w insurance

What is insurance?
Insurance is a way to manage your risk. When you buy insurance,
you purchase protection against unexpected financial losses.
The insurance company pays you or someone you choose if
something bad happens to you.
If you have no insurance and an accident
happens, you may be responsible for all
related costs. Having the right insurance
for the risks you may face can make a big
difference in your life.
An insurance policy is a written contract
between the policyholder (the person
or company that gets the policy) and the
insurer (the insurance company).
The policyholder is not necessarily the insured. An individual or company may get
an insurance policy (making them the policyholder) that protects another person or
entity (who is the insured). For example, when a company buys life insurance for an
employee, the employee is the insured, and the company is the policyholder.

How does insurance reduce your financial risk?
Imagine you’re driving your car and you hit a deer, which damages your car. If you
have the right kind of auto insurance policy, the insurance company will pay the
costs of the car repairs (minus the deductible — the portion you have to pay).
Now, imagine a water pipe bursts in your bathroom, ruining everything in that
room and in the bedroom next to it. Typically, if you have homeowner’s or renter’s
insurance, the insurance company will pay to replace some or all of the damaged
property, once you pay your deductible. Insurance policies will only pay for things
that are described in the policy. So, it’s important to read a policy carefully before
you buy it, so you’ll know exactly what’s covered.

What are common types of insurance?
There are many types of insurance, but some common types are described here.
§ Health insurance: Helps you pay for doctor fees and sometimes prescription
drugs. Once you buy health insurance coverage, you and your health insurer
each agree to pay a part of your medical expenses — usually a certain dollar
amount or percentage of the expenses.
§ Life insurance: Pays a person you select a set amount of money if or when you
die. The money from your life insurance policy can help your family pay bills and
cover living expenses.
§ Disability insurance: Protects individuals and their families from financial
hardship when illness or injury prevents them from earning a living. Many
employers offer some form of disability coverage to employees, or you can buy
an individual disability insurance policy.
§ Auto insurance: Protects you from paying the full cost for vehicle repairs and
medical expenses due to a collision. In most states, the law requires you to have
auto insurance when operating a motor vehicle.