| 1. Intro | | | | This kind of insurance protection is more tangible |
| Before I introduce this month's insurance topic, I | | | | than liability. Property insurance protects physical stuff |
| need to point out a bit of irony that took place at | | | | against damage or loss of use. Most policies will |
| the end of last month. After writing an article about | | | | include and exclude certain kinds of events, called |
| what to do in the event of a winter auto accident, I | | | | "perils". For example War is excluded on almost every |
| found myself slipping on ice, heading slow-motion | | | | policy; which is why on 9/11, when President Bush |
| toward another car at an intersection. I was driving | | | | declared war, he simultaneously voided coverage for |
| at the right speed for the conditions. Sometimes | | | | all of lower Manhattan. Fire on the other hand is |
| however, events are just out of your control. As I | | | | included on almost every insurance policy because fire |
| slid slowly toward the other car that day, I was glad | | | | insurance is historically where property insurance has |
| of two things, I was sliding SLOWLY and that both I | | | | its roots. |
| and the other driver were protected against the | | | | Professional Insurance: |
| financial loss that was quite literally coming our way. | | | | You can think of this kind of insurance as liability |
| We've all been there; writing the monthly check for | | | | insurance for specific professions. Doctors, Lawyers |
| the auto or home insurance, thinking to yourself, why | | | | and Engineers have to have this kind of insurance in |
| do I have to pay money to a company for the | | | | case they make a bad decision or give poor advice. |
| promise that they'll pay out when I need it. That day, | | | | This kind of insurance is expensive, especially in areas |
| I was glad I had it, but rest assured there are many | | | | like the medical field where professionals are making |
| days I don't feel those same emotions. My goal in | | | | judgment calls many times a day. |
| this month's article is to provide you with basic | | | | 3. Why Do We Need Insurance? |
| differences between the main varieties of insurance | | | | Many of us have never had to make a claim on our |
| and some reasons for its existence. | | | | insurance. Therefore when we continue to write the |
| 2. What is Insurance | | | | check month after month, we feel as if we are |
| Put simply, "Insurance" is the payment of a small | | | | pouring money right down the drain. Even though |
| predictable amount of money ("premium") to protect | | | | you've never had to make a claim on your insurance, |
| against a larger unpredictable expense ("loss | | | | there is a good reason that its there. Naturally |
| claim").This transfers the risk from you to the | | | | insurance is there to protect yourself and your |
| insurance company for a fee. This protection comes | | | | investment, but let's face it; many of us wouldn't |
| in several ways. | | | | bother with insurance if it wasn't required by law or |
| Liability Insurance: | | | | the bank. |
| Everyone talks about our "litigious society". We all | | | | Not only does insurance protect you and those |
| know people who are sue-happy. You could say that | | | | around you, it is an unsung hero of America's |
| liability protection is for other people. Liability insurance | | | | economic success. Think about it for a second, who |
| is the protection afforded to you by the insurance | | | | else has a stake in protecting your property; if you |
| company, telling you that they'll pay the amount you | | | | lease your car or mortgage your house, then the |
| become legally obligated to pay. Sometimes this could | | | | bank does. They want to make sure that their |
| mean a court case but more often the issue is | | | | investment is protected. Banks wouldn't want to lend |
| "settled" for you by the insurance company. Imagine | | | | out money unless they knew that there was a really |
| that your houseguest trips and falls on the ice on | | | | good chance that they'll get their money back. |
| your walkway, and blames you for not putting out | | | | Consequently, insurance provides protection for the |
| sand or salt. Your insurance company responds by | | | | consumer lending process which is the backbone of |
| paying for her medical bills, lost wages and maybe | | | | the American economy. You might say that insurance |
| pain and suffering because of the accident. | | | | greases the wheels enterprise. |
| Property Insurance: | | | | |