A way by which covering is offered against any unexpected financial loss is known as insurance. The entity which offers the protection against that financial loss is usually known as the insurer or underwriter. The individual or entity who is offered the protection against financial loss through the purchase of insurance is usually referred to as the insured. So as to determine the occasions in which the insured is legible to a compensation from the insurance company in the event of a financial loss, an insurance policy is usually issued.
Premium is a set value by the insurance company to the policyholder in order to facilitate the efficient covering. The process of making a claim by the insured to the insurance company when a financial loss is experienced involves the undertaking of a claim adjuster by the insured. There are several guidelines that an insurance company will follow in issuing out insurance policies to the insured.
One of the principles of insurance is that there has to be a big sum of similar exposure units in order for an insurance cover to be effected. This is because insurance companies usually work through the pooling together of resources in order to actualize compensation in the event of a financial loss. The kind of financial loss that is catered for in the insurance policy offered by an insurance company has to be definite in that its cause, time and place of happening can be determined.
Additionally, another ground for the provision of an insurance cover by the insurance carrier to the insured is that the loss has to he accidental. 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.
Additionally, in the event of making a cover against a probable financial risk, an insurance company has to observe that the loss is calculable. Another characteristic that would qualify it for insurance by an insurance company is that the loss should not have the probability of happening in a sequence of similar losses at the same time thereby constituting to large losses. There are different kinds of insurance covers that are provided by the insurance company against different kinds 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 type of insurance also covers against other losses such as damage or theft of the vehicle.