Businesses that don't provide their employees with health insurance have been in the news lately thanks to the Affordable Care Act and the US presidential campaign—But what about businesses that buy too much insurance? Does such a company even exist?

The answer is surprising. Plenty of small and large businesses alike buy much more insurance than they need. Here's a look at five types of insurance that are usually unnecessary (but still get bought anyway).

Credit Card Payment Protection

Almost every business maintains some sort of line of credit, including at least one credit card. When applying for credit cards, customer service representatives will almost always try to sell you some sort of payment protection plan. These plans start off free (usually for somewhere between 30 and 90 days) and promise to take over payments in the event of either a financial or medical emergency.

But the problem is these plans are extremely expensive after the free introductory period.

Beyond their expense, payment protection plans are almost always wholly unnecessary. In the event of a true financial crisis—a bankruptcy, for example—a company credit card is likely to be the least of the business owner's concern. And as for a medical emergency, quality medical insurance is much more important than having your credit card balance insured.

Anything Other than Liability Insurance on Old Cars

For brand new cars, it absolutely makes sense to have a high level of insurance. And in cases of cars that aren't owned outright, it's usually a required condition of an auto loan. But for low value older cars, anything more than basic liability insurance can be a real waste of money.

If you maintain collision and/or uninsured motorist coverage on your older car's auto insurance plan, you can easy add $100 or more a month to your premiums. For a car that may only be worth a couple of thousand dollars, that expense almost never makes sense. It's certainly possible that at some point, your aging vehicle may be hit by an uninsured motorist, but that's not likely to happen often enough to make collision insurance worth it.

Consider the math: $100 per month for 30 years (or 360 months) comes out to $36,000. Even if accidents ruin four or five older vehicles, the extra insurance isn't likely to pay for itself. There's a reason auto insurance companies push the extra coverage: They make big profits from it—which means you don't.

Identity Theft Protection

The Internet and our credit card based economy have made it easier than ever for criminals—or even pure opportunists—to gain access to personal or financial information and use it to their advantage. But the stories of hacked company credit card databases, stolen social security numbers, and drained bank accounts shouldn't cause businesses to consider identity theft insurance.

Credit card companies and banks already have identity theft protection protocols in place. If this first line of defense doesn't catch identity thieves, then financial institutions will still refund unauthorized charges as long as victims report the fraudulent charges within a reasonable amount of time (usually a few days).

Given the expense of identity theft insurance—often $10 to $20 a month—it makes much more sense for a business to have an accountant or book keeper keep close tabs on the company accounts. For especially concerned business owners, it's possible to get credit card usage notifications sent directly to their smart phones and/or email account(s).

One-Time Car Rental or Other Travel Insurance

Businesses should never buy the insurance offered by car rental companies, airlines, or other companies offering short term travel related insurance. These forms of insurance are extremely expensive and almost never worthwhile. Additionally, many business travelers are already covered under existing insurance policies. For example, many auto insurance policies cover employees during working hours regardless of what vehicle they are in. And most businesses already have personal property insurance, which protects them against theft.

For businesses who are interested in protecting their employees or company assets while traveling, they should find out how to add the desired coverage to their existing long-term insurance policies. Adding additional coverage riders is almost always far cheaper than buying short term insurance from a travel company.

Extended Warranties

It's tempting to buy that extra three or five year warranty on an expensive computer or flat screen TV, but it's almost never worth it. Electronics retailers rely on extended warranties to provide most of their margins on high dollar electronics, which means they're a bad deal for consumers (statistically speaking).

Most high end electronics devices already come with one or two year manufacturer warranties. Plus, with the breakneck speed of technology development, in three or four years most electronic devices will be outdated and ready for replacement.

For businesses who want their electronics to last, it makes much more sense to buy higher end products from reputable vendors rather than spend money on a warranty for a less reliable product. In the rare event that one of these products fails, it's usually cheaper to have the device repaired. For example, if a business buys five computers and one of them breaks, the cost to repair it might be $100 to $150, whereas extended warranties for all five computers could easily run $500 to $1,000.

Conclusion

When business owners and decision makers weigh their insurance options, they shouldn't just consider whether they want protection against a certain kind of event. Rather, they should compare the cost of insurance against the cost of dealing with the problem themselves. Often, the onetime cost of resolving a situation costs less than long term insurance.

Natan Roth is a licensed insurance agent that's dedicated to finding the lowest prices on life insurance for his clients. You can read some of his insider strategies in this post from MyCheapLifeInsurance.com. In addition to providing cheap life insurance policies to his brick and mortar clients, he now works hard to help people on the web get the best deals possible, while allowing them to obtain the coverage that they need and deserve.