How Does Insurance Work?
Protecting Your Assets
The most important aspect of any kind of insurance is to protect your assets. With homeowners insurance you are protecting your home and property. With car insurance you are protecting your car and liability in an accident. Health insurance is a bit different, but the goal is to protect your assets in case you have any health issues. All types of insurance have one goal in mind and that is protecting you and your assets. Without insurance, you can suffer a financial burden if an accident happens. This is why insurance is crucial for everyone to have. Not having one can make you go bankrupt.
How Do Premiums Work?
A premium is an amount to be paid to ensure that you have insurance coverage. Premiums are not like monthly fees as they can change based on your risk. For example, someone with a lot of car accidents will have a high risk and a high premium. When you sign up for insurance, you’ll get a premium that is for a certain period of time, usually six months. You can pay it off at once or choose a monthly payment plan, sometimes with an additional fee. So your premium will need to be divided by six or twelve to calculate what you would pay per month.
Determining Coverage
There are several steps to determine the type of coverage you need. The first step is to check how much you can comfortably pay for insurance. While it's important to protect your belongings, full coverage can be expensive and counter-intuitive if your assets aren’t worth much. Once you budget how much you can pay, you need to find what type of coverage and what deductible best suits you. If your property is brand new, getting maximum coverage is best if you can afford it. Older cars and homes should have deductibles that are cheaper than the total price of the car and not cost more than the property itself.
Getting a Quote
Getting a quote for insurance is the easiest part of the process if done correctly. The most popular way is to go online and get multiple quotes from several providers. Insurance quotes can vary greatly, so getting a couple can save you the most money. Some insurance companies also offer discounts such as good student discounts, senior discounts, homeowner discounts and even discounts for military service. Always get at least five different quotes before choosing a provider and choose the one that offers the best price. After all, insurance is a long term commitment.
Filing a Claim
If you have suffered some sort of damage or loss of property, filing a claim can get you back on track and help you spend little money to fix your damaged goods. Once you have a claim to file you need to contact your agent who will help guide you through the process. If you are in a car accident, you would file a claim and give them the accident details. This could be pictures, videos and a police report. An insurance agent will check if you are liable or not and send you someone who can repair your damaged goods.