Explanation of insurance?

Explanation

Explanation of insurance?  Insurance can be define as:

A contract between a person and an insurance company.

Explantion of Insurance
This contract include an agreement that the insurance company will cover some portion of an individual loss as long as the person meets certain conditions mention in the insurance contract. The individual or policyholder pays a premium to obtain insurance coverage. If the person experiences a loss covered by insurance, such as an accident to the car or a house damage, the individual files a claim for reimbursement with the insurance company. The individual will pay a deductible to cover part of the loss, and the insurance company will pay the rest.

Example

Let’s take an example, consider you have a homeowners insurance policy. You pay 1,500 Dollar per year in premiums for a policy with a face value of 300,000 Dollar, this value is what the insurance company take an estimates it would cost to completely to rebuild your home or house in the event of a total loss.
Unfortunately 1 day as has happened to too many people in recent years,  a huge wildfire surround  your neighborhood including your house burns to the ground. After the event you file a claim for 300,000 Dollar with your insurance company. The company approves the claim. You pay your 1,500 Dollar deductible, and the insurance company covers the remaining 298,500 Dollar of your loss. You then take that money from insurance company and use it to hire contractors to rebuild your own house.





When you buy an insurance policy, you are common your loss risk with the loss risk of everyone else who has purchased insurance from the same insurance company. If you for some reasong buy homeowners insurance from the State Farm, which sells too many more homeowners insurance policies than any of its competitors, then you are actually joining forces with millions of other homeowners to collectively protect each other against any kind of loss. Each homeowner pays annual premiums.

List of things you should Insure

This is the list of things you need to Insure. Insurance give an opportunity for financial protection against a wide variety of losses:
  • apartment burglaries
  • medical payments to occupants injured in a car accident
  • help with basic activities of daily living
  • long-term disability
  • house fires
  • death of someone (caretaking support)
  • emergency room visits
  • surgery
  • a lawsuit brought by a visitor who slips and falls on your icy front porch
  • auto body damage from a car accident
  • and many more.

When you insure the right thing in the right amounts, you will be protected from potentially devastating losses that could send your life veering off course and devastate your finances.

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Imran Khan
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