How Well Do You Understand Your Insurance? Rest Easy – Here’s a Quick Guide!

How well do you understand your insurance? Pages of policy can be overwhelming – here’s a quick guide to what, and why, you have to know what you’ve purchased.

Peace of mind is so valuable. When you purchase insurance, it’s really peace of mind that you’re buying so you can rest easier knowing that you and your family will be taken care of in the event of a crisis.

As we’ve seen in recent days, life can be disrupted very easily. And where we can be prepared, where we can be proactive to maintain the wellbeing of ourselves and our loved ones, we have to be.

Whether it’s burst water pipes due to a sudden cold snap, a tree down due to a windstorm, a car collision, or damage to your business by vandals – insurance helps you to be prepared. Day-to-day can be a roller coaster in the event of an accident or loss but protecting yourself in the aftermath with the appropriate insurance can help you better manage.

The unexpected can be costly, and the right insurance policy provides the necessary protection to help mitigate those expenses incurred by the automobile accident, those heinous vandals, or the burst water pipes. Understand the basics of insurance, and you’ll be far more educated and prepared to make the necessary informed decisions about the coverage you’ll need.

If you don’t have insurance, you’ll be unable to get a mortgage on your home or drive a car. Travel, too, becomes a risk that could be very, very costly.

1. 1. What exactly is insurance and how does it help? Along with the many other people buying insurance, your purchase adds funds to a premium pool. These are the funds that get distributed to help you or another contributor to the pool in the event of the unexpected – an accident or loss during that calendar year. The payouts are referred to as ‘claims’. It is that law that insurers always have sufficient funds to cover all claims filed.
   2.  Why is insurance a MUST? If you don’t have insurance, driving a car, buying a home, launching your own business, or even just traveling out of the province, pose an unaffordable risk, if you’re able to do it all. In the event of a crisis – a loss or accident – you would be left on the hook to cover all of the costs, often thousands and thousands of dollars if not much, much more.
   3. Why do I pay for insurance yearly?  Aside from only the rarest exception, an insurance policy is purchased on an annual contract basis and renewed each year. The premium pools operate one year at a time and the insurance company uses a formula to predict the funds necessary to pay the claims for the coming year. After one year, everyone’s contract renews and premiums do not carry over or build up year to year. Calculating insurance premiums is somewhat complicated and involves a risk assessment that draws on actuarial science. Based on informed predictions about what funds will be needed to pay future claims, the premiums are calculated. Insurance providers collect the information and, in addition to what they understand from their experience, they set a fair and accurate premium price.
   4. What will my insurance cover? Regardless of what happens, in every case, your policy will only pay for those insured losses outlined in your coverage contract. It is important that you take the necessary time to review your policy and be sure to understand exactly what’s detailed within. If you have any questions, your insurance representative will be more than happy to answer them so that everyone is on the same page. Keep in mind, it’s not just what’s in the policy – it’s what isn’t covered as well.  Be very clear about both aspects of your policy – talk to your insurance agent to get a full understanding.

The 4 steps of buying insurance

1. Your insurance company estimates an annual premium to accept the risk involved to cover your home, vehicle, business, or travels.
2. You will pay that premium to your insurance provider on an annual, or monthly, basis.
3. The insurance company adds all premiums paid into one large pool, operating as a contract on a yearly basis.
4. Your insurance provider will use that pool to pay for the losses identified by claims made that calendar year.

We want to feel as care-free as possible in our daily lives. However, there are many things we do each year that pose some degree of inherent risk – driving a car, owning a home, traveling – where additional protection is essential, even mandatory in many cases.

Insurance is the one tool that helps to provide the preparedness, the protection, and the invaluable peace of mind to do it all!

If you have any questions about an existing or new policy, we want to help! Contact us today to discuss your insurance needs or get a FREE QUOTE!