Insurance is a safety net that provides help to pay for any injury to yourself caused by another or property damage. It also works to pay someone else on your behalf if you are responsible for hurting someone or causing property damage. It is a contract that transfers the risk of financial loss from an individual or business to insurance companies. The company collects a small amount of money from a client regularly and pools the money together to pay claims if they occur.

Insurance is divided into two main categories:

Property and Casualty insurance

Life and Health insurance

Property and casualty insurance gives protection to both individuals and businesses for loss associated with goods or assets, whether financial or a physical item. The other forms of insurance – Life and Health provide protection from monetary loss as a result of premature death, illness or disease. For more details on Insurance Brokers Bath, visit a site like Mark Richard, an Insurance Brokers Bath.

Calculating insurance is done with the large numbers law and probability, a variety of different risk calculations and then a premium can be set for the clients. The level should be enough for the company meet any future claims, to pay its costs and achieve a fair profit, but not so much that it turns away customers.

The more chance there is of an event occurring for a client, like a house near water on a floodplain that has a considerable historical flood rate, the more the insurance companies need to collect to pay anticipated claims.

Insurance companies market their products and services to consumers in different ways. Cost price for insurance companies is subject to government regulations. The insurance company may not discriminate against any applicant or insure by factors that are not directly related to the possible adverse effects.