How Insurance Works
While it may seem complex, the insurance is actually quite simple: The payments (or premiums) of the many pay for the losses of a few. Your premiums go into a big pool, if you will, with your insurance company. The claims of the few are paid from this pool. Since there are more people around the pool, as there are, the claims are, there is always enough to pay the claims – even large individual claims, as if someone permanently as a result of the collision of a car, or many smaller claims such as those that are disabled for a natural disaster. (The Ice Storm 1998, the parts of Ontario, Quebec and New Brunswick met an estimated 700,000 claims for compensation was worth $ 1.4 billion.) However, major disasters (such as the Ice Storm) does not come close to draining the pool.
Car Insurance How It Works – Insurance for Insurance
Even if the pool is near empty, there is another pool to draw from the insurance company to pay claims can. Some of your purchase of your insurance premiums for reinsurance – insurance for insurance companies. Sometimes losses are so large – such as those from an earthquake – that there is no way that an insurance company may cover the costs. Reinsurance is an additional protection against large losses.
Car Insurance How It Works – Annual replenishment
Your insurance is an annual contract, so that the pool only operates for one year at a time. Your premiums and the premiums of others, how much money the insurance companies think they need in the coming year has to pay the claims.Your premiums do not build over the years – in contrast to the premiums for some types of life insurance.
Car Insurance How It Works – How premiums are calculate
Within reasonable limits, some of which are prescribed by law, your premium will be charged to the likelihood that you make a claim to reflect – that is, that you draw money from the insurance pool. Those who are likely to draw from the pool to pay less than those who are more likely to draw from it
The insurers take many factors into consideration, the likelihood that you determine to make a claim. A common misconception is that a policyholder who has a claim should never be less, pay little or nothing for insurance. While it is true that in the past claims history is important, a reliable indicator of how likely an individual or a company it is, a claim is the statistical group to which he / she / it.
Car Insurance How It Works – Your insurance U.S. dollars
Here is a listing of where to go, your insurance premium dollars.
For every dollar of insured premiums collected, 53.1 ¢ back to policyholders in the form of claims that go back 15.9 ¢ to municipalities in the form of various state taxes on insurance contracts, 20.5 ¢ to the industry operating go and regulatory costs and 10.5 ¢ will benefit the industry.
These percentages are based on a 7-year national average for 2004 to 2010.
Car Insurance How It Works – Insurance pays for …
Insurance pays only for the types of losses described in your contract. It is very important that you read your policy and / or talk to your insurance agent about what you are looking for and what you are not covered. The insurance will not pay for any problem that may occur, nor is it a maintenance contract. The insurance is usually determined – and therefore expensive -. “Suddenly and randomly” to help policyholders with the financial consequences of unforeseen events that can be managed if, such as, you live on a floodplain of a river that floods your Real Estate in Spring is not sudden or accidental, it is inevitable, and therefore not insurable.
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