What does an insurer do?

Answer 1

An insurer (also known as an insurance company) offers, for a price, to take on some or all of a specified risk, and to pay an agreed-upon amount in the event of a loss.Generally, risks will fall into two broad categories: property and casualty, and life and health. Property insurers agree to pay a specific sum to repair or replace an item that has been lost, stolen or damaged. For example, home insurance covers the threat of a total loss (the house burns down), a partial loss (the roof is damaged by hail), or even theft (the house is burglarized). Auto insurance works the same way.Casualty (or liability) coverage protects one from the threat or results of a lawsuit. For example, if you caused an accident resulting in injuries, your auto insurer would pay for medical care under the liability portion of your policy.Life insurers, as the name implies, pay a specified, pre-agreed upon amount (called the death benefit or face amount) if you die while the policy is in force. Life insurers may also cover losses resulting from injury or even the need for long term care, depending on the kinds of policies issued.Health insurers pay for medical-related expenses, such as hospital stays, doctor visits and prescriptions. Regardless of the kind of policy issued, insurers must first assess the risk (how much is the house worth, is it in good condition). This is called underwriting. Once the risk has been determined, the insurer must decide whether or not to offer coverage and, if so, at what price. At that point, an offer is made and the prospective client must decide whether or not to accept it.