The need for insurance depends on a variety of factors, including state law, individual preference and the type of property or business at risk. Some insurance is mandatory, such as car insurance in most states and workers’ compensation in many industries. Other types of insurance are optional, such as life insurance, home insurance or business liability policies. When deciding whether or not to buy a policy, consider the pros and cons of each. Insurance also has a lot of terms that can be confusing for the new consumer. This article will help to explain some of the most common terms associated with insurance requirements:
Coverage for physical damage to your property, usually limited by an insured’s deductible. This covers the cost to repair or replace damaged items with similar materials, minus depreciation.
A legal process of examining, accepting and rejecting insurance applicants and assigning rates for those accepted, according to underwriting guidelines. Underwriting also involves the evaluation of potential risks and classifying them to determine a premium for the coverage selected, according to Front Range Insurance.
The Declarations Page of an insurance policy includes a summary of the person covered, their name and the amount of coverage. It may also contain definitions or special exclusions that limit the insurer’s responsibility to pay a claim. For example, a special exclusion may be that the death benefit of a life policy is reduced if the person died from a pre-existing condition or illness.
Most people have health insurance through an employer or the government, but some consumers purchase private coverage. A good health policy covers preventive care, doctor visits and hospital stays, as well as prescriptions and other medical services. It should have reasonable deductibles and co-payments, and should cover pre-existing conditions for the person covered and any family members who join the plan later.
Liability coverage pays for the other driver’s injuries and vehicle damage if you cause an accident that’s your fault. It should also include personal injury protection, which covers a person’s medical expenses and some lost income after an accident. Most people also have property and casualty insurance in addition to their auto insurance, as most lenders require it to secure a mortgage.
A life insurance policy, which is often bought to pay for final expenses, provides a tax-free lump sum that can help your loved ones with the financial burden of paying the debts left behind. However, it is important to note that a death benefit does not replace lost income. For this reason, some people choose to purchase additional unemployment or disability insurance to supplement their income. 501(c)(3) insurance requirements