Personal lines can be described as an insurance which provides financial protection for individuals. This necessarily means that it only caters to persons and not for businesses or commercial establishments. Insurance providers offer these insurance coverages to individuals to safeguard them, through indemnification, from any future loss or damage and to cover any financial liability claims against them.
There are several types of personal lines and the most common insurance types are auto insurance and homeowners insurance. Auto insurance pays for any damage suffered by the insured party’s vehicle as well as the liability claims filed after an accident. While homeowners insurance generally covers any damage of the policyholder’s house in the event that a natural disaster or unexpected events occur. It also pays for liabilities which results from any injury suffered by an individual within the policyholder’s property. Health insurance are sometimes categorized as a personal line if the coverage is sold in the individual market. Renters insurance and umbrella policies are also examples of personal lines.
The three important factors which personal lines insurance takes into account are the risk, premiums and eligibility. The higher the risk involved, the higher the insurance premiums consumers have to pay. If a driver is labeled as a high risk driver, insurance providers will naturally increase his or her insurance premiums. Eligibility refers to the standards or requirements that an applicant must passed in order to legally be entitled to insurance coverage. In health insurance policies, general health condition, age, occupation and health history are among the many factors considered by insurance providers to determine if the applicant is eligible or not.
Personal lines are created and purchased by individuals for many reasons. Life insurance for example is a great investment because it allows the insured person to save while he is still capable of earning income during his or her lifetime and to reclaim the investments when he or she gets older. It also ensures that the policyholder’s family will be financially safeguarded in the event that he or she dies. Health insurances on the other hand protect an individual from financial burdens that may arise due to medical expenses. Health plans cover medical bills from hospitalization and other medical treatments resulting from the policyholder’s illness. Health plans saves the insured person or his family from taking money out of his or her pocket during sicknesses. Auto insurance provides coverage for damages caused by road traffic accidents and other comprehensive events. There is an alarming rate of road accidents which takes place all over the world and auto insurance is known to have a positive contribution to resolve the road traffic problem. Auto insurance is designed to financially protect the public as well as the driver from loss or damage. The need or necessity for personal lines insurance is exactly the determinant factor for its demand in the insurance market. It plays a important role in the lives of many individuals and the society as a whole. Its advantages are globally recognized and take part in the social and economic progress.