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How Does Insurance Work?
Introduction 
Insuranceprovidespeopleandcompanieswithprotectionagainstmajorfinanciallossesduetodamageorlossofproperty.Inexchangeforaperiodicpaymentorpremium, individualsandcompaniesareguaranteedtobecompensatedorreimbursedunderthetermsoftheinsurancepolicy.Insuranceisapartofdailylife.
Carinsuranceandhomeowner'sinsurancearetwoofthemostcommonformsofinsurance. Healthinsuranceandworkmen'scompensationarealsowell-knowntypesofinsurance.Whileinsuranceisapartofmostpeople'slives,noteveryoneunderstandshowitworks.
How Insurance Works 
Therearealwaysrisksinlifesuchasfire,theftorearthquake.Manypeoplehopetoavoidthefinancialconsequencesofreplacingpersonalpropertythatislostordamaged.Insuranceisawaytoprotectyourpersonalfinancesfromundueburdens.Insuranceisreallyaformofriskmanagementinwhichtheriskistransferredtotheinsurancecompanyinexchangeforpaymentsorpremiums.Whenapersonpurchasesinsurance,hegetsaninsurancepolicywhichisalegallybindingcontract.
Thispolicydescribesindetailalltherights, responsibilitiesandobligationsofboththeinsuredandtheinsurancecompany.Ifapersonsufferslossescoveredinthepolicy,hefilesaclaim.Aclaimisadetailedaccountofwhatislostordamagedanditsvalue.Theamountofmoneyapersonisreimbursedisbasedontheamountofthepolicy.
Types of Insurance Available 
Thereseemtobeinsurancepoliciesavailableforanysituation.Anythingthathasapotentialriskoflossordamagecanbeinsured.Onepolicycancoverseveralareasofrisksuchasahomeowner'spolicydealingwithfire,theftandliability.Someofthemorecommonkindsofinsurancearerenter's,life,disability, liability,travelandpetinsurance.Companieshavepoliticalriskinsuranceiftheydobusinessinpoliticallyunstablecountries.
Propertyinsuranceprotectsagainstlossofboats, planes,andfarmcrops.Creditinsuranceprovidesprotectionforloansiftheborrowershoulddie, becomesdisabledorlosehisjob.Inconsideringanyofthesetypesofinsuranceyouhavetoassessyoursituationanddeterminewhatisbestforyou,yourfamilyandyourbusiness.
Source: 
http://www.ehow.com/how-does_4675265_insurance- work.html 
Images: 
http://www.lifefinancialplanners.com/

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How does insurance work