I’ll never forget the first time I bought insurance. I had just gotten my first car—used, kinda clunky, but it was mine—and I was feeling all responsible about getting everything set up the “adult” way. So I walked into this insurance office and walked out with a policy so bloated I swear it looked like I was trying to insure a spaceship.
Turns out, I was paying for things I didn’t need, stuff that didn’t even apply to my life. Roadside assistance even though I already had AAA. Rental car reimbursement for a car worth less than the rental would’ve cost. Zero-dollar deductible that doubled my monthly rate. I didn’t know any better—I just trusted the rep and signed on the dotted line.
That little mistake cost me hundreds over the course of a year. So now when folks ask me, “What insurance do I really need?” I tell them this: it depends. But I’ve learned a lot through trial, error, and a couple facepalm moments. So let’s break it down.
Start with the Big Three: Health, Auto, and Home (or Renters)
These are the must-haves for most folks. They protect you where it hurts most—your body, your wheels, and your living space.
Health Insurance:
Look, even if you’re healthy and never get sick, stuff happens. I once slipped on ice walking my dog and ended up in urgent care with a sprained wrist. That bill? Over $1,300 without insurance. I paid $90 with it.
You don’t need the fanciest PPO plan unless you’ve got specific doctors you must see. I’ve found high-deductible health plans (HDHPs) with an HSA (Health Savings Account) are great if you rarely go to the doctor but want protection for big stuff.
Pro tip: Check the maximum out-of-pocket cost—that’s your worst-case scenario number. If it’s $7,000, can you handle that in an emergency? If not, maybe look at a lower deductible.
Auto Insurance:
Legally required in most states, but beyond the legal minimums, you’ve got options. Early on, I bought full coverage for a car worth $2,500. Then I got into a minor fender bender and learned the insurance would pay out less than what I’d paid them over the year. Brutal.
Here’s my rule now:
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If your car is worth less than $4,000, liability + uninsured motorist is probably enough.
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If it’s newer or you’ve got a car loan, go with full coverage.
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Always check the comprehensive and collision deductibles—higher deductibles = lower premiums, but you better have that money on hand.
Homeowners or Renters Insurance:
When I bought my first home, I didn’t think much about home insurance except that the bank required it. Fast-forward six months: a pipe burst in the basement, and the water damage was a nightmare. The claim was covered, but if I’d gone with the super cheap policy I’d been eyeing? I’d have been on the hook for thousands.
Even renters should have insurance. A friend of mine had her apartment broken into—her laptop, camera, and jewelry were gone. No renters insurance. Replacing it cost more than six months’ rent.
Tip: Make a quick video of your stuff for proof in case of theft or damage. I just walk around my apartment with my phone once a year and save it to the cloud. Done.
The “Maybe” Pile
These types of insurance depend more on your situation. I used to skip all of these—then learned (the hard way) that some were totally worth it.
Life Insurance:
I always thought life insurance was just for parents. Then a friend passed unexpectedly, and their family was left scrambling to cover funeral costs. That changed my perspective.
If someone depends on your income—even just to cover shared rent or debts—it’s worth having a term life insurance policy. They’re cheap (like, $10–$30/month cheap if you’re young and healthy), and you don’t need bells and whistles. Just enough to cover final expenses and a year or two of support.
Skip the whole life policies unless you’ve got specific estate planning goals. They’re expensive and not usually worth it unless you’ve maxed out every other investment option.
Disability Insurance:
I slept on this one for too long. Your chances of becoming temporarily disabled are way higher than dying early—like, 1 in 4 during your working years. I ended up out of work for two months after surgery, and thank goodness my employer had short-term disability coverage.
If you’re self-employed or don’t get coverage through work, look into it. It’s not the most exciting insurance, but it’s the one that can keep your bills paid when you can’t work.
Pet Insurance:
I thought pet insurance was silly until my dog swallowed part of a tennis ball and needed emergency surgery. $2,700. That was a rough week for my bank account.
Now I pay around $40/month and feel a whole lot better knowing I won’t be choosing between my wallet and my pup. Just read the fine print—some plans don’t cover genetic conditions or routine care.
What You Probably Don’t Need
There are so many insurance add-ons out there, and I’ve bought more than a few that I ended up canceling.
Rental Car Insurance:
Most major credit cards cover rental car damage if you use them to pay and decline the rental agency’s coverage. Check your card benefits before buying.
Credit Protection Insurance:
Usually offered when you take out loans or open credit cards. It covers your payments if you lose your job. But it’s pricey and often not worth the cost. Better to build a mini emergency fund instead.
Extended Warranties (aka Product Insurance):
Honestly, most of the time these are a waste. I’ve rarely had a product fail outside the regular return window. Plus, your credit card may already double manufacturer warranties.
A Few Final Tips (that took me way too long to learn)
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Bundle your policies. Most companies offer a discount if you combine home and auto.
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Review your coverage annually. I saved $400 this year just by calling around and asking for updated quotes.
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Use an independent agent if you feel overwhelmed. They can shop multiple companies for you.
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Read the exclusions. This one’s huge. I once thought my homeowners policy covered flood damage. It didn’t.
Insurance isn’t exciting, but it’s one of those adult things that can seriously mess you up if you ignore it. The trick is finding that sweet spot where you’re protected—but not overpaying for stuff you’ll never use.
Hopefully, some of my screwups save you a bit of money or at least a headache. Let me know if you want a sample coverage checklist—I keep one now and update it every fall when I do my “life admin” day.
Honestly, I wish someone had told me all this years ago. Would’ve saved me a bunch of money and at least two mild panic attacks.
