Just as in driving, when planning your finances you have to learn to be defensive. Great asset allocations, high-flying mutual funds, and perfectly structured portfolios won't save you if you get sued. And while the mereword "insurance" makes some people cringe, it might not seem so bad if you can find ways to protect your family and save money at the same time.

Today we'll investigate homeowners, auto, and umbrella insurance coverage.

Homeowners Insurance
Guess what claim caused insurance companies to pay out more than $380 million in 2008 alone? Dog bites. That's right. In 2008,one-third of all liability claims on homeowners policies were for dog-bite injuries, with an average cost per claim of $24,461 according to the Insurance Information Institute. Shocking, isn't it?

Even if there's no Fido in your life, think about the folks who've lost property in fires, floods, tornados, you name it. None of us is immune. Homeowners insurance protects your biggest investment (your house) and all the contents in it. It also provides some liability coverage in case you are sued. Because disasters happen when we least expect them, you need to do something today to prepare.

Where to start? Take an inventory ofthe contents of your house, preferably on videotape. Then put that tape in your safe deposit box or a flame-resistant home safe.

Next, take a closer look at your policy. Does it provide for 100% guaranteed replacement value for your house and possessions? Is there an inflation clause? Be careful not to overinsure by including the cost of the land. Is there "loss of use" coverage that pays for expenses while you can't live in your house? What are the limits on items such as computers, cameras, jewelry, or furs? If you've accumulated more "stuff" over the past few years, have you included it in your inventory of assets? Most people should update that at least every two years.

How much are you paying for that coverage? Using the Internet, you can do some comparison shopping.Try a site like www.netquote.com. You'll find lots of good information including free insurance quotes.

If you have special items like musical instruments, art, antiques, expensive jewelry, or rare coins, you may need an additional rider on your policy or you may need a separate personal articles policy. By carefully reading your homeowners policy, you can see what's covered. And keep in mind, if you are at risk for either flood or earthquake, you'll need additional coverage beyond the standard homeowners policy.

Other tips:

• Ask about discounts for smoke detectors, fire extinguishers, deadbolts, and alarm systems.
• Consider reducing your premiums by raising your deductible to $1,000 and self-insuring for the first $1,000. (You're supposed to have that emergency fund in place anyway, right?)
• Check out the ratings of your insurance company at A.M. Best. Preferably your company should rate an A or A plus. A financially strong company is much more likely to be able to pay your claims if the need arises.
• Make sure you update your policy if you remodel your home.
• Don't leave your home office uninsured (you may need additional coverage).

Need more help? Call the National Insurance Consumer Helpline at 800-942-4242.

If you rent your home, you should also be covered by renters insurance. The building owner's property coverage will not pay to replace your apartment's contents. You never can tell when an upstairs neighbor may leave the water running or trip over one of your kids' roller skates.

Auto Insurance
Even James Bond could end up without wheels. The 2005 most-stolen vehicle was the 2001 BMW M Roadster. The Honda Accord takes the first place for 2008. Other top-10 stolen cars include the Toyota Camry, Dodge Caravan, and Jeep Grand Cherokee.

Now that I have your attention, go find your auto insurance policy. First, your policy needs to cover liability. I'd recommend $250,000 per individual, $500,000 per accident for most people. You may also need medical coverage, but check your health policy to make sure you are not duplicating coverage. Not everybody is as responsible about his or her car as you are. Be sure you have protection from uninsured or underinsured drivers: $250,000 to $500,000 of coverage should protect you from most risks.

Physical damage is another important aspect of car insurance. There are two basic types of coverage: collision and comprehensive. As the value of your car goes down, it may not make sense to continue collision coverage. You can check out the value of your caraccording to Kelly Blue Book. If you know you'll replace your car if you have an accident, you probably don't need the collision protection. Comprehensive covers all risks other than collision (fire, theft, storm damage, etc.).

Other tips:

• Like homeowners insurance, consider increasing your deductible to $1,000. You can self-insure that amount with your emergency funds. Use your savings to purchase an "umbrella" policy.
• Ask about discounts for alarms, air bags, or automatic seat belts.

"Umbrella" Insurance
Car crashes are the single biggest reason to have "umbrella" coverage. It is not unusual for people to end up in multimillion-dollar lawsuits if they were at fault in an auto accident. Other incidents that can lead to lawsuits: Your golf ball hits a fellow player in the head, a visitor slips on your stairs and breaks a leg, your child pokes his babysitter in theeye and partially blinds her, a kid is injured in your pool.

Umbrella coverage gets its name because it sits on top of your homeowners and auto insurance. It extends the liability coverage of those policies. You must have the underlying coverage (assuming you own the asset) in place. Be careful to read the underlying coverage liability limits. You don't want to have a gap between what the homeowners coverage pays for and what the umbrella policy pays for. If you do, you're on the hook for the gap. Be sure to check into discounts if you purchase all of these policies from the same insurance company.

Ask yourself these questions. The more you answer yes, the more you should think about umbrella coverage.

• Do you have a swimming pool?
• Do you have a big or excitable dog?
• Do you have teenage drivers?
• Do you regularly carpool other people's kids?
• Do babysitters or cleaning people work in your home?
• Do you ever leave your home in the care of a housesitter?
• Are you active in sports: golf, biking, skiing, boating, mountain climbing?
• Do people come to parties at your house, drink, and drive?

Here's the good news. This coverage is cheap. A million dollars of coverage will probably cost about $100 per year. Five million dollars of coverage will probably be $200 to $300. It will cover accidents at your home, in your car, slander, defamation of character, invasion of privacy, libel, and plagiarism. The more assets you have, the more you need this coverage.

So remember to protect those assets that you've worked so hard to accumulate. You never know when something unexpected can ruin notjust your day but your financial plans for the future. Spend some time this month making sure you're prepared, and try not to slip on any banana peels.