Insurance Basics: What Can Be Covered?

Most people do not give sufficient thought to the consequences of a sudden accident, loss of health, or natural disaster that could happen to anyone at any time. The reality is that a serious mishap or illness can radically change a person's life, causing loss of income and the inability to pay one's bills. Sudden death can result in serious hardship for a family left behind, even to the point of leaving a spouse and children without a home. Fortunately, such worries can be avoided by buying insurance policies that cover the cost of financial losses when disaster strikes.

Insurance is essentially a promise by an insurer to provide the funds needed to cover future losses, in return for a promise to pay a monthly premium. Insurers are required by law to hold sufficient assets and the financial means to cover all insured losses. Insured individuals must pay the premiums stipulated by the terms and conditions of the policy to be eligible for compensation in the event of a loss. Premiums can usually be reduced, however, if the insured agrees to pay a deductible amount, which is a nominal percentage of the loss. No one should doubt the necessity of insurance, though sometimes guidance and advice is needed to decide what exactly should be covered.

Life insurance is probably the most common kind of coverage purchased by individuals. This should be considered essential by anyone with dependents and family commitments, as it provides, not only peace of mind, but continued provision for the family's welfare in the event of a sudden death. Insurance against poor health or injury is just as important. Most employers implement plans for their employees through insurance companies that specialize in this kind of coverage. Such plans usually include provision for medication, dental, and eye care, as well.

After personal insurance protection, most people think of their home as the most important item for coverage. Fire can totally destroy a home in a very short time, however unlikely this may be. Fire insurance should be considered essential. It is also important to have comprehensive home coverage that would cover the cost of water damage, electrical problems, and any damage caused by inclement weather. Many insurance companies that offer car insurance can provide home insurance as well.

There is no option when it comes to any vehicles being driven on the public highways. Although options may be available for coverage of the vehicle itself in case of a collision, vandalism, or theft, liability insurance is mandatory. No one would want to drive without such coverage in any case. Settlements for injuries or death caused by a driver can reach millions of dollars. Automobiles, like boats, trailers, and recreational vehicles, are expensive items, and owners are well advised to have them insured against loss or damage of any kind.

Litigation is a frequent occurrence, and individuals in almost any walk of life can be held liable, especially in the case of negligence or failed responsibility. Home insurance frequently includes a rider to cover claims arising from home situations, and home owners need to be aware of both their liability and the insurance coverage available.

Individuals with specific skills and abilities may need to insure against loss, especially if their livelihood depends on them. Musicians, for example, including vocalists, may need to insure their hands or voices against damage or loss if they are unable to make a living without them. Insurance is available for this kind of coverage, and many professional performers take advantage of it.

Insurance is available for almost any kind of loss. The items insured and the kind of coverage selected is up to the individual consumer, but in the world today, all citizens are strongly advised to buy protection against loss. Failure to do so can result in devastating change to a person's life.

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.