Insurance provides people and companies with protection against major financial losses due to damage or loss of property. In exchange for a periodic payment or premium, individuals and companies are guaranteed to be compensated or reimbursed under the terms of the insurance policy.

1. How Does Insurance Work?

2. Introduction
Insuranceprovidespeopleandcompanieswithprotectionagainstmajorfinanciallossesduetodamageorlossofproperty.Inexchangeforaperiodicpaymentorpremium, individualsandcompaniesareguaranteedtobecompensatedorreimbursedunderthetermsoftheinsurancepolicy.Insuranceisapartofdailylife.

3. Carinsuranceandhomeowner'sinsurancearetwoofthemostcommonformsofinsurance. Healthinsuranceandworkmen'scompensationarealsowell-knowntypesofinsurance.Whileinsuranceisapartofmostpeople'slives,noteveryoneunderstandshowitworks.

4. How Insurance Works
Therearealwaysrisksinlifesuchasfire,theftorearthquake.Manypeoplehopetoavoidthefinancialconsequencesofreplacingpersonalpropertythatislostordamaged.Insuranceisawaytoprotectyourpersonalfinancesfromundueburdens.Insuranceisreallyaformofriskmanagementinwhichtheriskistransferredtotheinsurancecompanyinexchangeforpaymentsorpremiums.Whenapersonpurchasesinsurance,hegetsaninsurancepolicywhichisalegallybindingcontract.

5. Thispolicydescribesindetailalltherights, responsibilitiesandobligationsofboththeinsuredandtheinsurancecompany.Ifapersonsufferslossescoveredinthepolicy,hefilesaclaim.Aclaimisadetailedaccountofwhatislostordamagedanditsvalue.Theamountofmoneyapersonisreimbursedisbasedontheamountofthepolicy.

6. Types of Insurance Available
Thereseemtobeinsurancepoliciesavailableforanysituation.Anythingthathasapotentialriskoflossordamagecanbeinsured.Onepolicycancoverseveralareasofrisksuchasahomeowner'spolicydealingwithfire,theftandliability.Someofthemorecommonkindsofinsurancearerenter's,life,disability, liability,travelandpetinsurance.Companieshavepoliticalriskinsuranceiftheydobusinessinpoliticallyunstablecountries.

7. Propertyinsuranceprotectsagainstlossofboats, planes,andfarmcrops.Creditinsuranceprovidesprotectionforloansiftheborrowershoulddie, becomesdisabledorlosehisjob.Inconsideringanyofthesetypesofinsuranceyouhavetoassessyoursituationanddeterminewhatisbestforyou,yourfamilyandyourbusiness.

8. Source:
http://www.ehow.com/how-does_4675265_insurance- work.html
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