From our Free-Lance Correspondent

If you are renting, you should consider tenant's insurance. It is usually quite inexpensive to purchase (around $ 100.00 per year) and protects your belongs in case of fire, theft, etc. There are limitations on policies for amount of coverage and cause of damage or loss. Know these limits and, if you suspect there may be a need, pay extra for further coverage. If, for example, you have valuable jewelry, musical instruments, computer equipment or the like, you should make certain your insurance will cover replacement cost should something happen to these items. Tenant's insurance can be purchased from many large companies (Nationwide, Allstate, State Farm, etc.) or through an insurance broker.

If you have bought a home, you will probably be required to have homeowner's insurance in order to protect the investment your mortgage lender has made. Beyond what they require you to have, however, you should be concerned about your belongs (as stated above) and your family. Some insurance will provide you with money to live somewhere temporarily, should you and your family be displaced due to damage to your home. Make certain you are covered for what you might need.

Typically, homeowner's insurance does not cover instances of flood or earthquake. The cost of such insurance is low where the risk is low and is high where the risk is high. If your home is lost in such a disaster and you are not covered, you will lose your home and possessions as well as your equity and, since you will probably be forced financially to default on your mortgage, your good credit record as well. Your home is likely to be the most expensive purchase you ever make. Insure it accordingly.

Liability insurance is another concern, particularly of a homeowner. This protects your assets should someone sue you for something which has occurred on your property. Experts recommend that you be insured for at least an amount equal to your financial worth -- twice that is preferable.

Keep in mind that insurance is a bit of a gamble. If nothing happens, you may over time pay a lot in insurance premiums from which you will never benefit. So if you own little of value, or have enough money to cover being displaced or replacing your belongings with little trouble, don't waste money on insurance you do not need. Statistics reveal that most folks buy the wrong coverage from the wrong company and pay far more than necessary. Between 10% and 15% of every dollar spent in the U.S. economy is just paying for insurance. That is a sobering figure! Be sure that you are buying insurance you need and shop around for the best coverage for the least amount of money.