How to Avoid Being Surprised by 7 Nasty Expenses

Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend.

Stressed woman looking at car accident damage from dented bumper and back end of vehicle ready to call car insurance
Bilanol /

Unexpected expenses are bound to happen. Cars break down, roofs leak and faulty plumbing floods homes.

One way to be prepared for such financial surprises is to build an emergency fund that is big enough to cover all of your living expenses for months — just in case. You should also protect yourself by buying homeowners, health and auto insurance.

Following are some of life’s most unpleasant expenses that can catch you off-guard, and more strategies for coping with them.

1. Automobile breakdowns

Man leaning against car with hood open, making a call.
pathdoc /

Vehicle breakdowns are hard to anticipate. Some drivers buy mechanical breakdown insurance or extended repair warranties for added peace of mind.

Mechanical breakdown insurance is supplemental insurance that covers repairs unrelated to accidents.

An extended auto warranty covers repairs after factory warranties have expired. The items such warranties protect vary, but they typically exclude wear-and-tear and routine maintenance, such as replacing tires, notes U.S. News & World Report.

Some warranties are backed by vehicle manufacturers and others are backed by car dealers or warranty companies.

Money Talks News founder Stacy Johnson weighs the pros and cons of extended repair warranties in “Ask Stacy — Should I Buy an Extended Car Warranty?

2. Costly home repairs

Home damage
SpeedKingz /

Anyone who owns a home knows there are plenty of unexpected expenses. A flooded kitchen or a damaged roof easily can lead to thousands of dollars in repairs.

Aside from building an emergency fund, the best way to cope is to have a homeowners insurance policy. Be sure to get quotes from several carriers and compare levels of coverage.

Homeowners policies don’t cover normal wear and tear or damage to electrical systems, plumbing and household appliances, however. One way to guard against expenses associated with such wear and tear is to buy a home warranty, which is like a service contract.

You can learn more about the pros and cons of this type of protection in “Are Home Warranties Worth It? Decide What’s Best For You.”

3. Funeral expenses

Oscar C. Williams /

The national median cost of a funeral with viewing and burial is $7,848, according to the latest data from the National Funeral Directors Association. The average price of a casket alone is $2,000 to $5,000, depending on type.

You can limit funeral costs if you shop for the lowest prices and beware predatory business practices.

Funeral providers are required by law to give you an itemized statement of the total cost of the funeral you’ve selected. This should include the cost of complying with any legal requirements. However, optional services and products can add to your costs.

For more ideas, read “11 Ways to Make a Funeral Affordable but Not Cheap.”

4. Medical costs

health care costs
Elnur /

The high cost of health care in America can quickly deplete your bank account.

You can try to stay well by exercising and eating healthful foods. But the best way to protect yourself from unexpected medical costs is to have health insurance.

Another way to lower prices is to negotiate with health care providers for reduced bills.

Catastrophic health insurance is another option, available for purchase through or your state’s health insurance marketplace. These catastrophic plans have low monthly premiums but high deductibles, the share of costs that you must pay, says Those eligible for these plans include:

  • People under 30
  • People of any age with a hardship exemption or affordability exemption (based on Marketplace or job-based insurance being unaffordable)

Low-income Americans may qualify for Medicaid, the health insurance program run through state and federal governments for the poorest citizens.

People who are 65 or older generally qualify for Medicare, the federal health insurance program for seniors and some disabled individuals.

5. Totaled automobiles

A man makes a phone call after a car crash
Tom Wang /

Having your auto insurance company declare your damaged car to be a total loss can trigger a financial crisis if you don’t receive a large enough payout to buy a replacement vehicle.

It’s common for cars to be considered totaled when the damage exceeds the car’s market value. If your car is an older model, it may have a low market value even though it runs great.

If you believe your totaled car is valuable enough to justify repair costs, you can contest your insurer’s decision to total your vehicle. One way to do this is to demonstrate that cars like yours are selling for more than your insurer thinks yours is worth. Kelley Blue Book and the National Association of Automobile Dealers publish guides that you can use to judge car values.

Another option is to keep the totaled car and pay for the repairs yourself. If you want the car, typically your insurer will pay you the cash value of the damaged vehicle, minus any required deductible and the amount it could have sold for to a salvage yard. It will be up to you to arrange for repairs.

6. Lawsuit judgments

sebra /

Losing a lawsuit can deal a serious financial blow if you’re found to be legally responsible for damages.

To help avoid that outcome, respond quickly when a suit has been filed against you.

“Failing to timely file an answer to a [lawsuit] can result in a default judgment filed against you,” Boston attorney Christopher Earley tells Money Talks News.

One of your first steps should be to contact an attorney. Make sure you understand how he or she will bill you.

Liability insurance is a good way to protect yourself from the cost of a lawsuit. It will cover the cost of your legal defense and pay judgments against you, up to the limits of the policy.

For example, liability protection typically is included in a homeowners insurance policy to cover you in the event that someone is injured on your property. If you own a business, you may need a separate policy to protect your business from liability claims.

7. Burglaries

Burglar using crowbar to pry open window
Christian Delber /

Burglary victims often face serious expenses when it comes to replacing missing items.

After you’ve installed good locks and an alarm system, the best defense is to have an insurance policy for your home or business that will replace stolen items.

If you choose an actual cash value (ACV) policy, you may save money compared with a replacement cost protection plan. However, if a loss occurs, it will pay only what your property is worth at the time of the claim — meaning after depreciation. Under a replacement policy, however, your insurer pays the full cost of replacement.

Standard homeowners policies generally limit how much you can collect when high-value property is stolen or damaged. If you have expensive artwork, collectibles or jewelry, you may need to buy an insurance rider — a written agreement that increases your benefits to cover expensive items that your policy would not otherwise cover.

Get smarter with your money!

Want the best money-news and tips to help you make more and spend less? Then sign up for the free Money Talks Newsletter to receive daily updates of personal finance news and advice, delivered straight to your inbox. Sign up for our free newsletter today.