What is insurance?

Have you ever wondered, what do I know about insurance? Specifically, what do you know about home insurance? It sounds pretty simple, first you understand the concept of insurance, and then you apply it to a residential property, home insurance. Well, is it that clear? Can you clearly define to yourself what exactly insurance is? Could you do it? What exactly do I actually know about how insurance works and how it applies to real-estate?

 Insurance is basically a contract defined by a specific policy, where individuals or entities as an individual pay for

protection. These protections defend clients financially from damages either big or small covered by the client’s policy, or from liability for damage or injury of a third party. Meaning clients pay for a policy each month, giving
payments to be put into a pool of money to be paid out on the occasion that an incident occurs that is covered by a client’s policy.  This allows the client to save money by paying a smaller amount in the case that there may be more damage than the client would otherwise be able to pay directly out of pocket at one time. Home insurance policies can be extremely varied depending on location and possibility of risk based on personal information, geography, the fiscal value of the property and/or home, etc. Insurance companies make their money in the hopes that many of their clients will never need to claim the money they're owed in the case of loss or damages. ominous but eventually, something will go wrong, and your insurance is there to cover you. Most of the time the cost of your insurance is much smaller, in comparison, than the amount that the insurance company will need to put out to cover your losses.

That begs the question? Why have insurance if the point is to pay for something that everyone, including yourself, are hoping you’ll never need or use? Especially when you consider the fact that the price of your insurance could go up based on risk factors outside of your control. It sounds like a waste of money.  The thing is, and excuse my language, shit happens. Shit will eventually happen, no matter how careful you are, no matter how much effort you put into prevention of damage or loss, something will eventually slip through. Your home protects you, your stuff, and your family from the outside world and that protection means the wear and tear that your home protected you from will be deflected onto your house. This sounds

The next article in this series will go over types of home insurance. What types you may need and how much it may cost you.
https://thecottonhometeam.blogspot.com/2018/08/beginners-guide-to-homeowners-insurance.html