All abou insurance

Why insurance is important?

1.) Insurance Keeps Commerce Moving

In the days after the 9/11 attacks and mumbai taj hotel attacks, there were many worries about insurance coverage. Acts of war are not covered by insurance. Was terrorism an act of war? The big question was, How would the mumbai or 9/11 attacks be classified? Fortunately, the insurance industry decided the attacks were not an act of war.

However, after attacks, some insurers began excluding terrorism. But the federal government stepped in and required coverage in the name of keeping commerce moving. In this case, insurance likely prevented many businesses from avoiding terrorist-targeted operations, such as refineries and chemical haulers

2.) Lenders Require Insurance

This reason is tied to No. 1. Lenders require that you have insurance. Think about it: Mortgage lenders want proof of insurance before you buy or build a new building. In short, to get the money your business needs to keep going, it’s likely you enjoy the benefits of insurance. Without insurance, your winning business model can't get the funding it needs to take its first step, or your established business model can't get the funding to evolve and better compete.

3.)Insurance Ensures Family and Business Stability

Insurance is a safety net for when risks go wrong. Life insurance can support the life of a family, should a member be lost. It’s similar for a business. Should a key member or piece of equipment go out of commission, the business can carry on, thanks to insurance. This reason why insurance is important dovetails nicely with peace of mind. It all goes back to the idea that insurance, when activated, makes policyholders whole again.

How insurance works

How it works

When you buy a policy you make regular payments, known as premiums, to the insurer. If you make a claim your insurer will pay out for the loss that is covered under the policy.

If you don’t make a claim, you won’t get your money back; instead it is pooled with the premiums of other policyholders who have taken out insurance with the same insurance company. If you make a claim the money comes from the pool of policyholders’ premiums.

How premiums are calculated

Insurers use risk data to calculate the likelihood of the event you are insuring against happening. This information is used to work out the cost of your premium. The more likely the event you are insuring against is to occur, the higher the risk to the insurer and, as a result, the higher the cost of your premium.

An insurer will take two important factors into account when working out the premium they will charge.

1. How likely is it in general terms that someone will need to make a claim?
2. Is the person who wants to take out a policy a bigger or smaller risk than the ‘average’ policyholder (for example, a young person with a high-powered car may be charged a higher premium as they are statistically more likely to be involved in an accident than a mature, experienced driver)?

Only a proportion of policyholders will make a claim in any one year. 

Standard policy conditions 

Although policies have different terms and conditions, in general there are three main principles that are common across all insurance policies. These include:

• cover is provided for the actual value of the property or item that has been lost or damaged (its replacement value), but does not include any sentimental value
• there needs to be a large number of similar risks so that the likelihood of a claim can be spread among other policyholders. It must be possible for insurers to calculate the chance of loss so that a premium can be set which matches the risk
• losses must not be deliberate

7 Types of Insurance

Types of Insurance Business are;

• Life Insurance or Personal Insurance.
• Property Insurance.
• Marine Insurance.
• Fire Insurance.
• Liability Insurance.
• Guarantee Insurance.
• Social Insurance.

• Life Insurance or Personal Insurance.

Financially safeguards your family in case of your untimely death. It can help them maintain their lifestyle and achieve their life goals even when you are not around.Maturity Benefit, Surrender Benefit, Loyalty Additions, etc. can be added on top of the base cover

• Marine Insurance.

• Marine insurance is very important because through marine insurance, ship owners and transporters can be sure of claiming damages especially considering the mode of transportation used. Of the four modes of transport – road, rail, air and water – it is the latter most which causes a lot of worry to the transporters not only because there are natural occurrences which have the potential to harm the cargo and the vessel but also other incidents and attributes which could cause a huge loss in the financial casket of the transporter and the shipping corporation.
• Incidents like piracy and possibilities like cross-border shoot-outs also pose a major threat when it comes to water transportation and therefore in order to avoid any loss because of such events and happenings, in the interest of the corporation and the transporter, it is always beneficial to have a back-up like a marine insurance.

Property insurance

The property insurance is the insurance that protects the physical goods and the equipment of the business or home against any loss from theft, fire, and any other perils. It can be an all-risk coverage policy that gives protection against all the risks, or it can be named-risk coverage policy that gives protection against only those perils that are specified in the policy document.

The property insurance is considered as an umbrella or package cover that offers a combination of covers through single policy. It may include the homeowner’s policy, renter’s policy, flood insurance, shopkeeper’s policy, office package policy, and earthquake insurance policy. Such policies instead of just covering the risk of the property might also include some of the personal liabilities also.

Generally, the property insurance covers the risks of all the damages caused by fire, theft, wind, smoke, snow, lightning, etc. But, the property insurance does not cover any damages that are caused by water due to flooding, water seepage, standing water, tsunamis, cyclones, etc. Some of the property insurance covers also exclude the losses due to earthquakes, molds, and the acts of war like terrorism, etc.

Definition of Fire in Insurance

The fire insurance contract is defined as “an agreement, whereby one party in return for a consideration undertakes to indemnify the other party against financial loss which the latter may sustain by reason of certainly defined subject-matter being damaged or destroyed by fire or other defined perils up to an agreed amount”.

Fire, in order to make the insurer liable under the contract, must satisfy two conditions.

First, there should be actual fire or ignition, and second, the fire must be fortuities in its nature.

What Is Liability Insurance?

Liability insurance provides the insured party with protection against claims resulting from injuries and damage to people and/or property.  

Liability insurance policies cover both legal costs and any payouts for which the insured party would be responsible if found legally liable. Intentional damage and contractual liabilities are generally not covered in these types of policies.

Guarantee insurance

A financial guarantee is a non-cancellable indemnity bond backed by an insurer to guarantee investors that principal and interest payments will be made. Many insurance companies specialize in financial guarantees and similar products that are used by debt issuers as a way of attracting investors

Social insurance

public insurance program that provides protection against various economic risks (e.g., loss of income due to sickness, old age, or unemployment) and in which participation is compulsory. Social insurance is considered to be a type of social security (q.v.), and in fact the two terms are sometimes used interchangeably.

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