Insurance In USA and UK types~nepal

Nature of Insurance

The insurance has the following characteristics which are generally, observed in case of life, marine, fire and general insurances.

1        Sharing of Risk : Insurance is a device to share the financial losses which might be fall on an individual or his family on the happening of a specified event  The event may be death of a bread-winner to the family in the case of life insurance , marine-perils in marine insurance, fire in the fire insurance and other certain events in general insurance , e.g., theft in burglary insurance , accident I motor insurance, etc. the loss arising from these events if insured are shared by all the insured in the form of premium.

2        Co-operative Device: The most  important feature of every insurance plan is the co-operation of large number of persons who, in effect, agree to share the financial loss arising due to a particular risk which is insured. Such a group of persons may be brought together voluntarily or through publicity or through solicitation of the agents. An insurer would be unable to compensate all the losses from his own capital. So by insuring or underwriting a large number of persons, he is able to pay the amount of loss . Like all co-operative devices, there is no compulsion here on anybody to purchase the insurance policy.

3        Value of Risk: The risk is evaluated before insuring to charge the amount of share of an insured, herein called, consideration of premium. There are several methods of evaluation of risks If there is expectation of more loss , higher premium may be charged. So, the probability of loss is calculated at the time of insurance.

4        Payment of Contingency: The payment is made at a certain contingency insured If the contingency occur, payment is made. Since the life insurance contract is a contract of certainty, because the contingency, the death or the expiry of term, will certainly occur the payment is certain. In other insurance contracts, the contingency is the fire or the marine perils etc, may or not occur. So, if the contingency occurs payment is made, otherwise no amount is given to the policy-holder. Similarly, in certain types of life policies, payment is not certain due to uncertainty of a particular contingency within a particular period. For example, in term-insurance, the payment is made only when death of  the assured occurs  within the specified term, may be one or two years. Similarly, in pure endowment payment is made only at the survival of the insured at the expiry of the period.

5        Amount of payment: The amount payment depends upon the value of loss occurred due to particular insured risk provided insurance is there up to that amount. In life insurance, the purpose is not to make good the financial loss suffered. The insurer promises to pay a fixed sum on the happening of an event. If the event or the contingency takes place, the payment does fall due if the policy is valied and in force at the time of the event, like property insurance , the dependents will not be required to prove the occurring of loss and and the amount of loss. It is immaterial in life insurance what was the amount of loss at the time of contingency. But In the property and general insurances, the amount of loss, as well as the happening of loss is required to be proved.

6        Large Number of Insured persons: to spread the loss immediately, smoothly and cheaply, large number of persons should be insured. The co-operation of a small number of persons may also be insurance but it will be limited to smaller area. The cost of insurance to each member may be higher. So it may be unmarketable. Therefore, to make the insurance cheaper, it is essential to insure large number of persons of property because the lesser would be cost of insurance and so, the lower would be premium in past years, tariff associations or mutual fire insurance associations were found to share the loss at cheaper rate. In order to function successfully, the insurance should be joined by a large number of persons.

7        Insurance is not gambling:   The insurance  serves indirectly to increase the productivity of the community by eliminating worry and increasing initiative. The uncertainty is changed into certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. From a family and business point of view all lives possess an economic value which may at any time be snuffed out by death, and it is as reasonable to ensure against the loss of this value as it is to protect oneself against the loss of property. In the absence of insurance, the property owners could at best practice only some form of self –insurance, which may not give him absolute certainty. Similarly, in absence of life insurance, saving requires time; but death may occur at any time and the property, and family may remain unprotected. Thus the family is protected against losses on death and damage with the help of insurance, from  the company point of view, the life insurance is essentially non-speculative, in fact no other business operates with greater certainties From  the insured point of view, too, insurance is also the antithesis of gambling. Nothing is more uncertain than life and life insurance offers the only sure method of changing that uncertainty into certainty. Failure of insurance  amounts gambling because the uncertainty of loss is always looming. In fact, the insurance is just the opposite of gambling. In gambling , by bidding the person exposes himself to risk of losing , in the insurance, the insured is always opposed to risk, and will suffer loss if he is not insured, by getting insured his life and property, he protects himself against the risk of loss In fact, if he does not get his property or life insured he is gambling with his life on property.

8        Insurance is not charity:  Charity is given without consideration but insurance is not possible without premium. It provides security and safety to an individual and to the society although it is kind of business  because in consideration of premium it guarantees the payment of loss. It is profession because it provides adequate sources at the time of disasters only by charging a nominal premium for the service. 

Principles of insurance

The insurance is based upon (i) principles of co-operation and, (ii) principle of probability

i)                   Principle of co-operation: Insurance is co-operation device. If one person is providing for his own losses, it cannot be strictly an insurance because in insurance, the loss is shared by a group of persons who are willing to co-operate. In ancient period, the persons of a group were willingly sharing the loss to a member of the group. They used to share the loss to a member of the group. They used to share the loss at the time of time damage. They collected enough funds from the society and paid to the dependents of the deceased or the persons suffering property losses. The mutual co-operation was prevailing from the very beginning up to the era of Christ in most of the countries. Lately, the co-operation too another from where it was agreed between the individual or the society to pay a certain sum in advance to be member of the society. The society by accumulating the funds, guarantees payment of certain amount at the time of loss to any member of the society. The accumulation of funds and charging of the share from the member in advance became the job of one institution called insurer. Now it became the duty and responsibility of the insurer to obtain adequate funds from the members of the society to pay them at the happening of the insured risk. Thus, the shares of loss took the form of premium. Today, all the insured give a premium to join the scheme of insurance. Thus, the insured are co-operating to share the loss of an individual by payment of a premium in advance.

ii)                 Principles of probability: The loss in the shape of premium can be distributed only on the basis of theory of probability. The chances of loss are estimated in advance to affix the amount of premium. Since the degree of loss depends upon various factors, the affecting factors are analysed before determining the amount of loss. With the help of this principle, the uncertainty of loss is converted into certainty. The insurer will have not to suffer loss as well have to gain windfall. Therefore, the insurer has to charge only so much of amount which is adequate to meet the losses. The probability tells what are the chances of losses  and what will be the amount of losses.

     The inertia of large number is applied while calculating the probability. The larger the number of exposed persons, the better and more practical would be the findings of the probability. Therefore, the law of large number is applied in the principle of probability. In each and every field of insurance the law of large number is essential. These principles keep in account that the past events will incur in the same inertia. The insurance, on the basis of past experience, present conditions and future prospects, fixes the amount of premium. Without premium, no co-operation is possible and the premium cannot be calculated without the help of theory of probability, and consequently no insurance is possible. So these two principles are the two main legs of insurance.

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Is a Auto Insurance Necessary for You?

Is a Auto Insurance Necessary for You?

In some Countries some kind of Insurance is compulsory. Different countries have different rules and regulations for insurance premium and their returning amount.

The More property you gain, the more risk of loss. It is wiser to do Insurance even though there is no accident....

Motor Insurance (also known as GAP Insurance, Vehicle insurance or car Insurance or a Auto insurance ) is insurance for motorcycles, cars, trucks and other road vehicles. This insurance provides protection against damage or human injuries due to accident.

Motor Insurance Contracts are liable to the essential standards relevant to property and obligation protection when all is said in done. The manager of the vehicle must bear a lawful relationship to the vehicle whereby he or she stands to profit by the security of the vehicle, right, investment or opportunity from risk and stands to lose by any misfortune, harm, damage or production of obligation.

Auto Insurance and Car Insurance, Is it necessary for you?

Required Documents for Motor Insurance (a Auto Insurance)

    Driving License Photocopy

    Route permit Photocopy

    Quotation and bills

    Description about accident from Vehicle Owner

    The required document incase of death of the driver, conductor or passengers.

    Police Report

    Accident Report Document

Auto Insurance and Car Insurance, Is it necessary for you?

The car insurance covers (private car, motorcycle, motor scooter, commercial vehicles, goods transport vehicles, passenger bus, taxi, and a variety of vehicles such as ambulances, Publicity Van, etc.) to damage, as well as third party offers, including compensation. If there is no damage to the fulfillment may be related to skilled. More bank loans to finance a car or take the risk of cases, this is even more.

The sum of amount of premium is determined by the date of the registration of vehicle to the Vehicle and transport Department.

There is always the risk of thief and accident of the vehicles and Automobiles. Even more there is higher risk for the 2 wheelers for the loss of the vehicle and their life. Even thought you are riding your vehicle in safety, there may be the risk of accident due to the fault of other vehicles. Such Economical loss of vehicle and theft can be covered by Motor (vehicle, Passenger and Third party) Insurance. Most of the 2 wheeler owner does third party insurance of their vehicles. If the owner does the Motor insurance, then only he can get protection from such thief and accident. Most of the transport company does the insurance of passengers, workers as well as third party insurance. But private cars and 2 wheelers only doesn't even renew the third party insurance.

While Doing Motor Insurance, it is necessary to show the purpose of owing the vehicle. So that the insurance company won’t pay the damage of the vehicle if the loss of the vehicle while working on other purpose that is not written in insurance paper. The detail information of insurer is to be written clearly in the insurance paper. The Insurance Company will not pay Insurance in case of loss due to the use of vehicle by person that doesn’t have driving license. Fire, Thunder, loss of motor or damage of its parts, volcanic eruption, flood, landslide, high snowfall and sudden accident are covered by motor Insurance. Also Loss due to violence, riot, and vandalism are also covered by motor insurance. The insurance company uses their expert to analyze the loss so while reporting to loss; we should not provide wrong information to them. This may lead to rejection of insurance or even may face legal problems.

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Top 10 Best Car Insurance Companies (Auto Insurance 2014) List in USA

Best Car (Auto) Insurance Companies in USA

You have chosen a good auto (vehicle) insurance agency is significant serenity you may get to have before you get during a mischance, have your auto purloined, or expertise any variety of circumstances that embrace you needing to make a case.  You’d like to not discover past the purpose of no comeback that your auto protection provider isn't satisfactory.

Auto crashes can happen, even to the simplest folks. An accident protection strategy will facilitate unfold repairs to your vehicle and medical expenses within the occasion of a mischance. Considers it your firewall against financial catastrophe if you be found at shortcoming for property harm or wounds to other individual.

USAA, State Farm and Farmers attained the highest scores from both auto(Vehicle) and home insurance customers in Insure.com’s annual client  satisfaction study. It is USAA’s third year as the highest-rated auto and home insurer in the survey.

This summing contains the most 10 best auto insurance organizations centered around reasonableness, estimation of administrations, and responsiveness. Since, truth be told, what great is having an absolute bottom rate on the off chance that you don't receive enough as an exchange or can't get the help you require when you require it.

1. Liberty Mutual

Established since 1912, the company is providing quality service to its customers, third largest property and casualty insurer in the U.S. based on 2013 direct premium written according to the National Association of Insurance Commissioners.

Contact Information:-

Liberty Mutual Insurance
175 Berkeley Street
Boston, Massachusetts 02116
Phone: 617-357-9500

User Reviews:

" They are the BEST out there! I have gone to different ones and had to come back to them because they are so honest, so friendly and so professional. They are not ripping you off with those 6 month policies and with a bunch of other fees. Do your research... Call around and you will be shocked at how many of those other companies are charging for their premiums (double what Liberty Mutual charges) and then once they get you the first year with somewhat low rates, they hike them back up the second year! Do your research and you will realize that Liberty Mutual is the best all around!I am a 40 year customer. They are personal, competitively priced, and are quick and professional wiht price. Sometimes they try to raise prices at renewal time if you don't stay on top of your policy.

  " This is an amazing company. I remember when I was small when my mother would show me her work (At Liberty   Mutual). Everybody gave me mints and gave me a caring grin. When I passed there well lit offices. I loved the people there and I still do.

" Great company - takes care of its customers

2. Esurance

The company comprised of over 3,000 associates in 17 offices nationwide. Esurance offers direct-to-consumer personal car insurance in 43 states.

Contact Information:-
Call 1-800-ESURANCE (1-800-378-7262).

User Reviews:

"  I tired of my insurance payments going up and up and up, so thought it was time to start shopping for new insurance. I had tried over the Internet before but hadn't a clue what I was doing, so I just gave up. I had my previous insurance elsewhere and came to find out I was paying way, way too much. I am saving $750. 00 a year by switching to Esurance! I could not believe it! I immediately started the process of switching, and I am now a new Esurance customer and a very happy one! Today, I received my policy and cards via email just as promised and am glad I switched!

" Thanks Esurance for the savings, Progressive wanted
$900.00 6 months and 21st wanted $1100.00 and ESURANCE
$525.00 what more can I say!

" Simple, easy to use online interface with little or no lag time. You can change your policy and pay bills in literally seconds. 5/5 stars for convenience alone. Competitive rates too.

" Better priced than Progressive with the most friendly phone agents I've encountered. Not only was a happy about my new move and the insurance switch by the end of the conversation but I'm looking forward to chatting with Doug again - Thanks Esurance, I feel part of the family.

3. State Farm

Established in 1922 by retired farmer and insurance salesman George Jacob "G.J." Mecherle.  A mutual company owned by its policyholders, State Farm is currently ranked number 44 on the Fortune 500 list of largest companies.

Contact Information:-
Insurance Claims
800-STATEFARM (800-782-8332)

Insurance Payments
800-440-0998

State Farm Bank®
877-SF4-BANK (877-734-2265)

Credit Cards
877-SF4-VISA (877-734-8472)

State Farm Mutual Funds
800-447-4930

User Reviews:
" A company can't stay number one in business unless the people in the company do what they promise. I have always been delivered more than promised by my State Farm Agent. No one asks how much they were paying when one has a claim. Price becomes pretty subjective. How fast and fair claim is handled matters the most when one has a loss.

" I love State Farm, they handle all my ins. My car, car loan, my Apt. , and my health ins. My old car loan charged me a lot for gap insurance, my SF car loan gives me gap insurance for free, I saved money when I refinance my car with SF. My old insurance was more money, and my coverages were less. My agent explained what I had, and I picked better coverages and pay less. I also like their website. Nice being able to talk to real people 24/7, even in late at night, m and I am traveling, and in other time zones. Great service.

" I've had State Farm my whole life and they have always done right by me. On April 10, 2009 my home was destroyed by a tornado. Amidst all the turmoil, the traffic, and the inability to call anyone... I was finally able to reach my agent around midnight to report my claim. The next morning I went to the location of my destroyed home around 8 am to find my agent was already there with a check in hand to keep me on my feet. My agent and claims team found me a town home to stay in, fully furnished it with supplies and furniture, and allowed me to stay there until the construction on my new home was complete. All the while, tending to my every need and resolving any complications or worries I had very quickly.

" We have had State Farm Home and Auto for over 40 years. You get what you pay for with insurance. State Farm may be a little pricier, but they are the BEST.

4. Allstate

Established in 1931 & became a publicly traded company in 1993.  Allstate is widely known through the "You're In Good Hands With Allstate ®" slogan. As of year-end 2013, Allstate had $123.5 billion in total assets. In 2014 Allstate was number 92 on the Fortune 500 list of largest companies in America.

Contact Information:-
Allstate Insurance Company
P.O. Box 12055
1819 Electric Rd. S.W.
Roanoke, VA 24018

Allstate Insurance Company
P.O. Box 660636
Dallas, TX 75266

User Reviews:
" One never really knows how good his or her insurance provider is until disaster strikes. I was broadsided by an SUV that ran a red light. The other driver did not have insurance, and both my wife and I went to the hospital. Allstate's response was compassionate and swift. A few days later all bills were paid. My rates did go up, but the rate hike was well worth the peace of mind I felt. I am sticking with Allstate.

" My dad had Allstate insurance for 28 years for his house and car. He never had a claim on his house insurance until his water heater broke, and water damaged his finished basement. That's when we found out that Allstate is a very very poor insurance company. They did not want to cover much at all.

" I have both auto and renters with Allstate and get an awesome discount for multiple policies. My agent is local, and the customer service at 1-800-Allstate is awesome too! I know there are cheaper insurance companies out there, but I always keep this in mind, "Good insurance isn't cheap. Cheap insurance isn't good.

5. GEICO

Government Employees Insurance Company. The company has more than 13 million auto policies in force and growing. GEICO insures more than 22 million vehicles

Contact Information:-
1-800-841-3000
Corporate headquarters:
5260 Western Avenue, Chevy Chase, Md. 20815
Mailing address:
One GEICO Plaza, Washington, D.C. 20076

User Reviews:
" I love GEICO, they have EXCELLENT customer service! They are always great, they're always so personal, they are always there to help all day and night and weekends and you don't have to worry about someone being on vacation or sick because there's always more and great agents there to help. Plus they work with other outside companies and you can get discounts other places just for being with them. I just wanted to say I think GEICO is worth calling and getting a quote if you don't already have a policy.

" Switched from Allstate after 24 1/2 year and Saved $600.00 every 6 months. Was paying $1298 and now $698. 10 and now I'm switching home insurance also. Thank You GEICO for SAVING me $1200 a year on my AUTO.

" I just switched to Geico because of these comments. I thought the whole, "save you more money, " marketing was just a gimmick, but I really did save money. My bill has gone down! I'm paying less for 2 vehicles than I was for 1 vehicle with another provider, same features! I spoke with 3 different people, and all of them were great, and personable. I didn't feel like just another number. Awesome rates, awesome service. Highly recommended.

" Geico has to be the best! Been with them for over 30 years!

6. Progressive

This insurance company was established in 1937.

Contact Information:-
Corporate Headquarters
The Progressive Corporation
6300 Wilson Mills Rd.
Mayfield Village, Ohio 44143
Investor Relations
The Progressive Corporation Investor Relations
6300 Wilson Mills Road
Box W33 Mayfield Village, Ohio 44143

User Reviews:
" I used to have Farmers insurance until I got in an accident. Even though I had a local insurance agent, because I had to file my claim after hours, I had to contact a generic claims call center. Then, since I initiated the claim using the 1-800 number, I had to complete the rest of the process that way. At that point I was asking myself why I was paying a premium to have a local agent when he was doing nothing to help me. After the whole experience, I decided to shop around and ended up choosing Progressive. They had much better prices and since it no longer mattered to me to have a local agent, I signed up. I've had nothing but a positive experience with Progressive so far.

" I shopped around for the best price for the coverage I wanted and Progressive undercut the others by around $1200. Every 6 months my monthly premium goes down. After the first six months we added another car, and the premium only went up by $6 because the policy dropped by such a significant amount. They've been good at getting my documents to me quickly, and having 24 hour customer service - which I'm coming to appreciate more and more with the odd hours I'm awake and work.

" After I switched to Progressive I got into a car accident. I did not know exactly what I needed to do, but the people at progressive helped me the entire way. All I had to do was choose where I wanted to have my car repaired and they did the rest. Since I used one if the shops they referred I had my car back in less than a week. Quick and painless, all I had to do was make a call.

" Great insurance. Never a problem in the 10 years I have been with them.

7. USAA

This insurance company was established in 1922, when 25 Army officers agreed to insure each other's vehicles when no one else would

Contact Information:-
210-531-USAA (8722)
or 800-531-USAA

Home Office Address
9800 Fredericksburg Road
San Antonio, TX 78288
Bank Routing Number
314074269

User Reviews:
" They are ALWAYS there! When I lost control of my new pick up (11 months old) on slick streets, and totaled it in 2007, I was all alone. No one for miles in any direction. I called USAA to let them know what had happened. I was scared and alone, and the representative stayed on the phone with me until someone got to me. I was physically unhurt, but scared. She eased my fear and talked me through everything I needed to do. Gave me sound advice as to where to take the truck. Everything was handled smoothly and quickly. Settlement was swift. I was in a rental car in a matter of a few hours and in new car in a matter of days. We have been with USAA since 1976. We have had three burglary claims with them over the years and every one handled well and payment was swift. They are an honorable company who put their customers FIRST.

" 19USAA is just the best for taking care of their customers and making a stressful situation virtually stress free.

" I have had USAA since 1975. I qualified based on my father's status as a US Army Officer. In 1978, I became qualified on my own when I received a direct commission as an officer.

" USAA used to be for Officers and their families only. Not long ago they opened up membership to non-commissioned officers, then to all active military. Recently they even opened up membership to include honorably discharged veterans as well.

" USAA use to be a reputable company however in pass years their level in integrity customer service has declined tremendously. Lack of due diligence poor laziness. I am so ashamed for them. I have been a member for over 12 years no more. I am in the process of moving all my accounts and severing all ties. Yes it is that bad. It is time consuming but 200% necessary unfortunately. I will not share each negative and compromising act they did but I do not trust them. If you want your own horrible experience please join and find out.

" Great rates on everything from loans to insurance, nice to have all banking/loans/insurance in one central site to make keeping track of everything so much easier!

8. Nationwide

This insurance company was established since 1925. Nationwide has grown from a small mutual auto insurer owned by policyholders to one of the largest insurance and financial services companies in the world, with more than $158 billion in statutory assets, Fortune 500 company

Contact Information:-
Get a quote    1-877-669-6877
Start a claim    1-800-421-3535
Service    1-877-669-6877

User Reviews: " I just switched from State Farm to Nationwide and State Farm was reasonable, though I wasn't necessarily happy with the coverage. It was only $79 a month for full coverage, but they didn't have accident forgiveness, if I got into an accident, I would have to pay 20% of the rental fee for a car, and the lowest deductible for collision they will go is $250. I switched to Nationwide a week ago and the quote was for $70 a month, (every little bit counts) but the big difference is the coverage. I got accident forgiveness included, also they pay 100% of car rental fee, and I only have $100 deductible for collision. However they do have $0 deductible but 100 I can do. This is for a 2011 Ford Focus which Focuses are generally cheap to insure.

" I have been with Progressive for over two years, but I keep getting bills with extra charges and if I don't pay they will cancel my coverage. I went on line and checked several other companies, but NO success. When I contacted Nationwide, I ran into a problem doing the on line quote, so I called and talked with an agent. He was extremely helpful, got me three times the coverage, road side service, towing and all at a much lower rate! I'm very thankful with the kindness and the outstanding service, that this man and company showed me and how he made me feel, like my business was important to him and his company. I believe that I'm going to be a very satisfied customer and long time client as well!

" I LOVE nationwide! I previously had State farm under my parents, and switched onto my own when quoted. I received a call the next week telling me it would be 90 more a month! I called EVERYWHERE and the cheapest I could find was 4000/6 months, until I called nationwide. (I am only 18 with a new car and high coverage. ) My new agent is VERY nice and informative and I am only paying 1200/6months. One week after switching, someone totaled my car, and Nationwide was right there, helping me through everything. I would NEVER switch! Go Nationwide!

9. AAA

AAA (the American Automobile Association, Inc.) is a federation of affiliated automobile clubs

Contact Information: -
 1-800-AAA-HELP (1-800-222-4357)

User Reviews: " I just finished up a auto claim with AAA. I had used AAA for my first car years ago, but switched to geico and then state farm since I had to be insured on a college student budget.

" Post grad I moved back to AAA when I was making higher income. The past weekend was the first time I've had to actually invoke my car insurance coverage due to a hit on run on my car while parked.

" The response time, courteousness and professionalism shown by the AAA agent was amazing.

" I intend to stay with AAA for many, many years to come. Thumbs up.

" The most feared by other insurance companies. With AAA, nobody messes with you.

" I just saved about $400 dollars a year by switching to AAA from State Farm. The coverage for my cars is the same and the coverage for my home is much better (and cheaper) than before. I have a credit card through AAA, roadside assistance through AAA and finally, my insurance through AAA. I could not be happier. On all fronts, AAA has the best customer service I've ever encountered.

10. 21st Century Insurance

This insurance company was established since 1958.  Farmers Insurance serves more than 10 million households with more than 20 million individual policies across all 50 states through the efforts of over 50,000 exclusive and independent agents and nearly 24,000 employees.

Contact Information:-

866-447-2611.

call 1-888-244-6163

User Reviews: “When I talked to the employees at 21st Century Insurance, they don't talk at me, they talk to me just like they would any other person. They look past the bottom line dollar signs and see me as an individual; a lot of insurance companies today can't seem to deliver that. I think it's obnoxious when a company becomes so big that they don't treat the customers as people anymore or when companies become so large that the employees become impersonal and arrogant. So far, I've not encountered this with 21st Century Insurance and that, my friends, leaves me a satisfied customer!

“The specialist that spoke with me helped me understand what no other insurance company ever did. Wow! I thought the lowest was ok, but now I know. I'm glad I called. They took the time to explain and make suggestions. I was only saving $10, but it was worth the switch from another company on the top 10 list.

" I love 21st Century, I am elated that I made the switch from Farmers. Farmers use to make mistakes on my policy and I had to pay for it by them over charging me, so enough said about them. 21st Century keep up the good work your customer service skills are on point as well as the compassion you show your policy holders.

" I would recommend this company and the savings are awesome. A satisfy customer

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Insurance Minimizing your risk in USA || UK

KNOWLEDGE ABOUT INSURANCE:

Insurance in UK, Insurance In USA, Inusrance World wide????

Insurance is defined as a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to ensure themselves against that risk. Risk is uncertainty of financial loss. It should not be confused with the chance of loss which is the probable number of losses out of a given number of exposures. It should not be confused with peril which is defined as the cause of loss or with hazard which is a condition that may increase the chance of loss. Finally, risk must not be confused with loss itself which is the unintentional decline in or disappearance of value arising from a contingency. Wherever there is uncertainty with respect to a probable loss there is risk.

            Every risk involves the loss of one or other kind. The function of insurance is to spread the loss over a large number of persons who are agreed to co-operate each other at the time of loss. The risk cannot be averted but loss occurring due to a certain risk can be distributed amongst the agreed persons. They are agreed to share the loss because the chances of loss, i.e., the time, amount, to a person are not known. Anybody of them may suffer loss to a given risk, so, the rest of the persons who are agreed will share the loss. The larger the number of such persons, the easier the process of distribution of loss. In fact; the loss is shared by the by payment of premium which is calculated on the probability of loss. In olden time, the contribution by the persons was made at the time of loss. The insurance is also defined as a social device to accumulate funds to meet the uncertain losses arising through a certain risk to a person insured against the risk.

FUNCTION OF INSURANCE

The function of insurance can be studied can be studied into two parts (i) primary function and (ii) secondary functions.

Primary Functions

i)                   Insurance provides certainty: Insurance provides certainty of payment at the uncertainty of loss. The uncertainty of loss can be reduced by better planning and administration. But, the insurance relieves the person from such difficult task. Moreover, if the subject matters are not adequate, the self provision may prove costlier. There are different types of uncertainty in a risk. The risk will occur or not, when will occur, how much loss will be there? In other words, there are uncertainty of happening of time and amount of loss. Insurance removes all the uncertainty and the assured is given certainty of payment of loss. The insurer charges premium for providing the said certainty.

ii)                 Insurance provides protection: The main function of the insurance is to provide protection against the probable chances of loss. The time and amount of loss are uncertain and at the happening of risk, the person will suffer loss in absence of insurance. The insurance guarantees the payment of loss and thus protects the assured from sufferings. The insurance cannot check the happening of risk but can provide for losses at the happening of the risk.

iii)               Risk-sharing: The risk is uncertain, and therefore, the loss arising from the risk is also uncertain. When risk takes place, the loss is shared by all the persons who are exposed to the risk. The risk sharing in ancient time was done only at time of damage or death; but today, on the basis of probability of risk, the share is obtained from each and every insured in the shape of premium without which protection is not guaranteed by the insurer.

Secondary Function:

Besides the above primary functions, the insurance works for the followings.

i)                   Prevention of loss:  The insurance joins hands with those institutions which are engaged in preventing the losses of the society because the reduction in loss causes lesser payment to the assured and so more saving is possible which will assist in reducing the premium. Lesser premium invites more business and more business causes lesser share to the assured. So again premium is reduced to, which will stimulate more business and more protection to the masses. Therefore, the insurance assist financially to the health organization, fire brigade, educational institutions and other and other organisations  which are engaged in preventing the losses of the masses from death or damage.

ii)                 Its Provides Capital:  The insurance provides capital to the society. The accumulated funds are invested in productive channel. The dearth of capital of the society is minimised to a greater extent with the help of investment and loans of the insurers.

iii)               It Improves Efficiency:   The insurance eliminates worries and miseries of losses at death and destruction of property the carefree person can devote his body and soul together for better achievement. It improves not only his efficiency, but the efficiencies of the masses are  also advanced

iv)               It helps Economic progress:  The insurance by protecting the society from huge losses  of damage, destruction and death, provides an initiative to work hard for the betterment of the masses. The next factor of economic progress, the capital, is also immensely provided by the masses. The Property, the valuable assets, the man, the machine and the society cannot loss much at the disaster.

DEFINITION OF INSURANCE

The definition of insurance can made from two points: (i) functional Definition and (ii) Contractual Definition

Functional Definition:

Insurance is co-operative device to spread the loss caused by a particular risk over a number of persons, who are exposed to it and who agree to insure themselves against the risk thus, the insurance is (a) a co-operative device to spread the risk; (b) the system to spread the risk over a number of persons who are insured against the risk; (c) the principle to share the loss of each member of the society on the basis of probability of loss to their risk;; and (d) the method to provide security against losses to the insured.

      Similarly another definition can be given Insurance is a co-operative device of distributing losses, falling on an individual or his family over a large number of persons, each bearing a nominal expenditure  and feeling secure against heavy loss.

Contractual Definition:

Insurance has been defined to be that in which a sum of money as a premium is paid in consideration of the insurer’s incurring the risk of paying a large sum upon a given contingency. The insurance , thus, is a contract whereby (a) certain sum, called premium , is charged in consideration, (b) against the said consideration , a large sum is guaranteed to be paid by the insurer who received the premium, (c) the payment will be made in a certain  definite sum, ie, the loss or the policy amount whichever may be, and (d) the payment is made only upon a contingency more specific definition can be given as follows – Insurance may be defined as a consisting one party (the insurer) agrees to pay to the other party (the insurer) or his beneficiary, a certain sum upon a given contingency (the risk) against which insurance is sought.

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