Insurance is usually defined as a way of giving some protection against sudden financial loss. There security against the loss of value of worth is offered by an entity known as an insurance carrier. The party to which the insurance cover is given by an insurance company is also known as a policyholder. The insurance policy is a documented contract that contains the terms and conditions under which the insured person or organization will be compensated by the insurance company in the event of a loss.
Premium is a set value by the insurance company to the policyholder in order to facilitate the efficient covering. In the event that a financial loss that is covered for in the insurance policy occurs, the insured makes a submission of a claim through effecting a claim adjuster to the insurance company. For an insurance cover to be effected by the insurance company to the policyholder, a list of set guidelines is usually adhered to.
One of the guidelines that is followed by the insurance company in the provision of insurance cover against any financial loss to the insured is through the observation of big sums of same exposure risks. The reason for this is that there have to be accumulated funds so as to enable the insurance carrier to make compensations that are made in a claim as a result of a loss of value covered in an insurance policy. The other guideline that is followed by an insurance company in offering insurance cover is that the loss has to be definite meaning that it has to be known.
Another condition under which the insurance organization will accept to get the give an insurance protection against the financial loss that may be suffered by an insured is that the financial loss has to be out of the control of the insured. The insurance company also considers the size of the probable loss in that it ensures that the loss is large. Similarly, the insurance company also has to make sure that the premium to be paid by the insured can be calculated and subdivided into small affordable amounts.
The easy estimation and approximation of an expected financial loss to be insured against and insurance cover given for by an insurance company is necessary. The insurance company also has to make sure that the financial loss covered for in an insurance policy does not have huge risks in the resulting to catastrophically large losses. Due to the nature of the various kinds of probable financial losses that may occur, insurance carriers usually give insurance covers against a number of risks.
One of the insurance covers that is provided for by an insurance company is auto insurance that protects an insured against a loss of value in the event of a traffic accident which involves their vehicle. This protection also caters for other occurrences such as the destruction of the vehicle or loss of the vehicle through theft.