Ahead of buying any insurance policy either for your life or property, there are those issues you normally would seek to understand.
One reason people buy insurance policies is to ensure their peace of mind because someone else assumes the risk of a loss in exchange for their premium.
Premium is the insurance price standing for the amount charged for a certain amount of coverage extended to the buyer of the policy.
The insurer is the company that accepts equitable transfers of the risk of a loss from the insured (the policy buyer).
For the insured plans to succeed, the event to be covered by the insurance company must be insurable. Some of the frequent characteristics of insurable risks include the following.
Exact loss- this means that the event that gives rise into the loss, requiring insurance, must be definite in the sense that time, place and also the cause can be known.
Take for example, a worker who gets injured at the workplace can easily claim the workmen compensation benefits since, the cause of his or her injury can be ascertained, as well as when and which workstation he was when the loss happened.
As well, life insurance policyholder demise is a certain risk as opposed to some others that may not be easily identifiable in reality.
In other words, for a risk to be insurable, the cause, moment and place where the loss occurred must be adequately clear to any sensible person, given as much as necessary information to neutrally authenticate these.
Big number of homogenous exposure units- the insurer is in business and this is why they must create a pool of closely related exposure units willing to transfer their risk of losses to them in exchange for premiums.
It is not all policyholders who suffer losses at a given point in time but they still pay their premium, which allows the insurer to commit some of the funds to compensate the few who actually suffer losses and probably invest the rest.
Remember, indemnification for any loss, follows a thorough investigation to verify if event is definite.
Therefore, only those that qualify this stage are returned to the position they enjoyed ahead of loss occurrence.
There may be an insurer covering the less recurrent events or properties that exceptionally lack homogenous exposure units.
Type of loss covered should be large-it is very imperative for the policy holders to consider the size of the loss in relation to the value they hold to the property, such that if it were lost, they would feel the punch.
When seeking coverage for a given property, an insured must estimate the anticipated cost of loss if by any chance it occurred in the future.
Additionally, the process of obtaining policies involves cash and when this push through, the insured start paying premiums.
It would be reasonable to insure large losses and tolerate high initial costs for a property of real value in the sense that one cannot easily afford another or repair the excessively expensive damages.
Except for small losses of huge value, there is no reason of incurring the same costs and one can pay for them on their own if such properties vanished.
The insured must also buy policy for the event that is not within their control and lacking the approximate aspect for the insurer to consider their requests. In short the loss must be accidental.
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