The Spinoff copped some flak for talking about insurance policies you may not need, so we asked Sorted’s Tom Hartmann for a view on how much insurance is too much.

We are swimming in insurance providers, products and policies these days, and it can be overwhelming to figure out if you’ve got too much or too little coverage in place. The fine print alone – inclusions, exclusions, acts of God – seems to stretch beyond comprehension. It’s all become too complex, so where to begin?

Firstly, ask yourself: what would make you happiest if your situation were to change? What would provide the most wellbeing? In the face of the many risks life brings, for most people that is making sure their loved ones will be okay if something happens. No more, no less.

Insurance is not the only way of doing this – many things are covered by the government, ACC, or our community. What often doesn’t get said is you may not need many products yet, or you may be paying for some you no longer require. Our relationship with insurance tends to lag. We typically wait too long to get the right insurance in place, then we hold onto it way longer than we need to.

We can also cover risks ourselves. After all, if we were crazy rich we wouldn’t need insurance at all, we’d just throw money at any situation that most people insure themselves against. Of course most of us are not rich, but we can still cover some things ourselves, like keeping an emergency fund to pay for phone repairs. The more we do, the less we have to pay an insurance company.

That said, insurance is an important tool. It allows us to pool life’s risks with others and pay a company to carry them for us, so the risk is off our shoulders. For those costs that would set us back too much, such as losing a house, that’s for a company to cover. We’re paying for peace of mind.

Prioritise what to protect

If you’re shopping around for insurance or are reviewing what you currently have, help is at hand to prioritise. It comes down to three things, in this order:

1. Cover your people

When others depend on us, we need to cover them so that if we’re not able to support them in the same way, they can still move forward. Partners, children, parents: it’s about them.

The main insurance products here are life, trauma and disability insurance, as well as income protection. Other non-insurance protections such as wills and enduring powers of attorney are essential too.

And this is where funeral insurance is supposed to help, so that the people we leave behind don’t need to fret. But will it work for all the money we pour in? That’s the question.

2. Cover your money

Good insurance very often is the art of not getting stuck with the bill when something unexpected happens. Someone typically has to pay, and it might as well not be you.

For example, third party insurance on a car can cover you if you run into someone’s Maserati on the street. Contents insurance protects you if there’s damage to a property you’re renting. You don’t want to drain every penny you have if the unexpected occurs.

3. Cover your stuff

If you’ve got possessions that would be too valuable to self-insure if something happened to them, it can be helpful to have coverage in place. House insurance, car insurance, contents insurance are all ways of protecting what we own.

But again, will it work? Some contents insurance, for example, does not cover computers that are more than two years old. If that’s what you’re trying to protect, you may be paying for a product that doesn’t do the job.

Where does pet insurance fall in all of this prioritising? Unfortunately some of us still treat our animals as something we own, but for many they will be furry members of the family. They may need some insurance coverage of their own, or we may be in a position to cover all or some of the costs.

Good advice is gold – it’s worth digging some up

So depending on the people, money and stuff in your life, you will need different kinds of insurance. It needs to work for you (and not the other way around).

But how can you tell if your insurance really fits your situation, and whether a certain product is going to work when you need it to?

Buying insurance products online has become as easy as whipping out a credit card. But if there is a technical reason for it to fail when you go to make a claim – that is, it wasn’t fit for purpose – your people, money and stuff aren’t really protected at all.

This is where insurance advisers can truly bring value. Sure, they work for the insurance companies, but the good ones work for us as well.

An adviser will sort out the right policies for your particular situation and your budget. Their job is to know the products so well they can ensure they will work.

And if you need to claim, a good adviser will push that claim through for you and make sure the company pays out.

How to find one? They’re out there, but it helps to shop around. Find someone who will assess your needs, and help you access a wide range of products from multiple providers. Be clear about how much you want to spend and what you want to protect.

And should the unexpected happen, your adviser and your insurance company will be there to do their job – protect what’s important to you.

Tom Hartmann is Sorted’s managing editor. Check out the guides and tools from Sorted – brought to you by CFFC.