Abstract
Insurance policies cover unexpected life occurrences that affect individuals and businesses financially. They shield people from financial loss through reimbursement of funds, which had been contributed earlier as premiums. Insurance companies get into a contract with people and businesses agreeing to pay money upon the occurrence of a risk. The insured is expected to pay premiums at an agreed point in time to act as reimbursement money. Insurance payouts help business owners recover after the occurrence of risks such as fire, theft, and tornados. Personal insurance and business insurance are critical types of insurance covers. The covers have their similarities and differences. Personal insurance and business insurance are similar in that they protect the insured from financial loss. They are different depending on who is insured, the type o property insured, auto insurance, and the liability coverage of the policies. A critical individual insurance cover is health insurance, which protects people from expensive medical costs that can influence the quality of care for patients without medical covers.
A scenario in which insurance policies may mitigate risks in a small business
Events in life can be unpredictable, consequently creating the risk to put measures in place to mitigate harmful events in life that can interrupt life. Simple steps put in place by people to reduce risk can be as simple as closing one's house and putting money in the bank as opposed to the house. Such measures are meant to protect people from loss of property and destruction. In the insurance industry, the risk is the possibility of a harmful event occurring. Taking out insurance is a crucial way of risk management by preparing for specific risks arising in the future. The occurrence of risk can set back business people financially, leading to the crippling of businesses. To avoid financial loss, business people take insurance policies for when risks occur.
Delegate your assignment to our experts and they will do the rest.
An insurance policy is a contract between a business owner and insurance companies detailing the terms and conditions of a contract of insurance. Through the policy, the individual or business owner pays premiums, and upon the occurrence of the risk, they receive financial protection from the insurance provider. The aim of insurance is to protect people from financial loss and not benefit from the occurrence of a risk. The reimbursement done after the occurrence of risk reinstates people back to the financial state they were when the risk occurred. Insurance policies contain various components, which include; premium, policy limit, and deductible. A premium includes payments made to the insurance company after specifically agreed timelines, for instance, at the end of every month. A policy limit is a maximum amount payable by the insurer upon the occurrence of a risk. A deductible is paid out of pocket by a policyholder before a claim is paid. There are many types of insurance, and people need to identify their needs and what they are willing and capable of paying for premiums and take insurance policies. Some of the common types of insurance include; health insurance, car insurance, life, and home insurance.
A scenario in which insurance policies may mitigate risks in a small business could be a business owner running a retail store seeking an insurance cover to protect him from loss when the insured risk occurs. One of the insurances covers a retail trader can acquire business property coverage. This cover will protect the business owner from the destruction of the store or merchandise as a result of natural occurrences such as fire, lightning, tornados, wind storms, hail storm, and vandalism. Some insurance companies may not cover events of mass destruction; hence retail stores in areas prone to these natural events will need to make inquiries about what their policy will cover. Upon getting the information, retail store owners will need to seek insurance companies to protect against mass destruction events. Another crucial insurance cover for retail stores is business crime insurance. A business can lose money in multiple ways. Theft, dishonesty by employees, fraud, and cybersecurity are some examples of how a retail shop can lose money as such a business owner taking business insurance cover will help mitigate the loss of money when risks occur. The third possible cover for a small business owner like retail stores is commercial auto insurance. Some retail stores have motor vehicles that need to be insured from damage and collisions. Workers' compensation is another critical cover that helps the employer in a retail store take care of their injured employees when at work. It is important to note that the details of the cover are crucial, and business owners should identify their needs and look for insurance covers that serve their needs and protect their financial future from unforeseen risks.
How personal insurance needs are similar or not similar to business needs
Personal insurance and business insurance have similar characteristics. Both types of insurance are meant to protect people and businesses. Both insurance policies are intended to protect the insurers from financial loss when the risks insured against occur.
Personal insurance and business insurance though they are meant to prevent financial loss, are different. The first difference between the two insurance covers is the name covered. In a personal insurance policy, the named insured will be a couple, family, or a person. The cover is meant to protect an individual and their family. On the other hand, business insurance covers the name of the insured is an establishment or entity. The named insured is mostly the business. It is possible to have multiple names insured under the same policy.
The type of property presents another source of difference. A personal insurance policy can cover homeowners, enabling them to houses and their contents. Business covers are meant to establishments related to a business; this includes offices or warehouses or any other structure related to business. Inventory, office furniture, and equipment in the office can be included in the cover. The third difference is on auto insurance. A personal auto insurance policy is meant for individuals and their families or anyone in the care during an accident. A business insurance cover is intended to cover those who use the vehicle for business purposes. It is important to note that policies differ among states as such business owners with vehicles crossing state boundaries need to be aware of what their insurance companies cover and the state regulations in the states they operate.
The fourth difference is in liability coverage. The business covers contain multiple liabilities to protect the business owner against risks associated with running a business. The extent of the coverage depends on the business's needs and the policy agreed upon by the insured and the insurance company. On the other hand, a personal cover mitigates the risks that could occur in the insured person's day-to-day life. Lastly, Personal insurance and business insurance could also differ in terms of the provider. Some insurance companies may not have all the covers. More so, depending on the customer's needs, some companies may not have the covers a customer need.
Describe of an insurance product that can be utilized in your personal life and how it can minimize your personal risk
One insurance product that can be utilized in my personal life is health insurance. Healthcare can be expensive, and mostly if the payments are being made out of pocket. Depending on the type of service a patient receives during a doctor's visit, the bill can cost several thousands of dollars. The majority of people in the society cannot afford to pay massive amounts of money, especially when an illness is not something that is planned for, and people do not know how much they will need for treatment.
Acquisition of health insurance helps the insured prevent the financial burden that occurs when an individual falls ill by having a health insurance provider cover medical costs when the need arises. When someone gets medical insurance, they pay premiums through sharing risk with other people enrolled in the medical cover paying similar premiums. Since people do not fall ill at the same time, the insurance providers are able to pay for the medical expenses of those that fall ill. The insurance companies usually have calculated the amount needed for premiums in order to cover for the people enrolled in a particular medical cover. Health insurance provides people with a sense of peace, knowing they can afford medical care when needed. Health insurance helps people afford medical care and prevent them from falling into debt so as to finance medical deficits or taking loans. Through health insurance, individuals can focus on getting well and not worry about medical costs. Health insurance is especially crucial for people with chronic health conditions who have to do regular doctor's visits. The multiple doctor's visits can be overwhelming financially and could impact the number of visits made, consequently compromising the quality of care received by a patient over time. Medical cover, hence ensures that patients receive quality care when needed.
In conclusion, insurance policies are vital engagements that help shield people and business owners from financial loss when risks occur. Insurance covers involve payment of premiums, which is reimbursed to affected people and business upon occurrence of a risk. There are various types of insurance products available to individuals and companies; hence people and business people select according to their needs. Personal covers and business covers have similar characteristics as well as differences. The critical similarity includes both covers are meant to protect individuals and businesses from financial loss, and they all involve the payment of premiums to be used in the future when a risk occurs. Health insurance is one insurance product that can be utilized in my life to minimize the effects of disease burden. Medical cover is essential because one cannot know when they will fall ill or the anticipated medical bill. As a result, making partial payments for when the need arises is essential; this way, a patient can afford expensive medical care without going into debt or taking loans to finance medical bills.
