I’m a glass-half-full kind of gal; I tend to expect the best possible outcome from any scenario. Even still, I’m also an accident prone kind of gal, so I always try to buffer my innate optimism with a protective shield of preparation and planning for the worst. I’m pretty sure there’s an ages-old adage to that same affect, but I won’t say it because I’m also the kind of gal who hates to be trite.

Insurance, in its many forms, is a way to protect yourself in the event that things do go wrong, which at some point, they typically will. In spirit, the idea of insurance seems simple enough: pay a little money now to have someone take care of things if/when something goes wrong. Unfortunately, it’s not at all that simple in its real world application. Instead, it’s a huge industry, with thousands (or more) of jobs and billions of dollars involved – and an ever-changing tide of rules, regulations, and trends. Because of this, there is a great deal of misinformation and wrong assumptions about the various forms of insurance and their applications in your life. Let’s see if we can set the record straight:

Myth 1: Rental car insurance

It’s very tempting to tell rental car employees to take a hike when they’re trying to push insurance coverage on you. They usually push a little hard, and that’s off-putting. But an annoying person behind the counter doesn’t necessarily mean you should blow off their proposal. Even if you think your regular car insurance, or your credit card insurance, will cover any costs in the event of an accident, there could be limits to this. For starters, not all insurance policies cover rentals, so obviously, you’ll want to check that out first. And even when they do, there is a heap of other fees that the rental company will inevitably try to tack on to the bill should something happen to the car while it’s in your possession. For example, they will often charge a “loss of use” fee to cover the money they couldn’t make while the car was being repaired, in addition to all kinds of administrative fees, etc. And many insurance companies don’t want to cover those costs, which can quickly add up to hundreds or even thousands of dollars.

So before you scoff at the rental company’s offer of added coverage, do your research; find out exactly to what extent you are already covered and then weigh your options. This is one of those times when it might be mildly annoying to pay a little more for something you know you probably won’t need…but it could be an altogether much bigger headache if you something does happen and you’re not covered properly.

Myth 2: You don’t need life insurance

It might come as a surprise how many people don’t think they need life insurance. Either they say, “well, I don’t have any family so it doesn’t matter,” or, “My spouse will re-marry so it doesn’t matter!” The truth is this: when you kick the bucket, someone is going to have to clean up the mess. And regarding the whole re-marrying thing, let’s think about it: do you really want your recently widowed spouse to have to worry about mourning, taking care of family, and courting a new partner just so he/she will be taken care of? It sounds crazy, but people really do site that as an excuse to not have life insurance!

Really, life insurance doesn’t have to be a huge undertaking. As far as insurance policies (or any long-term financial obligation) goes, it’s usually one of the simplest to understand and navigate. And if you do a little shopping around, planning for your family’s future after your gone doesn’t have to put a huge dent in your wallet while you’re still here.

Myth 3: The government covers natural disasters

Not to be negative, but let’s just go ahead and say that firmly counting on the government as a back-up plan in any situation is probably not the smartest move. Government entities are slow-moving, and notoriously fraught with red tape and a penchant for penny-pinching. If you are hit by a natural disaster, like floods, hurricanes, tornadoes, earthquakes, looking to Washington might not get you very far.

In fact, most non-insurance disaster relief comes in the form of small grants and loans (usually under $5,000) from the Small Business Administration. That’s right – loans. As in, you have to pay them back. And to even qualify for these, your house has to have sustained a certain level of damage, and be located in a designated disaster area, which it might not officially be if the disaster in question wasn’t widespread.

Your homeowners insurance may or may not already cover certain natural disasters – check into it. While adding additional coverage, or even a separate policy may not sound like the most appealing thing to your pocket book, you have to be smart about it. And that means being realistic about where you live; at the very least, make sure you’re covered for the natural disasters that frequently occur in your area.

What do you do?

What forms of insurance do you have? Which ones have you decided aren’t necessary for you and why? Feel free to share any tips and tricks for navigating these tricky waters!