All businesses are risky. But risk is the essence of insurance. It is the nature risk of insurance products that make it such an interesting business. Investors and managers must decide in advance what goods or services to produce, and how, in light of expected sales even further in the future. Insurers, however, have to make such projections not only on production and sales, but also about developments even beyond the point of sale. Any insurance product is unusual in that, even at the point of sale, the cost of production is not known. Product development, sales, and certain administrative expenses are incurred up front. However, the major expense is not such “loading,” but rather future payments to policyholders on claims plus the associated cost of resolving those claims. (more…)

Pay particular attention to issues involving liability. This coverage protects your assets against lawsuits. Review the liability limits of your insurance policies. In the past most of the personal liability risks you faced probably came in some degree from your business or work. For most people, homeowners insurance coverage offers their main protection from non-work related personal liability. As you spend more time away from work, (more…)

Homeowners insurance is designed not only to protect your home and your belongings against loss, but to protect you from liability for injuries to others, and liability for damage to the value of property of others. You may buying homeowners insurance years ago when you first purchased your home and continued to renew it every year without thinking about it. Now is the time to think about it again, before a loss occurs that you can’t afford. (more…)

Hedging risk:

The main purpose of insurance is the hedge the risk of loss. The risk-bearing onus is shifted from the owner of the insured item also referred to as the insured to the insurer. A premium is paid to the insurer and in return you get a guarantee against larger losses. If a quantity can be attached to a risk, it can normally be insured. (more…)

Major natural disasters have caused catastrophic amounts of property loss in the United States and other parts of the world. In 2005, the damage caused by Hurricane Katrina resulted in $81.2 billion in damage cost, making it the most costliest natural disasters in the United Sates history. This event, causing most insurance companies to raise home property insurance premiums to cover their risk in surrounding area. (more…)