Insurance provides a way to help you financially recover from a loss. It is not a substitute for taking reasonable steps to avoid risk, however. Insurance is required or recommended for many things, including automobiles, homes and businesses.
Each policy contains a lot of information, but most begin with the Declarations section. It contains summary information, such as the insured’s name, address, type of coverage and a description of the insured property. It also lists the premium, which is the cost to be paid for the policy each year, and the name of the insurance company that assumes the risk.
The next section is the definitions section, which includes key terms used throughout the policy. These are important to understand so that you can be an informed consumer of insurance and not pay for levels of coverage you do not need. In addition, this information can help you determine if the policy you are considering is right for you.
A standard homeowners insurance policy, for example, covers the physical structure of your home (as well as any other structures on the property, such as sheds and barns) against damage from a number of covered perils. It also pays for your personal belongings, such as clothing and furniture, if they are lost or damaged by a covered peril. Generally, the amount of money that is paid to repair or replace your house if it is damaged or destroyed is called the dwelling coverage limit. Other structures, such as garages and fences, are typically covered at a percentage of the dwelling coverage limit.
You should work closely with your producer to ensure you have the right level of coverage for your home and personal possessions. The amount of coverage that is necessary can vary widely, depending on the value of your property and the level of protection you want.
The policy also contains a Conditions section, which explains your responsibilities and the procedures the insurance company will follow if you make a claim or are sued. This section is important to read and understand because it will affect your rights in the event of a loss.
Health insurance policies, for example, usually have a waiting period that ranges from one year to four years before certain illnesses are covered. These are known as pre-existing conditions.
Some types of insurance, such as life, private passenger auto and workers’ compensation, are required by law. Others, such as general business liability and professional liability, are voluntary.
While the pros and cons of insurance are debated, most people recognize that the financial assistance provided by insurance can help them get back on track after a loss or tragedy occurs. For example, it could mean that your family does not have to move out of their home or that your children can afford college if you have the proper life and auto insurance coverage. Without these policies, the impact can be devastating. This is why many people choose to purchase them. 501(c)(3) insurance requirements