Insurance is a mechanism for risk transfer, which ensures partial or full compensation for damage or loss incurred by an insured party. An insurance contract allows an individual to receive reimbursement or financial protection from an insurance firm. However, before you buy an insurance cover, it is advisable that you understand the types of insurance covers that are available. This will make it easy for you to choose an insurance cover that suits your needs. You also need to understand that some of these protection policies are compulsory and you are required to have them by law such as car insurance.
Different Types Of Insurance Coverage
1. Home Insurance
Home insurance is convenient for homeowners who wish to cover the cost of rebuilding their home or repair it. Furthermore, you also need to understand that home insurance also covers your possession from damage and even theft. Having a home insurance is a legal requirement in most states. However, it is advisable that you go through the policy document to check what is covered.
2. Car Insurance
There are three types of insurance policies that cover vehicles. These are third party, comprehensive and third party, theft and fire. Third party insurance cover protects passengers and other peopleÕs belongings. However, you need to be aware of the fact that this policy does not cover the car and you are required to pay for the repair services in case it gets damaged.
The comprehensive policy covers the car and the passengers as well as their belongings. However, this particular insurance covers is considered to be costly compared to other protection policies offered for car insurance cover. A third party, theft, and fire provide compensation of your car in case it gets stolen or set on fire.
3. Travel Insurance
Travel insurance is not compulsory and is usually issued to travelers. This type of insurance covers emergency medical expenses, the cost of cutting or delayed trip and also covers stolen or lost belongings when traveling. Travel insurance also covers personal liability in case you get sued for causing injury or damaging property.
4. Life Insurance
Life insurance covers critical illness, payment protection, and income protection. Life insurance pays a lump sum when diagnosed with critical illness. An example of serious diseases that are covered includes stroke, heart attack, multiple sclerosis conditions and even some stages of cancer. Income protection insurance covers fifty percent of your take home pay when you are not in perfect condition to work because of illness or being disabled. Moreover, it also covers the cost of treating any illness that stops you from working.
Payment protection insurance covers your loan, monthly mortgage and credit card repayments as well. The insurance covers you when involved in an accident, loss your job and when you become unfit to work because of various health challenges.
5. Private Health Insurance
A private health insurance covers in-patient treatments such as surgery and tests. However, some private health insurance policies also offer medical cover for out-patient treatments such as consultants and specialists. However, you also need to be aware of the fact that this particular insurance policy does not cover treatment for pregnancy, routine check-ups, chronic illnesses and pre-existing medical conditions.
Understanding the types of insurance covers that are offered in the market, will help you choose an insurance policy that best suits you. You can buy an insurance cover through an insurance broker or agent and also through a travel agent and building society.