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Finance Information   »»  Insurance

Insurance is a system by which individual or companies secure our property against loss or damage. This is provided by the insurance companies and the individual or company is to give small payments according to the premiums. The insured individual or company will take claim on the property at the time of loss or damage.






Principles of insurance

  1. A large number of homogeneous exposure units:The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004.
  2. Definite Loss:The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy.
  3. Accidental Loss:The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost.
  4. Large Loss:The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims.
  5. Limited risk of catastrophically large losses: The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed.

Types of insurance

  1. Automobile insurance known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself.
  2. Aviation insurance insures against hull, spares, deductible, hull war and liability risks.
  3. Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
  4. Disability insurance policies provide financial support in the event the policyholder is unable to work because of disabling illness or injury.
  5. Health insurance policies will often cover the cost of private medical treatments if the National Health Service in the publicly-funded health programs do not pay for them.
  6. Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses.
  7. Political risk insurance can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.
  8. Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.

    Broker

    Broker is acts as an agent who represents the interest of the buyer in seaching for the insurance coverage at lowest cost and highest benefit to the buyer.

    Policy

    It is type of contract that details about the risks on which insurance is claimed and what are the premiums and who they are to be paid.