Insurance implies protection and bears a cost. You could protect your life, your health, your house, your car, and even your belongings.
Celebrities are known to insure body parts like feet, face, and buttocks and so on.
Insurance is essentially a financial service and carried out by organized companies.
The purpose of insurance is to protect something which is actually of great value. There are certain items that are irreplaceable, while there are others which are replaceable but expensive. The perfect example of an irreplaceable insurable object is human life. Human life once lost cannot be replaced, and insurance is just a way of making up the monetary loss a person would have earned in his lifetime. When a person opts for life insurance his principal objective is to secure the financial loss his dependents might have to face in the insured’s absence. Here protection is more important than saving.
Insurance for saving is primarily the forte of property insurance. Property both movable and immovable could be insured for definite periods. Insurance on properties is done for the purpose of saving money.
Vehicle insurance as a case study
Motor vehicles across the world are sold only with insurance. Any motorized vehicle which is not insured is not allowed to ply on roads. There are two reasons for this: I) third party insurance; II) vehicle insurance.
Third party insurance
The possibility of accidents cannot be ruled out in spite of very cautions driving. Similarly, the possibility of causing injury to others cannot be ruled out. When you enter into a third-party agreement with an insurer as the owner of a vehicle, the insurer bears the damage caused to the third party when your vehicle gets involved in this. If there was no third party coverage, then the damage caused by your vehicle would have to be borne entirely by you.
Third party insurance is a way of saving this money you would have paid as compensation for the damage caused by your vehicle. It is always advisable to opt for third party insurance if you own a motor vehicle. It not only saves you money but also gives you peace of mind as a car owner.
A car is a valuable item which is supposed to serve you over a considerable period of time. As it is not possible to change it at slight provocations and mishaps, it is wise to have it protected in the form of car insurance. As accidents and damages cannot be ignored an insurance coverage is advisable. The value of insurance depends on the value of your car and could change every year.
Once your vehicle is insured, the insurer is bound to pay for damages and losses caused to your car because of accidents, thefts, or eventualities like fire. The cost of insurance is always a fraction of the total cost of your vehicle and reasonable. Once insurance is paid the insurer takes complete responsibility of covering the cost of damages. You as an owner are saved from bearing a huge amount arising out of accidental damages or thefts. Once again you save money when you have insurance.
Insurance is not expenditure but a surety. This is where most of us make a mistake. When you insure you essentially protect, not only your vehicle but also your money. Most companies offer comprehensive insurance for motor vehicles; comprehensive in the sense that it covers third party insurance in addition to vehicle insurance.
The term of insurance is usually for a period of one year from the date of purchase of your vehicle and renewable after every year. In case there are no claims in a year, then the insurer in most cases offers a discounted insurance amount for the following year.