deposits,” says Todd Shasha, managing director for personal insurance at Travelers Insurance.
5. Moving Insurance.
It’s a large financial risk to pile all of your personal possessions onto a truck and watch as someone else drives away with them. Moving insurance covers damage and theft to your items as well as any destruction to either home that occurs during the move.
How much does it cost: About 1 percent of the value of your stuff.
Who should consider it: Those making a long-distance move or moving many valuable items.
Who should skip it: If you’re moving in-state, check with your homeowner’s or renter’s policy to see whether they offer coverage for your items during a move.
What to watch out for: Movers are required to offer minimum coverage of 60 cents per pound for your things on all intra-state moves, but that’s typically inadequate. Look for full-value replacement instead.
