An insurance firm (the insurer) and the person(s), company, or other entity being covered do have a legal agreement which is called an insurance policy (the insured). By reading this policy, an insured party can make sure that it addresses their needs and that both the insured party and the insurance provider are aware of both parties’ obligations in the event of a loss. The insurer promises to pay out if you suffer a loss, but only in certain circumstances.
The main types of coverage provided by an insurance policy include:
- Property damage – this protects against fire, earthquake and flood;
- Liability – includes medical expenses, personal injury protection (PIP) or bodily injury liability (BIL), which pays for lost wages if injured on the job;
- Life – covers your funeral costs if needed at death; and so on…
The policy is a legal contract between you and the insurer that sets forth specific details about what is to be covered and when.