I also didn’t know about insurance coverage when I was new in the world of insurance. My father told me that you should know commonly used terminologies in insurance as this will help you make more informed decisions. Let me tell you what is insurance coverage in simple terms.
What Do You Mean By Insurance CoverageLet me tell you about insurance first. Well, insurance is basically designed to protect you from any losses that might occur due to unforeseen incidents.
Insurance coverage is the total amount of risk, liability, or loss that you are protected from, by an insurance plan. The higher the insurance coverage amount, the better you’ll be able to withstand liabilities or losses.
Let’s understand this using an example:Let’s say you buy an insurance plan from an insurance company and it covers you from losses of up to Rs. 50,00,000. Now, this Rs. 50,00,000 is your insurance coverage. What this means is that the insurance company will compensate you financially for certain expenses that you incur or losses that you suffer from, to the tune of Rs. 50,00,000.
That said, what if the expenses or losses exceed Rs. 50,00,000? In that case, your financial compensation would be restricted to the insurance coverage that you go for, which is Rs. 50,00,000. And what if your losses are lower than Rs. 50,00,000, say Rs. 30,00,000? In that case, your financial compensation will be restricted to Rs. 30,00,000.
In return for offering you insurance coverage, the insurance company will need you to pay some money periodically in the form of premiums. You usually have to pay for these premiums monthly. However, it can also be annual, semi-annual, or quarterly. In some cases, the insurance company also allows you to pay the entire premium as a lump sum, 1-time payment.
Read more:
Is property insurance mandatory for home loan as per RBI?
Who needs commercial property insurance?
What does property insurance cover?
What is property and casualty insurance?
I hope now you have a complete understanding of what is insurance coverage.
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Authors Of The Question
What is insurance coverage?
Mitali
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2 Year
2022-03-23T18:06:13+00:00 2022-03-23T18:06:21+00:00Comment
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