Most people don't like to think about insurance, the very thought of laying out money for something you may never need, especially when times are tough seems like a waste.
Unfortunately there are some types of insurance that are compulsory, e.g., third party cover for our cars.
Another insurance which is essential to have is Home and Contents Insurance, which covers your home and contents if a disaster were to take place.
People who live in rural areas can ill afford not to have home and contents insurance especially in the event of a bushfire.
Research by AAMI has shown that about a third of people living in NSW don't have building or contents insurance.
A very common problem is under insurance this is when policy holders under estimate the value of their possessions, in such cases the payout will be less than the replacement cost.
That is why it is very important that homeowners regularly need to review the value of their belongings especially noting items such as appliances, CD's TV's furniture and clothing.
Another important thing to take into account is the increase in value of your property after renovations have been completed.
Everyone is legally required to have third party car insurance, however there are still a number of people who go without cover and some never shop around when they renew their policy.
A spokesman for AAMI has stated that many people don't bother to shop around for car insurance so they miss out on savings which could even be worth hundreds of dollars.
Some experts have warned that focusing on price alone may mean that payouts could suffer in the event of a claim.
This is not just for the well-off; with the help of government incentives Health Insurance is now becoming affordable to everyone.
Australian Bureau of Statistics data has revealed that almost half the population with hospital cover, which is about 3.9 million people, lives in households where the gross annual income is less than $69,993.
People who delay taking out Private Health Insurance risk being penalized by the Federal Government by 2 per cent on top of the premiums they would have to pay for every year they put off by not taking private health insurance after the age of 31.
So if you wait until you are 40 you would pay 20 per cent more than somebody who took a policy at 31.
There is also the Medicare surcharge levy, which basically adds 1 per cent onto your tax bill, if you don't have private health cover and you earn more than $73,000 for singles and $146,000 for couples.