Introduction To Personal Insurance And Risk Management

Posted on: January 6th, 2015

Understanding Your Need For Insurance Coverage

In life, it seems that the only certainty is uncertainty. Just when you least expect it, a rock cracks your windshield or a pipe bursts in your home and you are faced with a significant unforeseen expense. How do you handle that?

Most Americans face life’s uncertainty with protection against it in the form of personal insurance coverage. Although insurance can seem like a complicated product, at its core it is simply people making preparations so unexpected circumstances will not create considerable financial burden. Essentially, insurance allows us to move the risk of financial loss away from ourselves.

There are two different ways that risk is handled: risk transfer or risk funding. Risk transfer occurs when the losses are so significant that an individual is unable to handle them. Natural disasters are a good example of when risk is transferred from affected individuals to society as a whole, who can better absorb it.

Risk funding occurs when we pay small amounts, in advance, to negate the need to pay a large sum of money down the road. We choose to fund our risks when the timing is uncertain but the risk is certain, such as in the case of auto insurance. Unfortunately, the majority of drivers will be involved in an accident at some point. Auto insurance prepares for that eventuality by insuring policyholders against major expenses when that accident occurs.

Insurance can seem complicated, but a knowledgeable insurance agent can help you best understand your policies to ensure they are working for you. An agent can point out any gaps in your coverage that could lead to significant expenses down the road, and show you how to close them (for minimal expense, in most cases).

If you are looking for an expert to guide you through the insurance industry, contact The DiForte Agency, serving Staten Island and the surrounding metropolitan area. Our team of experts is here to serve as your bridge to security. Call us today!

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