Insurance is launched to help the insured company or other entity at the time of unexpected losses and financial well being. Insured is provided with financial protection by insurance company from losses which occur due to uncertain events. A person can be given this protection by insurance company by paying premium.
How insurance works
The concept behind insurance is that, contributions are made by a group of people to form a pool of funds to face the risks. Group of people make contribution of funds to share common risks and insurance company collects the funds in the form of premium.
Insurance blocks the future losses that might financially spoil insured future. Insured should not buy insurance for small exposures due to cost of premium is high price and money will be wasted. Insurance need to cover major exposures.
There are 3 basic procedures for determining insured needs
1. Reduce or eliminate policy holder’s risk by managing maintenance properly, safety programs and training and repair.
2. The risk oneself by paying small losses and buying high deductibles is assumed.
3. Risk is transferred by purchasing the proper amounts of insurance modified to policy holder’s specific requirements.
Risk can be operated by small businesses without insurance. Risk is minimized from circumstances beyond their control using insurance.
How insurance works
The concept behind insurance is that, contributions are made by a group of people to form a pool of funds to face the risks. Group of people make contribution of funds to share common risks and insurance company collects the funds in the form of premium.
Insurance blocks the future losses that might financially spoil insured future. Insured should not buy insurance for small exposures due to cost of premium is high price and money will be wasted. Insurance need to cover major exposures.
There are 3 basic procedures for determining insured needs
1. Reduce or eliminate policy holder’s risk by managing maintenance properly, safety programs and training and repair.
2. The risk oneself by paying small losses and buying high deductibles is assumed.
3. Risk is transferred by purchasing the proper amounts of insurance modified to policy holder’s specific requirements.
Risk can be operated by small businesses without insurance. Risk is minimized from circumstances beyond their control using insurance.
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