Insurance Policies Vs. Insurance Guidelines
Businesses and consumers look to insurance carriers to provide protection against a variety of risks. Insurance is designed to offer financial protection against loss of personal property, liability, accident, loss of health or even loss of life. Insurance carriers establish guidelines applicants must meet to obtain insurance protection.
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Guidelines and Policies
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Some individuals and businesses pose more insurance risk than others. Insurance guidelines are a set of rules that establish the insurability of a potential policyholder. Insurance carriers set guidelines that are in line with the goals and objectives of the company. Guidelines determine how much risk the company is willing to assume by insuring a person or business.
An insurance policy is a contract between an insurance company and the policyholder. In exchange for a premium, the insurance company agrees to pay for covered losses suffered by the policyholder during the term of the policy.
Examples
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Examples of insurance products are health, life, automobile and homeowner's insurance. Individuals purchase health and life insurance policies to protect against losses suffered through illness or premature death. They purchase automobile and homeowner's insurance to protect against losses from car accident or weather-related property damage.
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Exclusions
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Many insurance companies have guidelines which exclude coverage for certain types of incidents. Homeowner's insurance policies, for example, do not provide coverage for losses due to an earthquake, hurricane, landslide or other "geological" incidents. Although these incidents are beyond the policyholder's control, typical insurance policies will deny claims that result from them. A homeowner seeking protection in these cases must purchase a separate policy which specifically covers the incident in addition to their homeowner's policy.
Many health insurance companies will not cover particular conditions. An insurance carrier may set a maximum age for individuals to be eligible for a life insurance policy.
Further, insurance carriers may take the position that policyholders must be accident- or claim-free to obtain their best rates for auto and homeowner's insurance.
Insurance Claims
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In the event a loss occurs, the policyholder files a claim with the insurance carrier to be compensated for the loss. The insurance carrier will conduct an investigation based on the circumstances surrounding the loss. The company will also consider the correlation between the events of the loss and the information provided on the policyholder's initial application. For example, if a homeowner's insurance carrier's rules prohibit vicious dog breeds in a home, and the policyholder denies owning a vicious breed, the carrier will deny any claims that arise from dog bites if it's found that the homeowner does have a vicious breed in the home.
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