Many financial emergencies are caused by major life events, such as a car accident. While the results of such events can be devastating, maintaining adequate insurance is one good way to protect yourself from financial ruin. In fact, for your protection and the protection of those around you, many states now require some types of insurance.

Because there are many types of auto insurance available, it is important to understand what you are getting for your money.

-Liability. The most important type of insurance, liability covers costs associated with property damages or bodily injury caused by you or a member of your household. It could protect you from losing everything in a lawsuit.

-Collision. If your car is damaged in an accident, collision coverage will pay for the damages.

-Comprehensive. Damage to your car by factors other than an accident (fire, vandalism, theft) are covered by comprehensive coverage.

-Medical payments. This coverage guarantees immediate medical payments regardless of who is at fault. It also covers you and members of your household in any accident involving an automobile, even if you are walking or on a bicycle.

-Uninsured motorist. This coverage protects you if you are ever in an accident caused by an uninsured driver. It may also provide protection in a hit-and-run accident.

-Underinsured motorist. If an accident is caused by someone who is not adequately insured, this insurance would cover the additional expenses.

-Gap insurance. A type of insurance growing in popularity, gap insurance covers the difference between an insurance settlement and your loan or lease balance.

-Extra coverage. Some people choose to pay for voluntary coverages. Coverages available include towing insurance, auto glass insurance, emergency roadside insurance, and rental insurance.

-No-fault. No-fault insurance is required in many states. With no-fault insurance, your insurance company would cover your expenses in an accident—regardless of who was at fault. Other drivers would be covered by their own policies. No-fault insurance eliminates the need for accident victims to establish another’s liability in a lawsuit.

Most types of insurance are available with different levels that limit the dollar amount the insurer will pay in the event of an accident. Generally, the lower your limit, the less the insurance will cost you. The potential downside to low limits is that if you are ever in an accident, your coverage may not cover all of your costs.

Some insurance policies also have deductibles. Your deductible is the amount you would have to pay before your insurance policy kicks-in. For example, a $500 deductible means that you pay for the initial $500 of each loss. The higher your deductible, the lower the cost of your policy. However, you should consider how much you would realistically be able to pay if you were involved in an accident.

Also, you should be aware that it’s common for auto insurance companies to use credit information when deciding whether to issue a policy on your car and at what cost. Therefore, it pays to maintain a positive credit history.

Note: I am not an attorney. The above information is being shared for educational purposes and should not be interpreted as legal advice.

During uncertain economic times, it’s especially important that people not only know how to manage their debt, but also their interactions with debt collectors. To remind people of their rights—and debt collectors of their obligations—the Federal Trade Commission (FTC) is featuring a new video highlighting the rights of consumers whose debts have gone into collection, and the rules of behavior for debt collectors. And it has a friendly reminder that asserting your rights gives you a voice, but doesn’t make your debt disappear.

The FTC’s Money Matters website offers a wealth of information about spotting and avoiding scams and rip-offs when dealing with mortgages or loan modifications, using job placement services, and applying for credit and loans, in addition to coping with debt.

The safety of your personal information and your identity is always at risk. And unfortunately, identity thieves may be even closer than you think. According to the Identity Theft Assistance Center (ITAC), for every five cases of identity theft, at least two victims knew the thief personally.

Identity theft is a complex crime. The impact of the crime is significantly magnified when the imposter is someone you know and trust. If you find yourself in this situation, you have several options:

-Proceed as if this was a regular case of ID Theft by filing a police report and cooperating with law enforcement’s investigation.
-Work with the creditors to see if a resolution can be made without police involvement.
-Hire a mediator to help devise a solution.
-Pay the debt and live with the consequences.

You might also consider encouraging the impostor to seek professional counseling.

Because none of the options are easy, by far the best solution is to help prevent the theft from ever occurring. In honor of National Protect Your Identity Week (PYIW), October 17-24, 2009, consider the following tips to protect your personal information:

Lock it up. Invest in a filing cabinet that locks. File all personal documents including credit card and bank statements, tax documents, and any other financial paperwork that are kept at home.

Use passwords to protect your computer. Be sure to password protect your computer and all files on your hard drive pertaining to your finances. Change passwords often and be sure to use a password that is not too easy for thieves to figure out.

Keep credit cards and PIN numbers safe. Do not keep your bank or credit card PIN numbers in your wallet or anywhere near your debit and credit cards. Also, do not lend your card to others or share your PIN. If you have already made this mistake, call the issuer to get a new card and change the PIN. Additionally, do not carry your Social Security card around with you. It should also be kept in a secure location.

Choose your houseguests wisely. Use caution when inviting strangers into your home. Be extra careful when choosing someone to housesit or pick up your mail when you are on vacation. Consider asking the post office to hold your mail when planning to be away for more than a few days.

Go paperless. Research shows that people who bank entirely online reduce their chances of becoming identity theft victims by 10 percent. Also, consider investing in personal finance software to track expenses and pay bills online.

No one can completely protect themselves from all types of identity theft. If you become a victim, time is of the essence. Acting quickly and thoroughly can limit the potentially far-reaching impact identity theft may have on your finances and life. For more information about protecting your identity, visit USDOJ.gov or FTC.gov.