What is an insurance policy? An insurance policy is simply a legal contract between an insurer and the insured, that describes the insurance claims that the insured is legally obligated to cover. In return for an upfront payment, commonly known as the initial premium, the insured promises to cover certain perils typically covered under the insurance language of the contract. These include injury, sickness and damage to property. If the insured is ever unable to earn income due to any of these three things and death is permanent, death is treated as the insured’s only loss.
When an insurance policy first comes into play, the insured purchases coverage from the insurance company. If ever the insured has to miss paying premiums, the insurance company can force a payout out to the beneficiaries or family of the insured. Once this happens, the insurance company must either cap the payout at the current maximum amount, freeze it at that level or refund the full amount. If a payout is permanently capped, there is no way to gain access to it again.
There are three types of insurance policy coverage – collision coverage, liability coverage and property damage coverage. Collision coverage is the most common type of insurance policy and is designed to compensate for damages to automobiles. Liability coverage is designed to provide compensation for injuries resulting from collisions with other vehicles. Property damage coverage limits the amount that the insurance policy will pay in the event that the insured’s vehicle is damaged beyond repair.
If you are planning on buying auto insurance, you should always review your contract to verify what coverage you currently have and compare it to the new coverage. This is especially important in regards to collision coverage. Many times, individuals that purchase new cars purchase more collision coverage than they need, believing that their new car will handle the driving chores fine. Reviewing your existing liability insurance contract, you should make sure that you have adequate liability insurance.
The final type of insurance policy, and probably the most confusing, are the whole life insurance policy. This policy limits the payout to the benefit of the beneficiary. If the beneficiary dies, then the insurance company will take care of the remaining balance of the policy limit. This can cause many different problems, such as someone not getting enough money when they die. There are even some whole life insurance policies that allow people to borrow against the cash value of the policy limit, which can create a cash shortage in the event of a loss. Reviewing your insurance policies thoroughly can help you determine which ones have the best coverage, and also limits, allowing you to get the most out of your policy. Learn more information about Photographer Insurance
Having all of the insurance policies under one roof can be extremely helpful. Being able to view the cost, risk and benefits of each can allow you to quickly determine whether or not an insurer is financially protecting you against a specific problem, without having to deal with the many details of each individual plan. Once you know what you are paying for, you can make more informed financial protection decisions.