This is a self-assessment test to help you evaluate your insurance needs before purchasing personal or commercial coverage.
This test is designed to get you thinking about your unique risks and coverage requirements.
Answering these questions will prepare you for a more productive conversation with an insurance agent or broker. It is a starting point, not a substitute for professional advice.
Part 1: Personal Insurance Assessment
This section covers the insurance you need to protect yourself, your family, and your personal assets.
Auto Insurance
Vehicle Value: Is your car new or valuable enough that you would want to replace it if it were totaled? (This helps determine if you need comprehensive and collision coverage, not just state-mandated liability.)
Financial Cushion: Do you have enough savings to easily cover a major repair or a full replacement if your car is damaged or stolen?
Liability Risk: Do you have significant assets (like a house or savings) that you need to protect from a lawsuit if you cause a serious accident? (This helps determine your liability limits.)
Commute & Use: Do you rely on your vehicle for daily work commutes or business errands? (If so, downtime is costly, and you might consider rental reimbursement coverage.)
Household Drivers: Do you have teen drivers or other family members on your policy?
What your answers mean: If you have a valuable car, a lot to lose in a lawsuit, or can’t afford to be without a vehicle, you likely need more than a basic, minimum-liability policy. Consider higher liability limits and physical damage coverage (comprehensive and collision).
Homeowners/Renters Insurance
Inventory: Have you created a detailed inventory of your personal belongings (furniture, electronics, clothing)? Do you know their approximate replacement cost?
High-Value Items: Do you own expensive items like fine art, jewelry, collectibles, or high-end electronics? (A standard policy has limits on these; you may need a special rider or floater.)
Property Risks: Is your home in an area prone to specific risks like floods, earthquakes, or wildfires? (These are often excluded from standard policies and require separate coverage.)
Liability Hazards: Do you have a swimming pool, a trampoline, certain dog breeds, or a home-based business? (These increase your liability risk.)
Rebuilding Cost: For homeowners, do you know the estimated cost to completely rebuild your home today, not just its market value? (You should insure for the rebuilding cost.)
What your answers mean: If you have high-value items or live in a high-risk area, you must look beyond a standard policy. Renters often underestimate the value of their belongings and skip insurance, leaving them vulnerable. Homeowners should ensure their dwelling coverage is high enough for a full rebuild.
Life Insurance
Dependents: Does anyone rely on you financially (a spouse, children, aging parents)?
Debt: Would your family be burdened with significant debts like a mortgage, car loans, or student loans if you were to pass away?
Income Replacement: How long would your family be able to maintain their current lifestyle without your income?
Final Expenses: Do you have funds set aside to cover funeral costs, which can average over $9,000?
What your answers mean: If you answered “yes” to having dependents or major debts, life insurance is a critical tool to protect your family’s financial future. The amount you need depends on your specific goals (e.g., paying off the mortgage, funding college, replacing income for a set number of years).
Part 2: Commercial Insurance Assessment
This section covers the insurance you need to protect your business from financial loss.
Property & Assets
Physical Location: Do you own or lease your business premises? Do you have equipment, inventory, or furniture that would be expensive to replace in case of fire, theft, or disaster?
Business Equipment: Do you rely on specialized machinery or computer systems to operate? How quickly would you need them replaced?
Business Interruption: If a fire or other disaster forced you to close temporarily, how would you cover ongoing expenses like payroll and rent? (This is covered by Business Interruption insurance.)
Data: Is your business’s data critical? Do you store sensitive customer or employee information?
What your answers mean: A Business Owner’s Policy (BOP) or a Commercial Package Policy (CPP) bundles property and liability coverage. If your operations are data-heavy, Cyber Liability insurance is essential.
Liability & Lawsuits
Public Access: Do customers, clients, or vendors visit your physical location? (This creates a risk of slip-and-fall injuries, covered by General Liability.)
Professional Services: Do you provide advice, consulting, design, or other professional services? (A mistake could lead to a lawsuit for negligence, requiring Professional Liability or Errors & Omissions (E&O)insurance.)
Product Risk: Do you manufacture, distribute, or sell a physical product? (If it harms someone, you could be liable; this is covered by Product Liability insurance.)
Vehicles: Do you or your employees use vehicles for business purposes? (This requires Commercial Auto insurance, as personal auto policies often exclude business use.)
What your answers mean: Nearly every business needs General Liability insurance. Businesses in service or consulting industries must have E&O coverage. The more public interaction or risk your product/service carries, the higher your liability limits should be.
Employees & Operations
Staff: Do you have employees (even just one)? (If so, you are legally required in most states to have Workers’ Compensation insurance.)
Management Risks: Have you considered the risk of a lawsuit from an employee for issues like wrongful termination, discrimination, or harassment? (This is covered by Employment Practices Liability Insurance (EPLI).)
Key People: Does your business depend heavily on one or two key individuals whose death or disability would devastate the company? (You might consider Key Person insurance.)
What your answers mean: Failing to carry legally mandated coverage like Workers’ Compensation can result in severe fines and penalties. EPLI is becoming a must-have for any business with employees in today’s litigious environment.
Next Steps
After completing this assessment, use your answers to guide a conversation with a qualified, independent insurance broker. They can help you find the right policies, explain the fine print, and ensure you have no dangerous gaps in your coverage.
Remember to review your insurance portfolio at least once a year or whenever you have a major life or business change.