What Are Insurance Coverages?
December 22, 2019
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Insurance coverages (also called guarantees or benefits) are the protections specified in an insurance policy’s terms. They define what risks are covered and up to what financial limit. When an accident occurs, the insurer compensates the policyholder based on these agreed-upon coverages.
Choosing the right coverage is critical. You must assess your risks and select a policy that adequately compensates for potential damages. For complex insurance types (e.g., business or health insurance), consulting a professional is highly recommended.
Types of Insurance Coverages
1. Car Insurance
By law, Third-Party Liability is mandatory in most countries. It covers damages/injuries caused to others by your vehicle. Common car insurance types include:
Third-Party Only
- Mandatory liability coverage (physical/material damage to others).
- Voluntary liability (extends compensation up to €50 million).
- Legal defense & damage claims.
- Driver accident medical assistance.
- Travel assistance (e.g., towing).
Third-Party, Fire & Theft
Covers everything in Third-Party Only plus:
- Vehicle theft.
- Fire damage.
- Broken windows.
Comprehensive Insurance
- Covers all the above plus damages to your own vehicle (e.g., accidents, weather events).
Optional Add-Ons:
- Replacement vehicle.
- Animal collision coverage.
- License withdrawal subsidy.
- Total loss compensation.
2. Home Insurance
Home insurance covers:
- Property damage (e.g., fire, floods).
- Liability (e.g., injuries to guests).
Basic Coverage:
- Fire, theft, flooding, glass breakage, legal defense.
Optional Add-Ons:
- Jewelry/valuables coverage.
- Pet liability.
- Appliance repairs.
- Garden damage.
- Street robbery protection.
3. Health Insurance
Three common types:
- No-Copayment: Full access to network doctors/hospitals (no fees).
- Copayment: Pay a fixed fee per service.
- Reimbursement: Get refunded for out-of-network care.
Basic Coverage:
- Hospitalization, emergencies, preventive care, specialist treatments.
Optional Add-Ons:
- Dental/orthodontics.
- Plastic surgery.
- Second medical opinion.
- Alternative medicine (e.g., homeopathy).
4. Life Insurance
Mandatory Coverage:
- Death benefit (paid to beneficiaries).
Optional Add-Ons:
- Permanent disability (accident/illness).
- Critical illness (cancer, stroke, etc.).
- Double payout for accidental death.
Sources
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