Insurance involves a contract whereby an individual or organization makes with an insurance company to receive protection from financial loss. Insurance is a means of transferring the risk of doing business or losing money to a third party, the insurance company. This method is often referred to as a risk management strategy in organizations.
Insurance policies cover damage to the property insured in any form; the policies help to hedge against running into financial losses. The insurance company puts together clients’ risk to make payments affordable for the insured property.
The Insurance plan works by having the insurance company enter into a binding legal agreement with the insured which is called an insurance policy. The insured pays a premium constantly, and in the event of a loss or damage to the property or life, an insurance cover is paid by the insurance company. This is a standard risk management procedure for organizations or businesses that specialize in high-end equipment, getting insurance from an insurance company will save the organization financial loss.
Every insurance company already has some listed set of conditions and circumstances that will warranty an insurance amount to be paid, such events normally constitute loss or damage to insured property etc. When such occurs, the insurance company makes findings to ascertain the damage or loss fits the requirement of the company, if it fits the agreed terms between the insurance company and the insured, an amount is paid to cover up the damage.
Types of Insurance
An insurance plan can be made for things that are important or their loss will be enormous in value. The common forms of insurance are:
- Auto insurance: Automobiles are exposed to accidents from their daily operations. Auto insurance covers property damage or theft to the cost incurred from treating injuries sustained during an accident from an automobile. Auto insurance is passed into the legislation of some states or countries making it mandatory.
- Home insurance: House is usually a major asset for most individuals and the loss of it can be devastating. Insuring your house protects it from unpredictable damage either natural or manmade. An insurance premium is oftentimes paid alongside paying the mortgage of the house, House that is on an insurance plan enjoy a wide range of benefits.
- Life insurance: A life insurance plan involves a specified amount of money to be paid to an insurance company to ensure your dependents are financially secure in the event of an untimely demise. The family of the insured is financially compensated if the contract of insurance is fulfilled.
- Health insurance: The health insurance scheme is quite common. It is a form of insurance that covers medical costs for expensive treatments or procedures. The insurance premium paid towards the health insurance policy normally covers the cost for treatment, hospitalization and other medical costs.