Friday, July 2, 2010

Insurance is Hedge tool to uncertain risk

Insurance is agreement between the insurance company and the insurance holder, to protect the insurance holder from uncertain risk.
Insurance is also a hedge tool to protect the interest of the people. Insurance company charges premium on the holder on monthly or yearly basis. Now a day’s all movable and immovable goods comes in the criteria of insurance. One more thing need to consider that Insurance Company compensates only the loss portion, or the percentage insured.

Some basic steps:

1] Low Premium rate: Insurance premium vary with different insurance provider, so it’s better to check the market and go for the lowest premium rate available in the market.

2] Good liquidation position: Insurance is the hedge tool to protect from uncertain financial risk, so it’s good to go with that company which has financially strong in the market; means go with the company which has good liquidity position.

3] Disclose all the material facts of the insured item : Insurance company always mention in there rules and condition documents that in some circumstances they not pay the loss to the insurance taker, so always disclose all the material facts to the insurance company to become on the safe side.

4] complain to the regulatory board in case of fraud: If the insurance company not pays the damage or delay the payment than make the complain for this to the regulatory board of that country.

5] Insurance coverage: Insurance company paid only the risk which is insured, so its make sure before take any policy that how much risk is bearable.

6]There is interest on the insured property : Insurance holder need to prove that he has the interest on the insured property and any damage of the property affect the insurance holder financially.

1 comment:

  1. Very true. Insurance is the most promising tool that is preferred by all to overcome from the loss that are caused due to uncertain risks which can't be controlled. Thanks for listing the basic steps about insurance.
    company insurance