Insurance Coverage Simplified
You already know you need insurance coverage.
Pennsylvania state law requires you to have auto insurance. Your mortgage company or bank requires you to have homeowners insurance, and your lease agreement often requires you to have renters insurance.
But there’s a big different between getting the best policy and paying the cheapest price.
After all, you don’t want to slash your coverage to the bone and have a cut-rate policy that provides you with next to nothing should you need to file a claim. Sadly, a lot of people buy insurance without properly knowing exactly what they’re getting, or what the policy covers… and doesn’t cover.
There are many different types of:
- coverage options
That can often make “apples to apples” comparisons difficult if you aren’t familiar with some common insurance terms.
Makes sense, right?
Types of Insurance
There’s such a wide range of insurance policies that a more specific question would be “What types of insurance aren’t there?”. You can get just about anything insured provided you pay a reasonable premium monthly fee for the protection. The more common types of insurance include:
Car/Automotive Insurance – To protect you from the monetary impact of a road accident whilst. If you get your car written off, the Philadelphia insurance company could pay for a replacement. If you crash into someone else, your insurance would pay for damages.
Home Insurance – To protect you from damages caused to your home, such as burglary, vandalism or even natural disasters.
Travel Insurance – Many people skip the travel insurance when they go on holiday, but in the event of a flight cancellation, mugging or accident, travel insurance will pay for the resulting costs and bills.
Health Insurance – For the USA in particular, medical costs can rack up a large bill. Health insurance makes sure that you get the funding for treatment in the event of an illness.
Income Protection Insurance – Income protection is something you should look into if the consequence of losing your income is significant. For homeowners with mortgages in particular, this could protect you from getting your house repossessed.
Do You Need Insurance?
Insurance is usually only appropriate when the impact of the loss is significant enough to warrant the monthly premium. For example, it wouldn’t make sense to pay a monthly fee of $40 to protect something worth less or only a little more in monetary value.
In many cases insurance may be mandatory, and the absence of insurance could result in a hefty fine by the police, and even charges brought up against you.
So How Does Insurance Work?
Insurance companies are businesses that take on the risks of others. Talented risk analysts and actuaries are hired to calculate the risk value for each policy using a pool of data acquired from their clients or past clients.
The premium monthly fee is calculated using this risk figure to be slightly favorable to the insurance company, which is where their profit lies.