Life is full of events that no one can predict. It’s impossible to know if you’ll get into a car accident, have your laptop stolen, or need to visit the emergency room for a broken bone. While you can’t prevent these kinds of catastrophes, you can protect your personal finances by having enough of the right kinds of insurance.

Insurance is a special type of contract between you and an insurance company. The company agrees that when certain events occur, that are defined in an insurance policy, they’ll meet certain expenses or provide a payout. For example, with a car insurance policy, the insurer agrees to pay some amount of the cost to repair it if you’re in an accident. Health insurance pays a certain amount of your medical expenses if you need to go to the doctor.

Insurance eliminates or reduces the potential financial loss you could experience from an unforeseen event and protects the income and assets that you work hard for.