Insurance works best when it is set up thoughtfully and reviewed regularly. The tips below come from common questions and mistakes we see when people compare coverage. They apply in most states and many other countries, though laws and policy forms vary.

Before you buy

  • Start with your risks, not with a product. List what could seriously hurt your finances: a lawsuit, a house fire, a long illness, the death of an earner, a business interruption. Buy coverage for those first.
  • Check what is required. Auto liability, workers' compensation and some other coverages are required by law or by contract. See what insurance is required in the US.
  • Compare at least three quotes on the same limits and deductibles, and look at the differences in exclusions and endorsements, not only the price.
  • Check the insurer. Confirm it is licensed in your state, look at its financial strength rating and review its complaint record with your state insurance department or the NAIC. Our guide on how to check insurer reliability explains how.
  • Verify the person helping you. Producers must be licensed in your state for the line they sell.

Choosing limits and deductibles

  • State minimum auto liability limits are often low compared with the cost of a serious injury. Consider higher limits and an umbrella policy if you have assets or income to protect.
  • Insure your home for the estimated cost to rebuild, which can differ significantly from its market value.
  • Choose a deductible you could pay tomorrow without borrowing. A higher deductible saves premium only if you can afford it.
  • For life insurance, base the amount on income replacement, debts and future goals, not on a round number.

Reading the policy

  • Read the declarations page: named insured, covered property or vehicles, limits, deductibles, policy period.
  • Read the exclusions. Flood and earthquake damage, for example, are typically excluded from standard homeowners policies and need separate coverage. See common insurance exclusions.
  • Check conditions such as notice requirements, cooperation duties and vacancy clauses. Breaking a condition can put a claim at risk.
  • Ask for any promise made by a salesperson in writing, ideally as an endorsement to the policy.

Keeping coverage current

  • Review your coverage every year and after life events: marriage, a new child, a home purchase, renovations, a new car, a teenage driver, retirement.
  • Tell your insurer about changes in use, such as renting out a home, using a car for deliveries or starting a business at home. Many personal policies exclude business activities.
  • Update beneficiaries on life insurance and retirement accounts after major life changes.
  • Pay premiums on time and understand the grace period. A lapse can leave you uninsured and make future coverage more expensive.

Being ready for a claim

  • Keep a home inventory with photos or video and store it online.
  • Save copies of policies, insurer contact details and your producer's phone number where you can reach them after a disaster.
  • After a loss, take reasonable steps to prevent further damage, document everything, and report the claim promptly.
  • Do not sign releases or accept a final settlement until you understand what it covers. If a claim is denied, read our guide on what to do when a claim is denied.

Tips for business owners

  • Match coverage to contracts: leases and client agreements often require specific limits and additional insured status.
  • Do not assume your general liability policy covers professional mistakes, cyber incidents or employee injuries; those usually need separate policies.
  • Keep payroll and revenue estimates accurate to avoid surprises at audit.
  • Review business income limits against how long it would realistically take to reopen after a major loss.

Red flags

  • A price that is far below every other quote without a clear reason.
  • Pressure to sign immediately or to pay in cash or by gift card.
  • An insurer or seller you cannot find on your state insurance department's website.

Have a question about your situation? Use our insurance glossary, compare coverage types, or request a quote. Policies are issued by licensed insurers and placed through licensed producers in your state.