Not a lot happens these days without insurance. Insurance is simply a way of reducing your risk in an event or activity. Holding a concert, a sporting event or owning a house all attract an outlay in insurance. This outlay is usually called the premium. The insurance industry is a complex and changing industry based on the protection of individuals, business and other entities from financial loss.
The overriding principle of insurance is that the losses of a few are carried by the premiums of many. If everyone claimed more then their premiums each year, the insurance industry itself would go bankrupt. Insurance has become an integral part of our lives. Premiums are paid to insurers in return for insurers paying our claims when things go wrong. Insurers will offer policies on almost anything, if they can identify a potential to generate income.
What types of insurance are prudent? The types of insurance that are prudent are those insurances that cover the risks that we are not prepared to take. The following list and brief description shows the range of common available options.
1. Building insurance and household contents insurance. Building insurance protects the owner against damage to the structure and fittings of the building, whilst household contents insurance covers the loose items that you own. In some states they are combined.
2. Car Insurance. Car insurance protects the owner from the cost of repairs or replacement in the event of an incident. There are different levels of protection in car insurance from simply self-insurance to comprehensive insurance that covers any damage that occurs in an accident.
3. Life Insurance. A way of providing for your loved ones should you die prematurely.
4. Medical Insurance. Medical insurance provides for the protection of family members should they need to see medical advice or stay in hospital.
5. Travel Insurance. The cost of medical treatment in countries other than your own can be very expensive. Travel insurance covers medical matters, loss of luggage and other travel related events.
6. Accident and unemployment insurance. These insurances cover people for accident and unemployment by covering the loss in earnings for defined periods. Some policies cover only debt repayment. There are many variations to this type of insurance within states and across states.
7. Other non-fixed asset insurance. These policies cover items like boats, caravans, trailers and other non-fixed items that may suffer damage in their normal use.
8. Pet Insurance. Pet insurance, usually protects pet owners from veterinary bills should their pet need some medical procedures.
9. Other Insurances. There are many types of specialist policies that do not fit into the above list, like business insurances, fiduciary insurances, workers compensation insurance, professional indemnity insurance, consumer credit insurance and the list can go on.
Taking out an insurance policy to protect you from risk is prudent in many different situations. Assess the risk of an activity and decide if you want to accept the risk or to pass it on to an insurance company. They will charge you an annual premium based on their calculations of risk and other factors, hoping to make it attractive enough to pay the premium. Insurance brokers will help you in understanding the best policies to buy.
Act now, and assess your risks!