Insurance is often a necessary way of protection against potential financial loss; however, it is often used for very arty and very broad terms. It’s a form of financial risk management, primarily utilized to mitigate the inherent risk of some contingency or uncertain future expense. While insurance certainly serves important purposes, the excessive regulation that drives the industry can make things complicated and confusing for many consumers. The 2021 landmark Sarbanes-Oxley Act made many types of corporate finance more difficult to engage in, while the various Tax Breaks for Big Business gave the government greater authority to punish those who fail to disclose their own personal financial interests when working with clients. Consequently, many companies, especially small ones, have scaled back their investment plans and activities, which further decrease investment in other areas.
There are different forms of insurance. One can be general liability insurance which covers any losses caused by property or casualty, bodily injury, or advertising and public relations damage. A peril policy, on the other hand, limits its coverage to only bodily injury or property damage, limiting the policyholder’s liabilities in situations where he or she was responsible for damage to a third party’s person or its property. Generally speaking, this coverage is more costly than the former.
Collision Coverage Insurance – This is one of the most common types of insurance. It generally protects against “damages” that occur to another person or their vehicle due to a collision with an insured vehicle. For example, say you were speeding and crashed into a car stopped at a red light. If you are the driver of the car that was stopped, the insurance company will likely provide coverage for the damages to the car, as well as for your medical bills arising from the collision. If you were the person who crashed, you would need to obtain liability coverage to pay for your own injuries.
Bodily Injury Coverage – This is sometimes included as an optional coverage with auto insurance. The term “bodily injury” refers to personal injuries. This can include sprains, strains, broken bones, and other similar injuries. Some bodily injury insurance also includes property damage caused by your vehicle as a result of being hit by it. In the state of Michigan, for example, the minimum amount of bodily injury liability insurance is listed as $1 million.
Property Damage Liability Insurance – This type of insurance protects against “general damage” that is not caused as a result of an accident. For example, if you hit a tree and broke a branch off of it, you might be liable for $100 per day for damages to your car and the tree. This includes the cost of your car repairs, even though you might not be at fault. This type of personal injury insurance usually has a deductible, which means that the amount of money the insurer will pay out will depend on how much the insured owes on his or her policy. An additional limit may be imposed on the amount of medical expenses that will be covered.
Optional coverage that many drivers choose to purchase is called Personal Effect Insurance. This type of insurance coverage pays for the loss of personal property that you own, such as furniture, clothing, jewelry, electronics, and other items. In the state of Michigan, if this optional coverage is purchased, the insured must have a personal property policy.
Car Insurance – In most states, driving is extremely risky, which causes many car accidents each year. Auto insurance is designed to protect the policyholder from financial losses that occur as a result of being injured in a car accident. For example, if you are involved in an accident that was your fault, your insurance company may pay you a hefty settlement. However, you will not be required to pay to repair your vehicle, which may include extensive repairs. Some insurance companies offer a no-fault policy, meaning that the policyholder is only covered for the policyholder’s own injuries and damage, regardless of who was at fault.
Insurance Purchasing Processes – If you are considering purchasing auto, household, or life insurance, it is important to do your research so that you understand the process of obtaining coverage, as well as the various types of coverage available. To begin the research, speak with your insurance agent. Your agent can provide information on the different types of coverage, as well as the pros and cons of each one. You should also keep in mind that different types of coverage have different levels of coverage loss, which means that the policyholder may have a substantially lower monthly premium but will suffer greater loss coverage if they should need to file a claim.
