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Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of potential financial loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care. Types of insurance Any risk that can be quantified probably has a type of insurance to protect it. Among the different

Types of insurance are:
1) Automobile insurance: Its also known as auto insurance, car insurance and in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the vehicle itself. Over most of the United States purchasing an auto insurance policy is required to legally operate a motor vehicle on public roads. Recommendations for which policy limits should be used are specified in a number of books. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to No Fault systems, which reduce or eliminate the ability to sue for compensation but provide automatic eligibility for benefits. 2) Life insurance: Life insurance provides a cash benefit to a decedent's family or other designated beneficiary, and may specifically provide for burial, funeral and other final expenses. 3) Boiler insurance: Boiler insurance is a type of property insurance that pays accidental losses to machinery and equipment. Although it is called boiler insurance it can actually cover just about any device that uses, transmits or generates mechanical or electrical power; of course certain exclusions apply. 4) Casualty insurance: Casualty insurance insures against accidents, not necessarily tied to any specific property. 5) Credit insurance: Credit insurance pays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death. 6) Financial loss insurance: Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase cover to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover failure of a creditor to pay money it owes to the insured. Fidelity bonds and surety bonds are included in this category. 7) Health insurance: Health insurance covers medical bills incurred because of sickness or accidents. 8) Liability insurance: Liability insurance covers legal claims against the insured. For example, a homeowner's insurance policy provides the insured with protection in the event of a claim brought by someone who slips and falls on the property, and brings a lawsuit for her injuries. Similarly, a doctor may purchase liability insurance to cover any legal claims against him if his negligence (carelessness) in treating a patient caused the patient injury and/or monetary harm. The protection offered by a liability insurance policy is two-fold: a legal defense in the event of a lawsuit commenced against the policyholder, plus indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. 9) Total permanent disability insurance: Insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance. 10) Locked Funds Insurance: Locked Funds Insurance is a little known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorised parties. In special cases, a government may authorise its use in protecting semi-private funds which are liable to tamper. Terms of this type of insurance are usually very strict. As such it is only used in extreme cases where maximum security of funds is required. 11) Marine Insurance: It is covers the loss or damage of goods at sea. Marine insurance typically compensates the owner of merchandise for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier. 12) Nuclear incident insurance — damages resulting from an incident involving radioactivive materials is generally arranged at the national level. 13) Environmental Liability Insurance: It is protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of a pollutant. 14) Political risk insurance: Political risk insurance can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss. 15) Professional Indemnity Insurance: Professional Indemnity Insurance is normally a mandatory requirement for professional practitioners such as Architects, Lawyers, Doctors and Accountants to provide insurance cover against potential negligence claims. Non licensed professionals may also purchase malpractice insurance, it is commonly called Errors and Omissions Insurance and covers a service provider for claims made against them that arise out of the performance of specified professional services. For instance, a web site designer can obtain E&O insurance to cover them for certain claims made by third parties that arise out of negligent performance of web site development services. 16) Property insurance: Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance. 17) Title insurance: Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records done at the time of a real estate transaction. 18) Travel insurance: Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, lost of personal belongings, travel delay, personal liabilities. etc. 19) Workers' compensation: Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expense incurred due to a job-related injury. 20) Terrorism insurance: Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities. It is considered to be a difficult product for insurance companies, as the odds of terrorist attacks are very difficult to predict and the potential liability enormous. For example the September 11, 2001 attacks resulted in an estimated $31.7 billion loss. This combination of uncertainty and potentially huge losses makes the setting of premiums a difficult matter. Most insurance companies therefore exclude terrorism from coverage in Casualty and Property insurance, or else require endorsments to provide coverage. A risk manager looking for terrorism coverage is going to be facing quite a search. Some commercial insurers are offering terrorism insurance, despite the lack of a federal terrorism backstop and inaccurate techniques for modeling the risk. In general, the policies are restrictive and limited to a select few policyholders.Insurers are being very selective about who they underwrite and have only a very limited capacity to write this coverage, especially since no backstop has yet been approved in Washington. In fact, the majority of the insurance market isn't offering coverage. According to a recent study by both the Independent Insurance Agents of America (IIAA) and the Alliance of American Insurers (AAI). According to a study conducted in February of 2002 eighty percent of insurance companies have excluded or have indicated that they will exclude terrorism from commercial policies. Some of the language on the terrorism policies tends to be somewhat overly restrictive. For example, things like riot and vandalism would be covered, but if someone does it for a political cause they would not be covered. The pricing of the product, since early December, has moderated drasticly. Some of the underwriters are willing to offer more reasonable terms. The quotes that have been seen earlier were in the area of half of one percent to five percent rate online. If you're buying $10 million in limit, it was costing you somewhat in the range of $50,000 to $500,000. Recently,that range has moderated from two-tenths of one percent to 2 and half percent. The price of the policy really depends on where the clients are residing and how much limit they buy.
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