Avoid Narrow Coverage

Most experts warn against buying any insurance policy with extremely narrow coverage. Cancer insurance, for example, makes no sense when other policies can cover a broader array of health ailments.

Industry experts generally recommend a life insurance benefit of five to 10 times annual income, depending on how many debts and dependents you have.

With enough basic life coverage, you can avoid unnecessary life insurance gimmicks, Rutgers's Feinman says. For example, there is no need for extra life coverage folded into travel insurance products or for credit life insurance that pays off debts when you die.

Liability Coverage

Another important addition to homeowner policies is umbrella liability coverage. Without it, you could be bankrupted by a lawsuit, whether from someone injured on your property or from someone slandered by your Internet blog.

Such coverage is rare but important for renters who live in large buildings, says Wilson of the Independent Insurance Agents & Brokers of America.

A fire started in one apartment can easily spread to other units, potentially putting a renter on the hook for a big bill for damages. Each $1 million in liability coverage generally costs $100 to $200 per year in premiums, Headley says.

Tips on Add Law Coverage

If your older house is destroyed by a fire or disaster, you can't just blow the dust off the original construction plans and build again. In most of the U.S., building codes have become much more stringent, requiring upgrades of everything from electrical systems to the thickness of walls when you rebuild.

To pay for these extra costs, public insurance adjuster Raymond Altieri Jr. of Altieri Transco American Claims advises all owners of older homes to get so-called ordinance and law coverage added to their homeowners policy. A typical policy boosts premiums 3 percent to 7 percent.