What is the connection between risk and the insurance company?

Insurance is a contract between the insured (you) and an insurance company that protects against the risk of large catastrophic loss. If a light bulb burns out in your hallway, that’s a small loss. If an electrical fire destroys a room, that’s a large catastrophic loss. Insurance companies gather groups of people that share homogeneous risks. The probability of loss is determined across the group as a whole. By spreading the risk of loss across the entire group, each member contributes a small known loss (in the form of a premium payment) in exchange for protection against a catastrophic loss. Should a covered loss occur, the insurance company pays money. In its essence, insurance is a risk transfer device -- moving risk of loss from individuals to the insurance companies. Insurance companies determine the probability of loss across the entire homogenous group, add the cost of administration, and spread the estimated expected losses across the group by collecting a premium from each member of the group.Homeowners are one such homogeneous group. All homeowners face similar risks, such as loss or damage to the home, loss or damage to its contents, and liability for injury or harm to third parties who come to the home. It is insurance company actuaries who determine what it will cost to pay all the losses the group is expected to incur, factor in administrative expenses and profit, and decide how much each member of the group must pay for the insurance.

What should I do if there is a loss?

In the event of a loss, the first thing you must do is protect the rest of your property from further loss. For example, if you are able to put sand bags around your property during a flood, you should do so. Another example may be to fence off damaged property, prohibiting “wanderers” from strolling onto the property and getting injured. Take photographs or videos of damaged areas, if possible.The next step is to notify your insurance company of the loss. Almost all insurance companies have toll-free telephone numbers for their claims departments. Be aware that most conversations with the claims department of an insurance company will be recorded.Once your claim has been presented to the insurance company, the next step is to have the claims adjuster come to the property and assess the loss. Some companies have claims adjusters on staff and others employ independent adjusters.

Who is covered by my policy?

As the insured, you and the members of your home are covered for the loss of the home and its contents. Third parties -- other people who come to your home -- are covered through the liability portion of the insurance policy for injuries caused by your negligence. In addition, you and the members of your household have some liability protection to others even while you are away from the premises.With renter's insurance, it is important to note that coverage is only provided to the person named in the policy. Even if you share the premises with someone else -- if it is your insurance, the property of your "roommate" is not covered.
function RateWin() {
var url = "http://insurance.freeadvice.com/suggest.php?pagetracker=/insurance_help.php&urltracker=/insurance_help.php/109_109_242.htm";
ratewin = window.open(url,'ratewindow','width=620,height=620,toolbar=0, location=0,directories=0,status=0,menubar=0,scrollbars=yes,copyhistory=0,resizable=1');
window.ratewin.focus();
}
« Comment/Revise This Page » -->

Homeowners Insurance: When does coverage begin?

Coverage begins on the date the insurance is "bound." Most companies treat an insurance application as an offer by the insured (you) to place the insurance. The coverage does not begin until your offer is accepted.