When you buy insurance, you're really buying something that you hope you'll never have to use. But if you ever do need to file an insurance claim, you'll understand why having the right amount and right types of coverage is important.

Decide how much insurance you need

You can't stop bad things from happening. But you can protect yourself financially by purchasing insurance. How much insurance you need depends on a lot of factors including how much you owe and own, how much your assets are worth, whether you have dependents, and how much out-of-pocket cost you could afford to bear. You can estimate your coverage needs using calculators or worksheets available on-line, but it's a good idea to sit down with an insurance agent or broker who can thoroughly evaluate your needs.

Comparison shop

No matter what type of insurance you're buying, the process is essentially the same. Once you've decided what type of insurance and how much coverage you need, you can begin contacting insurance companies online, directly by phone, or through an insurance agent or broker to obtain quotes. Get quotes from several different insurers because premium cost can vary widely.

But compare the coverage offered, too. A policy might cost less because it offers fewer, or different, features and benefits. And make sure the company you've settled on is reputable, with good customer service and claims-paying ability. All insurance companies are rated by major rating agencies (e.g. Standard & Poor's, Moody's, A.M. Best) on their ability to pay claims. You can access these ratings online, through public libraries, or throughinsurance company literature.

An insurance policy is a legal contract that may be loaded with technical terms that are hard to understand. But read it anyway before you sign on the dotted line to find out about the coverage you're buying. For instance, the policy will tell you:

• Who or what is covered
• What coverage exclusions and limitations apply
• When coverage begins and ends
• How much coverage is provided
• How much you'll pay for coverage (the premium)
• How you report a loss or file a claim

It's always a good idea to ask an insurance professional to explain any terms, conditions, or benefits that you don't understand.

Evaluate your insurance needs periodically

As your life changes, your insurance needs change, too. So every once in a while (annually, some experts suggest), review your insurance to see if you need more (or less) coverage or an additional type of coverage. Here are some times in your life when you'll definitely want to re-evaluate your insurance needs:

• You're getting married or divorced
• You're starting a family
• You're renting an apartment
• You're buying a house or a car, or making a major purchase
• Your child is going off to college
• You're starting a new job or becoming self-employed
• You're buying or selling a business
• Your income increases or decreases substantially
• You're taking care of an aging parent
• You're retiring

Make your insurance policies work for you by taking the time to periodically review your needs and coverages.