Basics of how insurance works

How Does Insurance Work?

  • Insurance is a contract that transfers the risk of financial loss from a business, enterprise or individual to insurance company.  Insurance company collects a small sum of money from the clients/customers and pools that money together to pay pay for losses.
  • When a customer buys insurance cover , he/she normally pays an agreed-upon amount (called the premium) to the insurance company in exchange for protection from listed risks.
  •   The premium is collected by the insurance company and when it comes time to pay a claim, they take money from that “collection” to compensate the policy holder.

Does Everyone Have to Buy Insurance?

  • Depending on the type of insurance, some insurance is optional while other insurance like car insurance may have minimum requirements set out by law.
  • Although Everyone does not have to buy insurance, It is a recommended to buy insurance when you have a lot of financial risk or investment on the line or for your life cover.

By taking insurance cover we protect our properties, abide to the laws in our country and also protect ourselves. Therefore it is crucial to have insurance cover. For more information call us: 0709 896 000.