Have you ever had a moment—when looking at your insurance coverage or searching for insurance—when you’ve wondered, “What is insurance? And do I really need it?”
You’re not alone.
Insurance may be a confusing and complicated thing. How does insurance work? What are the advantages of insurance? And how can you discover the best insurance for you? These are typical queries, and luckily, there are some easy-to-understand solutions for them.
What is insurance?
Insurance is a financial safety net, helping you and your loved ones recover if something awful occurs, such as a fire, theft, lawsuit, or vehicle accident. When you acquire insurance, you’ll get an insurance policy, which is a legal contract between you and your insurance provider. And when you incur a loss that’s covered by your policy and submit a claim, insurance pays you or a specified recipient, called a beneficiary, depending on the terms of your policy.
The most frustrating thing about insurance is that you’re paying for something you hope you never have to use. Nobody wants anything horrible to happen to them. But experiencing a loss without insurance might put you in a terrible financial position.
What are the advantages of insurance?
Insurance is an essential financial instrument. It may let you live life with fewer anxieties, knowing you’ll get financial aid following a crisis or accident, helping you recover quicker. When it comes to life insurance, this may mean your family doesn’t have to move out of the house or that your kids can afford to go to college. For car insurance, it may mean you have additional cash in hand to help pay for repairs or a new vehicle following an accident. Insurance may help keep your life on track as much as possible when something horrible derails it.
Your independent insurance agent is a fantastic resource to learn more about the advantages of insurance as well as the perks of your individual insurance policy. For example, you may have access to advantages such as free roadside assistance, risk management counseling for companies, or cash value in a life insurance policy in addition to your insurance coverage.
And in other circumstances, like vehicle insurance and workers’ compensation, you may be compelled by law to obtain insurance in order to protect others.
How does insurance work?
Insurance is basically a big rainy-day fund shared by many individuals (called policyholders) and administered by an insurance firm. The insurance business utilizes money collected (called premium) from its policyholders and other investments to pay for its operations and to fulfill its commitment to policyholders when they submit a claim.
Because of the unpredictable nature of natural catastrophes—like tornadoes, hail, wildfires, and hurricanes—and daily disasters such as fender benders and kitchen fires, an insurance company’s principal purpose is to stay financially robust enough to manage anything that comes its policyholders’ way.
How do I pick an insurance provider?
Here are a few things to consider when selecting an insurance firm to deal with:
- Insurance coverage
What forms of insurance does the organization offer? Can you purchase all of your insurance via the firm and obtain a discount?
- Financial strength
Would the corporation be able to pay your claim? Look to U.S. credit rating firm AM Best to evaluate the company’s financial strength.
- Agency model
Would you prefer the support of a local insurance agent? Or would you want to handle your insurance on your own?
- Customer service
Do others recommend this company? What are others saying about it in online consumer reviews?
When in doubt, call your local independent insurance agent and ask them any questions you have regarding insurance. Your agent is an insurance specialist with the experience to assist you through the insurance process and help you get the finest insurance protection for you and the people and things you care about most.
This page is for informative and recommendation purposes only. If the policy coverage descriptions in this article disagree with the wording in the policy, the language in the policy applies. For comprehensive information on Grange’s business, car, home, and life insurance coverage and incentives, contact your independent agent.