Insurance 101 – The Basics

Insurance Blog about the Basics of Insurance

For the average person, who is not familiar with insurance policies or the terminology, understanding your coverage can be confusing. How can you be confident of your coverage if you are unsure what any of it means? Don’t worry; we are here to help. Below is a breakdown of what insurance is and how it works.

What Is Insurance?

Insurance is an arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for a premium payment. Insurance is a policy or a contract between you and the insurance company.   

How it Works:   

You and your insurance agent will select an insurance policy that best suits your needs. As the policyholder, you will pay the premium, and the insurance provider agrees to pay your losses according to your policy, if needed.

Types of Insurance:

There are two main types of insurance categories: Property & Casualty Insurance and Life & Health Insurance. 

1. Property and Casualty insurance(P&C) helps protect you and the property you own like your home or your car. Most P&C insurance coverage includes but is not limited to:

  • Property and Casualty Insurance
    • Home Insurance
    • Auto Insurance
    • Condo Insurance
    • Renters Insurance
    • Power Sports Insurance
    • Landlord Insurance

2. Life and Health Insurance serves an entirely different purpose and offers different coverage. 

  • Life insurance pays out a death benefit to your beneficiaries in the case of premature death. Many people use life insurance to cover:
    • Burial and Final expenses
    • Replace Income
    • Pay off Debt
  • Health insurance ensures that people can afford their medical expenses and stay healthy. An insurance policy that typically covers medical expenses such as:
    • Doctor visits
    • Surgery expenses
    • Prescription Drugs
    • Dental and Optical

Why you need insurance:

Let’s face it; life is unpredictable. Insurance can be that safety net when an accident occurs, or a risk goes wrong. Insurance gives you peace of mind, but, in most states, it’s also the law to have insurance. For example, vehicle or home insurance. Also, if you are looking to get a loan, like an auto loan, for example, most lenders will not approve you without proof of insurance.

How to purchase Insurance:

When shopping for an insurance policy, it’s important to remember that insurance policies are not one-size-fits-all. You are unique, and your situation, whether it be health, life, commercial, or auto, will also be unique. Your agent will help put together a customized coverage to meet your needs precisely.

Let one of our knowledgeable agents help you determine which types of coverage fits you best. Then you can focus on enjoying everyday life knowing that you have a safety net in place, just in case you need it.