What are the kinds of insurance?

Answer 1

There are far too many types to name. You can purchase insurance for anything. I have sold insurance on the life of valuable horses and on whether or not it would rain on the day of a fund raising festival. The million dollar hole-in-one events at Golf tournaments are actually insurance policies purchased by the event from an insurance company and are quite reasonable depending on the hole and the chance of someone getting a hole in one. The more difficult the hole, the lower the premium. It is quite reasonable and brings in people to help raise finds for the event.

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While the foregring is true in a very general sense, the law of insurance defines very specific categories into which insurance can fall. Many of these have historical antecedents. The basic kinds of insurance are as follows:

1. Marine and Inland Marine. This is probably the oldest form of insurance. Marine insurance is a form of all risk insurance. This means that a policy covers all manner of loss that are not specifically excluded. It insurers ships and cargo, usually when traveling on international waters. Inland marine insurance is similar. Originally, it covered goods that were transported on inland waterways. Later, it expanded to cover transport of goods by means other than ships.

2. Life insurance. Not surprisingly, this is insurance on human lives. Under such a policy, the insurer agrees to pay a stated benefit to a designated beneficiary upon the death of the person whose life is insured. There are various permutations of life insurance, such as term life, whole life, and variations of each, but the underlying function is the same. Health insurance is allied with life insurance. It does not pay in the event of death, but instead, covers stated medical expenses under certain circumstances.

3. Fire and Casualty Insurance. Fire insurance usually is intended to insure against hostile fires. Related is so-called "allied lines" which protects against losses from occurrences such as lightening, collision, explosion and others. Fire insurance is a form of property insurance (not life insurance).

Casualty insurance relates to the insured's legal liability for a loss sustained by another. That liability frequently arises by the insured having been negligent. Negligence is often measured by a "reasonable man" standard. This means that the insured's conduct is measured against that of a hypothetical "reasonable man" faces with similar circumstances. If the insured's level of care is found to have fallen below this, he/she may be found to have been negligent and liable for the victim's damages. Casualty insurance comes into play in these cases by (1) defending the insured in claims of negligence. This means that if the insured gets sued for the loss, the insurer will hire and pay a lawyer to defend the insured. The insurer will usually try to settle the claim, if possible to do so, without suit, but if not possible, the insurer is bound to (2) pay, on behalf of the insured the damages for which it is found legally liable. There are even circumstances under which the insurer has to pay more than policy limits (so-called "bad faith damages") but that is a very long discussion.

There are many varieties and sub-sets of these kinds of insurance, but these are the basics.