The amount that is protected by insurance
What is Insurance Coverage?
Insurance coverage is the amount of risk, liability, or potential loss that is protected by insurance. It helps individuals recover from financial losses as a result of incidents, such as car accidents, damaged property, or unexpected health issues.
In order to be covered for their losses, individuals pay an insurance premium. The insurance coverage depends on the policyholder’s age, place of residence, employment benefits, number of children, and other lifestyle factors.
Having insurance coverage is important because it can provide individuals with financial security and help mitigate losses. It also offers a sense of safety for the policyholder and their family, knowing that financial losses can be protected. The most common types of insurance coverages include life, health, auto, and homeowners.
Life Insurance Coverage
Life insurance coverage provides beneficiaries with a sum of money upon the death of the insured individual. Beneficiaries can be anyone that the insured individual wants to provide the money to, such as a spouse, friend, children, or charity. The purpose of life insurance is to be able to financially assist family members after the death of a loved one, provide for funeral expenses, or pay for outstanding debt. There are various types of life insurance, not limited to but including:
- Term life insurance: This insurance has a fixed period of time for coverage, such as 10, 20, or 30 years. The coverage may also only last a certain number of years or until a certain age, such as 65 years. After that, the policyholder will not receive coverage anymore unless they purchase insurance again.
- Permanent life insurance: This gives coverage for the rest of your life and never expires. There are two types – whole life insurance and universal life insurance.
Health Insurance Coverage
Having health insurance coverage can help individuals avoid paying the full costs of medical expenses incurred when they require medical attention. Depending on how much they pay for insurance, it can protect the policyholder from having to pay for visits to the doctor, prescription medicines, and any other healthcare costs. There are several types of coverages for health insurance, which includes:
- Health and dental insurance: This is beneficial in covering healthcare costs that are not protected by government programs or employment benefits.
- Disability insurance: This helps to protect the individual if they suffer from an accident and become disabled. The insurance coverage can help minimize financial losses if they are unable to work due to a disability.
- Critical illness insurance: This insurance is beneficial to cover the costs of healthcare for individuals who are suffering from serious or life-threatening illnesses.
- Long-term care insurance: This can help cover the costs of long-term care facilities or home-care service providers if the individual is no longer capable of caring for themselves due to aging, illness, or an accident.
Auto Insurance Coverage
Auto insurance is used to protect individuals from financial losses associated with medical expenses and repair costs due to a car accident. Not only does having auto insurance coverage financially protect the driver, but it can also protect the passengers in the vehicle and other vehicles involved in the accident. Here are some examples of several types of auto insurance coverages:
- Bodily injury liability: If the policyholder injures another individual in a car accident, this insurance helps cover medical costs for the injured individual.
- Property damage liability: This insurance covers the costs associated with repairing other vehicles or other property that the policyholder damaged.
- Collision coverage: This insurance covers the costs of repairing damages to the owner’s own vehicle or property.
- Comprehensive coverage: This insurance protects the policyholder in the case of loss, damage, or theft of their car. It can be due to an incident other than a car accident, such as damage from extreme weather or damage from a falling object.
Homeowner’s Insurance Coverage
Homeowner’s insurance protects you from financial losses related to your home. The coverage can help you with expenses associated with repairs, destruction, maintenance, or replacing damaged items inside your home. Depending on the type of coverage, it can also cover losses such as clothing, furniture, electronic appliances, and other personal belongings. Homeowners insurance coverage can financially protect you in situations such as:
- Fires
- Weather-related destruction such as wind, hurricane, lightning
- Theft and vandalism
Additional Resources
CFI also offers a variety of courses and related readings for you to continue learning about topics in finance:
FAQs
As a rule of thumb, stick to the facts. You should never lie when filing or discussing a claim with any insurer, as doing so may compromise your claim and lead to serious legal trouble down the line. However, you should also protect your interests by only providing the information you are required to by law.
What is insurance best answer? ›
Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursem*nt against losses from an insurance company.
What should you say in an insurance statement? ›
Stick to what you know for sure and be clear and concise in your answers. If you do not know the answer to a question, say so, rather than guessing or making assumptions. “I can't be sure, but I'll bet the other driver was on the phone” is classic speculation that is best left out of a statement.
What to say when making an insurance claim? ›
Give your name, address, policy number, and the date and time of your loss. Make sure to tell your insurance agent where you can be reached, especially if you are unable to stay in your home. Follow up the call with a letter detailing the problem. Keep a copy of the letter.
What not to say when talking to an insurance adjuster? ›
Do Not Admit Fault. You do not want to say anything to an insurance adjuster that could be taken as an admission of fault. To recover compensation, you'll need to show that someone else was responsible for your injuries.
Should you answer insurance questions? ›
Stick to the facts and only provide the information requested. If the adjuster attempts to discover information about your work or salary or wants to know where you work, avoid answering these questions by just saying that you cannot confirm that at that time.
What is insurance in one word answer? ›
Insurance is a legal agreement between two parties – the insurer and the insured, also known as insurance coverage or insurance policy. The insurer provides financial coverage for the losses of the insured that s/he may bear under certain circ*mstances.
How do you explain insurance coverage? ›
Insurance coverage is the amount of risk or liability that is covered for an individual or entity by way of insurance services.
What is the best policy answer? ›
“Honesty is the best policy” is a famous English proverb.
Is it good to give your own statement to an insurance? ›
The main reason to avoid making a recorded statement after an accident, even to your own insurance company, is that a recorded statement is much less precise than a written one.
Examples from Collins dictionaries
The insurance company paid out for the stolen jewellery and silver. We recommend that you take out travel insurance on all holidays. The country needs a defence capability as insurance against the unexpected.
Why is my insurance company asking for a statement? ›
Insurance adjusters will ask for a recorded statement as they are gathering information soon after the accident. This helps them to determine fault and how much compensation should be paid.
How do you answer insurance claim questions? ›
Remember this motto: Stick to the basic facts. Don't add opinions such as who's at fault, what triggered the crash, or what the damages might be. More importantly, don't lie or even embellish the facts, as this can compromise your insurance claim and become grounds for serious legal trouble.
What not to say when filing a claim? ›
9 Things Not to Say to Your Insurer After an Accident
- It was my fault. This may be common knowledge for many, but it's worth reiterating that you should never admit fault. ...
- I think. ...
- I'm fine. ...
- Names. ...
- Recorded statements. ...
- Unnecessary details. ...
- We don't have an attorney. ...
- Yes, I accept your offer.
To be strong and effective, a claim should be debatable, focused, and specific. In other words, it ought to be something that can be argued with reasons and evidence, and it ought to be narrow enough to properly support or prove in the space and format available.
How do you answer a question with a claim? ›
A statement that respond to/answers the question using words from the question. Provide EVIDENCE to support your claim. The evidence should relate to the answer and include facts/text evidence that will convince someone that your claim is correct.
How do you write a response to a claim? ›
Be brief. Answer the allegations in the complaint with one or two sentences. Again remember that the statements you make in your answer can be used as admissions against you. Your response to the allegations in the complaint may admit part of the statement in the specific paragraph and deny part.
What do you say when appealing an insurance claim? ›
I am writing to request a review of your denial of the claim for treatment or services provided by name of provider on date provided. The reason for denial was listed as (reason listed for denial), but I have reviewed my policy and believe treatment or service should be covered.
How do I argue an insurance claim? ›
Steps to Appeal a Health Insurance Claim Denial
- Step 1: Find Out Why Your Claim Was Denied. ...
- Step 2: Call Your Insurance Provider. ...
- Step 3: Call Your Doctor's Office. ...
- Step 4: Collect the Right Paperwork. ...
- Step 5: Submit an Internal Appeal. ...
- Step 6: Wait For An Answer. ...
- Step 7: Submit an External Review. ...
- Review Your Plan Coverage.
