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Insurance Types

Date Added: December 06, 2010 03:10:46 PM
When you are in the market for insurance, there are so many types available that it can be a little confusing. Of course, most of us know that we are required by law to carry auto insurance on our vehicles and that it is prudent to carry health insurance in case of illness or medical emergencies, but there are so many other types of insurance out there that it is actually mind boggling. When questioning how many types of insurance there are, you will get at least as many answers as there are types of insurance – which is a lot! The best way to understand insurance types is to have a better understanding of how insurance is defined.

Insurance Defined

Basically, insurance is a form of mitigating risk against a potential for loss. The risk is transferred from one party to the next in exchange for payment. Most of the time damage is too costly for you to pay for, so you transfer the ‘risk’ to an insurance company in exchange of paying your monthly premiums. So then, anything that has the potential to be subject to damage or loss can be insured. This goes for personal loss and business loss as well. Then each of those areas can be broken down further depending on the specifics of what needs to be insured.

The Private Insurance Market

Private insurance is any type of insurance that covers an individual or a family, and covers two broad categories which are life insurance and any other type that covers everything other than life. The most common types of private insurance are automobile, health insurance, life insurance and homeowners insurance, and within each of those categories there are more specific types of insurance policies that can be written. For instance, renters insurance falls under the broad category of homeowners insurance.

Business Insurance

Business insurance would encompass any type of policy that protects the business owner, corporation or assets therein. For example, business insurance could be theft, fire, liability, vandalism and casualty. Liability would protect both the owner as well as the business in cases where damages or injury result from perceived negligence on the part of the business. Under this broad category would be certain types of malpractice insurance such as medical malpractice insurance.

Some estimates state that there are over 150 types of insurance available that can insure persons, businesses or property. Some types of insurance are mandatory, such as automobile insurance in Canada, while others are optional such as health insurance. In the end, if there is potential for loss, there probably is a type of insurance to protect against that loss.