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Julie Baumann, who lives in the San Francisco Bay area, knows all too well that just because you have insurance, it doesn't mean you are covered. After years of paying high annual premiums for pet insurance, she filed a claim for surgery on her Bernese Mountain Dog. To her surprise, she was told the surgery wasn't covered and she would be stuck with the $6,000 bill.

Baumann isn't alone. Millions of consumers file claims every year against a wide variety of policies only to find the money they spent on insurance premiums was virtually thrown away. Americans spend more than $1.1 trillion on insurance premiums a year, according to the Insurance Information Institute. With coverage available for everything from your wedding day to your cat and your identity, what is worth your hard-earned cash and what's not?

Insurance you can skip

Pet insurance. Considering all the restrictions on most pet-insurance policies, you'd probably be better off setting aside money every year for your pet's health care. In addition to premiums, you also have the responsibility of co-pays, medications and deductibles, which quickly add up. Plus, with most plans, premiums rise and coverage declines as your pet gets older -- and it becomes more likely to need costly procedures.

Home warranty. This covers major appliances and some other assets such as wiring and plumbing. Unless you are buying a home with old appliances and you are unsure about the electrical work, you're probably better off setting money aside for home repairs. Also, with these policies you still may be responsible for deductibles, service charges and proof of non-neglect.

Extended warranties for electronics. When you buy electronics, the salesperson will almost always offer you an extended warranty. Usually, this is worth it is only if you are buying an expensive product that's new to the market or the technology is entirely new. If you opt for this additional coverage, you should not pay more than 10% of the purchase price for the warranty insurance. And besides, if you purchase a high-end product from a quality manufacturer, it comes with some warranty anyway.

Mobile phone insurance. The $7 or so you pay monthly adds up, and if you have to replace an expensive phone, like a smartphone, you're probably looking at a hefty deductible. Further, the phone you get as a replacement from the insurance carrier will almost certainly be refurbished, not new. If you have an expensive smartphone, it may be worth having this coverage if you travel a lot. Or, it could be worthwhile for your children's phones if they're prone to losing or damaging them. But you're probably better off saving older devices you can reactivate.

ID theft insurance. Having your identity stolen is a big, messy headache. But in most cases you won't have to pay for it, thanks to federal consumer-protection laws. For complete information, check out the Federal Trade Commission's ID theft website.

Flight insurance. This isn't travel insurance; it pays out only if your flight crashes. It isn't necessary if you already have life insurance, and even if you don't have life insurance, the odds of this kind of risk are so low as to make the expense unreasonable.

Wedding insurance. Your credit card company may already cover most services covered through a wedding insurance policy. Just make sure you put all deposits for services such as catering and photography on your credit card; don't pay by cash or check. Your homeowners or renters insurance may cover theft or loss of things like rings or gifts.

Insurance you might need

Travelers insurance. This can pay off, but read the fine print -- especially if you have a health condition. If you cancel your trip due to a health problem, you may have to prove it wasn't because of a pre-existing condition. Before buying travelers insurance, check with your credit card company to see whether it offers coverage for travel when expenses are charged to its card.

Insurance you definitely need

Medical insurance. This is a must. If you can't afford full coverage, opt for at least catastrophic coverage. Raise your deductibles to lower your premiums. A lack of coverage for medical expenses associated with catastrophic care is a key reason people go bankrupt.

Auto insurance. This type of coverage is not only necessary, it's required by law. If you need to lower your premiums, consider raising your deductibles. If your car isn't worth insuring, consider sticking with basic liability, which should cover collision damage to the other car if you're in an accident. Be aware that if you are making car payments you may be required to carry collision coverage on your car.

Umbrella insurance. This type of coverage is inexpensive, considering the protection it offers. Umbrella insurance gives you additional coverage on your underlying homeowners and auto policies. It picks up where the other policies end, giving you higher protection in the event you are sued and found liable. Most umbrella policies are about $25 a month for $1 million in coverage.

Renters insurance. This little policy offers a big bang for the buck. Not only will it cover theft or loss from a fire or some other types of disaster, it may include liability coverage or cover items stolen or lost outside the home. Plus, it's affordable, typically about $250 a year.

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Tips for finding the best coverage

Once you figure out what kinds of insurance you need, how do you find the policies that fit your situation best? These tips can help:

  • Read the fine print and ask questions. You need to be aware of any loopholes and exclusions.
  • Check to see if your credit card company protects and covers you in a way similar to an insurance policy.
  • Buy insurance only from licensed agents or companies. You can check their status through your state insurance commissioner's office.
  • If you have several policies from a single insurer, you may be able eligible for a multiple policy discount.

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