Jasmine Directory

Designed to mitigate loss, insurance is possible when a large number of policyholders pay an annual payment, called a premium, to one insurance provider. Probability of loss drives the cost of insurance for groups of policyholders with similar attributes. High risk participants will pay more since the potential payouts to those entities will cost more.

Various types of insurance protection are require legally or as part of a contract, such as a mortgage. A lender can require the borrower to carry sufficient insurance protection against loss to cover a building or other asset. Proof of insurance can be required as part of various contracts.

Sufficient insurance coverage is offset by the annual premiums that are paid for each type of insurance. Some potential insurance policyholders decide to save sufficient funds to cover potential losses in categories where insurance is optional.

A person, or business, is said to be “over insured” when the payout offered by the policy is insufficient to cover the loss or recoup the premiums paid. Balance is required to prevent insurance payments from becoming unmanageable during economic downturns.

Automobile insurance is required for all individuals and business entities. Lenders can require policyholders with auto loans to carry comprehensive and collision insurance to recover the cost of repairs or replacement of the vehicle. Buildings and homes are insured to mitigate the risk of loss from fire or storm damage.

Dozens of other forms of insurance are available to mitigate the risk of loss. Specialty insurance can be purchased for anything from collectible cars to a dancing professional’s legs.

Life insurance is a common form of insurance that provides significant payouts to sustain the lifestyle of the survivors. Businesses can purchase life insurance to reduce the impact realized when the business owner, or a principal, dies unexpectedly. Insurance proceeds would be used to fund the business transition plan.