What Is Insurance – How Does It Work?

By Amanda Morris    March 5, 2019

What exactly is insurance?

Insurance is a means of security from monetary loss. It is a form of risk management, used mainly to offset the risk of an unforeseen loss.

An establishment which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter.

A person or establishment who buys insurance is known as an insured or as a policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer’s promise to reimburse the insured in the event of a covered loss. The loss may or may not be monetary, but it must be reducible to monetary terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship.

How insurance works

Insurance aids you in paying for the damage to your property or to pay others on your behalf when you damage other people’s property or injure someone. is a contract that transfers the risk of financial loss from an individual or business to an insurance company. The company collects small amounts of money from its clients and pools that money together to pay for losses.

The insured receives an agreement, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured. The amount of money charged by the insurer from the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims handler.

How Insurance Brokers work

Insurance brokers do not work for an insurance company. Insurance brokers do the negotiations. Their target is to support their clients’ interests. A broker helps clients identify individual risks, family, business or organization liability risks.

Advantages of Insurance

The essential advantage is knowing that your risks are covered. Imagine how a fire can destroy so much of your office contents, electrical and electronic devices such as your laptops and other gadgets. Having them all insured for a small amount of money is a pretty good deal.

Another reason to have a superior policy for your Public Liability is to protect your assets should you cause injury or damage to any third person or their property as a result of your negligence.

Property and Liability insurance is a must for any successful business and they should form a part of your overall business protection plan. Disclosure is another issue that we see cause clients grief when it comes to claim time. You must make sure your insurance company knows and agrees to cover you for ALL of your business activities every year as you renew your policy, failure to do so can result in a claim being denied.

ARMA Insurance Brokers Hunter Valley specialises in commercial, agribusiness and general insurance. Currently offering over 50 types of standard insurance for all types of insurable risks. ARMA Insurance Brokers can definitely help you manage all claims swiftly and effectively.

For a FREE Insurance Review and Quotes contact Amanda Morris.

 

General Advice Warning

The information on this website is general advice only and does not take into account your personal circumstances, financial situation or needs. Please connect with an insurance broker to discuss your specific needs.

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