Here are some common insurance frequently asked questions.  Below is a list of questions and answers to help learn more about the different types of insurances, what they are and how it all works.

Below are frequently asked questions and concerns that many individuals have when they are looking for insurance.

1. What is an insurance policy?  An insurance policy is a contract that establishes a binding legal relationship that is regulated by both the common law and legislation. In some situations the law has been resulting from precedents established in courts; in other situations the contract is specifically regulated by laws passed by Parliament.

2. What does the Insurance Company do?  The insurance company is known as the "insurer"; the person who holds the policy is known as the "insured".

3. What is consumer Insurance?  Consumer insurance is usually either General insurance or Life insurance.  Consumer Insurance provides protection against financial loss in different situations for the consumer.
   
   Whether you are an individual or part of a family, thing will not always go according to plan, accidents and unforeseen circumstances can occur. These situations can not only hurt physically and emotionally but financially as well.
   
   By owning insurance consumers have a feeling of security being indemnified against a loss that can occur Therefore they can own a property, drive a car, travel overseas and live life without worrying about the financial losses that could occur.

That’s why planning in anticipation (just in case) with purchasing various insurance will not only help to soften financial burdens of unfortunate situations, but relieve much of the stress that occurs when something unexpected happens. Some types of insurance include:

1. Life Insurance
   
2. Car/Automobile Insurance
   
3. Homeowners insurance
   
4. Disability Insurance
   
5. Health Insurance
   
6. Travel Insurance
   
7. Wedding Insurance

Life Insurance

What is life insurance?
A life insurance policy is one that the insurance company will pay out a certain amount of financial compensation to the beneficiary when the policyholder dies.

Why would someone want to get life insurance?
Some people insure themselves in case of premature death because of the implications on his spouse and family. . With Life insurance you will be able to protect your family and provide you with peace of mind.

Car Insurance

Car insurance protects you against financial loss if you have a motor vehicle accident. By you agreeing to pay certain premiums outlined in your contract with your car insurer, the insurance company agrees to pay your losses as defined in your policy if you have an accident.

Homeowners Insurance

Homeowners Insurance provides compensation for losses as a result of damage to a policyholder’s home and contents. Also covers legal liability for injuries incurring from the household member to another person.

Disability Insurance

Disability insurance pays an income to a policyholder who is unable to work because of an accident or illness.

Travel Insurance

Provides compensation in case you need to cancel the trip due to sickness, disaster occurring or tour operator going bankrupt.

Health Insurance

Health Insurance pays all of part of the cost hospitalization, surgery and other medical care. Private health insurance main benefit is reduced waiting time compared to public service health care.

Wedding Insurance

Provides financial protection if you have to cancel or postpone a wedding because of a death, natural disaster or other situations specified in the policy occurs on your wedding day.

4. What is a transfer of risk?  This means that the insurer agrees to compensate you if you suffer a loss.  Without the insurance you would have to pay for that loss yourself. This contract is made on the basis that the insurance company calculates the risk that you, or the total number of people buying insurance, will cost more in payouts than what is received in premiums. This is determined by the use of statistics and the information you disclose on your application for insurance.

5. What is General Insurance?  General  Insurance includes:

·        Home Insurance: Homeowners Insurance provides compensation for losses as a result of damage to a policyholder’s home and contents. Also covers legal liability for injuries incurring from the household member to another person.  The policy covers loss or damage from a list of "defined" events, e.g. storm or fire; or "accidental loss or damage" i.e. all accidental loss with some exclusions.

·        Motor vehicle: Car insurance protects you against financial loss if you have a motor vehicle accident. By you agreeing to pay certain premiums outlined in your contract with your car insurer, the insurance company agrees to pay your losses as defined in your policy if you have an accident.  It covers damage caused by your car to another person's property. This type of insurance will not cover you for the cost of repairs to your own car; "third party fire and theft" i.e. it covers damage partly for damage caused by your car to another person's property, and restricted cover for damage to your car cause by theft or fire.

·        Public liability: This type of insurance covers any awards of damages given to a member of the public because of an injury or damage to their property caused by you or your business. It also covers any related legal fees, costs and expenses. States and Territories now have laws which limit an injured person's common law rights to sue for negligence, place thresholds and caps on damages for pain and suffering, and limit the payouts for economic losses.

6. What is personal accident insurance?  This includes:

·        Travel: Make sure the policy and the underwriter will be recognised in the countries in which you travel, otherwise you may face difficulties in receiving medical assistance.

·        Life insurance: This is a contract where the insurance company is bound to pay an agreed sum on the death of the person who is insured.

·        Income protection: This type of insurance the insurer agrees to pay you a specified amount of money, usually in monthly payments, in the event that you become disabled and unable to work. 

·        Trauma insurance: This provides a lump sum on diagnosis of one of number medical traumas such as a heart attack, stroke and cancer.

Some life insurance policies are more in the nature of an investment product, where the company takes your premiums and invests them to add value to the policy.

Using a broker: Under the law an insurance broker must be licensed and registered by the Australian Securities Insurance Commission. This establishes standards that ensure:

1. that their professional identity is truthful
   
2. That they do not try to pressure you into a policy you don't want
   
3. they follow certain accounting practices that protect your premiums
   
4. Disputes will be handled in an appropriate manner.

Types of cover

Make sure you understand the types of cover that you will receive from the policy. For instance, home insurance can either be:

1. defined event i.e. the policy covers loss or damage from a list of "defined" events, e.g. storm or fire
   
2. Accidental loss or damage i.e. all accidental loss with some exclusions.

Just because a defined event is covered in your policy is not a guarantee that you will be covered no matter how (or why) the event took place.  This partly depends on the way the events are described in the policy, and any exclusion that are made in the policy regarding the circumstances of the event.

Therefore it is always important to carefully read the policy. Accidental loss or damage policies cover all accidental losses, but it will nevertheless be subject to stated exclusions.