On the whole people would know what insurance is and have seen one type or another.
Sponsored links
Mortgage Loans
Solutions for Your Small Business. Business Begins Here.
www.business.com
FreeCreditReport.com
A Good Credit Score is 700 & Above. Click here to see yours for $0.
FreeCreditReport.com
Insurance: The Most Common Arguments
On the whole people would know what insurance is and have seen one type or another. You would have bought insurance for your home, car, or loan. Insurance policies are usually lengthy and complicated and presented in very fine prints. Even lawyers could lose track of the real meaning of the clauses. Nevertheless, there are some items that every insurance contract should have.
The intent of all insurance contracts is to provide protection for any eventuality that may or may not happen. This is the protection you are paying for. Such events could be a fire in the house, a vehicular accident, hospitalization expenses or other such loses. The only one that differs is the life insurance which gives benefits when the insured dies. This incident will surely happen, the only question is when as it may come when least expected.
The financial loss must be measurable. Insurance companies will cover the risks but they must be able to measure and calculate the loss that they might have to indemnify if the event ever happens. The loss should be measured in terms of money value. For instance, the insurance company would be able to calculate medical costs or a replacement car but not for emotional distress caused by the accident.
The loss should be identifiable and exact. As mentioned, the insurer should be able to calculate the monetary risk they could face or they will not be able to compute the premium rate.
The loss should be substantial. The collective cost for insuring the item should cover at least the cost of doing the paper work. Let me cite a good example. If you decide to insure your prized racehorse, a representative of the insurance company will inspect the horse to appraise its value then assign a premium, go back to the office and have the policy written. Of course, the value of the horse justifies all the expenses incurred and the time spent on the activity. However, the same cannot be said if you decide to insure your goldfish because its cost would hardly justify the effort versus the policy price.
Even if the event occurs, the loss should not reach the calamitous level. Calamitous level can be gauged through the assets that are at the disposal of the insurance company. So that the issued insurance policy will not be of value if the loss that the insured suffered will be greater than what the insurer can pay for. For instance, insuring for losses against earthquake will most likely be impracticable because the damage in the event of an earthquake will be so great that it would be unfeasible for the insurance company to indemnify all the losses.
Bookmark or share this article
Comments
No comments have yet been made.
