What Are the Different Types of Insurance?

There are three main insurances that a person should own, which include homeowners, auto and health insurance, as reported by U.S. News and World Report. There a few others, such as life and disability insurances, that may be helpful as well. As insurance comes in many different types with varying options and degrees of usefulness, it is typically a good idea to speak with a qualified professional to find out exactly what coverage is needed.

When owning a house with a mortgage, the bank will require homeowner's insurance be placed on it. This is to guarantee that if something was to occur to the house, there will be money to fix or replace it. The bank requires this so it doesn't lose the investment if something happens. Once the mortgage is paid off, and a person owns the house outright, homeowners insurance becomes optional but still recommended.

When owning a car, auto insurance is mandatory to be on the road legally. This is to ensure that if an accident does occur, the insurance will be able to cover the costs. If caught driving without insurance, fines and suspensions on the driver's license may occur, states U.S. News and World Report.

With the passing of the Affordable Care Act, having health insurance is needed to avoid fines, as stated on the government health care site. Health insurance covers costs of going to the doctor, lowers prescription medication costs and helps pay for hospital stays and other medical expenses. If a person does not have health insurance, there are fees to pay.