5 Insurance Policies for Summertime

Anyone who has ever forgotten to apply sunscreen knows it’s a good idea to take precautions during the summer even while at play. But for those who wade into the season unprepared, a nasty sunburn can be the least of their problems.

Many summer-related activities pose risks of injuries or damages that can be expensive for those without an adequate insurance policy. For example, traveling abroad without health coverage and getting into a medical emergency may cost the traveler hundreds or thousands of dollars out-of-pocket for health-care services. Even those who stay home during the summer face seasonal risks like flooding from hurricane damage, which isn’t covered by homeowner’s or renter’s insurance.

“There are certainly events and activities that occur during the summer where having an insurance policy would be helpful,” says Sheryl Garrett, a fee-only certified financial planner.

The trick is to make sure these policies are necessary and that you’re not overpaying for them. As insurance companies devise more products, it can be difficult to separate your true risk from the nightmare scenarios invented by clever marketers. They know that in the tough economy, many people fear getting hit with a big bill out of nowhere and may be more open to pitches for insurance.

So here’s how to size up five types of safety nets that are particularly relevant this time of year.

Travelers’ checklists often include little more than a camera, passport and sunblock. But before boarding the plane, make sure you have health coverage in case an emergency occurs while you’re away.

U.S.-based health-insurance providers rarely extend substantial benefits while you’re outside the country, says Garrett. Contact your insurance provider to verify your coverage abroad. To fill in any gaps, consider purchasing travel insurance.

Some 300 types of travel insurance exist, and most are sold by travel agents or online travel booking sites, says Scott Simmonds, an independent insurance consultant based in Saco, Maine. Policies can cover a wide array of health services, from hospital visits to medical evacuations from foreign countries. Without it, travelers may have to pay out-of-pocket for treatment, or risk being denied care.

Travel insurance typically costs 10% of the total trip, including flights and hotels, says Garrett. Before signing up, read the fine print to confirm your coverage, which will vary by policy and agent.

Whether you’re planning a weeklong road trip or driving to the nearest beach, check on your auto insurance before renting a car.

Drivers who own a car can contact their insurance provider to find out if they’ll be covered if they get into an accident or damage a rental vehicle, says Sam Belden, a vice president at Insurance.com, a policy comparison site. They also should consider whether they can afford to pay their policy’s deductible, says Belden.

Another option without additional cost is to use a credit card that provides a collision damage waiver. Most gold MasterCard, Visa, Discover and American Express credit cards offer this coverage to cardholders. Hold onto any receipts from the rental-car company citing damage to the rental car and send them to the credit-card company. Today, roughly 80% of all gold cards provide this benefit, but consumers should contact their credit-card company to confirm coverage before they rent the vehicle, says Simmonds.

If neither of those options pans out, consider purchasing a collision damage waiver from the rental company, which costs $12 a day on average, says Simmonds. Without coverage, in case of an accident, the rental-car company will usually determine how much you owe and charge your credit card -- even if it’s not your fault, he says.

Of course, accidents don’t always happen on the road. On the golf course, you can swing your nine-iron and mistakenly hit your opponent in the head. At a barbecue, your potato salad might make someone sick. In your own backyard, a guest might slip on the edge of your pool.

Most homeowner and renter insurance policies are sold with around $100,000 of liability coverage per occurrence, which kicks in when you’re held responsible for bodily or property damage on or off your property, says Simmonds.

“If you have any personal assets to protect you’ll need to have an umbrella policy,” says Garrett. “Otherwise, they could be at risk if you get sued.” To determine how much umbrella liability you need, round up your net worth, including your home and retirement savings, to the nearest million dollars, she says. Someone with a net worth of $1.3 million should get a $2 million umbrella policy, which costs an average $250 per year in premiums, she says.

When it comes to bad summer weather, homeowners’ policies cover most damage caused by hurricanes, but it doesn’t cover flood damage.

Typically, homes that require flood insurance are in low-lying areas near the Gulf Coast, the Mississippi River or a smaller river that can overflow. Home buyers will be alerted if they need flood insurance by the bank underwriting their mortgage. They can also contact their local city hall, which should keep track of flood zones.

Flood insurance, which is sold through FEMA’s National Flood Insurance Program, can range from $300 a year for a house with a minimal chance of a flood – say, one sitting on a mountaintop – or up to $10,000 a year if you’re living near a coast in a flood zone, says Simmonds. Read the fine print before signing up to make sure there aren’t any loopholes in your policy, like coverage restrictions based on the location of the damage or the cost of the repair.

There’s a reason why June is such a popular month for weddings, and it isn’t the rain, sleet or snow. Still, the weather doesn’t always cooperate.

Some couples try to guarantee the storybook setting by buying weather insurance, which covers costs related to changing your wedding plans in the event of rain, says Simmonds. The price of this insurance is based on historical weather data at your location and date, and it can often cost $2,000 or more, he says. A free alternative: Have a backup plan with your wedding venue to move the reception indoors in case of rain, says Garrett.