Branches of Insurance

Fire insurance :Fire insurance generally covers stationary property also called real estate. However, land is not covered. Another simple way of putting it is that fire insurance generally covers buildings and their contents. In addition to the peril of fire, more broadly based property insurance policies provide payment for damage caused by such perils as windstorm, riot, and vandalism. Another type of coverage associated with Business income property insurance is business income (interruption) coverage, which provides payment for indirect losses associated with damage done by fires and other covered perils.

Marine insurance generally covers mobile property. Ocean marine insurance covers ships and their cargoes. Inland marine insurance covers property moving on planes, trains, and trucks. This category is often called transportation insurance.

Casualty insurance describes several different fields of insurance including automobile insurance, liability insurance, crime insurance, workers' compensation, and accident and health insurance. The following section of this chapter provides an extended discussion of liability insurance because this concept is likely to be unfamiliar to some readers, and it is very important in the United States where lawsuits are more frequently encountered than elsewhere in the world.

Bonding is a special type of protection in which one party (the surety) guarantees the performance (surety bond) or the honesty (fidelity bond) of a second party to a third party. If the second party's poor performance or dishonesty results in a loss to the third party, the surety must pay.

Life insurance describes insurance based on human life contingencies. If the covered peril is death, the contract is called life insurance. If the peril is survival, the contract is called an annuity. The annuity guarantees that the insured will not have to survive without money If the covered peril is sickness, the coverage is called medical expense insurance. If the covered peril is disability, the coverage is called disability income insurance.

In addition to these standard categories of coverage, insurers sell other interesting types of insurance. The following list is meant only to convey the scope of available insurance possibilities. 1. Weather Related Insurance: Payments can be made for crop hail damage, rained out concerts, or too much or too little snow.

2. Change of Law Insurance: Payments are made if new regulations increase construction costs after contracts are signed.

3. Municipal Bond Insurance: This coverage guarantees principal and interest payments on municipal securities, the type of debt issued by cities, states, and their agencies, and whose income is usually free of the federal income tax.

4. Motion Picture Completion Bonds: Insured’s receive payment if the film is not completed on time. The death of a star or other unforeseen events could cause the insurer to pay.

5. Boiler and Machinery Insurance: Many property insurance contracts specifically exclude damage caused by exploding steam boilers. Some insurance companies sell this type of coverage, but in practice what insured’s pay for, in addition to the indemnity agreement, is regular inspections of their boilers.

6. Wedding Insurance: Many American weddings cost about $25,000 (www.topweddinglinks.com). Wedding insurance covers losses arising from cancellation or postponement because of illness of the bride or groom, loss of wedding gifts, or failure of vendors to perform. The insurance provides reimbursement for no recoverable expenses, payment of extra expenses, or payment for lost or damaged wedding rings, gifts, or wedding clothes.

7. Credit Insurance: Credit insurance is an example of insurance coverage for a speculative risk. In a credit insurance arrangement, the insurance company provides payment to its insured (the lender) if the insured's credit losses exceed a specified amount. In other words, the insurer pays the lender if the lender loses money because its debtors fail to repay their debts. Bankruptcies may leave lenders holding uncollectible account receivables, and credit insurance can reimburse the lender for its losses. Because it is insurance for a speculative risk, and subject to adverse selection, insurance companies underwrite this coverage carefully.