Basic Insurance — Things you need to know!

The following information is provided to give you some basic information about different kinds of insurance. Today most people buy some form of insurance. You are legally required to have car insurance if you drive a vehicle. You may also be required to have home insurance if you have a mortgage. If you are renting an apartment, you may have insurance on its contents. Insurance is a form of protection, if anything happens to your possessions' they are protected. You will receive some or all of the worth of the valuables you have insured depending on the agreement.

How does insurance work?

The amount of money you pay to insure something covers the cost of the insurance company taking the risk of your loss. When losses do occur, monies for the damaged goods are paid to you by the insurance company. This money is collected from thousands of customers who pay annual premiums for protection. Your annual premium is the amount of money you pay to the company for insurance coverage for one year. In any given year, a small percentage of people have claims, the extra money collected helps pay for those who claim losses and the operating costs of the insurance company.

How do I know what insurance to buy?

You should insure any valuable property you have that can be damaged, lost or stolen. You may also need to protect yourself against the costs of property damage or injury you may accidentally cause to someone else. Insurance agents can advise you about the amount and kinds of insurance you need.

How much will it cost?

There are many factors which affect the cost of insurance. For example, if you are buying home insurance, the value of your home, the age of the house, its location, and the kind of heating system you have are important. All of these factors will affect what your annual premium will be.

Are some insurance better than others?

It certainly pays to shop around. Insurance rates will vary with different companies. It is very important that you read and understand your contract. There are different levels of insurance coverage; you should not buy insurance simply by finding the company with the lowest price. You need to find out exactly what will be covered if you file a claim.

There are also different deductible with each kind of insurance; the deductible will affect the premium you pay. The higher the deductible, the lower the premium. A deductible is the amount of money you agree to pay up front when you make a claim. For example, if there was a fire in your house and the damage was estimated to be $4,000, you will have to pay the deductible. It may be $250, $500 or $1,000, depending on the policy you buy. If you buy home insurance that has a $1,000 deductible clause, $ l,000 will be subtracted from the total amount of your claim.

The law states that everyone who drives a car must have liability insurance. This kind of insurance protects the other person's property.

You do not have to have collision and comprehensive insurance on your vehicle. However, if you borrow money to buy a vehicle, it is usually required by the bank or lending agent. Collision and comprehensive insurance will cover most kinds of damage including fire and theft.

The amount of money you will have to pay for car insurance will depend on a number of factors. Some of them include where you live, your age, your sex, your driving history, the kind of car you want to insure, and your driving record.

Deciding the amount and types of insurance you need can be a difficult task. Understanding some of the basic terms involved in insurance will help you - understand your contract. It may also help you get the best insurance available for the least amount of money. Before you sign a contract, read it carefully. If there is something in it that you do not understand, ask that it be explained. The following terms are provided to help you get the kind of information you need to understand your insurance needs.

Deductible: The amount of money you pay before a claim is processed.

Claim: A request to receive payment for damaged goods.

Broker: The person who is the go between you and your insurance company.

Agent: The person or broker who sells insurance.

Premium: The amount of money you pay for insurance.

Liability: Protection for damage or injury to other people or their property.

Collision: Partial or complete personal protection of your vehicle in the event of an accident.

Comprehensive: This type of insurance covers against damage to the vehicle other than collision. Fire and theft are covered by this type of insurance.