Insurance is basically a way of protection against financial loss. It’s a form of strategic risk management, largely used to offset the risk of an unpredictable or contingent future financial exposure. This form of insurance also serves as a source of revenue for businesses and a way of maintaining the social responsibility of companies.
Insurance is a contract that gives an insurer a legal claim to compensate the insured for any losses. Insurance policies cover a wide range of risks like fire, natural disasters, injury or death, damage to the property, theft and bankruptcy. The different forms of insurance policies include policy limits and deductibles. Policy limits are the maximum amount that an insured will be compensated for. Deductible is the total amount that an insured need to pay out of pocket before the insurance company makes a payment.
Many types of insurances fall under the umbrella of general insurance. General insurance covers such risks as vehicle, home, health and dental insurance. However, it’s often required by law in some states to have this coverage. There are also policies such as commercial marine perils insurance which is designed to protect marine vessels and those operating under their flag.
Premiums are determined by risk. The higher the risk involved in an event the higher the premium payable. The level of premium increases proportionately to the insured’s risk.
Insurance can also be purchased separately for each individual aspect of an event covered under one policy. This is called an “airship and boat insurance.” Most boat operators and owners to purchase these types of policies because they provide added protection in the case of several potential losses, including grounding, damage due to storm, and possible legal liability in the event of an accident. In addition, marine perils policies are also available for vessels that carry more than one person on board. These policies are designed to protect passengers who may be injured in an accident by another passenger or by the ship itself.
One type of insurance that is increasingly popular is none recognized by most states. Known as “no fault” insurance, this policy protects against claims of medical and other negligence that happen at the site of the insured’s residence. Some examples of this insurance are home insurance, auto insurance, and health insurance. This type of insurance provides coverage for things like slip and falls, explosions, wrongful death, property damage, and personal injury claims. In many cases, this insurance does not cover the insured’s no fault injuries but provides up to a percentage of the claim’s cost.