What we need to know about Insurance?

The purpose of insurance is to provide financial protection to individuals and businesses against unpredicted events. Insurance provides financial protection for individuals and businesses and also help with risk management and reduce financial losses. The insured pays a regular premium to insurance company under the insurance policy. By doing so, the risks are transferred to the insurance company should any loss event happens, and the insured is protected against the large financial expenses and possible damages is minimized when unpredicted event happens.

There are various types of insurance for difference purposes. The most commonly used insurance we use in our daily activities are auto insurance, medical insurance, property insurance and life insurance. All insurance policies have a annual premium for the insured to pay, and there is also annual deductible that caps the limit of out-of-pocket expense that the insured needs to pay when covered by the policy.

Auto Insurance

Auto insurance, by law, is required for all vehicle drivers to carry, though each State has different coverage requirement for vehicle owners to have. The required coverage is liability insurance, that when there is a vehicle accident, the liability coverage covers the damage to the other party who is involved. Additional coverage, such as uninsured motorist coverage, medical coverage, and collision coverage which covers the vehicle owner's own vehicle, are all highly recommended to have and that gives protection should any accident happens.

The insurance premium is evaluated and underwritten based on the driver's years of driving, driver's past driving history, and type of vehicle that is insured. A new teenager driver typically has a very high auto insurance premium because new drivers have a much higher percentage of vehicle incidents happening rate. And also, electric vehicle tends to have a higher insurance premium as well comparing to traditional gasoline cars. And remember, any reported incidents, traffic violation will also act against insurance premium. So, be a good driver, and be rewarded with good insurance premium to pay!

Medical Insurance

Medical Insurance is to provide coverage for healthcare expenses, and protect against high expenses such as emergency room visit, operations, and hospital stay expenses. The insured pays a premium to the insurance company, and there is also deductible that sets the cap for out-of-pocket expense that the insured has to pay. Depending on the insurance network, either PPM or HMO, the insured can select in network primary care physicians PCP for routine visits and checkups. When needed, primary care physician will send patient to specialist as referral if needed. Besides from commercial medical insurance, Medicare and Medicaid are medical insurance coverage provided by federal and state government for seniors and low-income group people. Employers also provide medical insurance to its employees with a better group enrollment rate.

Property Insurance

Property insurance is a type of insurance that provides coverage to homeowners and the occupants of the property. Both primary homeowners and investment property owners have to carry insurance against any possible loss.

The main purpose of property insurance is to protect against major or total loss, such a fire, flood or earthquake. The property insurance also offers liability coverage, loss of use coverage, and theft coverage to homeowners. For investment property, it is also required to have the tenant carry its own Tenant Insurance against possible personal loss during the stay. The property insurance premium has been surging in the past few years, especially in high fire hazardous regions in California, and flood hazardous areas in Florida. Property insurance is a required item for lender when borrowers is applying a home loan. The lender must have the homeowner carry insurance policy to protect the property, as the property is used as a collateral, a secured debt for the lender to lend the money the borrower. As people might say that we must carry insurances that are needed, but we hope we don't have to use it!