How does insurance works?

Insurance is something we all need for one thing or another in our lives. We insure our cars, lives and homes. Car insurance helps to insure your vehicle. Home insurance is designed to insure your home. Life insurance is there to insure your death expenses. How does insurance really work? Let’s take a look and see exactly what insurance really does.

Car Insurance

Car insurance has many purposes such as liability which is required by state law for your vehicle. This is so when you have an accident you or the person who was hit in the accident are covered by that liability insurance. There are several different facets though to the policy you buy and what you receive in that policy. Car insurance companies will pay for medical bills and decide what damages are to be paid and why when an accident occurs.

The way this is usually decided is fault of the driver. Whoever is at fault while driving is the one to cover the expenses with their insurance. What is not covered will have to be paid by the driver at fault.

Insurance companies insure your vehicle and you and the drivers of your car so that if anything happens your bills are covered and the driver of the other car is also covered. You can purchase other coverage such as full coverage and flood insurance to make sure you are getting complete coverage on absolutely anything that could happen to your vehicle.

Full coverage car insurance covers such things as hail damage or vandalism and other things that could happen to your vehicle. Flood insurance covers flash flood damage. It also covers if your car is damaged by driving into a flooded area on accident. You are covered for the damages that you might have from such an incident.

Gap insurance is something that should be considered because in the event of your car being totaled, it is coverage that is needed for loan value of the car.   Insurance companies will only pay out the amount the car is worth in the blue book or the market value. Gap insurance will cover the amount owed on the lien against your car and is worth looking at to add extra protection to your vehicle.

Home Insurance

Home insurance works much the same way as car insurance but this is for your home and repairs are covered if they are in your policy coverage. Things such as plumbing disasters or storm damages are covered under your home insurance policies. Insurance is there to help protect your investment that is why it is a necessary thing when you buy a home.

Home insurance also covers for disasters such as fire and water damage inside the home. Flood insurance must be bought separately because it is not part of most home insurance policies. You can try to purchase flood insurance through your insurance company or through other agencies which only handle flood insurance.

Life Insurance

Life insurance is purchased to help your loved ones with your burial expenses and other bills incurred in the event of death. Life insurance is purchased the same as car insurance and home insurance and is paid in a premium so that it is there in the event of your death. When you purchase life insurance you must put a beneficiary on your life insurance so that they can be in charge of your expenses in death.

You can buy different types of life insurance and some build financially. Such as “Permanent Life Insurance” this type of life insurance builds equity like a home does over time. It can build equity in a cash value. It has a higher premium than “Term” Life insurance but as you pay your premiums you build equity like a home. Term life insurance doesn’t build equity but it is there for one to twenty years and it is an affordable way to get maximum coverage.

As long as you pay your premiums you could have either coverage for your life insurance policy and it will pay out the amount you insure in the event of your death. If you find you want both types of insurance? You can do both term and permanent life insurance together for double assurance your family is insured for the future.