Details; What Is One Cost Of Avoiding Insurance?

By | August 31, 2022
Details; What Is One Cost Of Avoiding Insurance?

Details; What Is One Cost Of Avoiding Insurance?

The one cost of not having insurance or avoiding it is the expense of repair. The amount due to the insurance provider is a premium. In other words, the price of loss due to non-insurance is the expense of not having it.

What Is Insurance?

Insurance is a contract policy in which a policyholder receives financial assistance or reimbursement against losses from an insurance company. The company makes payments to cover the client’s risks or losses when the need arises.

What Are The Parties Involved In An Insurance Contract?

For every insurance contract, there are four (4) participants and they are;

  1. The insured
    Is the person whose life or property is being covered by the terms of the contract.
  2. The insurer
    Is the insurance company that provides the cover?
  3. The proposer
    Is also known as the policyholder. The proposer has the right of ownership and is required to pay premiums.
  4. The beneficiary
    Is the person entitled to receive the benefits of the policy from the insurance company?

What Are The Costs Of Avoiding Insurance?

Repair costs.
It is the only cost for avoiding insurance. Having insurance offsets the cost involved in settling charges for repair of fixed assets and other items which insurance could cover. This is particularly essential for large businesses and companies that deal with huge machines which could cost more than GHC 10,000.00 to acquire. It seems wiser to insure these fixed assets and pay less premium than spending so much on repairs in the event of a breakdown.

How The State Regulates Insurance Companies.

The state insurance department will set rates based on several factors but its primary focus is on how much a company has to pay out in claims. A state with a high rate of criminal activities may not be able to charge as much for insurance as one with lesser records.

In another frame, when a company or industry has frequent complaints filed against them, costs are likely to rise across the board.

It should be noted that unlike other types of regulation in which costs can potentially be passed along to clients, many states regulate insurance rates through the set minimum coverage requirements.

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