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The uncertainties and uncalled problems are on rise in this fast moving world. They put us in a doom and make us wish that there was someone who could protect us during these uncalled problems. Insurance agency acts as a Genie’ to these uncalled problems and indemnifies the losses incurred to the insurer. Insurance is a type of indemnity contract whereby the offeror (insurer) protects the offeree (Insured) against the risk of a contingent loss; the offeree pays a premium against this loss.
In simple terms, Insurance is a means of transferring insurable risk of a potential loss to an insurance company against a premium. Hence insurance can be defined as pooling of losses by transfer of risk to insurer, who promises to indemnify insured for losses, which are unforeseen and accidental in nature.
Thus the characteristics of insurance are:
- Transfer of Risk: The risk is transferred from the insured to the insurer.
- Indemnification: The insurer is restored to his or her approximate financial position prior to the occurrence of the loss.
- Payment of unforeseen, unexpected and accidental loss. Insurance does not cover intentional loss.
- Pooling of Losses: This means sharing of losses incurred by few over the entire group, so that process average loss is substituted for actual loss.
When is a Loss Indemnified by an insurance agency?
- There exists a contract between the insurer and insured in which the insurer promises to pay on behalf of or to indemnify another party, called a policyholder or insured;
- A loss covered under the insurance policy has occurred.
- The policy against which the loss has been claimed has not lapsed.
What are the various types of Insurance?
The various kinds of Insurance Policies are:
- Homeowner’s Insurance: It insures the dwelling and other structures against all direct physical loss to the property except those losses that are specifically excluded (like flood and earthquakes, you have to buy two separate policies for earthquake and flood). It also covers the damage made by you or your family members (including your pets) to others property. The damage caused by poor maintenance is also not covered as maintenance related problems are considered to be homeowner’s responsibilities.
- Automobile Insurance: In most of the countries purchasing auto insurance is mandatory to drive your car on public roads. It covers the property (damage made to or theft to, your car), liability (damage made to others for bodily injury or other property damage) and medical (cost of treating injuries, rehabilitation and sometimes funeral expenses and lost wages) expenses incurred as a result of an unforeseen event.
- Health Insurance: This is an insurance, that all of us need it at some point of time, for few it might be required more frequently. Health insurance helps in yearly doctor’s visits and health checkups, it is more importantly required in a traumatic health related problem in which the medical attention is required.
- Life Insurance: This insurance policy the insured amount on the death of a person. It is basically done to replace the financial contribution made by you in case of your death.
- Annuity Insurance: This insurance is to provide you the same financial status that you have now, after your retirement.
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