Insurance

Insurance is a special type of contract between an insurance company and its client in which the
insurance company agrees that on the happening of certain events the insurance company will
either make payment to its client or meet certain costs.

Definition of insurance;
Insurance is an arrangement between an individual (consumer) and an insurer (insurance
company) to protect the individual against risk

Terms used in insurance

Policy
It is a contract between the individual and the insurer specifying the terms of the insurance
arrangements

Policyholder
It is a consumer who purchases the policy

Premium
It is a fee paid to the insurer to be covered under specified terms

Deductible
It is the amount paid out of pocket by the policy holder for the initial portion of a loss before the
insurance coverage begins

Example;
For example, in a car insurance policy, the insurance company agrees that if the car is damaged,
the insurance company will pay the cost of repairing it. Under an income protection policy, the
insurance company agrees that if its client is unable to work, the insurance company will pay its
expenses.

Types of insurance
There are following types of insurances

Automobile
Health
Life
Disability
Homeowners/Renters/ property insurance

Automobile Insurance
Automobile Insurance is an arrangement between an individual (consumer) and insurer
(insurance Company) to protect the individual against risk from automobile accidents
There are four types of coverage for Automobile Insurance:

Liability insurance
Medical payment insurance
Uninsured or underinsured motorists insurance
Physical damage insurance
Collision
Comprehensive

Liability Insurance
Liability Insurance covers the insured if injuries or damages are caused to other people or their
property it protects the insured party from being held liable for others financial lossesIt is the
minimum amount of insurance required by law for automobiles
Importance;
Liability insurance is very important for those who may be held legally liable for the injuries of
others, especially medical practitioners and business owners. A product manufacturer may
purchase product liability insurance to cover them if a product is faulty and causes damage to the
purchasers or any other third party. Business owners may purchase liability insurance that covers
them if an employee is injured during business operations.

Medical Payment Insurance

Medical Payment Insurance covers injuries sustained by the driver of the insured vehicle or any
passenger regardless of fault It also covers family members injured as passengers or if injured as
a pedestrian

Uninsured or Underinsured Motorists Insurance

Uninsured or Underinsured Motorists Insurance covers injury or damage to the driver,
passengers, or the vehicle caused by a driver with insufficient insurancea
Physical Damage Insurance
it covers damages caused to the vehicle
Collision covers a collision with another object, car, or from a rollover
Comprehensive covers all physical damage losses except collision and other specified losses

Health insurance
Health insurance provides protection against financial losses resulting from injury, illness, and
disability It may cover hospital, surgical, dental, vision, long-term care, prescription, or other
major expenditures It may be purchased by the individual or through their employer

Disability insurance;
This policy provide financial support to the policyholder if he became unable to work due to
illness or injury it provide monthly support to the policy holder

Life insurance

Life insurance is a contract between an insurer and policyholder specifying a sum to be paid to a
beneficiary upon the insureds death

The contract is a policy which states the amount to be paid to the beneficiary upon the
insured persons death
A beneficiary is the recipient of any policy proceeds if the insured person dies
A dependent is a person who relies on someone else financially

Property Insurance
Property insurance provides protection against risks to property, such as fire, theft or weather damage.
This may include specialized forms of insurance such as
fire insurance
flood insurance,
earthquake insurance,
home insurance
inland marine insurance
boiler insurance

Fire insurance
Fire insurance is a insurance that cover property, such as home shop or other fixed asset
protection against fire, burn Etc.. It also cover distraction of property due to fire

Aviation insurance
Aviation insurance protects aircraft hulls and spares, and associated liability risks, such as
passenger and third-party liability. Airports may also appear under this subcategory, including air
traffic control and refueling operations for international airports

Boiler insurance
Boiler insurance (also known as boiler and machinery insurance, or equipment breakdown
insurance) insures against accidental physical damage to boilers, equipment or machinery.

Builders Risk insurance

Builders risk insurance insures against the risk of physical loss damage to property during
construction. Builders risk insurance is typically written on an "all risk" basis covering damage
arising from any not otherwise expressly excluded. Builders risk insurance is coverage that
protects a persons or organizations insurable interest in

Crop insurance
Crop insurance may be purchased by farmers to reduce or manage various risks associated with
growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost
damage, insects, or disease.

Earthquake insurance
Earthquake insurance is a form of property insurance that pays the policyholder in the event of
an earthquake that causes damage to the property. Most ordinary home insurance policies do not
cover earthquake damage. Earthquake insurance policies generally feature a high deductible.
Rates depend

Flood insurance
Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not
provide flood insurance in some parts of the country. In response to this, the federal government
created the National Flood Insurance Program which serves as the insurer of last resort.

Marine insurance
Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on
inland waterways, and of cargo in transit, regardless of the method of transit. When the owner of
the cargo and the carrier are separate corporations, marine cargo insurance typically compensates

the owner of cargo for losses sustained from fire, shipwrecked. But excludes losses that can be
recovered from the carrier or the carriers insurance.

Natural disaster insurance

Natural disaster insurance covers specified expenses after a natural disaster renders the
policyholders home uninhabitable. Periodic payments are made directly to the insured until the
home is rebuilt or a specified time period has elapsed. Volcano insurance

Parties involved in insurance policy

There are two legal parties to an insurance contract

Insurer
It provides the contract of insurance

Insured (the policy owner)

It is the party protected and makes the contract with the insurer the beneficiary is not a party and neither
is the life insured (unless also the policy owner).

Procedure of insurance
Following step involved in the procedure of life insurance

Submission of proposal form:

A person desiring to take policy of life insurance will have to fill in the proposal form supplied
by the insurance company. The proposal form requires information with regard to the health, the
proposer, his family history, and his age habits of life, the amount a kind and term of policy.

Submission of agent's report:

The agent prepares a report on the basis of proposal from duly filled in. the report contains the
facts on the basis of proposal form and also from the enquiry made by the agent. The contract of
insurance largely depends upon agent's report.

Doctor's report:
The doctor of insurance company also presents a report regarding the proposed to the company.
The doctor certifies that the customer is free from fatal diseases and there is no risk if the
company issues him a life insurance policy. The report I very important because the company
evaluates the risk of life on the basis of this report.

Certificate of age:
The proposer will have to submit the certificate of his actual age. The certificate is the proof of
age. It is very important because the rate of premium is determined on the basis of actual age.

The customer must provide true information to the company. In case of concealment and wrong
information, the insurance company has a right to cancel the policy.

Scrutiny of documents:
The insurance company has the right to check the documents filed by the customers. The
contents of the proposal form, medical report and the certificate of age are examined by the
insurance company.

Acceptance of the proposal:

On consideration of the above facts, the insurance company decides to insure or not to insure the
life of the proposer. When the proposal is accepted the insurance company informs the customer
and demands the first premium. If the proposal is rejected, the letter of regret is sent to the
customer.

Payment of first premium:

The proposer should pay the premium amount to the company on the receipt of the demand
notice for the premium. The insurance contract is completed in receipt of the first premium. The
company issues a receipt for the amount of premium. The receipt acts as a contract between the
insurance company and the insured person. Later on, the company issues the life insurance
policy.

Famous insurance policies in Pakistan

In Pakistan, the famous and worldwide insurance companies are following for the sake of
valuable customers:
State Life Insurance Corporation
EFU Life Insurance
Jubilee Life
PICIC Life Insurance
Century Insurance Company
Beema-Pakistan Company
Adamjee Insurance Co. Ltd
MetLife ALICO Insurance

Names of 15 insurance companies around the world

1. American International Group (AIG):

2. AXA

3. Allianz Worldwide
4. Generali Group
5. Manulife Financial
6. Prudential Insurance Company
7. Metlife
8. ING:
9. Zurich Insurance Company:
10. Ping An Insurance
11. China life insurance Company
12. Berkshire Hathaway
13. Aegon
14. All State insurance company
15. Harford
Refrences
www.gogle.com
www.wikipedia.com
www.studymode.com
http://www.shebudgets.com/personal-finance/top-15-insurancecompanies/32011