General Insurance

What is Insurance? An Intro to the Basic Types of Insurance

Dustin Lemick


Dustin Lemick

Insurance is a form of risk management that provides financial protection against losses caused by an event, such as death, illness, property damage, or other unforeseen circumstances. It is a contract between an individual or organization and an insurance company. 


What You Will Learn

What is an Insurance Policy?

An insurance policy is a contract between an insurer and an insured person that outlines the specific requirements, terms, and conditions of coverage that the insurer will provide to the insured. It is a legally binding document that outlines the scope of the insurance coverage, the limits of the coverage, and the obligations of each party with respect to the policy. The insurer agrees to cover losses or damages resulting from the insured’s activities or exposures to certain risks. This can include medical expenses, property damage, and liability for third-party claims. The insurer pays out any claims against the insured promptly.The insured, in return, is responsible for the payment of premiums.


Insurance Premium

An insurance premium is the amount of money an individual or entity pays for an insurance policy. It pays in periodic installments, such as monthly, quarterly, or yearly. 

Typically,several factors determine premium amounts:

  • Type and amount of coverage 
  • The deductible
  • Age, health, and location,
  • The insurance company’s risk assessment of the insured.

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Car Insurance

Car insurance is a type of insurance cover that provides financial protection against damage or physical injury resulting from traffic collisions and against liability resulting from an accident. The insurance carrier provides this coverage,and it is the law in most countries for any vehicle owner to have car insurance. Car insurance is available as a package that includes liability, collision, comprehensive, and uninsured/underinsured motorist coverage. Liability insurance covers other drivers and passengers for bodily injury and property damage caused by the policyholder’s negligence. Collision coverage pays for damage to the policyholder’s vehicle caused by an accident. Comprehensive coverage pays for losses due to theft, vandalism, or other causes unrelated to a collision, such as a fire or a flood. Uninsured/underinsured motorist coverage pays for medical expenses and property damage caused by an at-fault driver who does not have insurance or does not have enough insurance to cover the full extent of the damages.

Financial Protection Insurance

Financial protection insurance is a type of insurance that protects against a variety of financial risks. It covers a wide range of financial losses, such as those resulting from the death or disability of a policyholder, the loss of a job, or the bankruptcy of a business. For individuals, financial protection insurance can provide protection against the loss of income due to disability, death, or loss of assets due to theft or other events. It can also provide replacement income to cover expenses in case of a job loss or other financial hardship. Financial protection insurance can provide peace of mind and security for individuals and businesses.

For businesses, financial protection insurance can provide the following:

  • Protection against the loss of key personnel
  • The loss of business income
  • The costs associated with legal action

Life Insurance Policies

Life insurance is a policy that provides death benefits to the beneficiary of the policyholder if they pass away while the policy is still in effect. It offers financial protection for the beneficiary in the event of the policyholder’s death. Life insurance policies can be an investment, as some policies have a cash value that can be withdrawn or borrowed against. Depending on the type of life insurance policy, the beneficiary could receive cash value also. Typically divided into two main categories: policies fall under either term life insurance or permanent life insurance. Term life insurance offers a death benefit for a specific period between 10-30 years. It is generally the least expensive option and often provides financial protection for a set time. Permanent life insurance is a type of life insurance policy that offers a death benefit for the policyholder’s entire life. Permanent life insurance policies are more expensive than term ones but provide more flexibility and potential benefits. 

Professional Liability Insurance

Professional liability insurance is a form of liability insurance that helps protect professional advice- and service-providing individuals and organizations from bearing the total cost of defending against a negligence claim made by a client and damages awarded in such a civil lawsuit. It covers both court costs and any damages. Professional liability insurance protects the insured from claims arising from any actual or alleged error, omission, or negligent act in performing professional services. It does not cover intentional acts. Individuals and organizations who purchase professional liability insurance can get professional advice or services for their clients, such as lawyers, doctors, accountants, real estate agents, and consultants. 

Homeowner’s Insurance

Homeowners insurance is a type of property insurance that covers losses and damages to an individual’s house and assets in the home. It also provides liability coverage against accidents in the home or on the property. Homeowners’ insurance can cover damage to the home caused by fire, windstorms, hail, lightning, and other natural disasters. It can also cover damage caused by theft, vandalism, and other covered losses. Most mortgage lenders require that a borrower have a homeowner’s insurance policy.

The policy typically covers the dwelling, other structures on the property, personal property, additional living expenses, and liability. In some cases, it can also cover personal liability and medical payments if someone is injured on the property. Depending on the policy, coverage may also be available for water damage. The cost of homeowner’s insurance can vary depending on the location and size of the home, the amount of coverage needed, and the insurance company. Deductibles, limits, and other policy terms can also affect the cost. Comparing rates and finding the best coverage for your needs is essential.

Health Insurance

Health insurance is a type of insurance that covers the cost of medical expenses incurred by an individual. It can help protect individuals and families from financial hardship due to unexpected medical bills. Health insurance can cover various medical services, from preventive care to major surgery. It can also cover prescription drugs, mental health services, and rehabilitation. Health insurance plans vary in coverage, cost, and eligibility requirements. Most health insurance plans require individuals to pay a monthly premium and sometimes a deductible. Once the deductible is met, the insurance company usually covers a percentage of the medical bills. Health insurance plans can also include out-of-pocket maximums, the maximum amount of money an individual or family must pay in a year before the health insurance company will pay the rest.

Jewelry Insurance

Jewelry insurance is a type of property insurance specifically designed for protecting higher value items such as engagement rings, wedding rings, diamond necklaces, bracelets, and luxury watches. While some people choose to add jewelry insurance to their homeowners policy (with added cost) in what is known as a floater or schedule, others prefer specialty jewelry insurance. Specialty jewelry insurance is offered by insurance providers that specialize in jewelry items and can offer several advantages over homeowners floaters. This can include better coverage, especially for a cause known as mysterious disappearance, as well as replacement of an item using a local jeweler of your choice. Specialized jewelry insurance is very affordable compared with other forms of personal property, averaging about .5% to 1.5% of the item’s appraised value annually.

Suggested Read: How to Insure Your Jewelry?

Key Takeaways about Insurance

Insurance is a form of financial protection that provides coverage for individuals and businesses in the event of an unforeseen loss. Insurance companies offer a variety of policies, such as health insurance, life insurance, auto insurance, and homeowners insurance that can provide coverage for losses resulting from accidents, illness, or death. An insurance policy is a contract between an insurer and a policyholder and outlines the coverage and conditions of the policy. An insurance company pays out claims when an insured event occurs, depending on the type of coverage provided in the insurance contract. Life insurance policies give financial protection to the policyholder’s family in the event of their death, while professional liability insurance may cover legal costs if a business is sued. Specific policies may also cover car insurance, homeowners insurance, and medical expenses. Insurance premiums are the costs associated with the policy and vary depending on the type and amount of coverage. Permanent life insurance policies may also provide cash value, which the insured can access over time.

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Need just the basic rundown? Take a look for quick answers. 

What is a premium? 

A premium is typically paid monthly to an insurance company in exchange for insurance services. The amount depends on the type and amount of insurance. 

What are some of the factors that determine coverage? 

Coverage determinations are made based on factors like your age for health insurance and the age of your home for home insurance. 

What are some of the main types of insurance? 

Healthcare, home, auto, and life insurance are a few of the main types of insurance. 

When do I get paid by an insurance company? 

It depends on the type of insurance, but typically you are reimbursed for damages or expenses in the event of particular circumstances.

Do you Truly have all the Insurance You Need?

Just like you don’t want to make the mistake of not having insurance when you need it for your car or health, you don’t want to do the same with your fine jewelry. 

BriteCo can help fill in the gaps in your existing insurance. We offer complete coverage for your fine jewelry, engagement rings, and luxury watches, whether at home or traveling or if you run into theft, loss, damage, or even mysterious disappearance. See why our 5-star jewelry insurance policies are better than the rest, and get your quote today.

Also Check:

Bvlgari Jewelry Insurance | BriteCo Jewelry Insurance
How Do You Finance An Engagement Ring
Jeweler’s guide to insurance payment suspensions by state

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The Easy Way to Insure Your Jewelry - and Save Money!



UP NEXT: Understanding Wedding Cancellation Insurance

Dustin Lemick


Dustin Lemick

Dustin Lemick is the Founder and CEO of BriteCo and a third-generation jeweler with over thirteen years of retail jewelry experience. He holds a Graduate Gemologist degree from the Gemological Institute of America (GIA) and has in-depth knowledge and expertise in appraisal systems, diamond and gemstone markets, retail pricing models, insurance replacement models, and jewelry quotation pricing systems.