How does insurance actually work?
All insurance works on one idea: many people pay into a pool so the unlucky few who suffer a loss are made whole. Your premium is your share; a claim is a payout from the pool.
The moving parts
- Premium — what you pay in.
- Deductible — your share before coverage starts.
- Claim — a request to be paid for a covered loss.
- Underwriting — how the insurer prices your risk.
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