For you to understand the purpose of insurance you will first have to ask yourself some difficult question, i.e. What if I was involved in an accident how would I settle my medical bills?, my possible subsequent continuing out patient treatment?, or maintain my standard of living or a descent standard of living after the loss of income due to my inability to work because of personal injury?, How will I pay for the living costs for me and my family until when I am in better health?
The answer is insurance for all the above. There are various types of insurance. General Insurance, Home, car, and life are just four of the diverse kinds of insurance policies that are accessible to the public. Insurance is a safeguard for consumers against all the possible wrong things that can happen to them or their possessions.
In certain circumstances particular types of insurance are legally required. Many governments require car owners to have an insurance policy for each vehicle the person or business owns. In other words, vehicle owners are legally required to buy an insurance liability policy that will compensate those that you have an accident with, but will not compensate your losses. If you would want to also cover your losses, you could buy a more comprehensive policy that will compensate for damages to both you and the 3 rd part in the accident; this policy can comprehensively cover medical costs and property/financial damages.
Therefore the basis as to why insurance is important for vehicles is that it covers you from having to pay large sums of money in damages out of personal finances in the event that you are found liable for the accident. Without automobile insurance policy, you might lose all that you have, and go into debt so as to pay for damages. Another type of insurance policy that is important is the house and contents insurance, the lowest policy level is often based on the probability level worked out by the insurance company.
Their are options in policy lenders for home owners to add to this level of insurance in order to protect such things as their furniture, home fixtures and décor and other personal items against loss. Insurance policies will more often than not extend to 3rd parties who may be affected on the premises should they find themselves in an accident and sustain injuries. Therefore one of the most important reasons for insurance is to protect the owner from legal actions that may arise from 3rd parties as well as to protect themselves from losses they may incur as a result of accident or damages to their property.
In addition to home and content insurance there are many more types of insurance policies. There are policies that insure against loss of income should you be injured; there are business policies that can cover workplace compensation or criminal activities by employees; there are high end policies that can cover expensive and unique items that have to be specially valued such as jewelry. All this tells us that the importance of having insurance is that it can cover almost everything you own and value against loss.