What is Insurance? What Types of Insurance Are There?


Quora News: We all like protection, ours, that of our relatives, precious assets ... for this, taking out insurance is the solution. 

Day by day we are exposed to suffering some damage and, as if this were not enough, we must take into account the economic impact that repairing or solving the damage suffered must be taken into account.

Therefore, one of the best ways to cover all eventualities and their cost is by taking out insurance. Next, we will see what insurance is and what types of insurance exist in the market today.

What is insurance?

Insurance is an agreement that a person makes with an insurance company so that in the event that the individual or company suffers any damage and this is covered in the insurance contract, it can be fully or partially compensated. The insured, in exchange for the coverage offered by the insurance company, pays a periodic premium to the insurer.

There are some insurances such as car insurance, civil liability insurance, dangerous dog insurance, and home insurance for a mortgaged home, which are compulsory insurance by law, so yes or yes you must take them out.

What is an insurance policy?

The insurance policy is the document that details the Insurance Contract in which all the coverages agreed between the insured person or company and the insurance company are found. The insurance policy is characterized by having all the rights and obligations that exist between the parties. Below we can see the basic information provided by the insurance policy :

  • Personal data of the insured and the insurance company
  • A detailed description of the insurance contracted, as well as possible details to take into account
  • Amount of the premium to be paid and the periodicity of its payment
  • Insurance validity: duration and date from which it is effective
  • Sum assured
  • Benefits and endorsements, that is, the additional coverage contracted or modifications made
  • Beneficiaries of the insurance, if any, who will be the ones who will receive the compensation

Who is involved in an insurance contract?

  • Insurance company: company that provides insurance services and is obliged to compensate the insured in the event of the event insured in the contract.
  • Insured: person who owns the insurance contract and is also exposed to risk.
  • Contracting party: person who signs the insurance policy and is in charge of paying the premium (compensation for the insurance policy, is calculated based on the eventuality calculations of the claim and the insurance history of the client).
  • Beneficiary: person who is compensated according to the conditions established in the insurance contract in the event that the event occurs.

Deadlines to take into account in the insurance contract

  • Acceptance period: this is the time that passes between the insurance company proposing an insurance offer and the person who wishes to take out the insurance accepts the offer. Normally the acceptance period is fifteen days.
  • Lack of coverage: this is the period that elapses between when the policy is formalized and the date on which the insurance coverage begins. During this period, the insured has no coverage.
  • Grace period: it is the 30 days after the payment of the premium or the periodic policy, in case the insured has not made the payment. During this time, the insured will be covered.

What types of insurance are there?

When hiring insurance, we must take into account what type of insurance we want to hire based on our personal or professional needs. Insurance is classified among personal insurance, insurance or property damage, and insurance service delivery.

  • Personal insurance
  • Health or sickness insurance
  • Life insurances
  • Personal accident insurance
  • Dependency insurance

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  • Property or damage insurance
  • Car insurance
  • Engineering insurance
  • Multi-risk insurance
  • Credit and surety insurance
  • Miscellaneous pecuniary loss insurance
  • Theft insurance
  • Transport insurance
  • Fire insurance
  • Civil liability insurance

Service provision insurance

  • Travel assistance insurance
  • Funeral insurance
  • Legal defense insurance

Despite all the aforementioned insurances, there is a great variety of insurances within each type that we can access depending on our needs. It is important to know above all what risks we are exposed to and compare what it would cost us to face the cost of one of these risks and, on the other hand, what we would save if we took out insurance.

Finally, highlighting the fact that more and more insurance is tailored to our needs, we can contract personalized insurance in which only the coverage that suits you is found.

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