Understanding Insurance

Insurance is a way to protect one's company or yourself from financial risks by paying some money called a premium. Let's say you bought car insurance and your car catches on fire, the insurance depending on how much it covers may be able to fix the damages for way less then it would’ve cost without it or completely covered. Insurance is a safety net that can help you bounce back after an accident, theft, lawsuit, etc. In simple terms it's a contract between you and the company that says; “if I pay you a certain sum of money, you have to help me recover from future accidents.” An important rule in insurance is the 80% rule which states: if the company uses 80 cents of every dollar to pay for the medical claims and activities that improve their company and insurance, then the company has a medical loss of 80%. Overall, just look out for your insurance and make sure you aren't losing and you are gaining for the price you pay.

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