Who Should Buy Comprehensive Insurance?

Insurance is an agreement between an insurer and an insured. The insured may be an individual, a business, or a large company. The insurer is usually a state-recognized organization with sufficient assets and financial backing to cover the terms of the contracted agreement. The essence of this agreement consists in a promise by the insurer to pay compensation to the insured for a future loss, in return for certain payments to be made on a regular basis. The payments, called premiums, are usually paid on a monthly or annual basis in an amount that reflects the value of the loss.

Insurance can be obtained on many potential losses, and premiums can be calculated for each one individually. Companies and individuals usually have several areas that require coverage, and by using the same insurer to cover loss for them all, they can qualify for reduced premiums. Insurance that covers several areas of potential loss is referred to as comprehensive insurance.

Almost everyone is advised to find insurance coverage for the important realities of life. Income and financial well-being, for example, need to be protected against unexpected loss, and, as no one can be sure about their future health, most people need some kind of health insurance coverage that will protect them from the high cost of emergency treatment. Reputable companies today almost always include insurance coverage of these basic essentials for all of their employees.

Most personal insurance coverage is optional, and the type and amount of insurance selected is entirely the choice of the person insured. Individuals must decide for themselves whether they can afford to cover losses from their own resources, or whether they will require some financial assistance in the case of a major loss. Not all insurance is optional, however. Sometimes, liability can be extremely high, as in the case of a tragic car accident or alleged negligence. In these cases, the law requires adequate insurance coverage to ensure that proper compensation is available to unsuspecting victims.

Many insurers require insured persons or companies to cover a percentage of their loss from their own resources. In the case of damage to a home or vehicle, for example, the insured may be required to pay the first 10% of the loss. This is referred to as a deductible, and though it may seem to be an inconvenience, it is usually worthwhile, because premiums are normally reduced to reflect this additional cost to the insured.

In today's environment, insurance coverage is required more than ever before. We live in a more precarious world, and although medical technology has improved dramatically over the past fifty years, so have the costs involved. More precautions are taken in the workplace, but still there is the constant fear of serious accident. Hospital treatment can be extremely expensive, and anyone who is able to obtain medical coverage should certainly do so.

Comprehensive insurance can cover many aspects of modern life realities. Big companies know that they are vulnerable, and they take precautions against charges of liability by buying appropriate coverage. But individual citizens are open to the same charges. They need to protect themselves through comprehensive insurance.

Information is for educational and informational purposes only and is not be interpreted as financial or legal advice. This does not represent a recommendation to buy, sell, or hold any security. Please consult your financial advisor.