Insurance has often been considered by many as a necessary evil.
But for the majority of people, insurance offers real security, peace of mind and forms a fundamental platform for a more certain financial future.
Understanding the basics of insurance and how it works will be enlightening for many.
What is an insurance policy?
Transfer of risk
It can either be "defined event" i.e. the policy covers loss or damage from a list of "defined" events, e.g. storm or fire; or "accidental loss or damage" i.e. all accidental loss with some exclusions.
It can either be "comprehensive" i.e. it covers any damage to your car as well as damage to the other car or another person's property; "third party property" i.e. it covers damage caused by your car to another person's property. This type of insurance will not cover you for the cost of repairs to your own car; "third party fire and theft" i.e. it covers damage partly for damage caused by your car to another person's property, and restricted cover for damage to your car cause by theft or fire.
States and Territories now have laws which limit an injured person's common law rights to sue for negligence, place thresholds and caps on damages for pain and suffering, and limit the payouts for economic losses.
Make sure the policy and the underwriter will be recognised in the countries in which you travel, otherwise you may face difficulties in receiving medical assistance.
This is a contract where the insurance company is bound to pay an agreed sum on the death of the person who is insured.
With this type of insurance the insurer agrees to pay you a specified amount of money, usually in monthly payments, in the event that you become disabled and unable to work.
This provides a lump sum on diagnosis of one of a number medical traumas such as a heart attack, stroke and cancer.