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Differences Between Insurances: Common & Unique

Differences Between Insurances: Common & Unique Posted on May 10, 2015Leave a comment

Insurance companies offer policies that cover death, illness or injury to people. These policies may cover a group of people or just an individual.

The most common include life insurance that pays a beneficiary if an insured person dies. Mortgage life insurance pays off the mortgage if the insured person dies. Health insurance pays for medical treatment if an insured person is injured or gets sick. Dental insurance pays for dental treatment of an insured person’s teeth and mouth. Disability insurance pays the insured person’s lost wages if he can’t work because of injury or illness. Funeral insurance pays for the funeral/burial expenses of an insured person.

Personal Property/Casualty

Insurance companies sell policies that financially compensate individuals for loss or damage to their personal property and provide liability coverage for injury to third parties. The most common include homeowner’s insurance that pays the insured person if his home is damaged or destroyed by fire, storms and other perils, and pays medical expenses of a visitor who suffered an injury while on his property. Renter’s insurance pays the insured person for loss or damage to personal property in a rental or condominium dwelling that’s damaged or destroyed by a fire, storm or other perils. Auto insurance pays medical expenses of the insured person and others injured in an auto accident, and for damage to the autos and other property of the insured person and other people involved in an auto accident.

Business Perils

Businesses can buy insurance policies that financially compensate them against unforeseen perils of doing business. The most common include standard commercial property/casualty that pays the business if its real or personal business property is lost or damaged by fire, storm, theft and other specific perils. Extended liability coverage pays if the business loses a lawsuit by a person or entity claiming it was damaged by the business. Business interruption policies pay revenues lost if business is interrupted by specific perils. Malpractice insurance sold to professionals such as doctors, lawyers and engineers will compensate people who are injured by a professional’s practice. Product liability insurance compensates parties injured by a company’s defective product.

Mandatory Insurance

People and businesses may be required by state laws to buy certain types of insurance. Most states require auto owners to purchase liability and property damage policies that compensate third parties injured in an auto accident. Most states require businesses to have workers’ compensation insurance that pays employees who incur medical expenses and loss of income because of on-the-job injuries. Unemployment insurance, required of businesses by every state, pays benefits to an employee terminated under qualifying circumstances.

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