Learn it before you do it. This article will put you through the various types of insurance in the market so, the next time you will know what you are talking about.
Property and Casualty Insurance
Covers financial loss or liability risk as a result of actions towards others
This broadly encompasses insurance not directly concerned with life insurance, health insurance, or property insurance. It is mainly liability coverage of an individual or organization for negligent acts or omissions. However, the term has also been used for property insurance for aviation insurance, boiler and machinery insurance, and glass and crime insurance. It may include marine insurance for shipwrecks or losses at sea or fidelity and surety insurance. It may also include earthquake, political risk insurance, terrorism insurance, fidelity and surety bonds. One of the most common kinds of casualty insurance today is auto insurance. In its most basic form, auto insurance provides liability coverage in the event that a driver is found “at fault” in an accident. This can cover medical expenses of individuals involved in the accident as well as restitution or repair of damaged property, all of which would fall into the realm of casualty insurance coverage.
Covers financial loss from property owned that may be damaged
This provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or boiler insurance. Property is insured in two main ways that is, open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism, and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning, explosion, and theft.
Life covers risk of premature death
Life insurance is a protection against the loss of income that would result if the insured passes away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses (such as funeral expenses) can also be included in the benefits. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Covers risk of medical bills and loss of income from injury and / or sickness
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care and health system expenses, among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.
Insurance coverage for insurance companies to enable them to spread the risk they have written
Reinsurance, also known as insurance for insurers or stop-loss insurance, is the practice of insurers transferring portions of risk portfolios to other parties by some form of agreement to reduce the likelihood of having to pay a large obligation resulting from an insurance claim. The party that diversifies its insurance portfolio is known as the ceding party. The party that accepts a portion of the potential obligation in exchange for a share of the insurance premium is known as the re-insurer.