Insurance .2

Insurance

A financial arrangement in which a person or entity pays premium’s to an insurance company in exchange for coverage or compensation for specified losses or damages. With insurance you are making a trade, trading money for financial protection against potential future losses

What do you do/ what happens when you pay premiums?

You transfer liability over to the insurance company.

Premium

The amount of money paid by an individual or entity to an insurance company for coverage under an insurance policy.This payment can be made on a regular basis (e.g., monthly or annually) and is essential for maintaining active coverage. Insurance companies collect premiums from many customers and pool the funds to cover large claims. This enables them to afford large reimbursements

Liability

An acceptance risk and/or obligation or responsibility to pay a certain amount.- who is responsible

Insurance policy

A written contract that outlines the terms and conditions of the insurance coverage. Your insurance policy is a contract.

What does your insurance policy speficy?

What is covered, excluded, the amount of coverage, and the permium amount and more

Claim

A formal request made by the insurance policyholder to the insurance company for compensation or reimbursement for a covered loss or event.

Order of a claim

The policyholder files a claim, the insurance company will access the claim to determine if it is a covered item, if the item is covered the amount of compensation may be paid on the nature of the event and the policy terms.

Deductible

The amount of money the policyholder must pay out of pocket before the insurance company begins to cover the remaining costs. - reduced number of smaller claims. ex. With a $500 deductible, if repair cost $2,000, the policyholder pays $500, and insurance covers $1,500. Deductibles help reduce the number of smaller dollar amount claims, and encourage policyholders to take care of their property.

Car insurance

A type of property insurance that provides financial protection against losses related to owning and operating on automobile.