Define Personal Insurance
Personal insurance, which includes products like homeowners and automobile insurance is defined by the Insurance Institute of America as "insurance products designed for and bought by individuals." Some sources also consider health, life and disability products in their definition of personal insurance coverages however, agents must have a separate license to sell these products.
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History
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Personal insurance has been around since the beginning of history. In the day of King Hammurabi, a person could be absolved of their debt if they suffered a disaster such as fire, flood, or disability. While it took nearly 100 years for insurance to catch on in America, we now have a very stable personal lines insurance industry.
Types of Personal Insurance Policies
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Auto insurance, which is mandatory in many states, is one of the most common personal insurance products. The following is not an exhaustive list, but gives examples of common personal insurance policies:
*Automobile
*Homeowners
*Condo-owners
*Renters
*Boatowners
*Recreational Vehicle
*Motorcycle
*Catastrophe Liability (commonly referred to as umbrella or excess)Can also include:
Health
Life
Accident/Disability -
Misconceptions
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Too often, consumers mistakenly believe their personal risk exposures are covered because they have insurance. Unfortunately, many people purchase cheap insurance with inadequate limits or unexpected coverage limitations. It's important to understand the features of personal insurance products.
Features
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Most personal insurance policies cover first-party property and third-party liability. These are separate coverage parts that serve different purposes. First-party property coverage protects things like your home, car or boat. Third-party liability coverage covers damages to someone else, for which you become legally liable. Make sure your policy limits are adequate in each of the categories.
Expert Insight
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Personal insurance is a form of risk transfer, which is just one of many risk management techniques. To adequately manage all of your personal risk exposures, it's important to implement other techniques like avoidance, retention and loss control.
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References
Resources
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