Insurance:

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated.

Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. In order to be an insurable risk, the risk insured against must meet certain characteristics. Insurance as a financial intermediary is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses

FUNCTIONS OF INSURANCE

The functions of insurance can be studied into two parts: (i) Primary Functions (ii) Secondary Functions.

Primary Functions:

(i) Insurance provides certainty: insurance Provides certainty of payment at the uncertainty of loss. The uncertainty of loss can be reduced by better planning and administration. But, the insurance relieves the person from such difficult task. Moreover, if the subject matters are not adequate, the self- provision may prove costlier. There are different types of uncertainty in a risk. The risk will occur or not, when will occur, how much loss will be there. In other words, there are uncertainty of happening of time and amount of loss. Insurance removes all these uncertainty and the assured is given certainty of payment of loss. The insurer charges premium for providing the said certainty.

(ii) Insurance provides protection: The main function of the insurance is to provide protection against the probable chances of loss. The time and amount of loss are uncertain and at the happening of risk, the person will suffer loss in absence of insurance. The insurance guarantees the payment of loss and thus protects the assured from sufferings. The insurance cannot cheek the happening of risk but can provide for losses at the happening of the risk.

(iii) Risk-Sharing: The risk is uncertain, and therefore, the loss arising from the risk is also uncertain. When risk takes place, the loss is shared by all the persons who are exposed to the risk. The risk sharing in ancient time was done only at time of damage or death, but today, on the basis of probability of risk, the share is obtained from each and every insured in the shape of premium without which protection is not guaranteed by the insurer.

Secondary Functions:

Besides the above primary functions, the insurance works for the following functions:

(i) Prevention of loss: The insurance joins hands with those institutions which are engaged in preventing the losses of the assured and so more saving is possible which will assist in reducing the premium. Lesser premium invites more business and more business causes lesser share to the assured. So again premium is reduced to, which will stimulate more business and more protection to the masses. Therefore, the insurance assist financially to the health organization, fire brigade, educational institution and other organizations which are engaged in preventing the losses of the masses from death or damage.

(ii) It provides Capital: The insurance provides capital to the society. The accumulated funds are invested in productive channel. The dearth of capital of the society is minimized to a greater extent with the help of investment of insurance. The industry, the business & the individual are benefited by the investment & loans of the insurers.

(iii) It improves Efficiency: The insurance eliminates worries and miseries of losses at death and destruction of property. The care-free person can devote his body & soul together for better achievement. It improves not only his efficiency, but the efficiencies of the masses are also advanced.

(iv) It helps Economic Progress: The insurance by protecting the society from huge losses of damage, destruction and death. Provides an initiative to work hard for the betterment of the

masses. The next factor of economic progress, the capital, is also immensely provided by the masses. The property, the valuable assets, the man the machine & the society cannot lose much at the disaster.

Property Insurance:
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or boiler insurance. Property is insured in two main waysopen perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism, and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning, explosion, and theft.

This tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes

The term property insurance may, like casualty insurance, be used as a broad category of various subtypes of insurance, some of which are listed below:

US Airways Flight 1549 was written offafter ditching into the Hudson River

Aviation insurance protects aircraft hulls and spares, and associated liability risks, such as passenger and third-party liability. Airports may also appear under this subcategory, including air traffic control and refuelling operations for international airports through to smaller domestic exposures.

Boiler insurance (also known as boiler and machinery insurance, or equipment breakdown insurance) insures against accidental physical damage to boilers, equipment or machinery. Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage arising from any cause (including the negligence of the insured) not otherwise expressly excluded. Builder's risk insurance is coverage that protects a person's or organization's insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure [22] should those items sustain physical loss or damage from an insured peril. Crop insurance may be purchased by farmers to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost [23] damage, insects, or disease. Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary home insurance policies do not cover earthquake damage. Earthquake insurance policies generally feature a high deductible. Rates depend on location and hence the likelihood of an earthquake, as well as the construction of the home. Fidelity bond is a form of casualty insurance that covers policyholders for losses incurred as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

Hurricane Katrina caused over $80 billion of storm and flood damage

Flood insurance protects against property loss due to flooding. Many insurers in the US do not provide flood insurance in some parts of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort. Home insurance, also commonly called hazard insurance or homeowners insurance (often abbreviated in the real estate industry as HOI), provides coverage for damage or destruction of the policyholder's home. In some geographical areas, the policy may exclude certain types of risks, such as flood or earthquake, that require additional coverage. Maintenance-related issues are typically the homeowner's responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the [24] household, including pets. Landlord insurance covers residential and commercial properties which are rented to others. Most homeowners' insurance covers only owner-occupied homes.

Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on inland waterways, and of cargo in transit, regardless of the method of transit. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss. Supplemental natural disaster insurance covers specified expenses after a natural disaster renders the policyholder's home uninhabitable. Periodic payments are made directly to the insured until the home is rebuilt or a specified time period has elapsed. Surety bond insurance is a three-party insurance guaranteeing the performance of the principal.

The demand for terrorism insurance surged after 9/11

Terrorism insurance provides protection against any loss or damage caused by terrorist activities. In the United States in the wake of 9/11, the Terrorism Risk Insurance Act 2002 (TRIA) set up a federal Program providing a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism. The program was extended until the end of 2014 by the Terrorism Risk Insurance Program Reauthorization Act 2007 (TRIPRA). Volcano insurance is a specialized insurance protecting against damage arising specifically from volcanic eruptions. Windstorm insurance is an insurance covering the damage that can be caused by wind events such as hurricanes.

Types of Coverage:
There are the three types of insurance coverage. Replacement cost coverage pays the cost of replacing your property regardless of depreciation or appreciation. Premiums for this type of coverage are based on [1] replacement cost values, and not based on actual cash value. Actual cash value coverage provides for replacement cost minus depreciation. Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of the limit. When you obtain an insurance policy, the coverage limit established is the maximum amount the insurance company will pay out in case of loss of property.

This amount will need to fluctuate if homes in your neighborhood are rising; the amount needs to be in step with the actual value of your home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high-value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy. If a fire leaves your home uninhabitable, the policy can help pay for a hotel or other living arrangements.

Home Insurance
Home insurance policies in India are property insurance that provides coverage against house damage or that of the contents inside. Apart from unauthorized entry, you can also get an extended cover for accidents that may occur at home. This seemingly useless expenditure is in fact highly essential. Do not wait for a calamity to prove that you do need home insurance; opt for it beforehand!

Benefits of Home Insurance

Home insurance offers numerous benefits to the policyholder. With a good home insurance in place, you can have complete peace of mind regarding your property investment. You can avail emergency repairs, the additional expenses of living outside your home in case of damage to property, or replacement of personal property, minus the hassles and minimum documentations. Besides, the monthly premiums involved are reasonably low in most cases so as not to put extra financial burden on the insurer. The home insurance premium calculator can help you to calculate and decide which home insurance plan to go for.

Key Features of Home Insurance

The key features of home insurance in general include the following:

There is easy option for payments including monthly premiums without extra costs. Get home insurance online, which is a hassle-free proposition for those interested. Discount is available on contents/home premiums and price reductions for multiple policyholders. Standard coverage is present against explosion or fire, theft, attempted burglary, damage due to natural disasters, and compensation for damage to property or contents within, through vehicular accidents. Reasonable covers for your valuables including camera and jewelry. Expense cover is available for alternate accommodation for up to one year. Presence of burglar or smoke alarm or other security measures help homeowners to get discount on their home insurance. The cover is for both self-owned and rented properties.

Home insurance coverage

If you want to go for home insurance coverage, it is possible to choose the cover amount based on personal spending capacities and requirements. Select contents that you want to get under the insurance umbrella. Coverage amount may depend upon the reinstatement value or the current value of the product in market. Also included is the personal accident cover concerning permanent disability or death of policyholder. In such cases, the nominee gets predetermined compensation amounts.

Exclusions
While there is a comprehensive coverage for homeowners through home insurance policies, there are certain exclusions present too. For example, this cover does not include radioactive contamination, or damage due to nuclear explosive equipment. Similarly, you do not get compensation for property or content damage that results from

war, military activity, or invasions. Do not ask for coverage when an untoward event such as civil war or coup is responsible for damage to property and content or loss of life. Inconceivable situations aside, your home is reasonably safe with a good home insurance policy to provide backup in negative situations. Nevertheless, compare home insurance quotes to understand clearly the benefits and exclusions present in a particular home insurance policy and then make the final decision. Get insurance and be safe!

Fire insurance in India

Fire insurance business in India is governed by the All India Fire Tariff that lays down the terms of [13] coverage, the premium rates and the conditions of the fire policy. The fire insurance policy has been renamed as "Standard Fire and Special Perils Policy". The risks covered are as follows: Dwellings, offices, shops, hospitals: Industrial, manufacturing risks Utilities located outside industrial/manufacturing risks Machinery and accessories Storage risks outside the compound of industrial risks Tank farms/gas holders located outside the compound of industrial risks

Perils covered
The following causes of loss are covered: Fire Lightning Explosion, implosion Aircraft damage Riot, strike Terrorism Storm, flood, inundation Impact damage Malicious damage Subsidence, landslide Bursting or overflowing of tanks Missile testing operations Bush fire

Exclusions
The following are excluded from insurance coverage:

Loss or damage caused by war, civil war, and kindred perils Loss or damage caused by nuclear activity Loss or damage to the stocks in cold storage caused by change in temperature Loss or damage due to over-running of electric and/or electronic machines

Claims In the event of a fire loss covered under the fire insurance policy, the insured shall immediately give notice thereof to the insurance company. Within 15 days of the occurrence of such loss the insured should submit a claim in writing giving the details of damages and their estimated values. Details of other insurances on the same property should also be declared.

US Property Insurance Claims

World Trade Center case

Attack on the World Trade Center

Following the September 11 attacks, a jury deliberated insurance payouts for the destruction of the World Trade Center. Leaseholder Larry A. Silverstein sought more than $7 billion in insurance money; he argued two attacks had occurred at the WTC. Its insurersincluding Chubb Corp. and Swiss Reinsurance Co.claimed the "coordinated" attack counted as a single event. In December 2004 [2] the federal jury decided in Silverstein's favor. In May 2007 New York Governor Eliot Spitzer announced more than $4.5 billion would be made available 2 [3] to rebuild the 16-acre (65,000 m ) WTC complex as part of a major insurance claims settlement.

Post-Hurricane Katrina property insurance claims

New Orleans in the aftermath ofHurricane Katrina

In the wake of Hurricane Katrina, several thousand homeowners filed lawsuits against their insurance [4] companies accusing them of bad faith and failing to properly and promptly adjust their claims. Insurance companies changed their pricing policies after Katrina, with most policy holders in New Orleans seeing [5] their property insurance premiums double after the storm, and deductibles increase by two, or even [6] three, fold. The losses from Katrina severely impacted both the affordability and coverage amounts [7] provided by property insurance, even in regions that were not impacted by the hurricane.

Florida Consumer Choice Act

On June 24, 2009, Florida Governor Charlie Crist vetoed the Consumer Choice Act (H.B. 1171). The bill would have trumped state regulation, and allowed Florida's biggest insurance companies to [8] establish their own rates. State Farm Florida expressed its disappointment with Crist's veto of the bill the company said "would have given consumers more options in their choice of a property insurer. It would [9] have attracted more capital to the property insurance market in Florida". State Farm had proposed a 47.1% property insurance rate increase for Florida policyholders. As a result of Crist's move, State Farm [10] plans to drop coverage for more than 700,000 homeowners by 2011. Remarking upon State Farm's pullout from Florida, Ted Corless, a property insurance attorney who has represented large insurance carriers like Nationwide, noted "that homeowners are really going to have to [11] look out for themselves". Five days after Crist vetoed the Consumer Choice Act, Corless defended property insurance deregulation by pointing out that "if the blue-chip insurance companies wanted to price themselves out of the market", then they would go out of business. He accused Crist of making choices on behalf of consumers, not protecting their right to choose. In 2006 the average Florida annual insurance premium was $1,386 for a homeowner, one of the highest in the country.