An insurance agent once told me, “if you can’t avoid it and you can’t afford it, you have to insure it.” This statement has stuck with me over the years because of its truth. Car crashes, tornadoes, hurricanes, disease epidemics, illness, work injuries, fires, and other calamities occur all the time, and everyone is at risk of suffering some loss. Insurance makes it possible for individuals to deal with these and other risks.
Insurance has ancient roots dating back to the Greeks in 4th century B.C. Modern insurance contracts can be traced back to Lloyds Coffee House (now Lloyds of London) in the late 17th century, where insurance coverage deals were made to cover ships and their cargo. In 1666, after the Great Fire of London, insurance companies began offering fire coverage. Shortly thereafter, insurance companies offered life insurance, and liability coverage was offered in the 1880s after the Civil War and industrialization. During WWII, employers started offering health insurance as a fringe benefit, and quickly thereafter, many types of coverages exploded into the marketplace: auto, products liability, medical malpractice, homeowners coverage, etc. Today, virtually all people and business are covered by numerous forms of insurance.
Insurance is, very basically and simply, risk distribution to protect policy holders from future loss. Insurance companies do this by pooling individuals together with similar risks, which allows the companies to predict quite accurately its loss obligations.
Not only does insurance protect individuals from losses, but it also serves many social functions. For example, insurance can encourage safety – you can receive premium reductions if your home is equipped with smoke detector. Insurance can serve as a social regulator, by not allowing doctors that with medical malpractice insurance to have hospital privileges. Finally, insurance is a social equalizer. Insurance companies take premiums from those without loss and give money to those who have suffered loss.
Questions about your insurance policies or if your loss is covered? Contact WOODS & THOMPSON, P.A. today at #763-447-4076 for a free consultation.