how does insurance companies work?
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Insurance companies basically do three things with the premium dollar. First, they pool the money to pay claims. Second, insurance companies pay for expenses involved in selling and providing insurance protection. ... Insurance companies generally do not make a profit from their underwriting operations.
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Insurers assess many factors – including your driving record – when calculating your premium. Your insurance rates are also determined, in part, by the type of car you drive. Generally, the harder your car is to steal and the less expensive it is to repair, the less you pay for insurance.
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If they truly are uninsured, your insurance company can't file a claim against them — like the saying goes, you can't squeeze water from a stone. Insurance companies work by filing claims against other insurance companies, so if there isn't one, there's literally no way for the insurance company to recover damages.
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Comprehensive car insurance generally lives up to its name. It'll cover you for a wide range of damage caused by an insured event like an accident, theft and weather events (think hail, fire and storms). ... Third party insurance, on the other hand, only covers damage to another person's vehicle and property.
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The insurance industry is massive and, chances are, whatever you want to insure you can probably find someone willing to do so. However, in everyday life there are really two broad categories: Insurances covering you against illness and death (e.g. life, critical illness, medical and travel insurance).
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1. With a deductible policy, the insurer pays for losses and then collects reimbursement from you afterward up to the amount of the deductible. With an SIR in place, you're required to make payments first and the insurer only begins to make payments once the SIR is satisfied.
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['Premiums are usually negotiated between MCOs and employers.', 'MCOs function like an insurance company and assume risk.', 'MCOs arrange to provide health care, mainly through contracts with providers.', 'MCOs manage the utilization of health care services.']
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Most insurance providers only cover pure risks, or those risks that embody most or all of the main elements of insurable risk. These elements are "due to chance," definiteness and measurability, statistical predictability, lack of catastrophic exposure, random selection, and large loss exposure.
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['Licensed. Ask if the business is licensed and, if so, with whom. Then contact the licensing agency to confirm. ... ', 'Insured. Ask the company to have its agent send a Certificate of Insurance directly to you. ... ', 'Bonded. Bonding is often a misunderstood and unique insurance product.']
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Tax law generally allows businesses to create “captive” insurance companies to protect against certain risks. ... Those amounts are paid, either as insurance premiums or reinsurance premiums, to a “captive” insurance company owned by the insured or parties related to the insured.
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Car cover and insurance premiums vary widely because many insurance companies target specific types of customers. That's just like car companies specialising in certain types of vehicle that may have higher profit mark-ups, or designed for a niche market.
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Insurance brokers acting on behalf of an insured can be paid for their services in a variety of ways. The most straightforward is a simple fee arrangement between broker and client. More commonly, however, the broker earns a commission, which is agreed with the insurer but taken out of the premium paid by the insured.
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Third-party insurance covers you for the damage you cause (property or physical) to other drivers; it will pay for the medical coverage of the passengers and drivers of vehicles you damage, as well as the cost of the repairs to the vehicle you damaged.
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How premiums are calculated. Insurers use risk data to calculate the likelihood of the event you are insuring against happening. ... The more likely the event you are insuring against is to occur, the higher the risk to the insurer and, as a result, the higher the cost of your premium.
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An insurance premium is the amount of money an individual or business pays for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, life, and others. Once earned, the premium is income for the insurance company.
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Underwriters work in several insurance categories, including health, life, auto and home. Their job is to review applications for insurance, analyze risks and decide whether the company will offer coverage. Underwriters must approve applications so that the insurance company can collect premiums.
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['Your age. Age is one of the most significant factors that insurers use. ... ', 'Your occupation. ... ', 'The car you drive. ... ', 'Where you live. ... ', 'Security. ... ', 'How you use your car. ... ', 'Your driving history and no-claims bonus. ... ', 'Your excess.']