Why do I Need Insurance?

We all rely on insurance throughout our lives.  It protects you and your family, as well as your home and belongings. Accidents and disasters can and do happen and if you aren’t adequately insured, it could leave you in financial ruin. Insurance makes starting a business, driving a car, travelling abroad, or borrowing money to buy a house possible. 

Insurance is all about ‘risk sharing’.  The definition of insurance is the undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril in which the object of insurance may be exposed. Insurance makes it possible for you to replace your property in the event of a loss; fire, theft, and so on.  You are also protected in the event someone sues you if you are liable for bodily injury or property damage.

Differences in Insurances

There are different types of insurance, and depending on what is at risk determines what kind of policy is issued.

There is Liability Insurance.  This is the protection extended to you by the insurance company telling you that they’ll pay the amount you become legally obligated to pay.  This occurs if someone sues you for bodily injury or property damage.

Property Insurance protects your physical stuff against damage or loss of use.  Policies include and exclude certain perils.

Then there is Professional Insurance.  This is liability insurance for specific professions.  Doctors, lawyers, engineers, etc have to have this kind of insurance in case they make a bad decision or give poor advice.

Where Do I Get Insurance From?

Through an insurance agent or insurance broker.  Agents and brokers may represent one or more insurance company so you will get different quotes.

Through a group or association.  Many associations and professional groups, as well as some employers, have group and home insurance plans. 

On the phone – most insurance companies provide quotes over the phone.

Online  - many insurance companies provide insurance quotes via their websites. Some even provide quotes from different companies.

Types of Insurance

Homeowners Basic Form – this type of policy includes the basic perils covered under an insurance policy; fire/lightning, explosion, smoke, falling object, impact by aircraft or land, riot, vandalism or malicious acts, water damage, windstorm or hail, glass breakage, transportation, theft including damage caused by attempted theft, and electricity.  And then there are listed specific exclusions to these perils.

Homeowners Broad Form – this includes All Risks coverage for the dwelling, while coverage for contents is Named Perils only (see listed perils under Basic Homeowners).

Homeowners Comprehensive Form – this is the broadest form of habitational coverage.  All property owned by the insured is covered on an All Risks basis.  All losses to property are insured unless they are specifically excluded.

What Information Do I Need to get Insurance?

An overall knowledge of the property to be insured is required.  A replacement cost needs to be established on the property in order to provide a basis for premium.  General information on the house or building is required; year it was built, construction, square footage, stories, bathrooms, etc.  And any updates on the house is also needed; what is and how old is the electrical in the house, age and type of plumbing, how old is the roof, and what is the heat source and how old.