You can get insurance on almost anything — computers, phones, trips, your identity, your credit and even home warranties! But should you?
“You should never insure something that is a consumer item,” money expert Clark Howard says. “People always worry about insurance on narrow things instead of the big things in life they really need it on.”
Here are a few kinds of voluntary insurance policies Clark does not recommend…
6 Types of Insurance You Can Skip Buying
Single-issue insurance policies are generally considered a ripoff by many consumer advocates, including Clark. Examples of such policies are those that only cover one specific scenario such as cell phone insurance and pet insurance.
Cell Phone Insurance
Cell phone insurance typically runs about $120 a year. You have a deductible to meet — usually anywhere from $50 to $200 — and after paying that you often get a refurbished replacement phone. Not necessarily a new one!
They’re a common sell on electronics of all kinds, but Clark says they’re completely unnecessary. Want proof? Modern TVs only fail 3% to 4% of the time, according to Consumer Reports. Why would you pay extra for something that has a 97% likelihood of giving you no trouble at all?
If something goes wrong in your home, the warranty companies are brutally difficult to deal with. They require you to use their contractor only. That contractor may or may not come on schedule while you’re burning up in the heat of summer without AC or freezing in the dead of winter without heat, as just two examples. And then you’ve got a deductible on top of that!
Clark says home warranties are not worth the paper they’re written on!
Home Title Lock
The company Home Title Lock offers a subscription monitoring service that will alert you to court filings affecting your home’s title, but it is not the same as home title insurance.
Clark recommends that every homeowner buy their own home title insurance, rather than relying on the insurance purchased by the lender.
Credit monitoring keeps tabs on your accounts so you’ll be alerted in the event of identity theft. But you don’t have to pay for it! Several companies like Credit Karma and Credit Sesame offer credit monitoring for free. (Make sure you sign up for free credit monitoring before you freeze your credit.)
RELATED: How to Monitor Your Credit for Free
Chronic diseases generally aren’t covered, and insurers often won’t pay for known defects among certain breeds. And of course, no insurer covers pre-existing conditions. Watch out for a maximum limit on treatment for individual illnesses too.