Insurance

Insurance

What is ‘Insurance’

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or her property, or from liability for damage or injury caused to a third party.

BREAKING DOWN ‘Insurance’

There are a multitude of different types of insurance policies available, and virtually any individual or business can find an insurance company willing to insure them, for a price. The most common types of personal insurance policies are auto, health, homeowners, and life. Most individuals in the United States have at least one of these types of insurance, and car insurance is required by law.

Businesses require special types of insurance policies that insure against specific types of risks faced by the particular business. For example, a fast food restaurant needs a policy that covers damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not subject to this type of risk but does require coverage for damage or injury that could occur during test drives. There are also insurance policies available for very specific needs, such as kidnap and ransom (K&R), medical malpractice, and professional liability insurance, also known as errors and omissions insurance.

Insurance Policy Components

When choosing a policy, it is important to understand how insurance works. Three important components of insurance policies are the premium, policy limit, and deductible. A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs.

A policy’s premium is simply its price, typically expressed as a monthly cost. The premium is determined by the insurer based on your or your business’ risk profile, which may include creditworthiness. For example, if you own several expensive automobiles and have a history of reckless driving, you will likely pay more for an auto policy than someone with a single mid-range sedan and a perfect driving record. However, different insurers may charge different premiums for similar policies; so, finding the price that is right for you requires some legwork.

The policy limit is the maximum amount an insurer will pay under a policy for a covered loss.  Maximums may be set per period (e.g. annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum.  Typically, higher limits carry higher premiums.  For a general life insurance policy, the maximum amount the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured.

The deductible is a specific amount the policy-holder must pay out-of-pocket before the insurer pays a claim.  Deductibles serve as deterrents to large volumes of small and insignificant claims.  Deductibles can apply per-policy or per-claim depending on the insurer and the type of policy.

Policies with very high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims. In regards to health insurance, people who have chronic health issues or need regular medical attention should look for policies with lower deductibles. Though the annual premium is higher than a comparable policy with a higher deductible, less expensive access to medical care throughout the year may be worth the trade-off.

Compare insurance quotes and start saving now!

Key points

  • Avoid monster bills by comparing a whole host of policies and insurers
  • Don’t roll over — auto-renewing can send your premium skyrocketing, and comparing can bring it back down to earth
  • Balance the price and policy to find the right insurance for you

Insurers want extra money from your pay packet, and usually, they get what they want.

Seriously — take a look at your latest bill. Now look at the same one from a year ago. Are you paying more?

If the answer is ‘yes’, you may well wonder why.

Your insurer grows its stash of cash by automatically renewing your policy every year and charging you more for the pleasure. Sometimes the price hikes creep up on you, and other times it’s an in-your-face monster, devouring your hard-earned savings in one big gobble.

Chances are you’re here because you’ve noticed your premium change for the worst. You did the right thing — let’s get started.

Dare to compare

Auto-renewal is lauded as ‘hassle-free’ — no thinking, or bother required, and astonishingly that’s a justification for loading on pounds, low-key.

Shoppers — rise up! There’s no need to roll over and accept a hiked premium, or overpay for insurance, ever.

Huge insurance savings are ripe for the picking, but only those who dare to compare, win.

Price versus policy

It’s not all about the money, money, money — you may also find that you get a policy that rocks your world and ticks the boxes, at a price you’re comfortable with.

GoCompare built its name and reputation on its ground-breaking insurance comparison service, and this remains at the heart of everything we do.

We were the first comparison site to focus on showing you the features of insurance policies as well as the price, and as we’ve developed our services the aim continues to be to find you the right product at the right price.

To help make your choices fair and simple, we’ve introduced features such as Defaqto product ratings — star-gradings of policies from an independent financial research company which is recognised and respected throughout the insurance world.

Insurance essentials

  • The costs of auto-renewal
  • Avoid doubling up on cover
  • Declarations and non-disclosure
  • We’ll give you the information you need, completely unbiased.
  • We’ll help you find the right products — less time, less hassle.
  • We’ll never sell your data. Ever.

We’re the only price comparison site that has British Insurance Brokers’ Association (BIBA) membership, a fact that helps us keep up with the latest in best practice, and we’re authorised and regulated by the Financial Conduct Authority.

GoCompare has got you covered

We’re best known for car and vehicle cover, but there’s so much more to us than that.

If you need property, life, health, income, pets, business and travel insurance, we’re your go-to.

Get quotes for this and more, plus read product guides and articles, watch videos, or take time to tot-up your costs with calculators and myth-bust your finances with quizzes to help answer all your questions.

Or, just chat to our customer service team (they promise not to sing… unless you want them to!)

So, don’t let your insurer trap you for two, three, four or more years with an increasingly demanding bill. Kick auto-renewal to the kerb and find an insurance policy that’s fairer on your bank account.

Customise your car insurance quote

  • Add cover for non-standard sound systems or car accessories to your motor insurance policy.
  • If you choose to add car hire to your insurance policy, and submit a valid claim, MiWay will provide you with a hired car for your chosen period of time in the event that you cannot drive your vehicle.
  • MiWay can cover your car for either private, professional or business use.

Looking for cheap car insurance?

Adjust your excess to decrease your monthly premium:

With car insurance from MiWay, you have the ability to choose your own excess. Choosing to pay a higher excess can significantly reduce your premium.

Choose the level of insurance cover for your vehicle:

  • «Comprehensive» cover provides the widest cover and covers for theft and hijacking, damages due to an accident, fire or explosion and natural disasters like hail and floods. Comprehensive insurance cover also includes damage to the vehicle’s windows and liability to other parties as a result of an accident, as well as intentional damage to your vehicle.
  • «Third-Party, Fire and Theft» cover provides insurance cover for your car against theft, fire-related damages, and damages you may have caused to another person’s vehicle during an accident.
  • «Third-Party Only» cover provides liability cover for any damage you may cause to the property of another person. Damage or loss to your own vehicle is not covered.
  • «Total Loss» provides cover to clients for the total loss of their vehicles only due to write-offs, theft or hijack, as well as limited third-part liability. Accidental damage that does not result in a total loss is not covered.

Insure your vehicle for one of the following values:

  • Retail value (the recommended insured value — the current selling price on the dealer’s floor as per the TransUnion Dealers’ Guide)
  • Market value (the average between the vehicle’s retail and trade values)
  • Trade value (the average price that a motor dealer will pay you for the vehicle as per the TransUnion Dealers’ Guide)
  • Special agreed value (which applies to unlisted, vintage and collectors’ vehicles, caravans and trailers where a valuation is given by an appropriate approved source)

The basics of insurance are simple: one company offers a guarantee future payment for a contracted event. The company offering the guarantee charges a premium for insuring against the event’s occurence — in doing so, the insurance company is protecting the client against certain circumstances, say physical capital loss due to a natural disaster. The insurance company assumes all financial responsibility associated with the client’s losses.

Where the business gets complicated is in the calculations of premiums. This involves the use of complex stochastic probabilty models meant to simulate the likelihood of a given event’s occurrence. Not all events are created equal, from an insurance perspective — for some types of insurance a company can accurately predict the probability of occurence (say, automobile insurance, which has such a large sample to study that companies can make accurate predictions and judgments about demographic groups). For events that are harder to predict (say, the future value a Mortgage-Backed Security (MBS)) insurance companies take on greater risk when they issue policies.

The insurance sector itself is segmented into four distinct sub-sectors: Life Insurance, Property & Casualty Insurance, Accident & Health Insurance, and Miscellaneous Insurance.

Insurance Industry Sub-Sectors

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Property & Casualty Insurance

Casualty insurance deals with policies that are written to hedge against the risk of unforeseen accidents. Some examples are insurance policies for auto accidents or losses incurred at sea (Marine Insurance). In general, casualty insurance hedges against risks associated with liability and crime.

Companies within the Casualty and Property Insurance Sub-Sector

  • Berkshire Hathaway (BRK)
  • American International Group (AIG)
  • Loews (LTR)
  • Allianz SE (AZ)

Accident & Health Insurance

Health insurance deals with policies that are written to hedge against the risk of unexpected or unexpectedly high health costs. Interestingly, the insurer of health insurance policy can either be from the private sector or the public sector, subsidized by taxes.

Companies within the Accident and Health Insurance Sub-Sector

  • UnitedHealth Group (UNH)
  • WellPoint Health Networks (WLP)
  • AFLAC (AFL)
  • Aetna (AET)

Financial Guarantors/Assurance

Assurance/guarantor companies provide insurance against default on credit instruments. They collect premiums to insure bonds against defaults and/or losses in value through insurance policies generally called «insurance enhancement products». Some examples are:

  • MBIA (MBI)
  • Ambac Financial Group (ABK)
  • Financial Security Assurance Holdings (FSE)

Miscellaneous Insurance

Companies within the Misellaneous Insurance Sub-Sector:

  • MetLife (MET)
  • Marsh & McLennan Companies (MMC)
  • Aon (AOC)
  • Brown & Brown (BRO)

Whats Moving the Insurance Sector

Retiring Baby Boomer Generation/Convergence of Insurance Sector and Financial Industry

As the first of the baby boomers are set to retire within the next few years, financial and insurance firms remain pitted in a battle to provide them with financial funds to fuel their retirement. The traditional methods of retirement finance such as social security, 401ks, and corporate pension plans are becoming increasingly riskier as government legislature struggles to find a solution to social security deficits and companies find it harder and harder to meet the promises of current pension plans. Since the lines between financial institutions and insurance institutions has been blurred with the repeal of the 1999 repeal of the Glass-Steagall Act, which restricted the ability of insurance companies to provide financial services, aging baby boomers have become an increasingly attractive market to insurance companies.

To compete with the corporate pensions plans provided by the company, insurance companies are offering annuities to retirees. Annuities come in many, often complex, forms and packages. However, the underlying concept remains the same: purchase of the annuity is made with an upfront lump sum, with the promise of a steady periodic income as long as the contract requires.

Since they’re wrikong on a solution already, my guess is that they will not want to bother using SPAAR’s data in the interim since it would be for so limited a time.I’m always chomping at the bit for the latest and greatest info so I’ll post it as soon as it’s available!