What are insurance policies? That might seem like a dumb question but it never hurts to ask. A policy is a contract of insurance that describes the term, coverage, premiums and deductibles involved in the purchase of insurance. You can find policies for your home, auto, motorcycle, health, life and even your pet. How about another dumb question? What is insurance? Insurance is a way to have the potential costs of a loss paid by a large group instead of an individual. Premiums are paid and combined in a 'pool' of premiums of a group of insured policyholders. When a loss occurs the cost is paid for from that pool. The insurance company keeps the premiums even if there are never any losses claimed.
Most people see images of pushy salesman waving an insurance policy and telling you all the reasons why you have to have one. There are certain types of insurance you are required to have whether you like it or not. A policy that covers you while you are driving a vehicle is not only required by the state but also by the company that holds the title to your car. If you own your car outright you have the choice to carry just liability or full coverage. Homeowner's insurance is required by your mortgage company while you owe on your loan, after that it is up to you whether you carry a homeowner's policy or not.
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