The Basics – What Insurance Is, Why Do You Need Insurance?

According to Wikipedia, insurance is:

“Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss”

Insurance can be Personal or Business one, but the main goal of insurance is to insure you or your business against a possible loss. Term insurance can be described as:

– A small loss that prevents a large, possibly devastating loss.

Insurance protects you against financial loss in a future if you have an accident. Insurance is a contract between you – a policyholder (person or entity buying the insurance), and the insurance company. Policyholder’s payments are called premium.

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There are a lot of types of insurance, but let’s stick with the main ones:

Auto Insurance

Auto insurance also known as

– vehicle insurance

– car insurance

– motor insurance

It is purchased for cars, trucks, motorcycles and other vehicles. The primary use of auto insurance is to provide protection against losses incurred as a result traffic accidents.

There were more than 180 million automobiles in USA in 2006. About 175 million were covered by auto insurance companies. It’s the largest auto insurance market in the world. There are more than 35 million automobiles in Russia. About 34 million are insured as well. China – 10 million insured automobiles.

Auto insurance provides:

a) Property coverage – it pays for thief or insurancegui com of your car

b) Medical coverage – it pays for your responsibility to others for bodily injury or property damage

c) Liability coverage – it pays for the cost of treating injuries, lost wages or even funeral costs.

Insurance premium varies for males and females, teenagers and adults. According to the statistics males drive more miles than females and consequently have a proportionally higher accident involvement at all ages. Teenagers who have no driving record will have higher car insurance premiums as well.

Owners of sport cars, motorcycles would have higher insurance premiums as opposed to compact cars, midsized cars and electric cars.

Your auto insurance policy is a contract, most polices are issued from six months to one year period. In USA, Russia, Brazil, Japan auto insurance company should notify you by mail, phone or any other method to renew your policy.