What is Insurance
Insurance is a contract between an insurer and a policyholder under which a person or entity receives financial protection or compensation from an insurance company in the event of loss or damage. There are many different types of insurance policies available. Auto, property, business, and life insurance are the most common types of insurance policies. Most Americans have at least one of these insurance policies.
Life insurance is a contract guaranteeing that in exchange for a regular premium, the insurer will pay a sum of money to named beneficiaries when the insured policyholder passes away. To keep a life insurance policy in force, the policyholder must either pay one-time or regular premiums over time. There are two types of life insurance policies: Term life insurance, which guarantees payment if the policyholder dies during a specified term, and Permanent life insurance, which remains in force for the policyholder’s entire life.
Life insurance is essential for protecting family members, as it allows the insured to leave a non-taxable amount after his death. It is also used to pay off mortgages and personal loans. According to LIMRA’s 2020 Insurance Barometer Study, 54% of all people in the United States had some form of life insurance.
Property insurance is a combination of policies that provide property owners with either property protection or liability coverage. It provides financial compensation to the owner or renter of a structure and its contents in case there is damage or theft—and to a person other than the owner or renter if that person is injured on the property. Examples of property insurance include homeowners, renters, and flood insurance policies.
While not required by the government, property insurance is typically required as a condition of obtaining a mortgage and is extremely valuable in terms of the protection it provides to homeowners. In the United States, at least 85 percent of homeowners have property insurance, and policies cost an average of $1,445 per year for 2021.
Auto insurance is a contract with an insurance company that protects the policyholder against financial loss in the event of an accident or theft. The insurance company agrees to pay the losses as outlined in the policy in exchange for premiums. Auto insurance provides liability, property, and medical coverages. These policies are usually issued for six months or a year and are renewable.
Drivers in 49 states and Washington D.C. are required to have auto insurance. New Hampshire is the only state that does not have a mandatory insurance liability law. Thus, nearly 215 million drivers in the United States have auto insurance.
Business insurance protects commercial enterprises against losses that occur in the ordinary course of business. In addition, it safeguards the financial interests of companies and their owners in the event of formal lawsuits or third-party claims. This insurance also protects business owners’ economic interests from penalties imposed as a result of litigation brought against them, as well as the associated legal costs. The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance.
In the United States, there are over seven million small businesses, ranging from construction firms to home-based businesses. They all have one thing in common: without the proper insurance coverage, they could be wiped out by a natural disaster or a lawsuit.
Special Event Insurance
Every day, schools, businesses, committees, cities, counties, non-profit organizations, and others plan and host events across the United States. Each of these events should be covered by special event insurance. A special event insurance policy protects the investment in a specific event. For example, It may help cover costs if the event is unexpectedly canceled or in case of property damage or injury during the event. Special event insurance is also called “wedding liability insurance,” as it is a type of coverage primarily sold to future brides and grooms to protect them from unforeseen issues that may arise during their wedding ceremony. In fact, 43 states have passed social host liability laws that allow party hosts to be sued if a guest causes an accident. Thus, most venues require to obtain event insurance that covers a minimum amount of liability to mitigate this risk.