Insurance is a contract between two parties, where one party pays a sum of money if something bad happens to the other party. It’s an agreement that says you will pay me if something bad happens to me. It doesn’t matter how big or small the thing that happened was, or what was stolen, or how old you are, or how much money you have in your bank account. If someone breaks into your house and steals your TV and they don’t find anything else worth stealing and they don’t see any signs of trespassing on your property, then they probably won’t bother suing you for damages.
If someone breaks into my house and steals my computer, then it’s possible that I might want them sued for damages. If they find some guns in my safe and take them without permission, then I might want them sued for damages. If someone shoots a gun at my window while I’m sleeping at night and kills one of my family members, then I might want them sued for damages. Insurance is a legal mechanism that allows people to pool their resources together in order to help each other out when things go wrong
What are the 4 main types of insurance?
The four main types of insurance are:
- Automobile insurance – covers damage to other people’s cars and property from accidents.
- Health insurance – protects you against medical costs, hospital bills, doctors’ fees and treatment if you become ill or injured.
- Homeowners’ insurance – protects your home against loss or damage caused by fire, theft or other hazards that are not covered by public liability policies (see above).
- Life insurance – helps pay for funeral expenses and other expenses if you die during the policy period, but it does not pay out until after your death.
What do you mean by insurance?
Insurance is a contract between two parties: the insurer and the insured. The insured agrees to pay for some loss or damage that may occur during a specified period of time, usually during the term of the policy.
In return for this payment, the insurer agrees to indemnify the insured against certain losses. Indemnification is where they cover you against losses that are caused by something you have done or failed to do.
The most common types of insurance policies are property and casualty (P&C) policies and life insurance policies.
What falls under general insurance?
The word ‘general’ is not a synonym for ‘all’. General insurance is a specific type of risk insurance that covers a wide range of risks. General insurance covers the loss or damage you may suffer from any number of events such as fire, theft, storm and flood, amongst others. It also covers you against losses if you are disabled or suffer from illness or accident.
There are many types of general and specialised risks that can be covered under this type of insurance policy. These include:
- motor vehicle accidents;
- worker’s compensation;
- income protection insurance;
- mortgage default cover;
- property damage (fire) and theft insurance;
- health insurance; and
- life insurance.