1. Know your coverages: Insurance coverages are
typically broken down into two categories whether you are talking about
home, auto or commercial policies: those are liability coverage and
property coverage. Liability protects your assets (all that you own) in
the event that you are responsible for damage to a person or that
person's assets and you are sued. Property coverage protects the items
that you own (home, auto, etc) in the event that they are damaged by
what is called a "Covered Peril". Peril is an insurance word for
"something that could cause damage" such as fire, wind, etc.
2. Do an assessment of your financial state: If you own a
home and have a job, you have a lot to lose, and therefore, more to
protect. A good rule of thumb is that your liability limits on both your
home and your auto should never be lower than the total of your assets,
plus several years of your current salary. If you were to have an auto
accident, and not have enough liability to pay for a medical or property
claim, in most states a judgment can be issued against your wages for
several years. This is money that is taken out before you ever receive
your paycheck.
3. Do your homework: Most insurance companies are rated
on both their history and their future. You can find out how well a
company ranks in terms of how well they pay their claims, how strong
they are financially, and how proficient their servicing staff performs.
(see links below)