Insurance is a way to hedge your bets — to get someone else to cover the risks of every day life. Your car insurance covers the risks you face on the road. Your health insurance limits the risks you face in the event of illness or injury. But with a little more knowledge about your insurance options, you can manage your risks even better.

Back Up Your Insurance With An Emergency Fund

Even with great insurance coverage, you’ll face expenses that simply aren’t covered by your insurance provider — or your deductible is high enough that your insurance doesn’t kick in. Maybe it’s a medical procedure, maybe it’s a cosmetic repair for your car — either way, having an emergency fund in place can help you eliminate the risk of an expense your insurance doesn’t cover.

Just how big an emergency fund needs to be varies, but even starting small can make a big difference. Even if you can only set aside $25 per week, at the end of the month you’ll have $100 saved up that you didn’t have before.

Keep A Close Eye On Changes

Especially in light of the current economic situation, many insurance companies are making changes to their offerings. They’re not the only ones, either: if your insurance is part of your benefits package from your employer, you may find that changes are coming from that direction as well. You should receive notice in writing of all changes — make sure that you read such documentation and understand it. In some cases, if may mean that you need to purchase supplemental insurance or change providers.

Make Insurance A Priority

It’s tough to manage all the insurance a person can really use. Even something as important as health insurance often falls by the wayside if you’re facing a financial crunch. But make it a priority to keep your insurance in place, especially your health insurance. You may not need it it — but it can just as easily make the difference between your finances remaining stable or an illness putting you entirely under.

It’s not just health insurance, either. If you can increase your home insurance, life insurance, long-term disability insurance and so on, it’s generally a good financial choice. We don’t know what the future holds, but we can see the risks. Minimizing the effects a situation can have makes sense, financially.

Check Out Your Insurer

Some insurance companies could use a little health coverage themselves right now. Take a look at the ratings for your insurance company from Standard & Poor’s or another ratings organizations: such information can tell you if your insurer is on solid ground. If the company is, great. If it isn’t, it’s worth shopping around to make sure that your policies will be there when you need them. This is especially true of policies you pay for over a long period of time for what may be a very large payout — life insurance, long-term disability and other options.

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We all know we need an emergency fund. Whether it’s called a rainy day account, a contingency fund or a just-in case account, it’s absolutely necessary. But most of us have a hard time getting in the habit of saving up for something we don’t expect. There are a few tricks that can help get some momentum going — as far as your emergency fund goes.

1. Separate out your savings: If you can get your emergency savings into an account entirely separate from the rest of your money, you’ll be better off. You’ll have less temptation to spend that money and there’s no chance that your savings for a rainy day will get mixed up with your savings for that brand new television. 
2. Put your savings out of reach: While you need to be able access your money in an emergency, it shouldn’t be too easy to get. If it takes significant effort to actually use your savings, you’re far less likely to touch it for something that isn’t an emergency. Think of it this way: if you have a credit or debit card in your wallet, you’re going to run into a situation sooner or later where you’ll use it. Whether you forgot to move money between accounts or you just need a couple extra bucks, you’ll use that card for something other than the emergencies it’s really for. Eliminate the temptation. Stick that card somewhere difficult to access.
3. Automate your savings: Plenty of people have suggested that the easiest way to build up your contingency fund is to automatically withdraw money from your checking account to your savings account. It’s popular advice because it works. Having to think about moving your money around only makes you worry about it. It’s easy to slip into the thought process that you can’t really afford to add to your savings this week and suggest to yourself that you’ll add in an extra $25 next week or something similar. Don’t give yourself the opportunity to not save.
4. Decide what an emergency means: Different people have different standards for emergencies. There are plenty of people out there right now, reluctant to crack open their contingency fund although they just lost their jobs. There are also plenty of people willing to make use of their emergency funds when they come up short on pizza money. There’s no right or wrong definition of an emergency — but you have to know ahead of time when you’re willing to use your savings. You don’t want to make that decision in the middle of a crisis.
5. Set goals for your savings: You don’t really want to be sticking all of your extra money in your emergency fund for the rest of your life, do you? So set a goal for your emergency fund — maybe as much as a year’s worth of expenses. Once you’ve met it, you can start applying your money to other goals, like investments. The exact amount of money you need in your emergency savings is a number you’ll have to decide for yourself, though. If your job is solid and you’re in good health, you can be comfortable with a smaller fund. It’s up to you, though.

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